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H-1B Series: The Labor Condition Application - Part 5

by George N. Lester IV

George N. Lester IV

"Non-Displacement" and Recruitment of U.S. Workers: Additional LCA Attestations for "H-1B Dependent" and "Willful Violator" Employers

Certain employers must make additional attestations relating to "non-displacement" and recruitment of U.S. workers. Employers subject to these requirements are those deemed "H-1B dependent" or found to be "willful violators" during a prior DOL or INS enforcement proceeding. The employer is exempt from these additional attestations, however, if the LCA only supports petitions for H-1B nonimmigrants earning annual salaries of $60,000 or more or holding master's degrees or equivalent qualifications.

A. What Employers Are Subject to the Additional Attestations

ACWIA introduced the concept of "H-1B dependent" status to distinguish those employers with workforces that comprise significant numbers of HIB nonimmigrants, so that those employers would be subject to tougher requirements. H-1B dependence occurs when:

  1. an employer with twenty-five or fewer full-time equivalent employees in the U.S. employs more than seven H-1B nonimmigrants,

  2. an employer with at least twenty-six, but not more than fifty, full-time equivalent employees in the U.S. employs more than twelve H-1B nonimmigrants, and

  3. an employer with fifty-one or more full-time equivalent employees in the U.S. employs a number of H-1B non-immigrants that is at least 15% of the number of such full-time equivalent employees.
The number of "full-time equivalent" employees within a workforce is determined by adding the number of actual full-time employees with a number derived from aggregating the number of part-time employees into a full-time equivalent number. Thus, the calculation is not specific to a particular occupation within the employer's workforce, but is based on the total number of full-time equivalent employees and total number of H-1B nonimmigrant employees, regardless of their positions.

The H-1B dependency calculation may be made in one of two ways: the employer may (1) add the actual hours of part-time employees and divide by its normal full-time hours (i.e., 35 or 40), or (2) count each part-time employee as one-half of a full-time equivalent.

A group of entities treated as a "single employer" under the Internal Revenue Code ("IRC") also is a single employer for purposes of determining H-1B dependency. In this case, the calculation above is based on the total number of full-time equivalent and H-1B employees in the entire group. "Single employer" groups under the IRC include (1) a "controlled group of corporations," such as a "parent-subsidiary controlled group," a "brother-sister controlled group," or a "combined group," (2) "a group of trades or businesses, whether or not incorporated, that are under common control," or (3) an "affiliated service group."

"Willful violator" employers are those against whom a finding of violation. has been entered on or after October 21, 1998 (the date of enactment of ACWIA) by the DOL or INS in an enforcement proceeding related to the H-1B program. In determining such a violation the agency must have found that the employer committed either a willful failure or a misrepresentation of a material fact during the five-year period preceding the filing of the LCA.

B. The "Non-Displacement of U.S. Workers" Attestations

H-1B dependent employers are prohibited from "displacing" U.S. workers within ninety days before and after the filing of an H-1B petition supported by the LCA. Displacement is prohibited regardless of whether it occurs "directly" within its own workforce, or "secondarily" at the worksite of a second employer. As a result, there are two attestations relating to nondisplacement on the LCA:
  1. "Displacement: The employer will not displace any similarly employed U.S. worker within the period beginning 90 days before and ending 90 days after the date of filing a petition for an H-1B nonimmigrant supported by the application.

  2. "Secondary Displacement: The employer will not place any H-1B nonimmigrant employed pursuant to this application with any other employer or at another employer's worksite UNLESS the employer applicant first makes a bona fide inquiry as to whether the employer has displaced or intends to displace a similarly employed U.S. worker within the period beginning 90 days before and ending 90 days after the placement, and the employer applicant has no contrary knowledge."
"Displacement" refers to the "lay off' of a U.S. worker from an "essentially equivalent job" as that held by, or offered to, the H-1B nonimmigrant.

A "lay off" occurs where the employer has caused the loss of the U.S. worker's employment in circumstances other than (1) the discharge for inadequate performance or other cause, (2) a voluntarily departure or retirement of the U.S. worker, (3) where a temporary grant or contract expires, or (4) where the U.S. worker is given a bona fide offer of similar employment at equivalent or higher compensation.

An "essentially equivalent job" involves "essentially the same duties and responsibilities" as the job from which the U.S. worker was laid off, provided that it is located in the same area of employment. The qualifications of the laid-off U.S. worker must also be "substantially equivalent" to the qualifications of the H-1B nonimmigrant. United States workers satisfying these criteria are considered "similarly employed."

The "direct displacement" prohibition is straightforward. The employer may not lay off a U.S. worker from a job that is essentially the equivalent of the job for which the H-1B nonimmigrant is sought within ninety days before or after the filing of any H-1B petition supported by the LCA making the attestation.

In the "secondary displacement" prohibition, the employer may not place an H-1B nonimmigrant with another-- or "secondary" -- employer, at the other employer's worksite, where there exist certain "indicia of an employment relationship" between the other employer and the nonimmigrant, until the H-1B employer has asked the other employer whether within ninety days before and after the placement the other employer has displaced or intends to displace a U.S. worker employed by the other employer, in an essentially equivalent job. The H-1B employer needs to attest that it has made such inquiry and that based on the inquiry it has no knowledge of any such displacement by the secondary employer.

"Indicia of employment" with the secondary employer includes factors such as that the employer (1) has a right to control when, where, and how the H-1B nonimmigrant performs the job, including setting hours and duration of the job, (2) furnishes tools, materials, or equipment to the person, (3) maintains a continuing relationship with the worker, and (4) has a right to provide additional assignments or to discharge the person.

The H-1B employer must use "due diligence" in making and documenting the necessary "secondary displacement" inquiries. DOL regulations suggest that appropriate methods include (1) securing and retaining a written assurance from the other employer that it has not and does not intend to effect such a displacement, (2) preparing and retaining a written memorandum documenting, in detail, the contemporaneous receipt of oral statements from the other employer with such assurances, or (3) including a "secondary displacement clause" in any contract between the H-1B employer and the secondary employer, in which the other employer expressly agrees to a non-displacement obligation. Other more particularized inquiry may be required for due diligence depending on the circumstances.

Regardless of the response the secondary employer provides to the inquiries, if it in fact displaces a U.S. worker during the applicable period, then the H-1B employer will be subject to a finding that it violated the LCA requirements, even if the H-1B employer had no knowledge of the secondary employer's displacement and may have otherwise acted in full compliance with its obligations.

C. The "Recruitment of U.S. Workers" Attestation

An employer subject to this obligation must attest on the LCA form as follows:
"Recruitment and Hiring: Prior to filing any petition for an H1B nonimmigrant pursuant to this application, the employer took or will take good faith steps meeting industry-wide standards to recruit U.S. workers for the job for which the non-immigrant is sought, offering compensation at least as great as required to be offered to the H-1B nonimmigrant. The employer will (has) offered) the job to any U.S. worker who (has) applied and is equally or better qualified than the H-1B nonimmigrant."
Under "industry-wide standards for recruitment" the employer need not use any particular methods or frequency of recruitment activities, and may make its own determination of the appropriate activities through industry sources. The recruitment should, however, "be at a level and through methods and media which are normal, common or prevailing in the industry, including those strategies that have been shown to be successfully used by employers in the industry to recruit U.S. workers." There must be both internal and external recruitment, and some "active" recruitment.

The employer may use "legitimate selection criteria relevant to the job that are normal or customary to the type of job" in screening applicants, provided that the criteria are not applied in a discriminatory manner. The recruitment must be conducted in good faith, and in a manner that does not favor H-1B nonimmigrant applicants. The employer must offer the job to any U.S. worker who applies and is equally or better qualified for the job than the H-1B nonimmigrant.

D. Exemption from the Non-Displacement and Recruitment Attestations

The nondisplacement and recruitment attestations are not required if the LCA is solely for employment of "exempt" H-1B nonimmigrants. An H-1B nonimmigrant is "exempt" if he or she receives annual wages equivalent to $60,000 or more, or has attained a master's degree or higher (or its equivalent) "in a specialty related to the intended employment."

In the "exempt" salary calculation, cash bonuses and similar compensation payments may be included, but only if they are guaranteed. Non-cash benefits such as insurance may not be included.

Clearly, if a foreign national holds a master's degree or higher from a U.S. institution, the foreign national is exempt. Academic degrees from foreign institutions that are accredited or recognized under the laws of the country where the degree was issued must be evaluated to determine that they are the equivalent of U.S. masters' degrees or higher as issued by a U.S. academic institution.[1] Experience and expertise are not equivalent of U.S. masters' degrees for exemptions. Further, the foreign degree must be "in a specialty which is generally accepted in the industry or occupation as an appropriate or necessary credential or skill for the person who undertakes the employment in question.[2]

To claim the exemption, the employer must designate on the LCA that the LCA will be used only to support H-1B petitions for exempt H-1B nonimmigrants. The INS will then determine the worker's exempt status as part of its adjudication of the petition, based on the salary stated and/or evidence of educational credentials.

ACWIA provided a separate exemption from the recruitment attestation for LCAs filed in support of H-1B nonimmigrants who are priority workers, who are defined as persons with extraordinary ability, outstanding professors or researchers, or multinational executives or managers. Usually, persons of extraordinary ability and outstanding professors or researchers will have masters' degrees or higher. Thus, this exemption is of limited use, since most eligible H-1B nonimmigrants qualify for the broader exemption from both the recruitment and non-displacement attestations described above. Further, multinational executives and managers are usually eligible for L-lA status and thus need not be beneficiaries of H-1B petitions.

[1] See the September 16, 2002 article in this series for a discussion of foreign degree equivalence.

[2] For comparison, see the September 23, 2002 article in this series for a discussion of the general requirement for H-1B classification that a degree be directly related to the occupation.

About The Author

George N. Lester IV is of the Immigration Practice Group (the "Group") of the law firm of Foley, Hoag & Eliot LLP. Foley, Hoag & Eliot LLP is a full-service law firm of 200 lawyers in Boston and Washington, D.C. It was the first large law firm in Boston to develop an expertise in business immigration law, and for over thirty years its Group has represented employers in a full range of procedures to obtain temporary or permanent authorization to employ foreign professionals. Mr. Lester has practiced immigration law for ten years, and regularly speaks to business, academic, and professional groups on immigration topics. As part of his regular AILA activities, Mr. Lester meets with officials of the INS Vermont Service Center to discuss H-1B and other liaison topics. He also serves as Treasurer and a Board Member of the Political Asylum/Immigration Representation Project (PAIR) in Boston, and received that organization's Pro Bono Attorney Award for Dedication and Commitment to Human Rights in May 1996. Mr. Lester is a 1989 graduate of Northeastern University School of Law.

This article is the seventeenth in a series by George N. Lester of the Foley Hoag LLP Immigration Practice Group based on a chapter he authored titled "Specialty Occupation Professionals," in the treatise Business Immigration Law: Strategies for Employing Foreign Nationals, edited by Rodney A. Malpert and Amanda Petersen, and appears here with the permission of the publisher. Published by Law Journal Press. Copyrighted by NLP IP Company. All rights reserved. Copies of the complete work may be ordered from Law Journal Press, Book Fulfillment Department, 105 Madison Avenue, New York, New York 10016 or at or by calling 800-537-2128, ext. 9300.

For the latest updates from the Foley Hoag Immigration Practice Group, particularly including weekly Process Time Updates from the Vermont Service Center, click here.

The opinions expressed in this article do not necessarily reflect the opinion of ILW.COM.

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