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< Back to current issue of Immigration Daily < Back to current issue of Immigrant's Weekly

< Back to current issue of Immigration Daily                        < Back to current issue of Immigrant's Weekly 

[Federal Register: December 20, 2000 (Volume 65, Number 245)]
[Rules and Regulations]               
[Page 80209-80254]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr20de00-22]                         
 
[[pp. 80209-80254]] Labor Condition Applications and Requirements for Employers Using 
Nonimmigrants on H-1B Visas in Specialty Occupations and as Fashion 
Models; Labor Certification Process for Permanent Employment of Aliens 
in the United States

[[Continued from page 80208]]

[[Page 80209]]

responsibilities of those agencies and of employers?
655.710   What is the procedure for filing a complaint?
655.715   Definitions
655.720   Where are labor condition applications to be filed and 
processed?
655.721   What are the addresses of the ETA regional offices which 
handle matters other than processing LCAs?
655.730   What is the process for filing a labor condition 
application?
655.731   What is the first LCA requirement, regarding wages?
655.732   What is the second LCA requirement, regarding working 
conditions?
655.733   What is the third LCA requirement, regarding strikes and 
lockouts?
655.734   What is the fourth LCA requirement, regarding notice?
655.735   What are the special provisions for short-term placement 
of H-1B nonimmigrants at place(s) of employment outside the area(s) 
of intended employment listed on the LCA?
655.736   What are H-1B-dependent employers and willful violators?
655.737   What are ``exempt'' H-1B nonimmigrants, and how does their 
employment affect the additional attestation obligations of H-1B-
dependent employers and willful violator employers?
655.738   What are the ``non-displacement of U.S. workers'' 
obligations that apply to H-1B-dependent employers and willful 
violators, and how do they operate?
655.739   What is the ``recruitment of U.S. workers'' obligation 
that applies to H-1B-dependent employers and willful violators, and 
how does it operate?
655.740   What actions are taken on labor condition applications?
655.750   What is the validity period of the labor condition 
application?
655.760   What records are to be made available to the public, and 
what records are to be retained?
Subpart I--Enforcement of H-1B Labor Condition Applications
655.800   Who will enforce the LCAs and how will they be enforced?
655.801   What protection do employees have from retaliation?
655.805   What violations may the Administrator investigate?
655.806   Who may file a complaint and how is it processed?
655.807   How may someone who is not an ``aggrieved party'' allege 
violations, and how will those allegations be processed?
655.808   Under what circumstances may random investigations be 
conducted?
655.810   What remedies may be ordered if violations are found?
655.815   What are the requirements for the Administrator's 
determination?
655.820   How is a hearing requested?
655.825   What rules of practice apply to the hearing?
655.830   What rules apply to service of pleadings?
655.835   How will the administrative law judge conduct the 
proceeding?
655.840   What are the requirements for a decision and order of the 
administrative law judge?
655.845   What rules apply to appeal of the decision of the 
administrative law judge?
655.850   Who has custody of the administrative record?
655.855   What notice shall be given to the Employment and Training 
Administration and the Attorney General of the decision regarding 
violations?


    2. The authority citation for Part 655 is revised to read as 
follows:

    Authority: Section 655.0 issued under 8 U.S.C. 1101(a)(15)(H)(i) 
and (ii), 1182(m) and (n), 1184, 1188, and 1288(c) and (d); 29 
U.S.C. 49 et seq.; sec. 3(c)(1), Pub.L. 101-238, 103 Stat. 2099, 
2102 (8 U.S.C. 1182 note); sec. 221(a), Pub.L. 101-649, 104 Stat. 
4978, 5027 (8 U.S.C. 1184 note); sec. 323, Pub.L. 103-206, 107 Stat. 
2149; Title IV, Pub.L. 105-277, 112 Stat. 2681; Pub.L. 106-95, 113 
Stat. 1312 (8 U.S.C. 1182 note); and 8 CFR 213.2(h)(4)(i).
    Section 655.00 issued under 8 U.S.C. 1101(a)(15)(H)(ii), 1184, 
and 1188; 29 U.S.C. 49 et seq.; and 8 CFR 214.2(h)(4)(i).
    Subparts A and C issued under 8 U.S.C. 1101(a)(150(H)(ii)(b) and 
1184; 29 U.S.C. 49 et seq.; and 8 CFR 214.2(h)(4)(i).
    Subpart B issued under 8 U.S.C. 1101(a)(15)(H)(ii)(a), 1184, and 
1188; and 29 U.S.C. 49 et seq.
    Subparts D and E issued under 8 U.S.C. 1101(a)(15)(H)(i)(a), 
1182(m), and 1184; 29 U.S.C. 49 et seq.; and sec. 3(c)(1), Pub.L. 
101-238, 103 Stat. 2099, 2103 (8 U.S.C. 1182 note).
    Subparts F and G issued under 8 U.S.C. 1184 and 1288(c); and 29 
U.S.C. 49 et seq.
    Subparts H and I issued under 8 U.S.C. 1101(a)(15)(H)(i)(b), 
1182(n), and 1184; 29 U.S.C. 49 et seq.; sec 303(a)(8), Pub.L. 102-
232, 105 Stat. 1733, 1748 (8 U.S.C. 1182 note); and Title IV, Pub.L. 
105-277, 112 Stat. 2681.
    Subparts J and K issued under 29 U.S.C. 49 et seq.; and sec 
221(a), Pub.L. 101-649, 104 Stat. 4978, 5027 (8 U.S.C. 1184 note).
    Subparts L and M issued under 8 U.S.C. 1101(a)(15)(H)(i)(c), 
1182 (m) and 1184; and 29 U.S.C. 49 et seq.


    3. Section 655.700 is revised to read as follows:


Sec. 655.700  What statutory provisions govern the employment of H-1B 
nonimmigrants and how do employers apply for an H-1B visa?

    (a) Statutory provisions. With respect to nonimmigrant workers 
entering the United States (U.S.) on H-1B visas, the Immigration and 
Nationality Act (INA), as amended, provides as follows:
    (1) Establishes an annual ceiling (exclusive of spouses and 
children) on the number of foreign workers who may be issued H-1B 
visas--
    (i) 195,000 in fiscal year 2001;
    (ii) 195,000 in fiscal year 2002;
    (iii) 195,000 in fiscal year 2003; and
    (iv) 65,000 in each succeeding fiscal year;
    (2) Defines the scope of eligible occupations for which 
nonimmigrants may be issued H-1B visas and specifies the qualifications 
that are required for entry as an H-1B nonimmigrant ;
    (3) Requires an employer seeking to employ H-1B nonimmigrants to 
file a labor condition application (LCA) agreeing to various 
attestation requirements and have it certified by the Department of 
Labor (DOL) before a nonimmigrant may be provided H-1B status by the 
Immigration and Naturalization Service (INS); and
    (4) Establishes an enforcement system under which DOL is authorized 
to determine whether an employer has engaged in misrepresentation or 
failed to meet a condition of the LCA, and is authorized to impose 
fines and penalties.
    (b) Procedure for obtaining an H-1B visa classification. Before a 
nonimmigrant may be admitted to work in a ``specialty occupation'' or 
as a fashion model of distinguished merit and ability in the United 
States under the H-1B visa classification, there are certain steps 
which must be followed:
    (1) First, an employer shall submit to DOL, and obtain DOL 
certification of, a labor condition application (LCA). The requirements 
for obtaining a certified LCA are provided in this subpart. The LCA 
(Form ETA 9035) and cover page (Form ETA 9035CP, containing the full 
attestation statements that are incorporated by reference in Form ETA 
9035) may be obtained from http://ows.doleta.gov, from DOL regional 
offices, and from the Employment and Training Administration (ETA) 
national office. Employers are encouraged to utilize the electronic 
filing system developed by ETA to expedite the certification process 
(see Sec. 655.720).
    (2) After obtaining DOL certification of an LCA, the employer may 
submit a nonimmigrant visa petition (INS Form I-129), together with the 
certified LCA, to INS, requesting H-1B classification for the foreign 
worker. The requirements concerning the submission of a petition to, 
and its processing by, INS are set forth in INS regulations. The INS 
petition (Form I-129) may be obtained from an INS district or area 
office.
    (3) If INS approves the H-1B classification, the nonimmigrant then 
may apply for an H-1B visa abroad at a consular office of the 
Department of State. If the nonimmigrant is already in the United 
States in a status other than H-1B, he/she may apply to the INS for a 
change of visa status.
    (c) Applicability. (1) This subpart H and subpart I of this part 
apply to all employers seeking to employ foreign workers under the H-1B 
visa

[[Page 80210]]

classification in specialty occupations or as fashion models of 
distinguished merit and ability.
    (2) During the period that the provisions of Appendix 1603.D.4 of 
Annex 1603 of the North American Free Trade Agreement (NAFTA) apply, 
this subpart H and subpart I of this part shall apply (except for the 
provisions relating to the recruitment and displacement of U.S. workers 
(see Secs. 655.738 and 655.739)) to the entry and employment of a 
nonimmigrant who is a citizen of Mexico under and pursuant to the 
provisions of section D or Annex 1603 of NAFTA in the case of all 
professions set out in Appendix 1603.D.1 of Annex 1603 of NAFTA other 
than registered nurses. Therefore, the references in this part to ``H-
1B nonimmigrant'' apply to any Mexican citizen nonimmigrant who is 
classified by INS as ``TN.'' In the case of a registered nurse, the 
following provisions shall apply: subparts D and E of this part or the 
Nursing Relief for Disadvantaged Areas Act of 1999 (Public Law 106-95) 
and the regulations issued thereunder, 20 CFR part 655, subparts L and 
M.

    4. Section 655.705 is revised to read as follows:


Sec. 655.705  What federal agencies are involved in the H-IB program, 
and what are the responsibilities of those agencies and of employers?

    Three federal agencies (Department of Labor, Department of State, 
and Department of Justice) are involved in the process relating to H-1B 
nonimmigrant classification and employment. The employer also has 
continuing responsibilities under the process. This section briefly 
describes the responsibilities of each of these entities.
    (a) Department of Labor (DOL) responsibilities. DOL administers the 
labor condition application process and enforcement provisions 
(exclusive of complaints regarding non-selection of U.S. workers, as 
described in 8 U.S.C. 1182(n)(1)(G)(i)(II) and 1182(n)(5)). Two DOL 
agencies have responsibilities:
    (1) The Employment and Training Administration (ETA) is responsible 
for receiving and certifying labor condition applications (LCAs) in 
accordance with this subpart H. ETA is also responsible for compiling 
and maintaining a list of LCAs and makes such list available for public 
examination at the Department of Labor, 200 Constitution Avenue, NW., 
Room C-4318, Washington, DC 20210.
    (2) The Wage and Hour Division of the Employment Standards 
Administration (ESA) is responsible, in accordance with subpart I of 
this part, for investigating and determining an employer's 
misrepresentation in or failure to comply with LCAs in the employment 
of H-1B nonimmigrants.
    (b) Department of Justice (DOJ) and Department of State (DOS) 
responsibilities. The Department of State, through U.S. Embassies and 
Consulates, is responsible for issuing H-1B visas. The Department of 
Justice, through the Immigration and Naturalization Service (INS), 
accepts the employer's petition (INS Form I-129) with the DOL-certified 
LCA attached. INS is responsible for approving the nonimmigrant's H-1B 
visa classification. In doing so, the INS determines whether the 
petition is supported by an LCA which corresponds with the petition, 
whether the occupation named in the labor condition application is a 
specialty occupation or whether the individual is a fashion model of 
distinguished merit and ability, and whether the qualifications of the 
nonimmigrant meet the statutory requirements for H-1B visa 
classification. If the petition is approved, INS will notify the U.S. 
Consulate where the nonimmigrant intends to apply for the visa unless 
the nonimmigrant is in the U.S. and eligible to adjust status without 
leaving this country. See 8 U.S.C. 1255(h)(2)(B)(i). The Department of 
Justice administers the system for the enforcement and disposition of 
complaints regarding an H-1B-dependent employer's or willful violator 
employer's failure to offer a position filled by an H-1B nonimmigrant 
to an equally or better qualified United States worker (8 U.S.C. 
1182(n)(1)(E), 1182(n)(5)), or such employer's willful 
misrepresentation of material facts relating to this obligation. The 
Department of Justice, through the INS, is responsible for disapproving 
H-1B and other petitions filed by an employer found to have engaged in 
misrepresentation or failed to meet certain conditions of the labor 
condition application (8 U.S.C. 1182(n)(2)(C)(i)-(iii); 1182(n)(5)(E)).
    (c) Employer's responsibilities. Each employer seeking an H-1B 
nonimmigrant in a specialty occupation or as a fashion model of 
distinguished merit and ability has several responsibilities, as 
described more fully in this subpart and subpart I, including--
    (1) The employer shall submit a completed labor condition 
application (LCA) on Form ETA 9035 in the manner prescribed in 
Sec. 655.720. By completing and signing the LCA, the employer agrees to 
several attestations regarding an employer's responsibilities, 
including the wages, working conditions, and benefits to be provided to 
the H-1B nonimmigrants (8 U.S.C. 1182(n)(1)); these attestations are 
specifically identified and incorporated by reference in the LCA, as 
well as being set forth in full on Form ETA 9035CP. The LCA contains 
additional attestations for certain H-1B-dependent employers and 
employers found to have willfully violated the H-1B program 
requirements; these attestations impose certain obligations to recruit 
U.S. workers, to offer positions to U. S. workers who are equally or 
better qualified than the H-1B nonimmigrant(s), and to avoid the 
displacement of U.S. workers (either in the employer's workforce or in 
the workforce of a second employer with whom the H-1B nonimmigrant(s) 
is placed with indicia of employment by that employer (8 U.S.C. 
1182(n)(1)(E)-(G)). These additional attestations are specifically 
identified and incorporated by reference in the LCA, as well as being 
set forth in full on Form ETA 9035CP. If the LCA is certified by ETA, a 
copy will be returned to the employer.
    (2) The employer shall make the LCA and necessary supporting 
documentation (as identified under this subpart) available for public 
examination at the employer's principal place of business in the U.S. 
or at the place of employment within one working day after the date on 
which the LCA is filed with ETA.
    (3) The employer then may submit a copy of the certified LCA to INS 
with a completed petition (INS Form I-129) requesting H-1B 
classification.
    (4) The employer shall not allow the nonimmigrant worker to begin 
work until INS grants the worker authorization to work in the United 
States for that employer or, in the case of a nonimmigrant who is 
already in H-1B status and is changing employment to another H-1B 
employer, until the new employer files a petition supported by a 
certified LCA.
    (5) The employer shall develop sufficient documentation to meet its 
burden of proof with respect to the validity of the statements made in 
its LCA and the accuracy of information provided, in the event that 
such statement or information is challenged. The employer shall also 
maintain such documentation at its principal place of business in the 
U.S. and shall make such documentation available to DOL for inspection 
and copying upon request.

    5. Section 655.710 is revised to read as follows:

[[Page 80211]]

Sec. 655.710  What is the procedure for filing a complaint?

    (a) Except as provided in paragraph (b) of this section, complaints 
concerning misrepresentation in the labor condition application or 
failure of the employer to meet a condition specified in the 
application shall be filed with the Administrator, Wage and Hour 
Division (Administrator), ESA, according to the procedures set forth in 
subpart I of this part. The Administrator shall investigate where 
appropriate, and after an opportunity for a hearing, assess appropriate 
sanctions and penalties, as described in subpart I of this part.
    (b) Complaints arising under section 212(n)(1)(G)(i)(II) of the 
INA, 8 U.S.C. 1182(n)(1)(G)(i)(II), alleging failure of the employer to 
offer employment to an equally or better qualified U.S. worker, or an 
employer's misrepresentation regarding such offer(s) of employment, may 
be filed with the Department of Justice, 10th Street & Constitution 
Avenue, NW., Washington, DC 20530. The Department of Justice shall 
investigate where appropriate and shall take such further action as may 
be appropriate under that Department's regulations and procedures.

    6. Section Sec. 655.715 is amended to revise the definition of 
``Area of intended employment'', to add the definition of ``Employed, 
employed by the employer or employment relationship'', to revise the 
definition of ``Employer'', to revise the definition of ``Employment 
and Training Administration (ETA)'', to add the definition of ``Office 
of Workforce Security (OWS)'', to revise the definitions of ``Place of 
employment'' and ``State Employment Security Agency (SESA)'', to remove 
the definition of ``United States Employment Service'', and to add the 
definition of ``United States worker (U.S. worker)'', to read as 
follows:


Sec. 655.715  Definitions.

    Area of intended employment means the area within normal commuting 
distance of the place (address) of employment where the H-1B 
nonimmigrant is or will be employed. There is no rigid measure of 
distance which constitutes a normal commuting distance or normal 
commuting area, because there may be widely varying factual 
circumstances among different areas (e.g., normal commuting distances 
might be 20, 30, or 50 miles). If the place of employment is within a 
Metropolitan Statistical Area (MSA) or a Primary Metropolitan 
Statistical Area (PMSA), any place within the MSA or PMSA is deemed to 
be within normal commuting distance of the place of employment; 
however, all locations within a Consolidated Metropolitan Statistical 
Area (CMSA) will not automatically be deemed to be within normal 
commuting distance. The borders of MSAs and PMSAs are not controlling 
with regard to the identification of the normal commuting area; a 
location outside of an MSA or PMSA (or a CMSA) may be within normal 
commuting distance of a location that is inside (e.g., near the border 
of) the MSA or PMSA (or CMSA).
* * * * *
    Employed, employed by the employer, or employment relationship 
means the employment relationship as determined under the common law, 
under which the key determinant is the putative employer's right to 
control the means and manner in which the work is performed. Under the 
common law, ``no shorthand formula or magic phrase * * * can be applied 
to find the answer * * *. [A]ll of the incidents of the relationship 
must be assessed and weighed with no one factor being decisive.'' NLRB 
v. United Ins. Co. of America, 390 U.S. 254, 258 (1968).
    Employer means a person, firm, corporation, contractor, or other 
association or organization in the United States which has an 
employment relationship with H-1B nonimmigrants and/or U.S. worker(s). 
The person, firm, contractor, or other association or organization in 
the United States which files a petition on behalf of an H-1B 
nonimmigrant is deemed to be the employer of that H-1B nonimmigrant.
    Employment and Training Administration (ETA) means the agency 
within the Department which includes the Office of Workforce Security 
(OWS).
* * * * *
    Office of Workforce Security (OWS) means the agency of the 
Department which is charged with administering the national system of 
public employment offices.
    Place of employment means the worksite or physical location where 
the work actually is performed.
    (1) The term does not include any location where either of the 
following criteria--paragraph (1)(i) or (ii)--is satisfied:
    (i) Employee developmental activity. An H-1B worker who is 
stationed and regularly works at one location may temporarily be at 
another location for a particular individual or employer-required 
developmental activity such as a management conference, a staff 
seminar, or a formal training course (other than ``on-the-job-
training'' at a location where the employee is stationed and regularly 
works). For the H-1B worker participating in such activities, the 
location of the activity would not be considered a ``place of 
employment'' or ``worksite,'' and that worker's presence at such 
location--whether owned or controlled by the employer or by a third 
party--would not invoke H-1B program requirements with regard to that 
employee at that location. However, if the employer uses H-1B 
nonimmigrants as instructors or resource or support staff who 
continuously or regularly perform their duties at such locations, the 
locations would be ``places of employment'' or ``worksites'' for any 
such employees and, thus, would be subject to H-1B program requirements 
with regard to those employees.
    (ii) Particular worker's job functions. The nature and duration of 
an H-1B nonimmigrant's job functions may necessitate frequent changes 
of location with little time spent at any one location. For such a 
worker, a location would not be considered a ``place of employment'' or 
``worksite'' if the following three requirements (i.e., paragraphs 
(1)(ii)(A) through (C)) are all met--
    (A) The nature and duration of the H-1B worker's job functions 
mandates his/her short-time presence at the location. For this purpose, 
either:
    (1) The H-1B nonimmigrant's job must be peripatetic in nature, in 
that the normal duties of the worker's occupation (rather than the 
nature of the employer's business) requires frequent travel (local or 
non-local) from location to location; or
    (2) The H-1B worker's duties must require that he/she spend most 
work time at one location but occasionally travel for short periods to 
work at other locations; and
    (B) The H-1B worker's presence at the locations to which he/she 
travels from the ``home'' worksite is on a casual, short-term basis, 
which can be recurring but not excessive (i.e., not exceeding five 
consecutive workdays for any one visit by a peripatetic worker, or 10 
consecutive workdays for any one visit by a worker who spends most work 
time at one location and travels occasionally to other locations); and
    (C) The H-1B nonimmigrant is not at the location as a 
``strikebreaker'' (i.e., the H-1B nonimmigrant is not performing work 
in an occupation in which workers are on strike or lockout).
    (2) Examples of ``non-worksite'' locations based on worker's job 
functions: A computer engineer sent out to customer locations to 
``troubleshoot'' complaints regarding software malfunctions; a sales 
representative

[[Page 80212]]

making calls on prospective customers or established customers within a 
``home office'' sales territory; a manager monitoring the performance 
of out-stationed employees; an auditor providing advice or conducting 
reviews at customer facilities; a physical therapist providing services 
to patients in their homes within an area of employment; an individual 
making a court appearance; an individual lunching with a customer 
representative at a restaurant; or an individual conducting research at 
a library.
    (3) Examples of ``worksite'' locations based on worker's job 
functions: A computer engineer who works on projects or accounts at 
different locations for weeks or months at a time; a sales 
representative assigned on a continuing basis in an area away from his/
her ``home office;'' an auditor who works for extended periods at the 
customer's offices; a physical therapist who ``fills in'' for full-time 
employees of health care facilities for extended periods; or a physical 
therapist who works for a contractor whose business is to provide 
staffing on an ``as needed'' basis at hospitals, nursing homes, or 
clinics.
    (4) Whenever an H-1B worker performs work at a location which is 
not a ``worksite'' (under the criterion in paragraph (1)(i) or (1)(ii) 
of this definition), that worker's ``place of employment'' or 
``worksite'' for purposes of H-1B obligations is the worker's home 
station or regular work location. The employer's obligations regarding 
notice, prevailing wage and working conditions are focused on the home 
station ``place of employment'' rather than on the above-described 
location(s) which do not constitute worksite(s) for these purposes. 
However, whether or not a location is considered to be a ``worksite''/
''place of employment'' for an H-1B nonimmigrant, the employer is 
required to provide reimbursement to the H-1B nonimmigrant for expenses 
incurred in traveling to that location on the employer's business, 
since such expenses are considered to be ordinary business expenses of 
employers (Secs. 655.731(c)(7)(iii)(C); 655.731(c)(9)). In determining 
the worker's ``place of employment'' or ``worksite,'' the Department 
will look carefully at situations which appear to be contrived or 
abusive; the Department would seriously question any situation where 
the H-1B nonimmigrant's purported ``place of employment'' is a location 
other than where the worker spends most of his/her work time, or where 
the purported ``area of employment'' does not include the location(s) 
where the worker spends most of his/her work time.
* * * * *
    State Employment Security Agency (SESA) means the State agency 
designated under section 4 of the Wagner-Peyser Act to cooperate with 
OWS in the operation of the national system of public employment 
offices.
* * * * *
    United States worker (``U.S. worker'') means an employee who is 
either
    (1) A citizen or national of the United States, or
    (2) An alien who is lawfully admitted for permanent residence in 
the United States, is admitted as a refugee under section 207 of the 
INA, is granted asylum under section 208 of the INA, or is an immigrant 
otherwise authorized (by the INA or by the Attorney General) to be 
employed in the United States.

    7. Section 655.720 is revised to read as follows:


Sec. 655.720  Where are labor condition applications to be filed and 
processed?

    (a) Facsimile transmission (FAX). If the employer submits the LCA 
(Form ETA 9035) by FAX, the transmission shall be made to 1-800-397-
0478 (regardless of the intended place of employment for the H-1B 
nonimmigrant(s)). (Note to paragraph (a): The employer submitting an 
LCA via FAX shall not use the FAX number assigned to an ETA regional 
office, but shall use only the 1-800-397-0478 number designated for 
this purpose.) The cover pages to Form ETA 9035 (i.e., Form ETA 9035CP) 
should not be FAXed with the Form ETA 9035.
    (b) U.S. Mail. If the employer submits the LCA (Form ETA 9035) by 
U.S. Mail, the LCA shall be sent to the ETA service center at the 
following address: ETA Application Processing Center, P.O. Box 13640, 
Philadelphia PA 19101.
    (c) All matters other than the processing of LCAs (e.g., prevailing 
wage challenges by employers) are within the jurisdiction of the 
Regional Certifying Officers in the ETA regional offices identified in 
Sec. 655.721.

    8. Section 655.721 is added to read as follows:


Sec. 655.721  What are the addresses of the ETA regional offices which 
handle matters other than processing LCAs?

    (a) The Regional Certifying Officers in the ETA regional offices 
are responsible for administrative matters under this subpart other 
than the processing of LCAs (e.g., prevailing wage challenges by 
employers). (Note to paragraph (a): LCAs are filed by employers and 
processed by ETA only in accordance with Sec. 655.720.)
    (b) The ETA regional offices with responsibility for labor 
certification programs are--
    (1) Region I Boston (Connecticut, Maine, Massachusetts, New 
Hampshire, Rhode Island, and Vermont): J.F.K. Federal Building, Room E-
350, Boston, Massachusetts 02203. Telephone: 617-565-4446.
    (2) Region I New York (New York, New Jersey, Puerto Rico, and the 
Virgin Islands): 201 Varick Street, Room 755, New York, New York 10014. 
Telephone: 212-337-2186.
    (3) Region II ( Delaware, District of Columbia, Maryland, 
Pennsylvania, Virginia, and West Virginia): Suite 825 East, The Curtis 
Center, 170 S. Independence Mall West, Philadelphia, Pennsylvania 
19106-3315. Telephone: 215-861-5250.
    (4) Region III (Alabama, Florida, Georgia, Kentucky, Mississippi, 
North Carolina, South Carolina, and Tennessee): Atlanta Federal Ctr., 
100 Alabama St., NW, Suite 6M-12, Atlanta, Georgia 30303. Telephone: 
404-562-2115.
    (5) Region IV (Arkansas, Colorado, Louisiana, Montana, New Mexico, 
North Dakota, Oklahoma, South Dakota, Texas, Utah, and Wyoming): 525 
Griffin Street, Room 317, Dallas, Texas 75202. Telephone: 214-767-4989.
    (6) Region V (Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, 
Missouri, Nebraska, Ohio, and Wisconsin): 230 South Dearborn Street, 
Room 605, Chicago, Illinois 60604. Telephone: 312-353-1550.
    (7) Region VI (Alaska, Arizona, California, Guam, Hawaii, Idaho, 
Nevada, Oregon, and Washington): P.O. Box 193767, San Francisco, 
California 94119-3767. Telephone: 415-975-4601.
    (c) The ETA website at http://ows.doleta.gov will be updated to 
reflect any changes in the information contained in this section 
concerning the ETA regional offices.
    9. Section 655.730 is revised to read as follows:


Sec. 655.730  What is the process for filing a labor condition 
application?

    (a) Who must submit labor condition applications? An employer, or 
the employer's authorized agent or representative, which meets the 
definition of ``employer'' set forth in Sec. 655.715 and intends to 
employ an H-1B nonimmigrant in a specialty occupation or as a fashion 
model of distinguished merit and ability shall submit an LCA to the 
Department.
    (b) Where and when is an LCA to be submitted? An LCA shall be 
submitted by the employer to ETA in accordance with the procedure 
prescribed in

[[Page 80213]]

Sec. 655.720 no earlier than six months before the beginning date of 
the period of intended employment shown on the LCA. It is the 
employer's responsibility to ensure that a complete and accurate LCA is 
received by ETA. Incomplete or obviously inaccurate LCAs will not be 
certified by ETA. ETA shall process all LCAs sequentially upon receipt 
regardless of the method used by the employer to submit the LCA (i.e., 
either FAX or U.S. Mail as prescribed in Sec. 655.720) and shall make a 
determination to certify or not certify the LCA within seven working 
days of the date the LCA is received and date stamped by ETA. If the 
LCA is submitted by FAX, the LCA containing the original signature 
shall be maintained by the employer as set forth at Sec. 655.760(a)(1).
    (c) What is to be submitted? Form ETA 9035.
    (1) General. One completed and dated original Form ETA 9035 bearing 
the employer's original signature (or that of the employer's authorized 
agent or representative) shall be submitted by the employer to ETA in 
accordance with the procedure prescribed in Sec. 655.720. The signature 
of the employer or its authorized agent or representative on Form ETA 
9035 acknowledges the employer's agreement to the labor condition 
statements (attestations), which are specifically identified in Form 
ETA 9035 as well as set forth in the cover pages (Form ETA 9035CP) and 
incorporated by reference in Form ETA 9035. The labor condition 
statements (attestations) are described in detail in Secs. 655.731 
through 655.735, and 655.736 through 655.739 (if applicable). Copies of 
Form ETA 9035 and cover pages Form ETA 9035CP are available from ETA 
regional offices and on the ETA website at http://ows.doleta.gov. Each 
Form ETA 9035 shall identify the occupational classification for which 
the LCA is being submitted and shall state:
    (i) The occupation, by Dictionary of Occupational Titles (DOT) 
Three-Digit Occupational Groups code and by the employer's own title 
for the job;
    (ii) The number of H-1B nonimmigrants sought;
    (iii) The gross wage rate to be paid to each H-1B nonimmigrant, 
expressed on an hourly, weekly, biweekly, monthly or annual basis;
    (iv) The starting and ending dates of the H-1B nonimmigrants' 
employment;
    (v) The place(s) of intended employment;
    (vi) The prevailing wage for the occupation in the area of intended 
employment and the specific source (e.g., name of published survey) 
relied upon by the employer to determine the wage. If the wage is 
obtained from a SESA, the appropriate box must be checked and the wage 
must be stated; the source for a wage obtained from a source other than 
a SESA must be identified along with the wage; and
    (vii) The employer's status as to whether or not the employer is H-
1B-dependent and/or a willful violator, and, if the employer is H-1B-
dependent and/or a willful violator, whether the employer will use the 
application only in support of petitions for exempt H-1B nonimmigrants.
    (2) Multiple positions and/or places of employment. The employer 
shall file a separate LCA for each occupation in which the employer 
intends to employ one or more H-1B nonimmigrants, but the LCA may cover 
more than one intended position (employment opportunity) within that 
occupation. All intended places of employment shall be identified on 
the LCA; the employer may file one or more additional LCAs to identify 
additional places of employment.
    (3) Full-time and part-time jobs. The position(s) covered by the 
LCA may be either full-time or part-time; full-time and part-time 
positions cannot be combined on a single LCA.
    (d) What attestations does the LCA contain? An employer's LCA shall 
contain the labor condition statements referenced in Secs. 655.731 
through 655.734, and Sec. 655.736 through 655.739 (if applicable), 
which provide that no individual may be admitted or provided status as 
an H-1B nonimmigrant in an occupational classification unless the 
employer has filed with the Secretary an application stating that:
    (1) The employer is offering and will offer during the period of 
authorized employment to H-1B nonimmigrants no less than the greater of 
the following wages (such offer to include benefits and eligibility for 
benefits provided as compensation for services, which are to be offered 
to the nonimmigrants on the same basis and in accordance with the same 
criteria as the employer offers such benefits to U.S. workers):
    (i) The actual wage paid to the employer's other employees at the 
worksite with similar experience and qualifications for the specific 
employment in question; or
    (ii) The prevailing wage level for the occupational classification 
in the area of intended employment;
    (2) The employer will provide working conditions for such 
nonimmigrants that will not adversely affect the working conditions of 
workers similarly employed (including benefits in the nature of working 
conditions, which are to be offered to the nonimmigrants on the same 
basis and in accordance with the same criteria as the employer offers 
such benefits to U.S. workers);
    (3) There is not a strike or lockout in the course of a labor 
dispute in the occupational classification at the place of employment;
    (4) The employer has provided and will provide notice of the filing 
of the labor condition application to:
    (i)(A) The bargaining representative of the employer's employees in 
the occupational classification in the area of intended employment for 
which the H-1B nonimmigrants are sought, in the manner described in 
Sec. 655.734(a)(1)(i); or
    (B) If there is no such bargaining representative, affected workers 
by providing electronic notice of the filing of the LCA or by posting 
notice in conspicuous locations at the place(s) of employment, in the 
manner described in Sec. 655.734(a)(1)(ii); and
    (ii) H-1B nonimmigrants by providing a copy of the LCA to each H-1B 
nonimmigrant at the time that such nonimmigrant actually reports to 
work, in the manner described in Sec. 655.734(a)(2).
    (5) The employer has determined its status concerning H-1B-
dependency and/or willful violator (as described in Sec. 655.736), has 
indicated such status, and if either such status is applicable to the 
employer, has indicated whether the LCA will be used only for exempt H-
1B nonimmigrant(s), as described in Sec. 655.737.
    (6) The employer has provided the information about the occupation 
required in paragraph (c) of this section.
    (e) Change in employer's corporate structure or identity. (1) Where 
an employer corporation changes its corporate structure as the result 
of an acquisition, merger, ``spin-off,'' or other such action, the new 
employing entity is not required to file new LCAs and H-1B petitions 
with respect to the H-1B nonimmigrants transferred to the employ of the 
new employing entity (regardless of whether there is a change in the 
Employer Identification Number (EIN)), provided that the new employing 
entity maintains in its records a list of the H-1B nonimmigrants 
transferred to the employ of the new employing entity, and maintains in 
the public access file(s) (see Sec. 655.760) a document containing all 
of the following:
    (i) Each affected LCA number and its date of certification;
    (ii) A description of the new employing entity's actual wage system 
applicable to H-1B nonimmigrant(s)

[[Page 80214]]

who become employees of the new employing entity;
    (iii) The employer identification number (EIN) of the new employing 
entity (whether or not different from that of the predecessor entity); 
and
    (iv) A sworn statement by an authorized representative of the new 
employing entity expressly acknowledging such entity's assumption of 
all obligations, liabilities and undertakings arising from or under 
attestations made in each certified and still effective LCA filed by 
the predecessor entity. Unless such statement is executed and made 
available in accordance with this paragraph, the new employing entity 
shall not employ any of the predecessor entity's H-1B nonimmigrants 
without filing new LCAs and petitions for such nonimmigrants. The new 
employing entity's statement shall include such entity's explicit 
agreement to:
    (A) Abide by the DOL's H-1B regulations applicable to the LCAs;
    (B) Maintain a copy of the statement in the public access file (see 
Sec. 655.760); and
    (C) Make the document available to any member of the public or the 
Department upon request.
    (2) Notwithstanding the provisions of paragraph (e)(1) of this 
section, the new employing entity must file new LCA(s) and H-1B 
petition(s) when it hires any new H-1B nonimmigrant(s) or seeks 
extension(s) of H-1B status for existing H-1B nonimmigrant(s). In other 
words, the new employing entity may not utilize the predecessor 
entity's LCA(s) to support the hiring or extension of any H-1B 
nonimmigrant after the change in corporate structure.
    (3) A change in an employer's H-1B-dependency status which results 
from the change in the corporate structure has no effect on the 
employer's obligations with respect to its current H-1B nonimmigrant 
employees. However, the new employing entity shall comply with 
Sec. 655.736 concerning H-1B-dependency and/or willful-violator status 
and Sec. 655.737 concerning exempt H-1B nonimmigrants, in the event 
that such entity seeks to hire new H-1B nonimmigrant(s) or to extend 
the H-1B status of existing H-1B nonimmigrants. (See 
Sec. 655.736(d)(6).)
    10. Section 655.731 is revised to read as follows:


Sec. 655.731  What is the first LCA requirement, regarding wages?

    An employer seeking to employ H-1B nonimmigrants in a specialty 
occupation or as a fashion model of distinguished merit and ability 
shall state on Form ETA 9035 that it will pay the H-1B nonimmigrant the 
required wage rate.
    (a) Establishing the wage requirement. The first LCA requirement 
shall be satisfied when the employer signs Form ETA 9035 attesting 
that, for the entire period of authorized employment, the required wage 
rate will be paid to the H-1B nonimmigrant(s); that is, that the wage 
shall be the greater of the actual wage rate (as specified in paragraph 
(a)(1) of this section) or the prevailing wage (as specified in 
paragraph (a)(2) of this section). The wage requirement includes the 
employer's obligation to offer benefits and eligibility for benefits 
provided as compensation for services to H-1B nonimmigrants on the same 
basis, and in accordance with the same criteria, as the employer offers 
to U.S. workers.
    (1) The actual wage is the wage rate paid by the employer to all 
other individuals with similar experience and qualifications for the 
specific employment in question. In determining such wage level, the 
following factors may be considered: Experience, qualifications, 
education, job responsibility and function, specialized knowledge, and 
other legitimate business factors. ``Legitimate business factors,'' for 
purposes of this section, means those that it is reasonable to conclude 
are necessary because they conform to recognized principles or can be 
demonstrated by accepted rules and standards. Where there are other 
employees with substantially similar experience and qualifications in 
the specific employment in question--i.e., they have substantially the 
same duties and responsibilities as the H-1B nonimmigrant--the actual 
wage shall be the amount paid to these other employees. Where no such 
other employees exist at the place of employment, the actual wage shall 
be the wage paid to the H-1B nonimmigrant by the employer. Where the 
employer's pay system or scale provides for adjustments during the 
period of the LCA--e.g., cost of living increases or other periodic 
adjustments, or the employee moves to a more advanced level in the same 
occupation--such adjustments shall be provided to similarly employed H-
1B nonimmigrants (unless the prevailing wage is higher than the actual 
wage).
    (2) The prevailing wage for the occupational classification in the 
area of intended employment must be determined as of the time of filing 
the application. The employer shall base the prevailing wage on the 
best information as of the time of filing the application. Except as 
provided in paragraph (a)(3) of this section, the employer is not 
required to use any specific methodology to determine the prevailing 
wage and may utilize a SESA, an independent authoritative source, or 
other legitimate sources of data. One of the following sources shall be 
used to establish the prevailing wage:
    (i) A wage determination for the occupation and area issued under 
one of the following statutes (which shall be available through the 
SESA):
    (A) The Davis-Bacon Act, 40 U.S.C. 276a et seq. (see also 29 CFR 
part 1), or
    (B) The McNamara-O'Hara Service Contract Act, 41 U.S.C. 351 et seq. 
(SCA) (see also 29 CFR part 4). The following provisions apply to the 
use of the SCA wage rate as the prevailing wage:
    (1) Where an SCA wage determination for an occupational 
classification in the computer industry states a rate of $27.63, that 
rate will not be issued by the SESA and may not be used by the employer 
as the prevailing wage; that rate does not represent the actual 
prevailing wage but, instead, is reported by the Wage and Hour Division 
in the SCA determination merely as an artificial ``cap'' in the SCA-
required wage that results from an SCA exemption provision (see 41 
U.S.C. 357(b); 29 CFR 541.3). In such circumstances, the SESA and the 
employer must consult another source for wage information (e.g., Bureau 
of Labor Statistics' Occupational Employment Statistics Survey).
    (2) Except as provided in paragraph (a)(2)(i)(B)(1) of this 
section, for purposes of the determination of the H-1B prevailing wage 
for an occupational classification through the use of an SCA wage 
determination, it is irrelevant whether a worker is employed on a 
contract subject to the SCA or whether the worker would be exempt from 
the SCA through application of the SCA/FLSA ``professional employee'' 
exemption test (i.e., duties and compensation; see 29 CFR 4.156; 
541.3). Thus, in issuing the SCA wage rate as the prevailing wage 
determination for the occupational classification, the SESA will not 
consider questions of employee exemption, and in an enforcement action, 
the Department will consider the SCA wage rate to be the prevailing 
wage without regard to whether any particular H-1B employee(s) could be 
exempt from that wage as SCA contract workers under the SCA/FLSA 
exemption. An employer who employs H-1B employee(s) to perform services 
under an SCA-covered contract may find that the H-1B employees are 
required to be paid the SCA rate as the H-1B prevailing wage even 
though non-H-1B employees

[[Page 80215]]

performing the same services may be exempt from the SCA.
    (ii) A union contract which was negotiated at arms-length between a 
union and the employer, which contains a wage rate applicable to the 
occupation; or
    (iii) If the job opportunity is in an occupation which is not 
covered by paragraph (a)(2)(i) or (ii) of this section, the prevailing 
wage shall be the weighted average rate of wages, that is, the rate of 
wages to be determined, to the extent feasible, by adding the wages 
paid to workers similarly employed in the area of intended employment 
and dividing the total by the number of such workers. Since it is not 
always feasible to determine such an average rate of wages with exact 
precision, the wage set forth in the application shall be considered as 
meeting the prevailing wage standard if it is within five percent of 
the average rate of wages. See paragraph (c) of this section, regarding 
payment of required wages. See also paragraph (d)(4) of this section, 
regarding enforcement. The prevailing wage rate under this paragraph 
(a)(2)(iii) shall be based on the best information available. The 
Department believes that the following prevailing wage sources are, in 
order of priority, the most accurate and reliable:
    (A) A SESA Determination. Upon receipt of a written request for a 
prevailing wage determination, the SESA will determine whether the 
occupation is covered by a Davis-Bacon or Service Contract Act wage 
determination, and, if not, whether it has on file current prevailing 
wage information for the occupation. This information will be provided 
by the SESA to the employer in writing in a timely manner. Where the 
prevailing wage is not immediately available, the SESA will determine 
the prevailing wage using the methods outlined at 20 CFR 656.40 and 
other administrative guidelines or regulations issued by ETA. The SESA 
shall specify the validity period of the prevailing wage, which shall 
in no event be for less than 90 days or more than one year from the 
date of the SESA's issuance of the determination.
    (1) An employer who chooses to utilize a SESA prevailing wage 
determination shall file the labor condition application within the 
validity period of the prevailing wage as specified on the 
determination. Once an employer obtains a prevailing wage determination 
from the SESA and files an LCA supported by that prevailing wage 
determination, the employer is deemed to have accepted the prevailing 
wage determination (as to the amount of the wage) and thereafter may 
not contest the legitimacy of the prevailing wage determination through 
the Employment Service complaint system or in an investigation or 
enforcement action. Prior to filing the LCA, the employer may challenge 
a SESA prevailing wage determination through the Employment Service 
complaint system, by filing a complaint with the SESA. See subpart E of 
20 CFR part 658. Employers which challenge a SESA prevailing wage 
determination must obtain a final ruling from the Employment Service 
complaint system prior to filing an LCA based on such determination. In 
any challenge, the SESA shall not divulge any employer wage data which 
was collected under the promise of confidentiality.
    (2) If the employer is unable to wait for the SESA to produce the 
requested prevailing wage determination for the occupation in question, 
or for the Employment Service complaint system process to be completed, 
the employer may rely on other legitimate sources of available wage 
information in filing the LCA, as set forth in paragraph (a)(2)(iii)(B) 
and (C) of this section. If the employer later discovers, upon receipt 
of a prevailing wage determination from the SESA, that the information 
relied upon produced a wage that was below the prevailing wage for the 
occupation in the area of intended employment and the employer was 
paying below the SESA-determined wage, no wage violation will be found 
if the employer retroactively compensates the H-1B nonimmigrant(s) for 
the difference between the wage paid and the prevailing wage, within 30 
days of the employer's receipt of the SESA determination.
    (3) In all situations where the employer obtains the prevailing 
wage determination from the SESA, the Department will accept that 
prevailing wage determination as correct (as to the amount of the wage) 
and will not question its validity where the employer has maintained a 
copy of the SESA prevailing wage determination. A complaint alleging 
inaccuracy of a SESA prevailing wage determination, in such cases, will 
not be investigated.
    (B) An independent authoritative source. The employer may use an 
independent authoritative wage source in lieu of a SESA prevailing wage 
determination. The independent authoritative source survey must meet 
all the criteria set forth in paragraph (b)(3)(iii)(B) of this section.
    (C) Another legitimate source of wage information. The employer may 
rely on other legitimate sources of wage data to obtain the prevailing 
wage. The other legitimate source survey must meet all the criteria set 
forth in paragraph (b)(3)(iii)(C) of this section. The employer will be 
required to demonstrate the legitimacy of the wage in the event of an 
investigation.
    (iv) For purposes of this section, ``similarly employed'' means 
``having substantially comparable jobs in the occupational 
classification in the area of intended employment,'' except that if no 
such workers are employed by employers other than the employer 
applicant in the area of intended employment, ``similarly employed'' 
means:
    (A) Having jobs requiring a substantially similar level of skills 
within the area of intended employment; or
    (B) If there are no substantially comparable jobs in the area of 
intended employment, having substantially comparable jobs with 
employers outside of the area of intended employment.
    (v) A prevailing wage determination for LCA purposes made pursuant 
to this section shall not permit an employer to pay a wage lower than 
that required under any other applicable Federal, State or local law.
    (vi) Where a range of wages is paid by the employer to individuals 
in an occupational classification or among individuals with similar 
experience and qualifications for the specific employment in question, 
a range is considered to meet the prevailing wage requirement so long 
as the bottom of the wage range is at least the prevailing wage rate.
    (vii) The employer shall enter the prevailing wage on the LCA in 
the form in which the employer will pay the wage (i.e., either a salary 
or an hourly rate), except that in all cases the prevailing wage must 
be expressed as an hourly wage if the H-1B nonimmigrant will be 
employed part-time. Where an employer obtains a prevailing wage 
determination (from any of the sources identified in paragraph 
(a)(2)(i) through (iii) of this section) that is expressed as an hourly 
rate, the employer may convert this determination to a salary by 
multiplying the hourly rate by 2080. Conversely, where an employer 
obtains a prevailing wage (from any of these sources) that is expressed 
as a salary, the employer may convert this determination to an hourly 
rate by dividing the salary by 2080.
    (viii) In computing the prevailing wage for a job opportunity in an 
occupational classification in an area of intended employment in the 
case of an employee of an institution of higher education or an 
affiliated or related nonprofit entity , a nonprofit research

[[Page 80216]]

organization, or a Governmental research organization as these terms 
are defined in 20 CFR 656.40(c), the prevailing wage level shall only 
take into account employees at such institutions and organizations in 
the area of intended employment.
    (ix) An employer may file more than one LCA for the same 
occupational classification in the same area of employment and, in such 
circumstances, the employer could have H-1B employees in the same 
occupational classification in the same area of employment, brought 
into the U.S. (or accorded H-1B status) based on petitions approved 
pursuant to different LCAs (filed at different times) with different 
prevailing wage determinations. Employers are advised that the 
prevailing wage rate as to any particular H-1B nonimmigrant is 
prescribed by the LCA which supports that nonimmigrant's H-1B petition. 
The employer is required to obtain the prevailing wage at the time that 
the LCA is filed (see paragraph (a)(2) of this section). The LCA is 
valid for the period certified by ETA, and the employer must satisfy 
all the LCA's requirements (including the required wage which 
encompasses both prevailing and actual wage rates) for as long as any 
H-1B nonimmigrants are employed pursuant to that LCA (Sec. 655.750). 
Where new nonimmigrants are employed pursuant to a new LCA, that new 
LCA prescribes the employer's obligations as to those new 
nonimmigrants. The prevailing wage determination on the later/
subsequent LCA does not ``relate back'' to operate as an ``update'' of 
the prevailing wage for the previously-filed LCA for the same 
occupational classification in the same area of employment. However, 
employers are cautioned that the actual wage component to the required 
wage may, as a practical matter, eliminate any wage-payment 
differentiation among H-1B employees based on different prevailing wage 
rates stated in applicable LCAs. Every H-1B nonimmigrant is to be paid 
in accordance with the employer's actual wage system, and thus to 
receive any pay increases which that system provides.
    (3) Once the prevailing wage rate is established, the H-1B employer 
then shall compare this wage with the actual wage rate for the specific 
employment in question at the place of employment and must pay the H-1B 
nonimmigrant at least the higher of the two wages.
    (b) Documentation of the wage statement. (1) The employer shall 
develop and maintain documentation sufficient to meet its burden of 
proving the validity of the wage statement required in paragraph (a) of 
this section and attested to on Form ETA 9035. The documentation shall 
be made available to DOL upon request. Documentation shall also be made 
available for public examination to the extent required by 
Sec. 655.760. The employer shall also document that the wage rate(s) 
paid to H-1B nonimmigrant(s) is(are) no less than the required wage 
rate(s). The documentation shall include information about the 
employer's wage rate(s) for all other employees for the specific 
employment in question at the place of employment, beginning with the 
date the labor condition application was submitted and continuing 
throughout the period of employment. The records shall be retained for 
the period of time specified in Sec. 655.760. The payroll records for 
each such employee shall include:
    (i) Employee's full name;
    (ii) Employee's home address;
    (iii) Employee's occupation;
    (iv) Employee's rate of pay;
    (v) Hours worked each day and each week by the employee if:
    (A) The employee is paid on other than a salary basis (e.g., 
hourly, piece-rate; commission); or
    (B) With respect only to H-1B nonimmigrants, the worker is a part-
time employee (whether paid a salary or an hourly rate).
    (vi) Total additions to or deductions from pay each pay period, by 
employee; and
    (vii) Total wages paid each pay period, date of pay and pay period 
covered by the payment, by employee.
    (viii) Documentation of offer of benefits and eligibility for 
benefits provided as compensation for services on the same basis, and 
in accordance with the same criteria, as the employer offers to U.S. 
workers (see paragraph (c)(3) of this section):
    (A) A copy of any document(s) provided to employees describing the 
benefits that are offered to employees, the eligibility and 
participation rules, how costs are shared, etc. (e.g., summary plan 
descriptions, employee handbooks, any special or employee-specific 
notices that might be sent);
    (B) A copy of all benefit plans or other documentation describing 
benefit plans and any rules the employer may have for differentiating 
benefits among groups of workers;
    (C) Evidence as to what benefits are actually provided to U.S. 
workers and H-1B nonimmigrants, including evidence of the benefits 
selected or declined by employees where employees are given a choice of 
benefits;
    (D) For multinational employers who choose to provide H-1B 
nonimmigrants with ``home country'' benefits, evidence of the benefits 
provided to the nonimmigrant before and after he/she went to the United 
States. See paragraph (c)(3)(iii)(C) of this section.
    (2) Actual wage. In addition to payroll data required by paragraph 
(b)(1) of this section (and also by the Fair Labor Standards Act), the 
employer shall retain documentation specifying the basis it used to 
establish the actual wage. The employer shall show how the wage set for 
the H-1B nonimmigrant relates to the wages paid by the employer to all 
other individuals with similar experience and qualifications for the 
specific employment in question at the place of employment. Where 
adjustments are made in the employer's pay system or scale during the 
validity period of the LCA, the employer shall retain documentation 
explaining the change and clearly showing that, after such adjustments, 
the wages paid to the H-1B nonimmigrant are at least the greater of the 
adjusted actual wage or the prevailing wage for the occupation and area 
of intended employment.
    (3) Prevailing wage. The employer also shall retain documentation 
regarding its determination of the prevailing wage. This source 
documentation shall not be submitted to ETA with the labor condition 
application, but shall be retained at the employer's place of business 
for the length of time required in Sec. 655.760(c). Such documentation 
shall consist of the documentation described in paragraph (b)(3)(i), 
(ii), or (iii) of this section and the documentation described in 
paragraph (b)(1) of this section.
    (i) If the employer used a wage determination issued pursuant to 
the provisions of the Davis-Bacon Act, 40 U.S.C. 276a et seq. (see 29 
CFR part 1), or the McNamara-O'Hara Service Contract Act, 41 U.S.C. 351 
et seq. (see 29 CFR part 4), the documentation shall include a copy of 
the determination showing the wage rate for the occupation in the area 
of intended employment.
    (ii) If the employer used an applicable wage rate from a union 
contract which was negotiated at arms-length between a union and the 
employer, the documentation shall include an excerpt from the union 
contract showing the wage rate(s) for the occupation.
    (iii) If the employer did not use a wage covered by the provisions 
of paragraph (b)(3)(i) or (b)(3)(ii) of this section, the employer's 
documentation shall consist of:
    (A) A copy of the prevailing wage finding from the SESA for the

[[Page 80217]]

occupation within the area of intended employment; or
    (B) A copy of the prevailing wage survey for the occupation within 
the area of intended employment published by an independent 
authoritative source. For purposes of this paragraph (b)(3)(iii)(B), a 
prevailing wage survey for the occupation in the area of intended 
employment published by an independent authoritative source shall mean 
a survey of wages published in a book, newspaper, periodical, loose-
leaf service, newsletter, or other similar medium, within the 24-month 
period immediately preceding the filing of the employer's application. 
Such survey shall:
    (1) Reflect the weighted average wage paid to workers similarly 
employed in the area of intended employment;
    (2) Be based upon recently collected data--e.g., within the 24-
month period immediately preceding the date of publication of the 
survey; and
    (3) Represent the latest published prevailing wage finding by the 
independent authoritative source for the occupation in the area of 
intended employment; or
    (C) A copy of the prevailing wage survey or other source data 
acquired from another legitimate source of wage information that was 
used to make the prevailing wage determination. For purposes of this 
paragraph (b)(3)(iii)(C), a prevailing wage provided by another 
legitimate source of such wage information shall be one which:
    (1) Reflects the weighted average wage paid to workers similarly 
employed in the area of intended employment;
    (2) Is based on the most recent and accurate information available; 
and
    (3) Is reasonable and consistent with recognized standards and 
principles in producing a prevailing wage.
    (c) Satisfaction of required wage obligation. (1) The required wage 
must be paid to the employee, cash in hand, free and clear, when due, 
except that deductions made in accordance with paragraph (c)(9) of this 
section may reduce the cash wage below the level of the required wage. 
Benefits and eligibility for benefits provided as compensation for 
services must be offered in accordance with paragraph (c)(3) of this 
section.
    (2) ``Cash wages paid,'' for purposes of satisfying the H-1B 
required wage, shall consist only of those payments that meet all the 
following criteria:
    (i) Payments shown in the employer's payroll records as earnings 
for the employee, and disbursed to the employee, cash in hand, free and 
clear, when due, except for deductions authorized by paragraph (c)(9) 
of this section;
    (ii) Payments reported to the Internal Revenue Service (IRS) as the 
employee's earnings, with appropriate withholding for the employee's 
tax paid to the IRS (in accordance with the Internal Revenue Code of 
1986, 26 U.S.C. 1, et seq.);
    (iii) Payments of the tax reported and paid to the IRS as required 
by the Federal Insurance Contributions Act, 26 U.S.C. 3101, et seq. 
(FICA). The employer must be able to document that the payments have 
been so reported to the IRS and that both the employer's and employee's 
taxes have been paid except that when the H-1B nonimmigrant is a 
citizen of a foreign country with which the President of the United 
States has entered into an agreement as authorized by section 233 of 
the Social Security Act, 42 U.S.C. 433 (i.e., an agreement establishing 
a totalization arrangement between the social security system of the 
United States and that of the foreign country), the employer's 
documentation shall show that all appropriate reports have been filed 
and taxes have been paid in the employee's home country.
    (iv) Payments reported, and so documented by the employer, as the 
employee's earnings, with appropriate employer and employee taxes paid 
to all other appropriate Federal, State, and local governments in 
accordance with any other applicable law.
    (v) Future bonuses and similar compensation (i.e., unpaid but to-
be-paid) may be credited toward satisfaction of the required wage 
obligation if their payment is assured (i.e., they are not conditional 
or contingent on some event such as the employer's annual profits). 
Once the bonuses or similar compensation are paid to the employee, they 
must meet the requirements of paragraphs (c)(2)(i) through (iv) of this 
section (i.e., recorded and reported as ``earnings'' with appropriate 
taxes and FICA contributions withheld and paid).
    (3) Benefits and eligibility for benefits provided as compensation 
for services (e.g., cash bonuses; stock options; paid vacations and 
holidays; health, life, disability and other insurance plans; 
retirement and savings plans) shall be offered to the H-1B 
nonimmigrant(s) on the same basis, and in accordance with the same 
criteria, as the employer offers to U.S. workers.
    (i) For purposes of this section, the offer of benefits ``on the 
same basis, and in accordance with the same criteria'' means that the 
employer shall offer H-1B nonimmigrants the same benefit package as it 
offers to U.S. workers, and may not provide more strict eligibility or 
participation requirements for the H-1B nonimmigrant(s) than for 
similarly employed U.S. workers(s) (e.g., full-time workers compared to 
full-time workers; professional staff compared to professional staff). 
H-1B nonimmigrants are not to be denied benefits on the basis that they 
are ``temporary employees'' by virtue of their nonimmigrant status. An 
employer may offer greater or additional benefits to the H-1B 
nonimmigrant(s) than are offered to similarly employed U.S. worker(s), 
provided that such differing treatment is consistent with the 
requirements of all applicable nondiscrimination laws (e.g., Title VII 
of the 1964 Civil Rights Act, 42 U.S.C. 2000e-2000e17). Offers of 
benefits by employers shall be made in good faith and shall result in 
the H-1B nonimmigrant(s)'s actual receipt of the benefits that are 
offered by the employer and elected by the H-1B nonimmigrant(s).
    (ii) The benefits received by the H-1B nonimmigrant(s) need not be 
identical to the benefits received by similarly employed U.S. 
workers(s), provided that the H-1B nonimmigrant is offered the same 
benefits package as those workers but voluntarily chooses to receive 
different benefits (e.g., elects to receive cash payment rather than 
stock option, elects not to receive health insurance because of 
required employee contributions, or elects to receive different 
benefits among an array of benefits) or, in those instances where the 
employer is part of a multinational corporate operation, the benefits 
received by the H-1B nonimmigrant are provided in accordance with an 
employer's practice that satisfies the requirements of paragraph 
(c)(3)(iii)(B) or (C) of this section. In all cases, however, an 
employer's practice must comply with the requirements of any applicable 
nondiscrimination laws (e.g., Title VII of the 1964 Civil Rights Act, 
42 U.S.C. 2000e-2000e17).
    (iii) If the employer is part of a multinational corporate 
operation (i.e., operates in affiliation with business entities in 
other countries, whether as subsidiaries or in some other arrangement), 
the following three options (i.e., (A), (B) or (C)) are available to 
the employer with respect to H-1B nonimmigrants who remain on the 
``home country'' payroll.
    (A) The employer may offer the H-1B nonimmigrant(s) benefits in 
accordance with paragraphs (c)(3)(i) and (ii) of this section.
    (B) Where an H-1B nonimmigrant is in the U.S. for no more than 90 
consecutive calendar days, the employer during that period may maintain 
the H-

[[Page 80218]]

1B nonimmigrant on the benefits provided to the nonimmigrant in his/her 
permanent work station (ordinarily the home country), and not offer the 
nonimmigrant the benefits that are offered to similarly employed U.S. 
workers, provided that the employer affords reciprocal benefits 
treatment for any U.S. workers (i.e., allows its U.S. employees, while 
working out of the country on a temporary basis away from their 
permanent work stations in the United States, or while working in the 
United States on a temporary basis away from their permanent work 
stations in another country, to continue to receive the benefits 
provided them at their permanent work stations). Employers are 
cautioned that this provision is available only if the employer's 
practices do not constitute an evasion of the benefit requirements, 
such as where the H-1B nonimmigrant remains in the United States for 
most of the year, but briefly returns to the ``home country'' before 
any 90-day period would expire.
    (C) Where an H-1B nonimmigrant is in the U.S. for more than 90 
consecutive calendar days (or from the point where the worker is 
transferred to the U.S. or it is anticipated that the worker will 
likely remain in the U.S. more than 90 consecutive days), the employer 
may maintain the H-1B nonimmigrant on the benefits provided in his/her 
home country (i.e., ``home country benefits'') (and not offer the 
nonimmigrant the benefits that are offered to similarly employed U.S. 
workers) provided that all of the following criteria are satisfied:
    (1) The H-1B nonimmigrant continues to be employed in his/her home 
country (either with the H-1B employer or with a corporate affiliate of 
the employer);
    (2) The H-1B nonimmigrant is enrolled in benefits in his/her home 
country (in accordance with any applicable eligibility standards for 
such benefits);
    (3) The benefits provided in his/her home country are equivalent 
to, or equitably comparable to, the benefits offered to similarly 
employed U.S. workers (i.e., are no less advantageous to the 
nonimmigrant);
    (4) The employer affords reciprocal benefits treatment for any U.S. 
workers while they are working out of the country, away from their 
permanent work stations (whether in the United States or abroad), on a 
temporary basis (i.e., maintains such U.S. workers on the benefits they 
received at their permanent work stations);
    (5) If the employer offers health benefits to its U.S. workers, the 
employer offers the same plan on the same basis to its H-1B 
nonimmigrants in the United States where the employer does not provide 
the H-1B nonimmigrant with health benefits in the home country, or the 
employer's home-country health plan does not provide full coverage 
(i.e., coverage comparable to what he/she would receive at the home 
work station) for medical treatment in the United States; and
    (6) the employer offers H-1B nonimmigrants who are in the United 
States more than 90 continuous days those U.S. benefits which are paid 
directly to the worker (e.g., paid vacation, paid holidays, and 
bonuses).
    (iv) Benefits provided as compensation for services may be credited 
toward the satisfaction of the employer's required wage obligation only 
if the requirements of paragraph (c)(2) of this section are met (e.g., 
recorded and reported as ``earnings'' with appropriate taxes and FICA 
contributions withheld and paid).
    (4) For salaried employees, wages will be due in prorated 
installments (e.g., annual salary divided into 26 bi-weekly pay 
periods, where employer pays bi-weekly) paid no less often than monthly 
except that, in the event that the employer intends to use some other 
form of nondiscretionary payment to supplement the employee's regular/
pro-rata pay in order to meet the required wage obligation (e.g., a 
quarterly production bonus), the employer's documentation of wage 
payments (including such supplemental payments) must show the 
employer's commitment to make such payment and the method of 
determining the amount thereof, and must show unequivocally that the 
required wage obligation was met for prior pay periods and, upon 
payment and distribution of such other payments that are pending, will 
be met for each current or future pay period. An employer that is a 
school or other educational institution may apply an established salary 
practice under which the employer pays to H-1B nonimmigrants and U.S. 
workers in the same occupational classification an annual salary in 
disbursements over fewer than 12 months, provided that the nonimmigrant 
agrees to the compressed annual salary payments prior to the 
commencement of the employment and the application of the salary 
practice to the nonimmigrant does not otherwise cause him/her to 
violate any condition of his/her authorization under the INA to remain 
in the U.S.
    (5) For hourly-wage employees, the required wages will be due for 
all hours worked and/or for any nonproductive time (as specified in 
paragraph (c)(7) of this section) at the end of the employee's ordinary 
pay period (e.g., weekly) but in no event less frequently than monthly.
    (6) Subject to the standards specified in paragraph (c)(7) of this 
section (regarding nonproductive status), an H-1B nonimmigrant shall 
receive the required pay beginning on the date when the nonimmigrant 
``enters into employment'' with the employer.
    (i) For purposes of this paragraph (c)(6), the H-1B nonimmigrant is 
considered to ``enter into employment'' when he/she first makes him/
herself available for work or otherwise comes under the control of the 
employer, such as by waiting for an assignment, reporting for 
orientation or training, going to an interview or meeting with a 
customer, or studying for a licensing examination, and includes all 
activities thereafter.
    (ii) Even if the H-1B nonimmigrant has not yet ``entered into 
employment'' with the employer (as described in paragraph (c)(6)(i) of 
this section), the employer that has had an LCA certified and an H-1B 
petition approved for the H-1B nonimmigrant shall pay the nonimmigrant 
the required wage beginning 30 days after the date the nonimmigrant 
first is admitted into the U.S. pursuant to the petition, or, if the 
nonimmigrant is present in the United States on the date of the 
approval of the petition, beginning 60 days after the date the 
nonimmigrant becomes eligible to work for the employer. For purposes of 
this latter requirement, the H-1B nonimmigrant is considered to be 
eligible to work for the employer upon the date of need set forth on 
the approved H-1B petition filed by the employer, or the date of 
adjustment of the nonimmigrant's status by INS, whichever is later. 
Matters such as the worker's obtaining a State license would not be 
relevant to this determination.
    (7) Wage obligation(s) for H-1B nonimmigrant in nonproductive 
status.
    (i) Circumstances where wages must be paid. If the H-1B 
nonimmigrant is not performing work and is in a nonproductive status 
due to a decision by the employer (e.g., because of lack of assigned 
work), lack of a permit or license, or any other reason except as 
specified in paragraph (c)(7)(ii) of this section, the employer is 
required to pay the salaried employee the full pro-rata amount due, or 
to pay the hourly-wage employee for a full-time week (40 hours or such 
other number of hours as the employer can demonstrate to be full-time 
employment for hourly employees, or the full amount of the weekly 
salary for salaried employees) at the required wage for the occupation 
listed on the LCA. If the employer's LCA carries a

[[Page 80219]]

designation of ``part-time employment,'' the employer is required to 
pay the nonproductive employee for at least the number of hours 
indicated on the I-129 petition filed by the employer with the INS and 
incorporated by reference on the LCA. If the I-129 indicates a range of 
hours for part-time employment, the employer is required to pay the 
nonproductive employee for at least the average number of hours 
normally worked by the H-1B nonimmigrant, provided that such average is 
within the range indicated; in no event shall the employee be paid for 
fewer than the minimum number of hours indicated for the range of part-
time employment. In all cases the H-1B nonimmigrant must be paid the 
required wage for all hours performing work within the meaning of the 
Fair Labor Standards Act, 29 U.S.C. 201 et seq.
    (ii) Circumstances where wages need not be paid. If an H-1B 
nonimmigrant experiences a period of nonproductive status due to 
conditions unrelated to employment which take the nonimmigrant away 
from his/her duties at his/her voluntary request and convenience (e.g., 
touring the U.S., caring for ill relative) or render the nonimmigrant 
unable to work (e.g., maternity leave, automobile accident which 
temporarily incapacitates the nonimmigrant), then the employer shall 
not be obligated to pay the required wage rate during that period, 
provided that such period is not subject to payment under the 
employer's benefit plan or other statutes such as the Family and 
Medical Leave Act (29 U.S.C. 2601 et seq.) or the Americans with 
Disabilities Act (42 U.S.C. 12101 et seq.). Payment need not be made if 
there has been a bona fide termination of the employment relationship. 
INS regulations require the employer to notify the INS that the 
employment relationship has been terminated so that the petition is 
canceled (8 CFR 214.2(h)(11)), and require the employer to provide the 
employee with payment for transportation home under certain 
circumstances (8 CFR 214.2(h)(4)(iii)(E)).
    (8) If the employee works in an occupation other than that 
identified on the employer's LCA, the employer's required wage 
obligation is based on the occupation identified on the LCA, and not on 
whatever wage standards may be applicable in the occupation in which 
the employee may be working.
    (9) ``Authorized deductions,'' for purposes of the employer's 
satisfaction of the H-1B required wage obligation, means a deduction 
from wages in complete compliance with one of the following three sets 
of criteria (i.e., paragraph (c)(9)(i), (ii), or (iii))--
    (i) Deduction which is required by law (e.g., income tax; FICA); or
    (ii) Deduction which is authorized by a collective bargaining 
agreement, or is reasonable and customary in the occupation and/or area 
of employment (e.g., union dues; contribution to premium for health 
insurance policy covering all employees; savings or retirement fund 
contribution for plan(s) in compliance with the Employee Retirement 
Income Security Act, 29 U.S.C. 1001, et seq.), except that the 
deduction may not recoup a business expense(s) of the employer 
(including attorney fees and other costs connected to the performance 
of H-1B program functions which are required to be performed by the 
employer, e.g., preparation and filing of LCA and H-1B petition); the 
deduction must have been revealed to the worker prior to the 
commencement of employment and, if the deduction was a condition of 
employment, had been clearly identified as such; and the deduction must 
be made against wages of U.S. workers as well as H-1B nonimmigrants 
(where there are U.S. workers); or
    (iii) Deduction which meets the following requirements:
    (A) Is made in accordance with a voluntary, written authorization 
by the employee (Note to paragraph (c)(9)(iii)(A): an employee's mere 
acceptance of a job which carries a deduction as a condition of 
employment does not constitute voluntary authorization, even if such 
condition were stated in writing);
    (B) Is for a matter principally for the benefit of the employee 
(Note to paragraph (c)(9)(iii)(B): housing and food allowances would be 
considered to meet this ``benefit of employee'' standard, unless the 
employee is in travel status, or unless the circumstances indicate that 
the arrangements for the employee's housing or food are principally for 
the convenience or benefit of the employer (e.g., employee living at 
worksite in ``on call'' status));
    (C) Is not a recoupment of the employer's business expense (e.g., 
tools and equipment; transportation costs where such transportation is 
an incident of, and necessary to, the employment; living expenses when 
the employee is traveling on the employer's business; attorney fees and 
other costs connected to the performance of H-1B program functions 
which are required to be performed by the employer (e.g., preparation 
and filing of LCA and H-1B petition)). (For purposes of this section, 
initial transportation from, and end-of-employment travel, to the 
worker's home country shall not be considered a business expense.);
    (D) Is an amount that does not exceed the fair market value or the 
actual cost (whichever is lower) of the matter covered (Note to 
paragraph (c)(9)(iii)(D): The employer must document the cost and 
value); and
    (E) Is an amount that does not exceed the limits set for 
garnishment of wages in the Consumer Credit Protection Act, 15 U.S.C. 
1673, and the regulations of the Secretary pursuant to that Act, 29 CFR 
part 870, under which garnishment(s) may not exceed 25 percent of an 
employee's disposable earnings for a workweek.
    (10) A deduction from or reduction in the payment of the required 
wage is not authorized (and is therefore prohibited) for the following 
purposes (i.e., paragraphs (c)(10) (i) and (ii)):
    (i) A penalty paid by the H-1B nonimmigrant for ceasing employment 
with the employer prior to a date agreed to by the nonimmigrant and the 
employer.
    (A) The employer is not permitted to require (directly or 
indirectly) that the nonimmigrant pay a penalty for ceasing employment 
with the employer prior to an agreed date. Therefore, the employer 
shall not make any deduction from or reduction in the payment of the 
required wage to collect such a penalty.
    (B) The employer is permitted to receive bona fide liquidated 
damages from the H-1B nonimmigrant who ceases employment with the 
employer prior to an agreed date. However, the requirements of 
paragraph (c)(9)(iii) of this section must be fully satisfied, if such 
damages are to be received by the employer via deduction from or 
reduction in the payment of the required wage.
    (C) The distinction between liquidated damages (which are 
permissible) and a penalty (which is prohibited) is to be made on the 
basis of the applicable State law. In general, the laws of the various 
States recognize that liquidated damages are amounts which are fixed or 
stipulated by the parties at the inception of the contract, and which 
are reasonable approximations or estimates of the anticipated or actual 
damage caused to one party by the other party's breach of the contract. 
On the other hand, the laws of the various States, in general, consider 
that penalties are amounts which (although fixed or stipulated in the 
contract by the parties) are not reasonable approximations or estimates 
of such damage. The laws of the various States, in general, require 
that the relation or circumstances of the parties,

[[Page 80220]]

and the purpose(s) of the agreement, are to be taken into account, so 
that, for example, an agreement to a payment would be considered to be 
a prohibited penalty where it is the result of fraud or where it cloaks 
oppression. Furthermore, as a general matter, the sum stipulated must 
take into account whether the contract breach is total or partial 
(i.e., the percentage of the employment contract completed). (See, 
e.g., Vanderbilt University v. DiNardo, 174 F.3d 751 (6th Cir. 1999) 
(applying Tennessee law); Overholt Crop Insurance Service Co. v. 
Travis,  941 F.2d 1361 (8th Cir. 1991) (applying Minnesota and South 
Dakota law); BDO Seidman v. Hirshberg, 712 N.E.2d 1220 (N.Y. 1999); 
Guiliano v. Cleo, Inc., 995 S.W.2d 88 (Tenn. 1999); Wojtowicz v. 
Greeley Anesthesia Services, P.C., 961 P.2d 520 (Colo.Ct.App. 1998); 
see generally, Restatement (Second) Contracts Sec. 356 (comment b); 22 
Am.Jur.2d Damages Secs. 683, 686, 690, 693, 703). In an enforcement 
proceeding under subpart I of this part, the Administrator shall 
determine, applying relevant State law (including consideration where 
appropriate to actions by the employer, if any, contributing to the 
early cessation, such as the employer's constructive discharge of the 
nonimmigrant or non-compliance with its obligations under the INA and 
its regulations) whether the payment in question constitutes liquidated 
damages or a penalty. (Note to paragraph (c)(10)(i)(C): The $500/$1,000 
filing fee under section 214(c)(1) of the INA can never be included in 
any liquidated damages received by the employer. See paragraph 
(c)(10)(ii), which follows.)
    (ii) A rebate of the $500/$1,000 filing fee paid by the employer 
under Section 214(c)(1) of the INA. The employer may not receive, and 
the H-1B nonimmigrant may not pay, any part of the $500 additional 
filing fee (for a petition filed prior to December 18, 2000) or $1,000 
additional filing fee (for a petition filed on or subsequent to 
December 18, 2000), whether directly or indirectly, voluntarily or 
involuntarily. Thus, no deduction from or reduction in wages for 
purposes of a rebate of any part of this fee is permitted. Further, if 
liquidated damages are received by the employer from the H-1B 
nonimmigrant upon the nonimmigrant's ceasing employment with the 
employer prior to a date agreed to by the nonimmigrant and the 
employer, such liquidated damages shall not include any part of the 
$500/$1,000 filing fee (see paragraph (c)(10)(i) of this section). If 
the filing fee is paid by a third party and the H-1B nonimmigrant 
reimburses all or part of the fee to such third party, the employer 
shall be considered to be in violation of this prohibition since the 
employer would in such circumstances have been spared the expense of 
the fee which the H-1B nonimmigrant paid.
    (11) Any unauthorized deduction taken from wages is considered by 
the Department to be non-payment of that amount of wages, and in the 
event of an investigation, will result in back wage assessment (plus 
civil money penalties and/or disqualification from H-1B and other 
immigration programs, if willful).
    (12) Where the employer depresses the employee's wages below the 
required wage by imposing on the employee any of the employer's 
business expenses(s), the Department will consider the amount to be an 
unauthorized deduction from wages even if the matter is not shown in 
the employer's payroll records as a deduction.
    (13) Where the employer makes deduction(s) for repayment of loan(s) 
or wage advance(s) made to the employee, the Department, in the event 
of an investigation, will require the employer to establish the 
legitimacy and purpose(s) of the loan(s) or wage advance(s), with 
reference to the standards set out in paragraph (c)(9)(iii) of this 
section.
    (d) Enforcement actions. (1) In the event of an investigation 
pursuant to subpart I of this part, concerning a failure to meet the 
``prevailing wage'' condition or a material misrepresentation by the 
employer regarding the payment of the required wage, the Administrator 
shall determine whether the employer has the documentation required in 
paragraph (b)(3) of this section, and whether the documentation 
supports the employer's wage attestation. Where the documentation is 
either nonexistent or insufficient to determine the prevailing wage 
(e.g., does not meet the criteria specified in this section, in which 
case the Administrator may find a violation of paragraph (b)(1), (2), 
or (3), of this section); or where, based on significant evidence 
regarding wages paid for the occupation in the area of intended 
employment, the Administrator has reason to believe that the prevailing 
wage finding obtained from an independent authoritative source or 
another legitimate source varies substantially from the wage prevailing 
for the occupation in the area of intended employment; or where the 
employer has been unable to demonstrate that the prevailing wage 
determined by another legitimate source is in accordance with the 
regulatory criteria, the Administrator may contact ETA, which shall 
provide the Administrator with a prevailing wage determination, which 
the Administrator shall use as the basis for determining violations and 
for computing back wages, if such wages are found to be owed. The 30-
day investigatory period shall be suspended while ETA makes the 
prevailing wage determination and, in the event that the employer 
timely challenges the determination through the Employment Service 
complaint system (see paragraph (d)(2), which follows), shall be 
suspended until the Employment Service complaint system process is 
completed and the Administrator's investigation can be resumed.
    (2) In the event the Administrator obtains a prevailing wage from 
ETA pursuant to paragraph (d)(1) of this section, the employer may 
challenge the ETA prevailing wage only through the Employment Service 
complaint system. (See 20 CFR part 658, subpart E.) Notwithstanding the 
provisions of 20 CFR 658.421 and 658.426, the appeal shall be initiated 
at the ETA regional office which services the State in which the place 
of employment is located (see Sec. 655.721 for the ETA regional offices 
and their jurisdictions). Such challenge shall be initiated within 10 
days after the employer receives ETA's prevailing wage determination 
from the Administrator. In any challenge to the wage determination, 
neither ETA nor the SESA shall divulge any employer wage data which was 
collected under the promise of confidentiality.
    (i) Where the employer timely challenges an ETA prevailing wage 
determination obtained by the Administrator, the 30-day investigative 
period shall be suspended until the employer obtains a final ruling 
from the Employment Service complaint system. Upon such final ruling, 
the investigation and any subsequent enforcement proceeding shall 
continue, with ETA's prevailing wage determination serving as the 
conclusive determination for all purposes.
    (ii) Where the employer does not challenge ETA's prevailing wage 
determination obtained by the Administrator, such determination shall 
be deemed to have been accepted by the employer as accurate and 
appropriate (as to the amount of the wage) and thereafter shall not be 
subject to challenge in a hearing pursuant to Sec. 655.835.
    (3) For purposes of this paragraph (d), ETA may consult with the 
appropriate SESA to ascertain the prevailing wage applicable under the 
circumstances of the particular complaint.

[[Page 80221]]

    (4) No prevailing wage violation will be found if the employer paid 
a wage that is equal to, or more than 95 percent of, the prevailing 
wage as required by paragraph (a)(2)(iii) of this section. If the 
employer paid a wage that is less than 95 percent of the prevailing 
wage, the employer will be required to pay 100 percent of the 
prevailing wage.

    11. Section 655.732 is revised to read as follows:


Sec. 655.732  What is the second LCA requirement, regarding working 
conditions?

    An employer seeking to employ H-1B nonimmigrants in specialty 
occupations or as fashion models of distinguished merit and ability 
shall state on Form ETA 9035 that the employment of H-1B nonimmigrants 
will not adversely affect the working conditions of workers similarly 
employed in the area of intended employment.
    (a) Establishing the working conditions requirement. The second LCA 
requirement shall be satisfied when the employer affords working 
conditions to its H-1B nonimmigrant employees on the same basis and in 
accordance with the same criteria as it affords to its U.S. worker 
employees who are similarly employed, and without adverse effect upon 
the working conditions of such U.S. worker employees. Working 
conditions include matters such as hours, shifts, vacation periods, and 
benefits such as seniority-based preferences for training programs and 
work schedules. The employer's obligation regarding working conditions 
shall extend for the longer of two periods: the validity period of the 
certified LCA, or the period during which the H-1B nonimmigrant(s) 
is(are) employed by the employer.
    (b) Documentation of the working condition statement. In the event 
of an enforcement action pursuant to subpart I of this part, the 
employer shall produce documentation to show that it has afforded its 
H-1B nonimmigrant employees working conditions on the same basis and in 
accordance with the same criteria as it affords its U.S. worker 
employees who are similarly employed.

    12. The title to Sec. 655.733 is revised to read as follows:


Sec. 655.733  What is the third LCA requirement, regarding strikes and 
lockouts?

    13. Section 655.734 is amended by revising the title and by 
revising paragraphs (a) (l) (ii) and (a) (2) and by adding paragraph 
(a)(3), to read as follows:


Sec. 655.734  What is the fourth LCA requirement, regarding notice?

* * * * *
    (a) * * *
    (1) * * *
    (i) * * *
    (ii) Where there is no collective bargaining representative, the 
employer shall, on or within 30 days before the date the LCA is filed 
with ETA, provide a notice of the filing of the LCA. The notice shall 
indicate that H-1B nonimmigrants are sought; the number of such 
nonimmigrants the employer is seeking; the occupational classification; 
the wages offered; the period of employment; the location(s) at which 
the H-1B nonimmigrants will be employed; and that the LCA is available 
for public inspection at the H-1B employer's principal place of 
business in the U.S. or at the worksite. The notice shall also include 
the statement: ``Complaints alleging misrepresentation of material 
facts in the labor condition application and/or failure to comply with 
the terms of the labor condition application may be filed with any 
office of the Wage and Hour Division of the United States Department of 
Labor.'' If the employer is an H-1B-dependent employer or a willful 
violator, and the LCA is not being used only for exempt H-1B 
nonimmigrants, the notice shall also set forth the nondisplacement and 
recruitment obligations to which the employer has attested, and shall 
include the following additional statement: ``Complaints alleging 
failure to offer employment to an equally or better qualified U.S. 
worker, or an employer's misrepresentation regarding such offer(s) of 
employment, may be filed with the Department of Justice, 10th Street & 
Constitution Avenue, NW., Washington, DC 20530.'' The notice shall be 
provided in one of the two following manners:
    (A) Hard copy notice, by posting a notice in at least two 
conspicuous locations at each place of employment where any H-1B 
nonimmigrant will be employed (whether such place of employment is 
owned or operated by the employer or by some other person or entity).
    (1) The notice shall be of sufficient size and visibility, and 
shall be posted in two or more conspicuous places so that workers in 
the occupational classification at the place(s) of employment can 
easily see and read the posted notice(s).
    (2) Appropriate locations for posting the notices include, but are 
not limited to, locations in the immediate proximity of wage and hour 
notices required by 29 CFR 516.4 or occupational safety and health 
notices required by 29 CFR 1903.2(a).
    (3) The notices shall be posted on or within 30 days before the 
date the labor condition application is filed and shall remain posted 
for a total of 10 days.
    (B) Electronic notice, by providing electronic notification to 
employees in the occupational classification (including both employees 
of the H-1B employer and employees of another person or entity which 
owns or operates the place of employment) for which H-1B nonimmigrants 
are sought, at each place of employment where any H-1B nonimmigrant 
will be employed. Such notification shall be given on or within 30 days 
before the date the labor condition application is filed, and shall be 
available to the affected employees for a total of 10 days, except that 
if employees are provided individual, direct notice (as by e-mail), 
notification only need be given once during the required time period. 
Notification shall be readily available to the affected employees. An 
employer may accomplish this by any means it ordinarily uses to 
communicate with its workers about job vacancies or promotion 
opportunities, including through its ``home page'' or ``electronic 
bulletin board'' to employees who have, as a practical matter, direct 
access to these resources; or through e-mail or an actively circulated 
electronic message such as the employer's newsletter. Where affected 
employees at the place of employment are not on the ``intranet'' which 
provides direct access to the home page or other electronic site but do 
have computer access readily available, the employer may provide notice 
to such workers by direct electronic communication such as e-mail 
(i.e., a single, personal e-mail message to each such employee) or by 
arranging to have the notice appear for 10 days on an intranet which 
includes the affected employees (e.g., contractor arranges to have 
notice on customer's intranet accessible to affected employees). Where 
employees lack practical computer access, a hard copy must be posted in 
accordance with paragraph (a)(1)(ii)(A) of this section, or the 
employer may provide employees individual copies of the notice.
    (2) Where the employer places any H-1B nonimmigrant(s) at one or 
more worksites not contemplated at the time of filing the application, 
but which are within the area of intended employment listed on the LCA, 
the employer is required to post electronic or hard-copy notice(s) at 
such worksite(s), in the manner described in paragraph (a)(1) of this 
section, on or before the date any H-1B nonimmigrant begins work.

[[Page 80222]]

    (3) The employer shall, no later than the date the H-1B 
nonimmigrant reports to work at the place of employment, provide the H-
1B nonimmigrant with a copy of the LCA (Form ETA 9035) certified by the 
Department. Upon request, the employer shall provide the H-1B 
nonimmigrant with a copy of the cover pages, Form ETA 9035CP.
* * * * *

    14. Section 655.735 is revised to read as follows:


Sec. 655.735  What are the special provisions for short-term placement 
of H-1B nonimmigrants at place(s) of employment outside the area(s) of 
intended employment listed on the LCA?

    (a) Subject to the conditions specified in this section, an 
employer may make short-term placements or assignments of H-1B 
nonimmigrant(s) at worksite(s) (place(s) of employment) in areas not 
listed on the employer's approved LCA(s) without filing new labor 
condition application(s) for such area(s).
    (b) The following conditions must be fully satisfied by an employer 
during all short-term placement(s) or assignment(s) of H-1B 
nonimmigrant(s) at worksite(s) (place(s) of employment) in areas not 
listed on the employer's approved LCA(s):
    (1) The employer has fully satisfied the requirements of 
Secs. 655.730 through 655.734 with regard to worksite(s) located within 
the area(s) of intended employment listed on the employer's LCA(s).
    (2) The employer shall not place, assign, lease, or otherwise 
contract out any H-1B nonimmigrant(s) to any worksite where there is a 
strike or lockout in the course of a labor dispute in the same 
occupational classification(s) as that of the H-1B nonimmigrant(s).
    (3) For every day the H-1B nonimmigrant(s) is placed or assigned 
outside the area(s) of employment listed on the approved LCA(s) for 
such worker(s), the employer shall:
    (i) Continue to pay such worker(s) the required wage (based on the 
prevailing wage at such worker's(s') permanent worksite, or the 
employer's actual wage, whichever is higher);
    (ii) Pay such worker(s) the actual cost of lodging (for both 
workdays and non-workdays); and
    (iii) Pay such worker(s) the actual cost of travel, meals and 
incidental or miscellaneous expenses (for both workdays and non-
workdays).
    (c) An employer's short-term placement(s) or assignment(s) of H-1B 
nonimmigrant(s) at any worksite(s) in an area of employment not listed 
on the employer's approved LCA(s) shall not exceed a total of 30 
workdays in a one-year period for any H-1B nonimmigrant at any worksite 
or combination of worksites in the area, except that such placement or 
assignment of an H-1B nonimmigrant may be for longer than 30 workdays 
but for no more than a total of 60 workdays in a one-year period where 
the employer is able to show the following:
    (1) The H-1B nonimmigrant continues to maintain an office or work 
station at his/her permanent worksite (e.g., the worker has a dedicated 
workstation and telephone line(s) at the permanent worksite);
    (2) The H-1B nonimmigrant spends a substantial amount of time at 
the permanent worksite in a one-year period; and
    (3) The H-1B nonimmigrant's U.S. residence or place of abode is 
located in the area of the permanent worksite and not in the area of 
the short-term worksite(s) (e.g., the worker's personal mailing 
address; the worker's lease for an apartment or other home; the 
worker's bank accounts; the worker's automobile driver's license; the 
residence of the worker's dependents).
    (d) For purposes of this section, the term workday shall mean any 
day on which an H-1B nonimmigrant performs any work at any worksite(s) 
within the area of short-term placement or assignment. For example, 
three workdays would be counted where a nonimmigrant works three non-
consecutive days at three different worksites (whether or not the 
employer owns or controls such worksite(s)), within the same area of 
employment. Further, for purposes of this section, the term one-year 
period shall mean the calendar year (i.e., January 1 through December 
31) or the employer's fiscal year, whichever the employer chooses.
    (e) The employer may not make short-term placement(s) or 
assignment(s) of H-1B nonimmigrant(s) under this section at worksite(s) 
in any area of employment for which the employer has a certified LCA 
for the occupational classification. Further, an H-1B nonimmigrant 
entering the U.S. is required to be placed at a worksite in accordance 
with the approved petition and supporting LCA; thus, the nonimmigrant's 
initial placement or assignment cannot be a short-term placement under 
this section. In addition, the employer may not continuously rotate H-
1B nonimmigrants on short-term placement or assignment to an area of 
employment in a manner that would defeat the purpose of the short-term 
placement option, which is to provide the employer with flexibility in 
assignments to afford enough time to obtain an approved LCA for an area 
where it intends to have a continuing presence (e.g., an employer may 
not rotate H-1B nonimmigrants to an area of employment for 20-day 
periods, with the result that nonimmigrants are continuously or 
virtually continuously employed in the area of employment, in order to 
avoid filing an LCA; such an employer would violate the short-term 
placement provisions).
    (f) Once any H-1B nonimmigrant's short-term placement or assignment 
has reached the workday limit specified in paragraph (c) of this 
section in an area of employment, the employer shall take one of the 
following actions:
    (1) File an LCA and obtain ETA certification, and thereafter place 
any H-1B nonimmigrant(s) in that occupational classification at 
worksite(s) in that area pursuant to the LCA (i.e., the employer shall 
perform all actions required in connection with such LCA, including 
determination of the prevailing wage and notice to workers); or
    (2) Immediately terminate the placement of any H-1B nonimmigrant(s) 
who reaches the workday limit in an area of employment. No worker may 
exceed the workday limit within the one-year period specified in 
paragraph (d) of this section, unless the employer first files an LCA 
for the occupational classification for the area of employment. 
Employers are cautioned that if any worker exceeds the workday limit 
within the one-year period, then the employer has violated the terms of 
its LCA(s) and the regulations in the subpart, and thereafter the 
short-term placement option cannot be used by the employer for H-1B 
nonimmigrants in that occupational classification in that area of 
employment.
    (g) An employer is not required to use the short-term placement 
option provided by this section, but may choose to make each placement 
or assignment of an H-1B nonimmigrant at worksite(s) in a new area of 
employment pursuant to a new LCA for such area. Further, an employer 
which uses the short-term placement option is not required to continue 
to use the option. Such an employer may, at any time during the period 
identified in paragraphs (c) and (d) of this section, file an LCA for 
the new area of employment (performing all actions required in 
connection with such LCA); upon certification of such LCA, the 
employer's obligation to comply with this section concerning short-term 
placement shall terminate. (However, see Sec. 655.731(c)(9)(iii)(C) 
regarding payment of business expenses for

[[Page 80223]]

employee's travel on employer's business.)

    15. Section 655.736 is added to read as follows:


Sec. 655.736  What are H-1B-dependent employers and willful violators?

    Two attestation obligations apply only to two types of employers: 
H-1B-dependent employers (as described in paragraphs (a) through (e) of 
this section) and employers found to have willfully violated their H-1B 
obligations within a certain five-year period (as described in 
paragraph (f) of this section). These obligations apply only to certain 
labor condition applications filed by such employers (as described in 
paragraph (g) of this section), and do not apply to LCAs filed by such 
employers solely for the employment of ``exempt'' H-1B nonimmigrants 
(as described in paragraph (g) of this section and Sec. 655.737). These 
obligations require that such employers not displace U.S. workers from 
jobs (as described in Sec. 655.738) and that such employers recruit 
U.S. workers before hiring H-1B nonimmigrants (as described in 
Sec. 655.739).
    (a) What constitutes an ``H-1B-dependent'' employer?
    (1) ``H-1B-dependent employer,'' for purposes of THIS subpart H and 
subpart I of this part, means an employer that meets one of the three 
following standards, which are based on the ratio between the 
employer's total work force employed in the U.S. (including both U.S. 
workers and H-1B nonimmigrants, and measured according to full-time 
equivalent employees) and the employer's H-1B nonimmigrant employees (a 
``head count'' including both full-time and part-time H-1B employees) 
--
    (i)(A) The employer has 25 or fewer full-time equivalent employees 
who are employed in the U.S.; and
    (B) Employs more than seven H-1B nonimmigrants;
    (ii)(A) The employer has at least 26 but not more than 50 full-time 
equivalent employees who are employed in the U.S.; and
    (B) Employs more than 12 H-1B nonimmigrant; or
    (iii)(A) The employer has at least 51 full-time equivalent 
employees who are employed in the U.S.; and
    (B) Employs H-1B nonimmigrants in a number that is equal to at 
least 15 percent of the number of such full-time equivalent employees.
    (2) ``Full-time equivalent employees'' (FTEs), for purposes of 
paragraph (a) of this section are to be determined according to the 
following standards:
    (i) The determination of FTEs is to include only persons employed 
by the employer (as defined in Sec. 655.715), and does not include bona 
fide consultants and independent contractors. For purposes of this 
section, the Department will accept the employer's designation of 
persons as ``employees,'' provided that such persons are consistently 
treated as ``employees'' for all purposes including FICA, FLSA, etc.
    (ii) The determination of FTEs is to be based on the following 
records:
    (A) To determine the number of employees, the employer's quarterly 
tax statement (or similar document) is to be used (assuming there is no 
issue as to whether all employees are listed on the tax statement); and
    (B) To determine the number of hours of work by part-time 
employees, for purposes of aggregating such employees to FTEs, the last 
payroll (or the payrolls over the previous quarter, if the last payroll 
is not representative) is to be used, or where hours of work records 
are not maintained, other available information is to be used to make a 
reasonable approximation of hours of work (such as a standard work 
schedule). (But see paragraph (a)(2)(iii)(B)(1) of this section 
regarding the determination of FTEs for part-time employees without a 
computation of the hours worked by such employees.)
    (iii) The FTEs employed by the employer means the total of the two 
numbers yielded by paragraphs (a)(2)(iii)(A) and (B), which follow:
    (A) The number of full-time employees. A full-time employee is one 
who works 40 or more hours per week, unless the employer can show that 
less than 40 hours per week is full-time employment in its regular 
course of business (however, in no event would less than 35 hours per 
week be considered to be full-time employment). Each full-time employee 
equals one FTE (e.g., 50 full-time employees would yield 50 FTEs). 
(Note to paragraph (a)(2)(iii)(A): An employee who commonly works more 
than the number of hours constituting full-time employment cannot be 
counted as more than one FTE.); plus
    (B) The part-time employees aggregated to a number of full-time 
equivalents, if the employer has part-time employees. For purposes of 
this determination, a part-time employee is one who regularly works 
fewer than the number of hours per week which constitutes full-time 
employment (e.g., employee regularly works 20 hours, where full-time 
employment is 35 hours per week). The aggregation of part-time 
employees to FTEs may be performed by either of the following methods 
(i.e., paragraphs (a)(2)(iii)(B)(1) or (2)):
    (1) Each employee working fewer than full-time hours counted as 
one-half of an FTE, with the total rounded to the next higher whole 
number (e.g., three employees working fewer than 35 hours per week, 
where full-time employment is 35 hours, would yield two FTEs (i.e., 1.5 
rounded to 2)); or
    (2) The total number of hours worked by all part-time employees in 
the representative pay period, divided by the number of hours per week 
that constitute full-time employment, with the quotient rounded to the 
nearest whole number (e.g., 72 total hours of work by three part-time 
employees, divided by 40 (hours per week constituting full-time 
employment), would yield two FTEs (i.e., 1.8 rounded to 2)).
    (iv) Examples of determinations of FTEs: Employer A has 100 
employees, 70 of whom are full-time (with full-time employment shown to 
be 44 hours of work per week) and 30 of whom are part-time (with a 
total of 1004 hours of work by all 30 part-time employees during the 
representative pay period). Utilizing the method in paragraph 
(a)(2)(iii)(B)(1) of this section, this employer would have 85 FTEs: 70 
FTEs for full-time employees, plus 15 FTEs for part-time employees 
(i.e., each of the 30 part-time employees counted as one-half of a 
full-time employee, as described in paragraph (a)(2)(iii)(B)(1) of this 
section). (This employer would have 23 FTEs for part-time employees, if 
these FTEs were computed as described in paragraph (a)(2)(iii)(B)(2) of 
this section: 1004 total hours of work by part-time employees, divided 
by 44 (full-time employment), yielding 22.8, rounded to 23)). Employer 
B has 100 employees, 80 of whom are full-time (with full-time 
employment shown to be 40 hours of work per week) and 20 of whom are 
part-time (with a total of 630 hours of work by all 30 part-time 
employees during the representative pay period). This employer would 
have 90 FTEs: 80 FTEs for full-time employees, plus 10 FTEs for part-
time employees (i.e., each of the 20 part-time employees counted as 
one-half of a full-time employee, as described in paragraph 
(a)(2)(iii)(B)(1) of this section) (This employer would have 16 FTEs 
for part-time employees, if these FTEs were computed as described in 
paragraph (a)(2)(iii)(B)(2) of this section: 630 total hours of work by 
part-time employees, divided by 40 (full-time employment), yielding 
15.7, rounded to 16)).
    (b) What constitutes an ``employer'' for purposes of determining H-
1B-dependency status? Any group treated

[[Page 80224]]

as a single employer under the Internal Revenue Code (IRC) at 26 U.S.C. 
414(b), (c), (m) or (o) shall be treated as a single employer for 
purposes of the determination of H-1B-dependency. Therefore, if an 
employer satisfies the requirements of the IRC and relevant regulations 
with respect to the following groups of employees, those employees will 
be treated as employees of a single employer for purposes of 
determining whether that employer is an H-1B-dependent employer.
    (1) Pursuant to section 414(b) of the IRC and related regulations, 
all employees ``within a controlled group of corporations'' (within the 
meaning of section 1563(a) of the IRC, determined without regard to 
section 1563(a)(4) and (e)(3)(C)), will be treated as employees of a 
single employer. A controlled group of corporations is a parent-
subsidiary-controlled group, a brother-sister-controlled group, or a 
combined group. 26 U.S.C. 1563(a), 26 CFR 1.414(b)-1(a).
    (i) A parent-subsidiary-controlled group is one or more chains of 
corporations connected through stock ownership with a common parent 
corporation where at least 80 percent of the stock (by voting rights or 
value) of each subsidiary corporation is owned by one or more of the 
other corporations (either another subsidiary or the parent 
corporation), and the common parent corporation owns at least 80 
percent of the stock of at least one subsidiary.
    (ii) A brother-sister-controlled group is a group of corporations 
in which five or fewer persons (individuals, estates, or trusts) own 80 
percent or more of the stock of the corporations and certain other 
ownership criteria are satisfied.
    (iii) A combined group is a group of three or more corporations, 
each of which is a member of a parent-subsidiary controlled group or a 
brother-sister-controlled group and one of which is a common parent 
corporation of a parent-subsidiary-controlled group and is also 
included in a brother-sister-controlled group.
    (2) Pursuant to section 414(c) of the IRC and related regulations, 
all employees of trades or businesses (whether or not incorporated) 
that are under common control are treated as employees of a single 
employer. 26 U.S.C. 414(c), 26 CFR 1.414(c)-2.
    (i) Trades or businesses are under common control if they are 
included in:
    (A) A parent-subsidiary group of trades or businesses;
    (B) A brother-sister group of trades or businesses; or
    (C) A combined group of trades or businesses.
    (ii) Trades or businesses include sole proprietorships, 
partnerships, estates, trusts or corporations.
    (ii) The standards for determining whether trades or businesses are 
under common control are similar to standards that apply to controlled 
groups of corporations. However, pursuant to 26 CFR 1.414(c)-2(b)(2), 
ownership of at least an 80 percent interest in the profits or capital 
interest of a partnership or the actuarial value of a trust or estate 
constitutes a controlling interest in a trade or business.
    (3) Pursuant to section 414(m) of the IRC and related regulations, 
all employees of the members of an affiliated service group are treated 
as employees of a single employer. 26 U.S.C. 414(m).
    (i) An affiliated service group is, generally, a group consisting 
of a service organization (the ``first organization''), such as a 
health care organization, a law firm or an accounting firm, and one or 
more of the following:
    (A) A second service organization that is a shareholder or partner 
in the first organization and that regularly performs services for the 
first organization (or is regularly associated with the first 
organization in performing services for third persons); or
    (B) Any other organization if :
    (1) A significant portion of the second organization's business is 
the performance of services for the first organization (or an 
organization described in paragraph (b)(3)(i) of this section or for 
both) of a type historically performed in such service field by 
employees, and
    (2) Ten percent or more of the interest in the second organization 
is held by persons who are highly compensated employees of the first 
organization (or an organization described in paragraph (b)(3)(i) of 
this section).
    (ii) [Reserved]
    (4) Section 414(o) of the IRC provides that the Department of the 
Treasury may issue regulations addressing other business arrangements, 
including employee leasing, in which a group of employees are treated 
as employed by the same employer. However, the Department of the 
Treasury has not issued any regulations under this provision. 
Therefore, that section of the IRC will not be taken into account in 
determining what groups of employees are considered employees of a 
single employer for purposes of H-1B dependency determinations, unless 
regulations are issued by the Treasury Department during the period the 
dependency provisions of the ACWIA are effective.
    (5) The definitions of ``single employer'' set forth in paragraphs 
(b)(1) through (b)(3) of this section are established by the Internal 
Revenue Service (IRS) in regulations located at 26 CFR 1.414(b)-1(a), 
(c)-2 and (m)-5. Guidance on these definitions should be sought from 
those regulations or from the IRS.
    (c) Which employers are required to make determinations of H-1B-
dependency status? Every employer that intends to file an LCA or to 
file H-1B petition(s) or request(s) for extension(s) of H-1B status 
between January 19, 2001 and October 1, 2003 is required to determine 
whether it is an H-1B-dependent employer or a willful violator which, 
except as provided in Sec. 655.737, will be subject to the additional 
obligations for H-1B-dependent employers (see paragraph (g) of this 
section). During this time period, no H-1B-dependent employer or 
willful violator may use an LCA filed before January 19, 2001 to 
support a new H-1B petition or request for an extension of status. 
Furthermore, on all LCAs filed during this period an employer will be 
required to attest as to whether it is an H-1B-dependent employer or 
willful violator. An employer that attests that it is non-H-1B-
dependent but does not meet the ``snap shot'' test set forth in 
paragraph (c)(2) of this section shall make and document a full 
calculation of its status. However, as explained in paragraphs (c)(1) 
and (2), which follow, most employers would not be required to make any 
calculations or to create any documentation as to the determination of 
H-1B status.
    (1) Employers with readily apparent status concerning H-1B-
dependency need not calculate that status. For most employers, 
regardless of their size, H-1B-dependency status (i.e., H-1B-dependent 
or non-H-1B-dependent) is readily apparent and would require no 
calculations, in that the ratio of H-1B employees to the total 
workforce is obvious and can easily be compared to the definition of 
``H-1B-dependency'' (see definition set out in paragraph (a)(1) of this 
section).
    For example: Employer A with 20 employees, only one of whom is an 
H-1B non-immigrant, would obviously not be H-1B-dependent and would not 
need to make calculations to confirm that status. Employer B with 45 
employees, 30 of whom are H-1B nonimmigrants, would obviously be H-1B-
dependent and would not need to make calculations. Employer C with 500 
employees, only 30 of whom are H-1B nonimmigrants, would obviously not 
be H-1B-dependent and would not need to make calculations. Employer D 
with

[[Page 80225]]

1,000 employees, 850 of whom are H-1B nonimmigrants, would obviously be 
H-1B-dependent and would not have to make calculations.
    (2) Employers with borderline H-1B-dependency status may use a 
``snap-shot'' test to determine whether calculation of that status is 
necessary. Where an employer's H-1B-dependency status (i.e., H-1B-
dependent or non-H-1B-dependent) is not readily apparent, the employer 
may use one of the following tests to determine whether a full 
calculation of the status is needed:
    (i) Small employer (50 or fewer employees). If the employer has 50 
or fewer employees (both full-time and part-time, including H-1B 
nonimmigrants and U.S. workers), then the employer may compare the 
number of its H-1B nonimmigrant employees (both full-time and part-
time) to the numbers specified in the definition set out in paragraph 
(a)(1) of this section, and shall fully calculate its H-1B-dependency 
status (i.e., calculate FTEs) where the number of its H-1B nonimmigrant 
employees is above the number specified in the definition. In other 
words, if the employer has 25 or fewer employees, and more than seven 
of them are H-1B nonimmigrants, then the employer shall fully calculate 
its status; if the employer has at least 26 but no more than 50 
employees, and more than 12 of them are H-1B nonimmigrants, then the 
employer shall fully calculate its status.
    (ii) Large employer (51 or more employees). If the number of H-1B 
nonimmigrant employees (both full-time and part-time), divided by the 
number of full-time employees (including H-1B nonimmigrants and U.S. 
workers), is 0.15 or more, then an employer which believes itself to be 
non-H-1B-dependent shall fully calculate its H-1B-dependency status 
(including the calculation of FTEs). In other words, if the number of 
full-time employees (including H-1B nonimmigrants and U.S. workers) 
multiplied by 0.15 yields a number that is equal to or less than the 
number of H-1B nonimmigrant employees (both full-time and part-time), 
then the employer shall attest that it is H-1B-dependent or shall fully 
calculate its H-1B dependency status (including the calculation of 
FTEs).
    (d) What documentation is the employer required to make or 
maintain, concerning its determination of H-1B-dependency status? All 
employers are required to retain copies of H-1B petitions and requests 
for extensions of H-1B status filed with the INS, as well as the 
payroll records described in Sec. 655.731(b)(1). The nature of any 
additional documentation would depend upon the general characteristics 
of the employer's workforce, as described in paragraphs (d)(1) through 
(4), which follow.
    (1) Employer with readily apparent status concerning H-1B-
dependency. If an employer's H-1B-dependency status (i.e., H-1B-
dependent or non-H-1B-dependent) is readily apparent (as described in 
paragraph (c)(1) of this section), then that status must be reflected 
on the employer's LCA but the employer is not required to make or 
maintain any particular documentation. The public access file 
maintained in accordance with Sec. 655.760 would show the H-1B-
dependency status, by means of copy(ies) of the LCA(s). In the event of 
an enforcement action pursuant to subpart I of this part, the 
employer's readily apparent status could be verified through records to 
be made available to the Administrator (e.g., copies of H-1B petitions; 
payroll records described in Sec. 655.731(b)(1)).
    (2) Employer with borderline H-1B-dependency status. An employer 
which uses a ``snap-shot'' test to determine whether it should 
undertake a calculation of its H-1B-dependency status (as described in 
paragraph (c)(2) of this section) is not required to make or maintain 
any documentation of that ``snap-shot'' test. The employer's status 
must be reflected on the LCA(s), which would be available in the public 
access file. In the event of an enforcement action pursuant to subpart 
I of this part, the employer's records to be made available to the 
Administrator would enable the employer to show and the Administrator 
to verify the ``snap-shot'' test (e.g., copies of H-1B petitions; 
payroll records described in Sec. 655.731(b)(1)) .
    (3) Employer with H-1B-dependent status. An employer which attests 
that it is H-1B-dependent--whether that status is readily apparent or 
is determined through calculations--is not required to make or maintain 
any documentation of the calculation. The employer's status must be 
reflected on the LCA(s), which would be available in the public access 
file. In the event of an enforcement action pursuant to subpart I of 
this part, the employer's designation of H-1B-dependent status on the 
LCA(s) would be conclusive and sufficient documentation of that status 
(except where the employer's status had altered to non-H-1B-dependent 
and had been appropriately documented, as described in paragraph 
(d)(5)(ii) of this section).
    (4) Employer with non-H-1B-dependent status who is required to 
perform full calculation. An employer which attests that it is non-H-
1B-dependent and does not meet the ``snap shot'' test set forth in 
paragraph (c)(2) of this section shall retain in its records a dated 
copy of its calculation that it is not H-1B-dependent. In the event of 
an enforcement action pursuant to subpart I of this part, the 
employer's records to be made available to the Administrator would 
enable the employer to show and the Administrator to verify the 
employer's determination (e.g., copies of H-1B petitions; payroll 
records described in Sec. 655.731(b)(1)).
    (5) Employer which changes its H-1B-dependency status due to 
changes in workforce. An employer may experience a change in its H-1B-
dependency status, due to changes in the ratio of H-1B nonimmigrant to 
U.S. workers in its workforce. Thus it is important that employers who 
wish to file a new LCA or a new H-1B petition or request for extension 
of status remain cognizant of their dependency status and do a recheck 
of such status if the make-up of their workforce changes sufficiently 
that their dependency status might possibly change. In the event of 
such a change of status, the following standards will apply:
    (i) Change from non-H-1B-dependent to H-1B-dependent. An employer 
which experiences this change in its workforce is not required to make 
or maintain any record of its determination of the change of its H-1B-
dependency status. The employer is not required to file new LCA(s) 
(which would accurately state its H-1B-dependent status), unless it 
seeks to hire new H-1B nonimmigrants or extend the status of existing 
H-1B nonimmigrants (see paragraph (g) of this section).
    (ii) Change from H-1B-dependent to non-H-1B-dependent. An employer 
which experiences this change in its workforce is required to perform a 
full calculation of its status (as described in paragraph (c) of this 
section) and to retain a copy of such calculation in its records. If 
the employer seeks to hire new H-1B nonimmigrants or extend the status 
of existing H-1B nonimmigrants (see paragraph (g) of this section), the 
employer shall either file new LCAs reflecting its non-H-1B-dependent 
status or use its existing certified LCAs reflecting an H-1B-dependency 
status, in which case it shall continue to be bound by the dependent-
employer attestations on such LCAs. In the event of an enforcement 
action pursuant to subpart I of this part, the employer's records to be 
made available to the Administrator would enable the employer to show 
and the Administrator to verify the employer's determination (e.g., 
copies of H-1B petitions; payroll records described in 
Sec. 655.731(b)(1)).

[[Page 80226]]

    (6) Change in corporate structure or identity of employer. If an 
employer which experiences a change in its corporate structure as the 
result of an acquisition, merger, ``spin-off,'' or other such action 
wishes to file a new LCA or a new H-1B petition or request for 
extension of status, the new employing entity shall redetermine its H-
1B-dependency status in accordance with paragraphs (a) and (c) of this 
section (see paragraph (g) of this section). (See Sec. 655.730(e), 
regarding change in corporate structure or identity of employer.) In 
the event of an enforcement action pursuant to subpart I of this part, 
the employer's calculations where required under paragraph (c) of this 
section and its records to be made available to the Administrator would 
enable the employer to show and the Administrator to verify the 
employer's determination (e.g., copies of H-1B petitions; payroll 
records described in Sec. 655.731(b)(1)).
    (7) ``Single employer'' under IRC test. If an employer utilizes the 
IRC single-employer definition and concludes that it is non-H-1B-
dependent, the employer shall perform the ``snap-shot'' test set forth 
in paragraph (c)(2) of this section, and if it fails to meet that test, 
shall attest that it is H-1B-dependent or shall perform the full 
calculation of dependency status in accordance with paragraph (a) of 
this section. The employer shall place a list of the entities included 
as a ``single employer'' in the public access file maintained in 
accordance with Sec. 766.760. In addition, the employer shall retain in 
its records the ``snap-shot'' or full calculation of its status, as 
appropriate (showing the number of employees of each entity who are 
included in the numerator and denominator of the equation, whether the 
employer utilizes the ``snap shot'' test or a complete calculation as 
described in paragraph (c) of this section). In the event of an 
enforcement action pursuant to subpart I of this part, the employer's 
records to be made available to the Administrator would enable the 
employer to show and the Administrator to verify the employer's 
determination (e.g., copies of H-1B petitions; payroll records 
described in Sec. 655.731(b)(1)).
    (e) How is an employer's H-1B-dependency status to be shown on the 
LCA? The employer is required to designate its status by marking the 
appropriate box on the Form ETA-9035 (i.e., either H-1B-dependent or 
non-H-1B-dependent). An employer which marks the designation of ``H-1B-
dependent'' may also mark the designation of its intention to seek only 
``exempt'' H-1B nonimmigrants on the LCA (see paragraph (g) of this 
section, and Sec. 655.737). In the event that an employer has filed an 
LCA designating its H-1B-dependency status (either H-1B-dependent or 
non-H-1B-dependent) and thereafter experiences a change of status, the 
employer cannot use that LCA to support H-1B petitions for new 
nonimmigrants or requests for extension of H-1B status for existing 
nonimmigrants. Similarly, an employer that is or becomes H-1B-dependent 
cannot continue to use an LCA filed before January 19, 2001 to support 
new H-1B petitions or requests for extension of status. In such 
circumstances, the employer shall file a new LCA accurately designating 
its status and shall use that new LCA to support new petitions or 
requests for extensions of status.
    (f) What constitutes a ``willful violator'' employer and what are 
its special obligations?
    (1) ``Willful violator'' or ``willful violator employer,'' for 
purposes of this subpart H and subpart I of this part means an employer 
that meets all of the following standards (i.e., paragraphs (f)(1)(i) 
through (iii))--
    (i) A finding of violation by the employer (as described in 
paragraph (f)(1) (ii)) is entered in either of the following two types 
of enforcement proceeding:
    (A) A Department of Labor proceeding under section 212(n)(2) of the 
Act (8 U.S.C. 1182(n)(2)(C) and subpart I of this part; or
    (B) A Department of Justice proceeding under section 212(n)(5) of 
the Act (8 U.S.C. 1182(n)(5).
    (ii) The agency finds that the employer has committed either a 
willful failure or a misrepresentation of a material fact during the 
five-year period preceding the filing of the LCA; and
    (iii) The agency's finding is entered on or after October 21, 1998.
    (2) For purposes of this paragraph, ``willful failure'' means a 
violation which is a ``willful failure'' as defined in Sec. 655.805(c).
    (g) What LCAs are subject to the additional attestation 
obligations?
    (1) An employer that is ``H-1B-dependent'' (under the standards 
described in paragraphs (a) through (e) of this section) or is a 
``willful violator'' (under the standards described in paragraph (f) of 
this section) is subject to the attestation obligations regarding 
displacement of U.S. workers and recruitment of U.S. workers (under the 
standards described in Secs. 655.738 and 655.739, respectively) for all 
LCAs that are filed during the time period specified in paragraph 
(2)(g) of this section, to be used to support any petitions for new H-
1B nonimmigrants or any requests for extensions of status for existing 
H-1B nonimmigrants. An LCA which does not accurately indicate the 
employer's H-1B-dependency status or willful violator status shall not 
be used to support H-1B petitions or requests for extensions. Further, 
an employer which falsely attests to non-H-1B-dependency status, or 
which experiences a change of status to H-1B-dependency but continues 
to use the LCA to support new H-1B petitions or requests for extension 
of status shall--despite the LCA designation of non-H-1B-dependency--be 
held to its obligations to comply with the attestation requirements 
concerning nondisplacement of U.S. workers and recruitment of U.S. 
workers (as described in Secs. 655.738 and 655.739, respectively), as 
explicitly acknowledged and agreed on the LCA.
    (2) During the period between January 19, 2001 and October 1, 2003, 
any employer that is ``H-1B-dependent'' (under the standards described 
in paragraphs (a) through (e) of this section) or is a ``willful 
violator'' (under the standards described in paragraph (f) of this 
section) shall file a new LCA accurately indicating that status in 
order to be able to file petition(s) for new H-1B nonimmigrant(s) or 
request(s) for extension(s) of status for existing H-1B 
nonimmigrant(s). An LCA filed prior to January 19, 2001 may not be used 
to support petition(s) for new H-1B nonimmigrant(s) or request(s) for 
extension(s) of status for existing H-1B nonimmigrants.
    (3) An employer that files an LCA indicating ``H-1B-dependent'' 
and/or ``willful violator'' status may also indicate on the LCA that 
all the H-1B nonimmigrants to be employed pursuant to that LCA will be 
``exempt H-1B nonimmigrants'' as described in Sec. 655.737. Such an LCA 
is not subject to the additional LCA attestation obligations, provided 
that all H-1B nonimmigrants employed under it are, in fact, exempt. An 
LCA which indicates that it will be used only for exempt H-1B 
nonimmigrants shall not be used to support H-1B petitions or requests 
for extensions of status for H-1B nonimmigrants who are not, in fact, 
exempt. Further, an employer which attests that the LCA will be used 
only for exempt H-1B nonimmigrants but uses the LCA to employ non-
exempt H-1B nonimmigrants (through petitions and/or extensions of 
status) shall--despite the LCA designation of exempt H-1B 
nonimmigrants--be held to its obligations to comply with the 
attestation requirements concerning

[[Page 80227]]

nondisplacement of U.S. workers and recruitment of U.S. workers (as 
described in Secs. 655.738 and 655.739, respectively), as explicitly 
acknowledged and agreed on the LCA.
    (4) The special provisions for H-1B-dependent employers and willful 
violator employers do not apply to LCAs filed after October 1, 2003 
(see 8 U.S.C. 1182(n)(1)(E)(ii)). However, all LCAs filed prior to that 
date, and containing the additional attestation obligations described 
in this section and Secs. 655.737 through 655.739, will remain in 
effect with regard to those obligations, for so long as any H-1B 
nonimmigrant(s) employed pursuant to the LCA(s) remain employed by the 
employer.

    16. Section 655.737 is added to read as follows:


Sec. 655.737  What are ``exempt'' H-1B nonimmigrants, and how does 
their employment affect the additional attestation obligations of H-1B-
dependent employers and willful violator employers?

    (a) An employer that is H-1B-dependent or a willful violator of the 
H-1B program requirements (as described in Sec. 655.736) is subject to 
the attestation obligations regarding displacement of U.S. workers and 
recruitment of U.S. workers (as described in Secs. 655.738 and 655.739, 
respectively) for all LCAs that are filed during the time period 
specified in Sec. 655.736(g). However, these additional obligations do 
not apply to an LCA filed by such an employer if the LCA is used only 
for the employment of ``exempt'' H-1B nonimmigrants (through petitions 
and/or extensions of status) as described in this section.
    (b) What is the test or standard for determining an H-1B 
nonimmigrant's ``exempt'' status? An H-1B nonimmigrant is ``exempt'' 
for purposes of this section if the nonimmigrant meets either of the 
two following criteria:
    (1) Receives wages (including cash bonuses and similar 
compensation) at an annual rate equal to at least $60,000; or
    (2) Has attained a master's or higher degree (or its equivalent) in 
a specialty related to the intended employment.
    (c) How is the $60,000 annual wage to be determined? The H-1B 
nonimmigrant can be considered to be an ``exempt'' worker, for purposes 
of this section, if the nonimmigrant actually receives hourly wages or 
annual salary totaling at least $60,000 in the calendar year. The 
standards applicable to the employer's satisfaction of the required 
wage obligation are applicable to the determination of whether the 
$60,000 wages or salary are received (see Sec. 655.731(c)(2) and (3)). 
Thus, employer contributions or costs for benefits such as health 
insurance, life insurance, and pension plans cannot be counted toward 
this $60,000. The compensation to be counted or credited for these 
purposes could include cash bonuses and similar payments, provided that 
such compensation is paid to the worker ``cash in hand, free and clear, 
when due'' (Sec. 655.731(c)(1)), meaning that the compensation has 
readily determinable market value, is readily convertible to cash 
tender, and is actually received by the employee when due (which must 
be within the year for which the employer seeks to count or credit the 
compensation toward the employee's $60,000 earnings to qualify for 
exempt status). Cash bonuses and similar compensation can be counted or 
credited toward the $60,000 for ``exempt'' status only if payment is 
assured (i.e., if the payment is contingent or conditional on some 
event such as the employer's annual profits, the employer must 
guarantee payment even if the contingency is not met). The full $60,000 
annual wages or salary must be received by the employee in order for 
the employee to have ``exempt'' status. The wages or salary required 
for ``exempt'' status cannot be decreased or pro rated based on the 
employee's part-time work schedule; an H-1B nonimmigrant working part-
time, whose actual annual compensation is less than $60,000, would not 
qualify as exempt on the basis of wages, even if the worker's earnings, 
if projected to a full-time work schedule, would theoretically exceed 
$60,000 in a year. Where an employee works for less than a full year, 
the employee must receive at least the appropriate pro rata share of 
the $60,000 in order to be ``exempt'' (e.g., an employee who resigns 
after three months must be paid at least $15,000). In the event of an 
investigation pursuant to subpart I of this part, the Administrator 
will determine whether the employee has received the required $60,000 
per year, using the employee's anniversary date to determine the one-
year period; for an employee who had worked for less than a full year 
(either at the beginning of employment, or after his/her last 
anniversary date), the determination as to the $60,000 annual wages 
will be on a pro rata basis (i.e., whether the employee had been paid 
at a rate of $60,000 per year (or $5,000 per month) including any 
unpaid, guaranteed bonuses or similar compensation).
    (d) How is the ``master's or higher degree (or its equivalent) in a 
specialty related to the intended employment'' to be determined? 
    (1) ``Master's or higher degree (or its equivalent),'' for purposes 
of this section means a foreign academic degree from an institution 
which is accredited or recognized under the law of the country where 
the degree was obtained, and which is equivalent to a master's or 
higher degree issued by a U.S. academic institution. The equivalence to 
a U.S. academic degree cannot be established through experience or 
through demonstration of expertise in the academic specialty (i.e., no 
``time equivalency'' or ``performance equivalency'' will be recognized 
as substituting for a degree issued by an academic institution). The 
INS and the Department will consult appropriate sources of expertise in 
making the determination of equivalency between foreign and U.S. 
academic degrees. Upon the request of the INS or the Department, the 
employer shall provide evidence to establish that the H-1B nonimmigrant 
has received the degree, that the degree was earned in the asserted 
field of study, including an academic transcript of courses, and that 
the institution from which the degree was obtained was accredited or 
recognized.
    (2) ``Specialty related to the intended employment,'' for purposes 
of this section, means that the academic degree is 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. A ``specialty'' which is not generally accepted 
as appropriate or necessary to the employment would not be considered 
to be sufficiently ``related' to afford the H-1B nonimmigrant status as 
an ``exempt H-1B nonimmigrant.''
    (e) When and how is the determination of the H-1B nonimmigrant's 
``exempt'' status to be made? An employer that is H-1B-dependent or a 
willful violator (as described in Sec. 655.736) may designate on the 
LCA that the LCA will be used only to support H-1B petition(s) and/or 
request(s) for extension of status for ``exempt'' H-1B nonimmigrants.
    (1) If the employer makes the designation of ``exempt'' H-1B 
nonimmigrant(s) on the LCA, then the INS--as part of the adjudication 
of the H-1B petition or request for extension of status--will determine 
the worker's ``exempt'' status, since an H-1B petition must be 
supported by an LCA consistent with the petition (i.e., occupation, 
area of intended employment, exempt status). The employer shall 
maintain, in the public access file maintained in

[[Page 80228]]

accordance with Sec. 755.760, a list of the H-1B nonimmigrant(s) whose 
petition(s) and/or request(s) are supported by LCA(s) which the 
employer has attested will be used only for exempt H-1B nonimmigrants. 
In the event of an investigation under subpart I of this part, the 
Administrator will give conclusive effect to an INS determination of 
``exempt'' status based on the nonimmigrant's educational attainments 
(i.e., master's or higher degree (or its equivalent) in a specialty 
related to the intended employment) unless the determination was based 
on false information. If the INS determination of ``exempt'' status was 
based on the assertion that the nonimmigrant would receive wages 
(including cash bonuses and similar compensation) at an annual rate 
equal to at least $60,000, the employer shall provide evidence to show 
that such wages actually were received by the nonimmigrant (consistent 
with paragraph (c) of this section and the regulatory standards for 
satisfaction or payment of the required wages as described in 
Sec. 655.731(c)(3)).
    (2) If the employer makes the designation of ``exempt'' H-1B 
nonimmigrants on the LCA, but is found in an enforcement action under 
subpart I of this part to have used the LCA to employ nonimmigrants who 
are, in fact, not exempt, then the employer will be subject to a 
finding that it failed to comply with the nondisplacement and 
recruitment obligations (as described in Secs. 655.738 and 655.739, 
respectively) and may be assessed appropriate penalties and remedies.
    (3) If the employer does not make the designation of ``exempt'' H-
1B nonimmigrants on the LCA, then the employer has waived the option of 
not being subject to the additional LCA attestation obligations on the 
basis of employing only exempt H-1B nonimmigrants under the LCA. In the 
event of an investigation under subpart I of this part, the 
Administrator will not consider the question of the nonimmigrant(s)'s 
``exempt'' status in determining whether an H-1B-dependent employer or 
willful violator employer has complied with such additional LCA 
attestation obligations.

    17. Section 655.738 is added to read as follows:


Sec. 655.738  What are the ``non-displacement of U.S. workers'' 
obligations that apply to H-1B-dependent employers and willful 
violators, and how do they operate?

    An employer that is subject to these additional attestation 
obligations (under the standards described in Sec. 655.736) is 
prohibited from displacement of any U.S. worker(s)--whether directly 
(in its own workforce) or secondarily (at a worksite of a second 
employer)--under the standards set out in this section.
    (a) ``United States worker'' (``U.S. worker'') is defined in 
Sec. 655.715.
    (b) ``Displacement,'' for purposes of this section, has two 
components: ``lay off'' of U.S. worker(s), and ``essentially equivalent 
jobs'' held by U.S. worker(s) and H-1B nonimmigrant(s).
    (1) ``Lay off'' of a U.S. worker means that the employer has caused 
the worker's loss of employment, other than through--
    (i) Discharge of a U.S. worker for inadequate performance, 
violation of workplace rules, or other cause related to the worker's 
performance or behavior on the job;
    (ii) A U.S. worker's voluntary departure or voluntary retirement 
(to be assessed in light of the totality of the circumstances, under 
established principles concerning ``constructive discharge'' of workers 
who are pressured to leave employment);
    (iii) Expiration of a grant or contract under which a U.S. worker 
is employed, other than a temporary employment contract entered into in 
order to evade the employer's non-displacement obligation. The question 
is whether the loss of the contract or grant has caused the worker's 
loss of employment. It would not be a layoff where the job loss results 
from the expiration of a grant or contract without which there is no 
alternative funding or need for the U.S. worker's position on that or 
any other grant or contract (e.g., the expiration of a research grant 
that funded a project on which the worker was employed at an academic 
or research institution; the expiration of a staffing firm's contract 
with a customer where the U.S. worker was hired expressly to work 
pursuant to that contract and the employer has no practice of moving 
workers to other customers or projects upon the expiration of 
contract(s)). On the other hand, it would be a layoff where the 
employer's normal practice is to move the U.S. worker from one contract 
to another when a contract expires, and work on another contract for 
which the worker is qualified is available (e.g., staffing firm's 
contract with one customer ends and another contract with a different 
customer begins); or
    (iv) A U.S. worker who loses employment is offered, as an 
alternative to such loss, a similar employment opportunity with the 
same employer (or, in the case of secondary displacement at a worksite 
of a second employer, as described in paragraph (d) of this section, a 
similar employment opportunity with either employer) at equivalent or 
higher compensation and benefits than the position from which the U.S. 
worker was discharged, regardless of whether or not the U.S. worker 
accepts the offer. The validity of the offer of a similar employment 
opportunity will be assessed in light of the following factors:
    (A) The offer is a bona fide offer, rather than an offer designed 
to induce the U.S. worker to refuse or an offer made with the 
expectation that the worker will refuse;
    (B) The offered job provides the U.S. worker an opportunity similar 
to that provided in the job from which he/she is discharged, in terms 
such as a similar level of authority, discretion, and responsibility, a 
similar opportunity for advancement within the organization, and 
similar tenure and work scheduling;
    (C) The offered job provides the U.S. worker equivalent or higher 
compensation and benefits to those provided in the job from which he/
she is discharged. The comparison of compensation and benefits includes 
all forms of remuneration for employment, whether or not called wages 
and irrespective of the time of payment (e.g., salary or hourly wage 
rate; profit sharing; retirement plan; expense account; use of company 
car). The comparison also includes such matters as cost of living 
differentials and relocation expenses (e.g., a New York City 
``opportunity'' at equivalent or higher compensation and benefits 
offered to a worker discharged from a job in Kansas City would provide 
a wage adjustment from the Kansas City pay scale and would include 
relocation costs).
    (2) Essentially equivalent jobs. For purposes of the displacement 
prohibition, the job from which the U.S. worker is laid off must be 
essentially equivalent to the job for which an H-1B nonimmigrant is 
sought. To determine whether the jobs of the laid off U.S. worker(s) 
and the H-1B nonimmigrant(s) are essentially equivalent, the 
comparison(s) shall be on a one-to-one basis where appropriate (i.e., 
one U.S. worker left employment and one H-1B nonimmigrant joined the 
workforce) but shall be broader in focus where appropriate (e.g., an 
employer, through reorganization, eliminates an entire department with 
several U.S. workers and then staffs this department's function(s) with 
H-1B nonimmigrants). The following comparisons are to be made:
    (i) Job responsibilities. The job of the H-1B nonimmigrant must 
involve essentially the same duties and responsibilities as the job 
from which the U.S. worker was laid off. The

[[Page 80229]]

comparison focuses on the core elements of and competencies for the 
job, such as supervisory duties, or design and engineering functions, 
or budget and financial accountability. Peripheral, non-
essential duties that could be tailored to the particular abilities of 
the individual workers would not be determinative in this comparison. 
The job responsibilities must be similar and both workers capable of 
performing those duties.
    (ii) Qualifications and experience of the workers. The 
qualifications of the laid off U.S. worker must be substantially 
equivalent to the qualifications of the H-1B nonimmigrant. The 
comparison is to be confined to the experience and qualifications 
(e.g., training, education, ability) of the workers which are directly 
relevant to the actual performance requirements of the job, including 
the experience and qualifications that would materially affect a 
worker's relative ability to perform the job better or more 
efficiently. While it would be appropriate to compare whether the 
workers in question have ``substantially equivalent'' qualifications 
and experience, the workers need not have identical qualifications and 
experience (e.g., a bachelor's degree from one accredited university 
would be considered to be substantially equivalent to a bachelor's 
degree from another accredited university; 15 years experience in an 
occupation would be substantially equivalent to 10 years experience in 
that occupation). It would not be appropriate to compare the workers' 
relative ages, their sexes, or their ethnic or religious identities.
    (iii) Area of employment. The job of the H-1B nonimmigrant must be 
located in the same area of employment as the job from which the U.S. 
worker was laid off. The comparison of the locations of the jobs is 
confined to the area within normal commuting distance of the worksite 
or physical location where the work of the H-1B nonimmigrant is or will 
be performed. For purposes of this comparison, if both such worksites 
or locations are within a Metropolitan Statistical Area or a Primary 
Metropolitan Statistical Area, they will be deemed to be within the 
same area of employment.
    (3) The worker's rights under a collective bargaining agreement or 
other employment contract are not affected by the employer's LCA 
obligations as to non-displacement of such worker.
    (c) Direct displacement. An H-1B-dependent or willful-violator 
employer (as described in Sec. 655.736) is prohibited from displacing a 
U.S. worker in its own workforce (i.e., a U.S. worker ``employed by the 
employer'') within the period beginning 90 days before and ending 90 
days after the filing date of an H-1B petition supported by an LCA 
described in Sec. 655.736(g). The following standards and guidance 
apply under the direct displacement prohibition:
    (1) Which U.S. workers are protected against ``direct 
displacement''? This prohibition covers the H-1B employer's own 
workforce--U.S. workers ``employed by the employer''--who are employed 
in jobs that are essentially equivalent to the jobs for which the H-1B 
nonimmigrant(s) are sought (as described in paragraph (b)(2) of this 
section). The term ``employed by the employer'' is defined in 
Sec. 655.715.
    (2) When does the ``direct displacement'' prohibition apply? The H-
1B employer is prohibited from displacing a U.S. worker during a 
specific period of time before and after the date on which the employer 
files any H-1B petition supported by the LCA which is subject to the 
non-displacement obligation (as described in Sec. 655.736(g)). This 
protected period is from 90 days before until 90 days after the 
petition filing date.
    (3) What constitutes displacement of a U.S. worker? The H-1B 
employer is prohibited from laying off a U.S. worker from a job that is 
essentially the equivalent of the job for which an H-1B nonimmigrant is 
sought (as described in paragraph (b)(1) of this section).
    (d) Secondary displacement. An H-1B-dependent or willful-violator 
employer (as described in Sec. 655.736) is prohibited from placing 
certain H-1B nonimmigrant(s) with another employer where there are 
indicia of an employment relationship between the nonimmigrant and that 
other employer (thus possibly affecting the jobs of U.S. workers 
employed by that other employer), unless and until the H-1B employer 
makes certain inquiries and/or has certain information concerning that 
other employer's displacement of similarly employed U.S. workers in its 
workforce. Employers are cautioned that even if the required inquiry of 
the secondary employer is made, the H-1B-dependent or willful violator 
employer shall be subject to a finding of a violation of the secondary 
displacement prohibition if the secondary employer, in fact, displaces 
any U.S. worker(s) during the applicable time period (see 
Sec. 655.810(d)). The following standards and guidance apply under the 
secondary displacement prohibition:
    (1) Which U.S. workers are protected against ``secondary 
displacement''? This provision applies to U.S. workers employed by the 
other or ``secondary'' employer (not those employed by the H-1B 
employer) in jobs that are essentially equivalent to the jobs for which 
certain H-1B nonimmigrants are placed with the other/secondary employer 
(as described in paragraph (b)(2) of this section). The term ``employed 
by the employer'' is defined in Sec. 655.715.
    (2) Which H-1B nonimmigrants activate the secondary displacement 
prohibition? Not every placement of an H-1B nonimmigrant with another 
employer will activate the prohibition and--depending upon the 
particular facts--an H-1B employer (such as a service provider) may be 
able to place H-1B nonimmigrant(s) at a client or customer's worksite 
without being subject to the prohibition. The prohibition applies to 
the placement of an H-1B nonimmigrant whose H-1B petition is supported 
by an LCA described in Sec. 655.736(g) and whose placement with the 
other/secondary employer meets both of the following criteria:
    (i) The nonimmigrant performs duties in whole or in part at one or 
more worksites owned, operated, or controlled by the other/secondary 
employer; and
    (ii) There are indicia of an employment relationship between the 
nonimmigrant and the other/secondary employer. The relationship between 
the H-1B-nonimmigrant and the other/secondary need not constitute an 
``employment'' relationship (as defined in Sec. 655.715), and the 
applicability of the secondary displacement provision does not 
establish such a relationship. Relevant indicia of an employment 
relationship include:
    (A) The other/secondary employer has the right to control when, 
where, and how the nonimmigrant performs the job (the presence of this 
indicia would suggest that the relationship between the nonimmigrant 
and the other/secondary employer approaches the relationship which 
triggers the secondary displacement provision);
    (B) The other/secondary employer furnishes the tools, materials, 
and equipment;
    (C) The work is performed on the premises of the other/secondary 
employer (this indicia alone would not trigger the secondary 
displacement provision);
    (D) There is a continuing relationship between the nonimmigrant and 
the other/secondary employer;
    (E) The other/secondary employer has the right to assign additional 
projects to the nonimmigrant;

[[Page 80230]]

    (F) The other/secondary employer sets the hours of work and the 
duration of the job;
    (G) The work performed by the nonimmigrant is part of the regular 
business (including governmental, educational, and non-profit 
operations) of the other/secondary employer;
    (H) The other/secondary employer is itself in business; and
    (I) The other/secondary employer can discharge the nonimmigrant 
from providing services.
    (3) What other/secondary employers are included in the prohibition 
on secondary displacement of U.S. workers by the H-1B employer? The 
other/secondary employer who accepts the placement and/or services of 
the H-1B employer's nonimmigrant employee(s) need not be an H-1B 
employer. The other/secondary employer would often be (but is not 
limited to) the client or customer of an H-1B employer that is a 
staffing firm or a service provider which offers the services of H-1B 
nonimmigrants under a contract (e.g., a medical staffing firm under 
contract with a nursing home provides H-1B nonimmigrant physical 
therapists; an information technology staffing firm under contract with 
a bank provides H-1B nonimmigrant computer engineers). Only the H-1B 
employer placing the nonimmigrant with the secondary employer is 
subject to the non-displacement obligation on the LCA, and only that 
employer is liable in an enforcement action pursuant to subpart I of 
this part if the other/secondary employer, in fact, displaces any of 
its U.S. worker(s) during the applicable time period. The other/
secondary employer will not be subject to sanctions in an enforcement 
action pursuant to subpart I of this part (except in circumstances 
where such other/secondary employer is, in fact, an H-1B employer and 
is found to have failed to comply with its own obligations). (Note to 
paragraph (d)(3): Where the other/secondary employer's relationship to 
the H-1B nonimmigrant constitutes ``employment'' for purposes of a 
statute other than the H-1B provision of the INA, such as the Fair 
Labor Standards Act (29 U.S.C. 201 et seq.), the other/secondary 
employer would be subject to all obligations of an employer of the 
nonimmigrant under such other statute.)
    (4) When does the ``secondary displacement'' prohibition apply? The 
H-1B employer's obligation of inquiry concerns the actions of the 
other/secondary employer during the specific period beginning 90 days 
before and ending 90 days after the date of the placement of the H-1B 
nonimmigrant(s) with such other/secondary employer.
    (5) What are the H-1B employer's obligations concerning inquiry 
and/or information as to the other/secondary employer's displacement of 
U.S. workers? The H-1B employer is prohibited from placing the H-1B 
nonimmigrant with another employer, unless the H-1B employer has 
inquired of the other/secondary employer as to whether, and has no 
knowledge that, within the period beginning 90 days before and ending 
90 days after the date of such placement, the other/secondary employer 
has displaced or intends to displace a similarly-employed U.S. worker 
employed by such other/secondary employer. The following standards and 
guidance apply to the H-1B employer's obligation:
    (i) The H-1B employer is required to exercise due diligence and to 
make a reasonable effort to enquire about potential secondary 
displacement, through methods which may include (but are not limited 
to)--
    (A) Securing and retaining a written assurance from the other/
secondary employer that it has not and does not intend to displace a 
similarly-employed U.S. worker within the prescribed period;
    (B) Preparing and retaining a memorandum to the file, prepared at 
the same time or promptly after receiving the other/secondary 
employer's oral statement that it has not and does not intend to 
displace a similarly-employed U.S. worker within the prescribed period 
(such memorandum shall include the substance of the conversation, the 
date of the communication, and the names of the individuals who 
participated in the conversation, including the person(s) who made the 
inquiry on behalf of the H-1B employer and made the statement on behalf 
of the other/secondary employer); or
    (C) including a secondary displacement clause in the contract 
between the H-1B employer and the other/secondary employer, whereby the 
other/secondary employer would agree that it has not and will not 
displace similarly-employed U.S. workers within the prescribed period.
    (ii) The employer's exercise of due diligence may require further, 
more particularized inquiry of the other/secondary employer in 
circumstances where there is information which indicates that U.S. 
worker(s) have been or will be displaced (e.g., where the H-1B 
nonimmigrants will be performing functions that the other/secondary 
employer performed with its own workforce in the past). The employer is 
not permitted to disregard information which would provide knowledge 
about potential secondary displacement (e.g., newspaper reports of 
relevant lay-offs by the other/secondary employer) if such information 
becomes available before the H-1B employer's placement of H-1B 
nonimmigrants with such employer. Under such circumstances, the H-1B 
employer would be expected to recontact the other/secondary employer 
and receive credible assurances that no lay-offs of similarly-employed 
U.S. workers are planned or have occurred within the prescribed period.
    (e) What documentation is required of H-1B employers concerning the 
non-displacement obligation? The H-1B employer is responsible for 
demonstrating its compliance with the non-displacement obligation 
(whether direct or indirect), if applicable.
    (1) Concerning direct displacement (as described in paragraph (c) 
of this section), the employer is required to retain all records the 
employer creates or receives concerning the circumstances under which 
each U.S. worker, in the same locality and same occupation as any H-1B 
nonimmigrant(s) hired, left its employ in the period from 90 days 
before to 90 days after the filing date of the employer's petition for 
the H-1B nonimmigrant(s), and for any such U.S. worker(s) for whom the 
employer has taken any action during the period from 90 days before to 
90 days after the filing date of the H-1B petition to cause the U.S. 
worker's termination (e.g., a notice of future termination of the 
employee's job). For all such employees, the H-1B employer shall retain 
at least the following documents: the employee's name, last-known 
mailing address, occupational title and job description; any 
documentation concerning the employee's experience and qualifications, 
and principal assignments; all documents concerning the departure of 
such employees, such as notification by the employer of termination of 
employment prepared by the employer or the employee and any responses 
thereto, and evaluations of the employee's job performance. Finally, 
the employer is required to maintain a record of the terms of any 
offers of similar employment to such U.S. workers and the employee's 
response thereto.
    (2) Concerning secondary displacement (as described in paragraph 
(d) of this section), the H-1B employer is required to maintain 
documentation to show the manner in which it satisfied its obligation 
to make inquiries as to the displacement of U.S. workers by the other/
secondary employer with which the H-1B employer places any H-1B

[[Page 80231]]

nonimmigrants (as described in paragraph (d)(5) of this section).

    18. Section 655.739 is added to read as follows:


Sec. 655.739  What is the ``recruitment of U.S. workers'' obligation 
that applies to H-1B-dependent employers and willful violators, and how 
does it operate?

    An employer that is subject to this additional attestation 
obligation (under the standards described in Sec. 655.736) is 
required--prior to filing the LCA or any petition or request for 
extension of status supported by the LCA--to take good faith steps to 
recruit U. S. workers in the United States for the job(s) in the United 
States for which the H-1B nonimmigrant(s) is/are sought. The 
recruitment shall use procedures that meet industry-wide standards and 
offer compensation that is at least as great as the required wage to be 
paid to H-1B nonimmigrants pursuant to Sec. 655.731(a) (i.e., the 
higher of the local prevailing wage or the employer's actual wage). The 
employer may use legitimate selection criteria relevant to the job that 
are normal or customary to the type of job involved, so long as such 
criteria are not applied in a discriminatory manner. This section 
provides guidance for the employer's compliance with the recruitment 
obligation.
    (a) ``United States worker'' (``U.S. worker'') is defined in 
Sec. 655.715.
    (b) ``Industry,'' for purposes of this section, means the set of 
employers which primarily compete for the same types of workers as 
those who are the subjects of the H-1B petitions to be filed pursuant 
to the LCA. Thus, a hospital, university, or computer software 
development firm is to use the recruitment standards utilized by the 
health care, academic, or information technology industries, 
respectively, in hiring workers in the occupations in question. 
Similarly, a staffing firm, which places its workers at job sites of 
other employers, is to use the recruitment standards of the industry 
which primarily employs such workers (e.g., the health care industry, 
if the staffing firm is placing physical therapists (whether in 
hospitals, nursing homes, or private homes); the information technology 
industry, if the staffing firm is placing computer programmers, 
software engineers, or other such workers).
    (c) ``Recruitment,'' for purposes of this section, means the 
process by which an employer seeks to contact or to attract the 
attention of person(s) who may apply for employment, solicits 
applications from person(s) for employment, receives applications, and 
reviews and considers applications so as to present the appropriate 
candidates to the official(s) who make(s) the hiring decision(s) (i.e., 
pre-selection treatment of applications and applicants).
    (d) ``Solicitation methods,'' for purposes of this section, means 
the techniques by which an employer seeks to contact or to attract the 
attention of potential applicants for employment, and to solicit 
applications from person(s) for employment.
    (1) Solicitation methods may be either external or internal to the 
employer's workforce (with internal solicitation to include current and 
former employees).
    (2) Solicitation methods may be either active (where an employer 
takes positive, proactive steps to identify potential applicants and to 
get information about its job openings into the hands of such 
person(s)) or passive (where potential applicants find their way to an 
employer's job announcements).
    (i) Active solicitation methods include direct communication to 
incumbent workers in the employer's operation and to workers previously 
employed in the employer's operation and elsewhere in the industry; 
providing training to incumbent workers in the employer's organization; 
contact and outreach through collective bargaining organizations, trade 
associations and professional associations; participation in job fairs 
(including at minority-serving institutions, community/junior colleges, 
and vocational/technical colleges); use of placement services of 
colleges, universities, community/junior colleges, and business/trade 
schools; use of public and/or private employment agencies, referral 
agencies, or recruitment agencies (``headhunters'').
    (ii) Passive solicitation methods include advertising in general 
distribution publications, trade or professional journals, or special 
interest publications (e.g., student-oriented; targeted to 
underrepresented groups, including minorities, persons with 
disabilities, and residents of rural areas); America's Job Bank or 
other Internet sites advertising job vacancies; notices at the 
employer's worksite(s) and/or on the employer's Internet ``home page.''
    (e) How are ``industry-wide standards for recruitment'' to be 
identified? An employer is not required to utilize any particular 
number or type of recruitment methods, and may make a determination of 
the standards for the industry through methods such as trade 
organization surveys, studies by consultative groups, or reports/
statements from trade organizations. An employer which makes such a 
determination should be prepared to demonstrate the industry-wide 
standards in the event of an enforcement action pursuant to subpart I 
of this part. An employer's recruitment shall 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. 
An employer may not utilize only the lowest common denominator of 
recruitment methods used in the industry, or only methods which could 
reasonably be expected to be likely to yield few or no U.S. worker 
applicants, even if such unsuccessful recruitment methods are commonly 
used by employers in the industry. An employer's recruitment methods 
shall include, at a minimum, the following:
    (1) Both internal and external recruitment (i.e., both within the 
employer's workforce (former as well as current workers) and among U.S. 
workers elsewhere in the economy); and
    (2) At least some active recruitment, whether internal (e.g., 
training the employer's U.S. worker(s) for the position(s)) or external 
(e.g., use of recruitment agencies or college placement services).
    (f) How are ``legitimate selection criteria relevant to the job 
that are normal or customary to the type of job involved'' to be 
identified? In conducting recruitment of U.S. workers (i.e., in 
soliciting applications and in pre-selection screening or considering 
of applicants), an employer shall apply selection criteria which 
satisfy all of the following three standards (i.e., paragraph (b) (1) 
through (3)). Under these standards, an employer would not apply 
spurious criteria that discriminate against U.S. worker applicants in 
favor of H-1B nonimmigrants. An employer that uses criteria which fail 
to meet these standards would be considered to have failed to conduct 
its recruitment of U.S. workers in good faith.
    (1) Legitimate criteria, meaning criteria which are legally 
cognizable and not violative of any applicable laws (e.g., employer may 
not use age, sex, race or national origin as selection criteria);.
    (2) Relevant to the job, meaning criteria which have a nexus to the 
job's duties and responsibilities; and
    (3) Normal and customary to the type of job involved, meaning 
criteria which would be necessary or appropriate based on the practices 
and expectations of the industry, rather than on the preferences of the 
particular employer.
    (g) What actions would constitute a prohibited ``discriminatory 
manner'' of recruitment? The employer shall not

[[Page 80232]]

apply otherwise-legitimate screening criteria in a manner which would 
skew the recruitment process in favor of H-1B nonimmigrants. In other 
words, the employer's application of its screening criteria shall 
provide full and fair solicitation and consideration of U.S. 
applicants. The recruitment would be considered to be conducted in a 
discriminatory manner if the employer applied its screening criteria in 
a disparate manner (whether between H-1B and U.S. workers, or between 
jobs where H-1B nonimmigrants are involved and jobs where such workers 
are not involved). The employer would also be considered to be 
recruiting in a discriminatory manner if it used screening criteria 
that are prohibited by any applicable discrimination law (e.g., sex, 
race, age, national origin). The employer that conducts recruitment in 
a discriminatory manner would be considered to have failed to conduct 
its recruitment of U.S. workers in good faith.
    (h) What constitute ``good faith steps'' in recruitment of U.S. 
workers? The employer shall perform its recruitment, as described in 
paragraphs (d) through (g) of this section, so as to offer fair 
opportunities for employment to U.S. workers, without skewing the 
recruitment process against U.S. workers or in favor of H-1B 
nonimmigrants. No specific regimen is required for solicitation methods 
seeking applicants or for pre-selection treatment screening applicants. 
The employer's recruitment process, including pre-selection treatment, 
must assure that U.S. workers are given a fair chance for consideration 
for a job, rather than being ignored or rejected through a process that 
serves the employer's preferences with respect to the make up of its 
workforce (e.g., the Department would look with disfavor on a practice 
of interviewing H-1B applicants but not U.S. applicants, or a practice 
of screening the applications of H-1B nonimmigrants differently from 
the applications of U.S. workers). The employer shall not exercise a 
preference for its incumbent nonimmigrant workers who do not yet have 
H-1B status (e.g., workers on student visas). The employer shall 
recruit in the United States, seeking U.S. worker(s), for the job(s) in 
the United States for which H-1B nonimmigrant(s) are or will be sought.
    (i) What documentation is the employer required to make or 
maintain, concerning its recruitment of U.S. workers?
    (1) The employer shall maintain documentation of the recruiting 
methods used, including the places and dates of the advertisements and 
postings or other recruitment methods used, the content of the 
advertisements and postings, and the compensation terms (if such are 
not included in the content of the advertisements and postings). The 
documentation may be in any form, including copies of advertisements or 
proofs from the publisher, the order or confirmation from the 
publisher, an electronic or printed copy of the Internet posting, or a 
memorandum to the file.
    (2) The employer shall retain any documentation it has received or 
prepared concerning the treatment of applicants, such as copies of 
applications and/or related documents, test papers, rating forms, 
records regarding interviews, and records of job offers and applicants' 
responses. To comply with this requirement, the employer is not 
required to create any documentation it would not otherwise create.
    (3) The documentation maintained by the employer shall be made 
available to the Administrator in the event of an enforcement action 
pursuant to subpart I of this part. The documentation shall be 
maintained for the period of time specified in Sec. 655.760.
    (4) The employer's public access file maintained in accordance with 
Sec. 655.760 shall contain information summarizing the principal 
recruitment methods used and the time frame(s) in which such 
recruitment methods were used. This may be accomplished either through 
a memorandum or through copies of pertinent documents.
    (j) In addition to conducting good faith recruitment of U.S. 
workers (as described in paragraphs (a) through (h) of this section), 
the employer is required to have offered the job to any U.S. worker who 
applies and is equally or better qualified for the job than the H-1B 
nonimmigrant (see 8 U.S.C. 1182(n)(1)(G)(i)(II)); this requirement is 
enforced by the Department of Justice (see 8 U.S.C. 1182(n)(5); 20 CFR 
655.705(c)).

    19. Section 655.740 is amended by revising the title and paragraph 
(a)(2)(ii) to read as follows:


Sec. 655.740  What actions are taken on labor condition applications?

    (a) * * *
    (2) * * *
    (ii) When the Form ETA 9035 contains obvious inaccuracies. An 
obvious inaccuracy will be found if the employer files an application 
in error-- e.g., where the Administrator, Wage and Hour Division, after 
notice and opportunity for a hearing pursuant to subpart I of this 
part, has notified ETA in writing that the employer has been 
disqualified from employing H-1B nonimmigrants under section 212(n)(2) 
of the INA. Examples of other obvious inaccuracies include stating a 
wage rate below the FLSA minimum wage, submitting an LCA earlier than 
six months before the beginning date of the period of intended 
employment, identifying multiple occupations on a single LCA, 
identifying a wage which is below the prevailing wage listed on the 
LCA, or identifying a wage range where the bottom of such wage range is 
lower than the prevailing wage listed on the LCA.
* * * * *

    20. Section 655.750 is amended by revising the title and paragraph 
(b)(2) to read as follows:


Sec. 655.750  What is the validity period of the labor condition 
application?

* * * * *
    (b) * * *
    (2) Requests for withdrawals shall be in writing and shall be 
directed to the ETA service center at the following address: ETA 
Application Processing Center, P.O. Box 13640, Philadelphia PA 19101.
* * * * *

    21. Section 655.760 is amended by revising the title and paragraph 
(a)(1), adding paragraphs (a)(6), (a)(7), (a)(8), (a)(9) and (a)(10), 
and revising the first sentence of paragraph (c), to read as follows:


Sec. 655.760  What records are to be made available to the public, and 
what records are to be retained?

    (a) * * *
    (1) A copy of the completed labor condition application, Form ETA 
9035, and cover pages, Form ETA 9035CP. If the application is submitted 
by facsimile transmission, the application containing the original 
signature shall be maintained by the employer.
* * * * *
    (6) A summary of the benefits offered to U.S. workers in the same 
occupational classifications as H-1B nonimmigrants, a statement as to 
how any differentiation in benefits is made where not all employees are 
offered or receive the same benefits (such summary need not include 
proprietary information such as the costs of the benefits to the 
employer, or the details of stock options or incentive distributions), 
and/or, where applicable, a statement that some/all H-1B nonimmigrants 
are receiving ``home country'' benefits (see Sec. 655.731(c)(3));
    (7) Where the employer undergoes a change in corporate structure, a 
sworn statement by a responsible official of the

[[Page 80233]]

new employing entity that it accepts all obligations, liabilities and 
undertakings under the LCAs filed by the predecessor employing entity, 
together with a list of each affected LCA and its date of 
certification, and a description of the actual wage system and EIN of 
the new employing entity (see Sec. 655.730(e)(1)).
    (8) Where the employer utilizes the definition of ``single 
employer''in the IRC, a list of any entities included as part of the 
single employer in making the determination as to its H-1B-dependency 
status (see Sec. 655.736(d)(7));
    (9) Where the employer is H-1B-dependent and/or a willful violator, 
and indicates on the LCA(s) that only ``exempt'' H-1B nonimmigrants 
will be employed, a list of such ``exempt'' H-1B nonimmigrants (see 
Sec. 655.737(e)(1));
    (10) Where the employer is H-1B-dependent or a willful violator, a 
summary of the recruitment methods used and the time frames of 
recruitment of U.S. workers (or copies of pertinent documents showing 
this information) (see Sec. 655.739(i)(4).
* * * * *
    (c) Retention of records. Either at the employer's principal place 
of business in the U.S. or at the place of employment, the employer 
shall retain copies of the records required by this subpart for a 
period of one year beyond the last date on which any H-1B nonimmigrant 
is employed under the labor condition application or, if no 
nonimmigrants were employed under the labor condition application, one 
year from the date the labor condition application expired or was 
withdrawn.* * *
* * * * *

Subpart I--Enforcement of H-1B Labor Condition Applications

    22. Section 655.800 is revised to read as follows:


Sec. 655.800  Who will enforce the LCAs and how will they be enforced?

    (a) Authority of Administrator. Except as provided in Sec. 655.807, 
the Administrator shall perform all the Secretary's investigative and 
enforcement functions under section 212(n) of the INA (8 U.S.C. 
1182(n)) and this subpart I and subpart H of this part.
    (b) Conduct of investigations. The Administrator, either pursuant 
to a complaint or otherwise, shall conduct such investigations as may 
be appropriate and, in connection therewith, enter and inspect such 
places and such records (and make transcriptions or copies thereof), 
question such persons and gather such information as deemed necessary 
by the Administrator to determine compliance regarding the matters 
which are the subject of the investigation.
    (c) Employer cooperation/availability of records. An employer shall 
at all times cooperate in administrative and enforcement proceedings. 
An employer being investigated shall make available to the 
Administrator such records, information, persons, and places as the 
Administrator deems appropriate to copy, transcribe, question, or 
inspect. No employer subject to the provisions of section 212(n) of the 
INA and/or this subpart I or subpart H of this part shall interfere 
with any official of the Department of Labor performing an 
investigation, inspection or law enforcement function pursuant to 8 
U.S.C. 1182(n) or this subpart I or subpart H of this part. Any such 
interference shall be a violation of the labor condition application 
and this subpart I and subpart H of this part, and the Administrator 
may take such further actions as the Administrator considers 
appropriate. (Federal criminal statutes prohibit certain interference 
with a Federal officer in the performance of official duties. 18 U.S.C. 
111 and 18 U.S.C. 1114.)
    (d) Confidentiality. The Administrator shall, to the extent 
possible under existing law, protect the confidentiality of any person 
who provides information to the Department in confidence in the course 
of an investigation or otherwise under this subpart I or subpart H of 
this part.

    23. Section 655.801 is added to read as follows:


Sec. 655.801  What protection do employees have from retaliation?

    (a) No employer subject to this subpart I or subpart H of this part 
shall intimidate, threaten, restrain, coerce, blacklist, discharge or 
in any other manner discriminate against an employee (which term 
includes a former employee or an applicant for employment) because the 
employee has--
    (1) Disclosed information to the employer, or to any other person, 
that the employee reasonably believes evidences a violation of section 
212(n) of the INA or any regulation relating to section 212(n), 
including this subpart I and subpart H of this part and any pertinent 
regulations of INS or the Department of Justice; or
    (2) Cooperated or sought to cooperate in an investigation or other 
proceeding concerning the employer's compliance with the requirements 
of section 212(n) of the INA or any regulation relating to section 
212(n).
    (b) It shall be a violation of this section for any employer to 
engage in the conduct described in paragraph (a) of this section. Such 
conduct shall be subject to the penalties prescribed by section 
212(n)(2)(C)(ii) of the INA and Sec. 655.810(b)(2), i.e., a fine of up 
to $5,000, disqualification from filing petitions under section 204 or 
section 214(c) of the INA for at least two years, and such further 
administrative remedies as the Administrator considers appropriate.
    (c) Pursuant to section 212(n)(2)(v) of the INA, an H-1B 
nonimmigrant who has filed a complaint alleging that an employer has 
discriminated against the employee in violation of paragraph (d)(1) of 
this section (or Sec. 655.501(a)) may be allowed to seek other 
appropriate employment in the United States, provided the employee is 
otherwise eligible to remain and work in the United States. Such 
employment may not exceed the maximum period of stay authorized for a 
nonimmigrant classified under section 212(n) of the INA. Further 
information concerning this provision should be sought from the 
Immigration and Naturalization Service.

    24. Section 655.805 is revised to read as follows:


Sec. 655.805  What violations may the Administrator investigate?

    (a) The Administrator, through investigation, shall determine 
whether an H-1B employer has--
    (1) Filed a labor condition application with ETA which 
misrepresents a material fact (Note to paragraph (a)(1): Federal 
criminal statutes provide penalties of up to $10,000 and/or 
imprisonment of up to five years for knowing and willful submission of 
false statements to the Federal Government. 18 U.S.C. 1001; see also 18 
U.S.C. 1546);
    (2) Failed to pay wages (including benefits provided as 
compensation for services), as required under Sec. 655.731 (including 
payment of wages for certain nonproductive time);
    (3) Failed to provide working conditions as required under 
Sec. 655.732;
    (4) Filed a labor condition application for H-1B nonimmigrants 
during a strike or lockout in the course of a labor dispute in the 
occupational classification at the place of employment, as prohibited 
by Sec. 655.733;
    (5) Failed to provide notice of the filing of the labor condition 
application, as required in Sec. 655.734;
    (6) Failed to specify accurately on the labor condition application 
the number of workers sought, the occupational classification in which 
the H-1B nonimmigrant(s) will be employed, or the wage rate and 
conditions under

[[Page 80234]]

which the H-1B nonimmigrant(s) will be employed;
    (7) Displaced a U.S. worker (including displacement of a U.S. 
worker employed by a secondary employer at the worksite where an H-1B 
worker is placed), as prohibited by Sec. 655.738 (if applicable);
    (8) Failed to make the required displacement inquiry of another 
employer at a worksite where H-1B nonimmigrant(s) were placed, as set 
forth in Sec. 655.738 (if applicable);
    (9) Failed to recruit in good faith, as required by Sec. 655.739 
(if applicable);
    (10) Displaced a U.S. worker in the course of committing a willful 
violation of any of the conditions in paragraphs (a)(2) through (9) of 
this section, or willful misrepresentation of a material fact on a 
labor condition application;
    (11) Required or accepted from an H-1B nonimmigrant payment or 
remittance of the additional $500/$1,000 fee incurred in filing an H-1B 
petition with the INS, as prohibited by Sec. 655.731(c)(10)(ii);
    (12) Required or attempted to require an H-1B nonimmigrant to pay a 
penalty for ceasing employment prior to an agreed upon date, as 
prohibited by Sec. 655.731(c)(10)(i);
    (13) Discriminated against an employee for protected conduct, as 
prohibited by Sec. 655.801;
    (14) Failed to make available for public examination the 
application and necessary document(s) at the employer's principal place 
of business or worksite, as required by Sec. 655.760(a);
    (15) Failed to maintain documentation, as required by this part; 
and
    (16) Failed otherwise to comply in any other manner with the 
provisions of this subpart I or subpart H of this part.
    (b) The determination letter setting forth the investigation 
findings (see Sec. 655.815) shall specify if the violations were found 
to be substantial or willful. Penalties may be assessed and 
disqualification ordered for violation of the provisions in paragraphs 
(a)(5), (6), or (9) of this section only if the violation was found to 
be substantial or willful. The penalties may be assessed and 
disqualification ordered for violation of the provisions in paragraphs 
(a)(2) or (3) of this section only if the violation was found to be 
willful, but the Secretary may order payment of back wages (including 
benefits) due for such violation whether or not the violation was 
willful.
    (c) For purposes of this part, ``willful failure'' means a knowing 
failure or a reckless disregard with respect to whether the conduct was 
contrary to section 212(n)(1)(A)(i) or (ii) of the INA, or 
Secs. 655.731 or 655.732. See McLaughlin v. Richland Shoe Co., 486 U.S. 
128 (1988); see also Trans World Airlines v. Thurston, 469 U.S. 111 
(1985).
    (d) The provisions of this part become applicable upon the date 
that the employer's LCA is certified, pursuant to Secs. 655.740(a)(1) 
and 655.750, whether or not the employer hires any H-1B nonimmigrants 
in the occupation for the period of employment covered in the labor 
condition application. If the period of employment specified in the 
labor condition application expires or the employer withdraws the 
application in accordance with Sec. 655.750(b), the provisions of this 
part will no longer apply with respect to such application, except as 
provided in Sec. 655.750(b)(3) and (4).

    25. Section 655.806 is added to read as follows:


Sec. 655.806  Who may file a complaint and how is it processed?

    (a) Any aggrieved party, as defined in Sec. 655.715, may file a 
complaint alleging a violation described in Sec. 655.805(a). The 
procedures for filing a complaint by an aggrieved party and its 
processing by the Administrator are set forth in this section. The 
procedures for filing and processing information alleging violations 
from persons or organizations that are not aggrieved parties are set 
forth in Sec. 655.807. With regard to complaints filed by any aggrieved 
person or organization--
    (1) No particular form of complaint is required, except that the 
complaint shall be written or, if oral, shall be reduced to writing by 
the Wage and Hour Division official who receives the complaint.
    (2) The complaint shall set forth sufficient facts for the 
Administrator to determine whether there is reasonable cause to believe 
that a violation as described in Sec. 655.805 has been committed, and 
therefore that an investigation is warranted. This determination shall 
be made within 10 days of the date that the complaint is received by a 
Wage and Hour Division official. If the Administrator determines that 
the complaint fails to present reasonable cause for an investigation, 
the Administrator shall so notify the complainant, who may submit a new 
complaint, with such additional information as may be necessary. No 
hearing or appeal pursuant to this subpart shall be available where the 
Administrator determines that an investigation on a complaint is not 
warranted.
    (3) If the Administrator determines that an investigation on a 
complaint is warranted, the complaint shall be accepted for filing; an 
investigation shall be conducted and a determination issued within 30 
calendar days of the date of filing. The time for the investigation may 
be increased with the consent of the employer and the complainant, or 
if, for reasons outside of the control of the Administrator, the 
Administrator needs additional time to obtain information needed from 
the employer or other sources to determine whether a violation has 
occurred. No hearing or appeal pursuant to this subpart shall be 
available regarding the Administrator's determination that an 
investigation on a complaint is warranted.
    (4) In the event that the Administrator seeks a prevailing wage 
determination from ETA pursuant to Sec. 655.731(d), or advice as to 
prevailing working conditions from ETA pursuant to Sec. 655.732(c)(2), 
the 30-day investigation period shall be suspended from the date of the 
Administrator's request to the date of the Administrator's receipt of 
the wage determination (or, in the event that the employer challenges 
the wage determination through the Employment Service complaint system, 
to the date of the completion of such complaint process).
    (5) A complaint must be filed not later than 12 months after the 
latest date on which the alleged violation(s) were committed, which 
would be the date on which the employer allegedly failed to perform an 
action or fulfill a condition specified in the LCA, or the date on 
which the employer, through its action or inaction, allegedly 
demonstrated a misrepresentation of a material fact in the LCA. This 
jurisdictional bar does not affect the scope of the remedies which may 
be assessed by the Administrator. Where, for example, a complaint is 
timely filed, back wages may be assessed for a period prior to one year 
before the filing of a complaint.
    (6) A complaint may be submitted to any local Wage and Hour 
Division office. The addresses of such offices are found in local 
telephone directories, and on the Department's informational site on 
the Internet at http://www.dol.gov/dol/esa/public/contacts/whd/
america2.htm. The office or person receiving such a complaint shall 
refer it to the office of the Wage and Hour Division administering the 
area in which the reported violation is alleged to have occurred.
    (b) When an investigation has been conducted, the Administrator 
shall, pursuant to Sec. 655.815, issue a written determination as 
described in Sec. 655.805(a).

    26. Section 655.807 is added to read as follows:

[[Page 80235]]

Sec. 655.807  How may someone who is not an ``aggrieved party'' allege 
violations, and how will those allegations be processed?

    (a) Persons who are not aggrieved parties may submit information 
concerning possible violations of the provisions described in 
Sec. 655.805(a)(1) through (4) and (a)(7) through (9). No particular 
form is required to submit the information, except that the information 
shall be submitted in writing or, if oral, shall be reduced to writing 
by the Wage and Hour Division official who receives the information. An 
optional form shall be available to be used in setting forth the 
information. The information provided shall include:
    (1) The identity of the person submitting the information and the 
person's relationship, if any, to the employer or other information 
concerning the person's basis for having knowledge of the employer's 
employment practices or its compliance with the requirements of this 
subpart I and subpart H of this part; and
    (2) A description of the possible violation, including a 
description of the facts known to the person submitting the 
information, in sufficient detail for the Secretary to determine if 
there is reasonable cause to believe that the employer has committed a 
willful violation of the provisions described in Sec. 655.805(a)(1), 
(2), (3), (4), (7), (8), or (9).
    (b) The Administrator may interview the person submitting the 
information as appropriate to obtain further information to determine 
whether the requirements of this section are met. In addition, the 
person submitting information under this section shall be informed that 
his or her identity will not be disclosed to the employer without his 
or her permission.
    (c) Information concerning possible violations must be submitted 
not later than 12 months after the latest date on which the alleged 
violation(s) were committed. The 12-month period shall be applied in 
the manner described in Sec. 655.806(a)(5).
    (d) Upon receipt of the information, the Administrator shall 
promptly review the information submitted and determine:
    (1) Does the source likely possess knowledge of the employer's 
practices or employment conditions or the employer's compliance with 
the requirements of subpart H of this part?
    (2) Has the source provided specific credible information alleging 
a violation of the requirements of the conditions described in 
Sec. 655.805(a)(1), (2), (3), (4), (7), (8), or (9)?
    (3) Does the information in support of the allegations appear to 
provide reasonable cause to believe that the employer has committed a 
violation of the provisions described in Sec. 655.805(a)(1), (2), (3), 
(4), (7), (8), or (9), and that
    (i) The alleged violation is willful?
    (ii) The employer has engaged in a pattern or practice of 
violations? or
    (iii) The employer has committed substantial violations, affecting 
multiple employees?
    (e) ``Information'' within the meaning of this section does not 
include information from an officer or employee of the Department of 
Labor unless it was obtained in the course of a lawful investigation, 
and does not include information submitted by the employer to the 
Attorney General or the Secretary in securing the employment of an H-1B 
nonimmigrant.
    (f)(1) Except as provided in paragraph (f)(2) of this section, 
where the Administrator has received information from a source other 
than an aggrieved party which satisfies all of the requirements of 
paragraphs (a) through (d) of this section, or where the Administrator 
or another agency of the Department obtains such information in a 
lawful investigation under this or any other section of the INA or any 
other Act, the Administrator (by mail or facsimile transmission) shall 
promptly notify the employer that the information has been received, 
describe the nature of the allegation in sufficient detail to permit 
the employer to respond, and request that the employer respond to the 
allegation within 10 days of its receipt of the notification. The 
Administrator shall not identify the source or information which would 
reveal the identity of the source without his or her permission.
    (2) The Administrator may dispense with notification to the 
employer of the alleged violations if the Administrator determines that 
such notification might interfere with an effort to secure the 
employer's compliance. This determination shall not be subject to 
review in any administrative proceeding and shall not be subject to 
judicial review.
    (g) After receipt of any response to the allegations provided by 
the employer, the Administrator will promptly review all of the 
information received and determine whether the allegations should be 
referred to the Secretary for a determination whether an investigation 
should be commenced by the Administrator.
    (h) If the Administrator refers the allegations to the Secretary, 
the Secretary shall make a determination as to whether to authorize an 
investigation under this section.
    (1) No investigation shall be commenced unless the Secretary (or 
the Deputy Secretary or other Acting Secretary in the absence or 
disability) personally authorizes the investigation and certifies--
    (i) That the information provided under paragraph (a) of this 
section or obtained pursuant to a lawful investigation by the 
Department of Labor provides reasonable cause to believe that the 
employer has committed a violation of the provisions described in 
Sec. 655.805(a)(1), (2), (3), (4), (7), (8), or (9);
    (ii) That there is reasonable cause to believe the alleged 
violations are willful, that the employer has engaged in a pattern or 
practice of such violations, or that the employer has committed 
substantial violations, affecting multiple employees; and
    (iii) That the other requirements of paragraphs (a) through (d) of 
this section have been met.
    (2) No hearing shall be available from a decision by the 
Administrator declining to refer allegations addressed by this section 
to the Secretary, and none shall be available from a decision by the 
Secretary certifying or declining to certify that an investigation is 
warranted.
    (i) If the Secretary issues a certification, an investigation shall 
be conducted and a determination issued within 30 days after the 
certification is received by the local Wage and Hour office undertaking 
the investigation. The time for the investigation may be increased upon 
the agreement of the employer and the Administrator or, if for reasons 
outside of the control of the Administrator, additional time is 
necessary to obtain information needed from the employer or other 
sources to determine whether a violation has occurred.
    (j) In the event that the Administrator seeks a prevailing wage 
determination from ETA pursuant to Sec. 655.731(d), or advice as to 
prevailing working conditions from ETA pursuant to Sec. 655.732(c)(2), 
the 30-day investigation period shall be suspended from the date of the 
Administrator's request to the date of the Administrator's receipt of 
the wage determination (or, in the event that the employer challenges 
the wage determination through the Employment Service complaint system, 
to the date of the completion of such complaint process).
    (k) Following the investigation, the Administrator shall issue a 
determination in accordance with to Sec. 655.815.
    (l) This section shall expire on September 30, 2003 unless section

[[Page 80236]]

212(n)(2)(G) of the INA is extended by future legislative action. 
Absent such extension, no investigation shall be certified by the 
Secretary under this section after that date; however, any 
investigation certified on or before September 30, 2003 may be 
completed.

    27. Section 655.808 is added to read as follows:


Sec. 655.808  Under what circumstances may random investigations be 
conducted?

    (a) The Administrator may conduct random investigations of an 
employer during a five-year period beginning with the date of any of 
the following findings, provided such date is on or after October 21, 
1998:
    (1) A finding by the Secretary that the employer willfully violated
    any of the provisions described in Sec. 655.805(a)(1) through (9);
    (2) A finding by the Secretary that the employer willfully 
misrepresented material fact(s) in a labor condition application filed 
pursuant to Sec. 655.730; or
    (3) A finding by the Attorney General that the employer willfully 
failed to meet the condition of section 212(n)(1)(G)(i)(II) of the INA 
(pertaining to an offer of employment to an equally or better qualified 
U.S. worker).
    (b) A finding within the meaning of this section is a final, 
unappealed decision of the agency. See Secs. 655.520(a), 655.845(c), 
and 655.855(b).
    (c) An investigation pursuant to this section may be made at any 
time the Administrator, in the exercise of discretion, considers 
appropriate, without regard to whether the Administrator has reason to 
believe a violation of the provisions of this subpart I and subpart H 
of this part has been committed. Following an investigation, the 
Administrator shall issue a determination in accordance with 
Sec. 655.815.


    28. Section 655.810 is revised to read as follows:


Sec. 655.810  What remedies may be ordered if violations are found?

    (a) Upon determining that an employer has failed to pay wages or 
provide fringe benefits as required by Sec. 655.731 and Sec. 655.732, 
the Administrator shall assess and oversee the payment of back wages or 
fringe benefits to any H-1B nonimmigrant who has not been paid or 
provided fringe benefits as required. The back wages or fringe benefits 
shall be equal to the difference between the amount that should have 
been paid and the amount that actually was paid to (or with respect to) 
such nonimmigrant(s).
    (b) Civil money penalties. The Administrator may assess civil money 
penalties for violations as follows:
    (1) An amount not to exceed $1,000 per violation for:
    (i) A violation pertaining to strike/lockout (Sec. 655.733) or 
displacement of U.S. workers (Sec. 655.738);
    (ii) A substantial violation pertaining to notification 
(Sec. 655.734), labor condition application specificity (Sec. 655.730), 
or recruitment of U.S. workers (Sec. 655.739);
    (iii) A misrepresentation of material fact on the labor condition 
application;
    (iv) An early-termination penalty paid by the employee 
(Sec. 655.731(c)(10)(i));
    (v) Payment by the employee of the additional $500/$1,000 filing 
fee (Sec. 655.731(c)(10)(ii)); or
    (vi) Violation of the requirements of the regulations in this 
subpart I and subpart H of this part or the provisions regarding public 
access (Sec. 655.760) where the violation impedes the ability of the 
Administrator to determine whether a violation of section 212(n) of the 
INA has occurred or the ability of members of the public to have 
information needed to file a complaint or information regarding alleged 
violations of section 212(n) of the INA;
    (2) An amount not to exceed $5,000 per violation for:
    (i) A willful failure pertaining to wages/working conditions 
(Secs. 655.731, 655.732), strike/lockout, notification, labor condition 
application specificity, displacement (including placement of an H-1B 
nonimmigrant at a worksite where the other/secondary employer displaces 
a U.S. worker), or recruitment;
    (ii) A willful misrepresentation of a material fact on the labor 
condition application; or
    (iii) Discrimination against an employee (Sec. 655.801(a)); or
    (3) An amount not to exceed $35,000 per violation where an employer 
(whether or not the employer is an H-1B-dependent employer or willful 
violator) displaced a U.S. worker employed by the employer in the 
period beginning 90 days before and ending 90 days after the filing of 
an H-1B petition in conjunction with any of the following violations:
    (i) A willful violation of any of the provisions described in 
Sec. 655.805(a)(2) through (9) pertaining to wages/working condition, 
strike/lockout, notification, labor condition application specificity, 
displacement, or recruitment; or
    (ii) A willful misrepresentation of a material fact on the labor 
condition application (Sec. 655.805(a)(1)).
    (c) In determining the amount of the civil money penalty to be 
assessed, the Administrator shall consider the type of violation 
committed and other relevant factors. The factors which may be 
considered include, but are not limited to, the following:
    (1) Previous history of violation, or violations, by the employer 
under the INA and this subpart I or subpart H of this part;
    (2) The number of workers affected by the violation or violations;
    (3) The gravity of the violation or violations;
    (4) Efforts made by the employer in good faith to comply with the 
provisions of 8 U.S.C. 1182(n) and this subparts H and I of this part;
    (5) The employer's explanation of the violation or violations;
    (6) The employer's commitment to future compliance; and
    (7) The extent to which the employer achieved a financial gain due 
to the violation, or the potential financial loss, potential injury or 
adverse effect with respect to other parties.
    (d) Disqualification from approval of petitions. The Administrator 
shall notify the Attorney General pursuant to Sec. 655.855 that the 
employer shall be disqualified from approval of any petitions filed by, 
or on behalf of, the employer pursuant to section 204 or section 214(c) 
of the INA for the following periods:
    (1) At least one year for violation(s) of any of the provisions 
specified in paragraph (b)(1)(i) through (iii) of this section;
    (2) At least two years for violation(s) of any of the provisions 
specified in paragraph (b)(2) of this section; or
    (3) At least three years, for violation(s) specified in paragraph 
(b)(3) of this section.
    (e) Other administrative remedies. (1) If the Administrator finds a 
violation of the provisions specified in paragraph (b)(1)(iv) or (v) of 
this section, the Administrator may issue an order requiring the 
employer to return to the employee (or pay to the U.S. Treasury if the 
employee cannot be located) any money paid by the employee in violation 
of those provisions.
    (2) If the Administrator finds a violation of the provisions 
specified in paragraph (b)(1)(i) through (iii), (b)(2), or (b)(3) of 
this section, the Administrator may impose such other administrative 
remedies as the Administrator determines to be appropriate, including 
but not limited to reinstatement of workers who were discriminated 
against in violation of Sec. 655.805(a), reinstatement of displaced 
U.S. workers, back wages to workers who have been displaced or whose 
employment has been terminated in violation of these

[[Page 80237]]

provisions, or other appropriate legal or equitable remedies.
    (f) The civil money penalties, back wages, and/or any other 
remedy(ies) determined by the Administrator to be appropriate are 
immediately due for payment or performance upon the assessment by the 
Administrator, or upon the decision by an administrative law judge 
where a hearing is timely requested, or upon the decision by the 
Secretary where review is granted. The employer shall remit the amount 
of the civil money penalty by certified check or money order made 
payable to the order of ``Wage and Hour Division, Labor.'' The 
remittance shall be delivered or mailed to the Wage and Hour Division 
office in the manner directed in the Administrator's notice of 
determination. The payment or performance of any other remedy 
prescribed by the Administrator shall follow procedures established by 
the Administrator. Distribution of back wages shall be administered in 
accordance with existing procedures established by the Administrator.
    (g) The Federal Civil Penalties Inflation Adjustment Act of 1990, 
as amended (28 U.S.C. 2461 note), requires that inflationary 
adjustments to civil money penalties in accordance with a specified 
cost-of-living formula be made, by regulation, at least every four 
years. The adjustments are to be based on changes in the Consumer Price 
Index for all Urban Consumers (CPI-U) for the U.S. City Average for All 
Items. The adjusted amounts will be published in the Federal Register. 
The amount of the penalty in a particular case will be based on the 
amount of the penalty in effect at the time the violation occurs.


    29. Section 655.815 is amended by revising the title and paragraphs 
(a) and (c)(5) to read as follows:


Sec. 655.815  What are the requirements for the Administrator's 
determination?

    (a) The Administrator's determination, issued pursuant to 
Sec. 655.806, 655.807, or 655.808, shall be served on the complainant, 
the employer, and other known interested parties by personal service or 
by certified mail at the parties' last known addresses. Where service 
by certified mail is not accepted by the party, the Administrator may 
exercise discretion to serve the determination by regular mail.
* * * * *
    (c) * * *
    (5) Where appropriate, inform the parties that, pursuant to 
Sec. 655.855, the Administrator shall notify ETA and the Attorney 
General of the occurrence of a violation by the employer.


    30. Section 655.820 is amended by revising the title and paragraph 
(a) to read as follows:


Sec. 655.820  How is a hearing requested?

    (a) Any interested party desiring review of a determination issued 
under Secs. 655.805 and 655.815, including judicial review, shall make 
a request for such an administrative hearing in writing to the Chief 
Administrative Law Judge at the address stated in the notice of 
determination. If such a request for an administrative hearing is 
timely filed, the Administrator's determination shall be inoperative 
unless and until the case is dismissed or the Administrative Law Judge 
issues an order affirming the decision.
* * * * *

    31. The title of Sec. 655.825 is revised to read as follows:


Sec. 655.825  What rules of practice apply to the hearing?

* * * * *

    32. The title of Sec. 655.830 is revised to read as follows:


Sec. 655.830  What rules apply to service of pleadings?

* * * * *

    33. The title of Sec. 655.835 is revised to read as follows:


Sec. 655.835  How will the administrative law judge conduct the 
proceeding?

* * * * *

    34. Section 655.840 is amended by revising the title and paragraph 
(c) to read as follows:


Sec. 655.840  What are the requirements for a decision and order of the 
administrative law judge?

* * * * *
    (c) In the event that the Administrator's determination of wage 
violation(s) and computation of back wages are based upon a wage 
determination obtained by the Administrator from ETA during the 
investigation (pursuant to Sec. 655.731(d)) and the administrative law 
judge determines that the Administrator's request was not warranted 
(under the standards in Sec. 655.731(d)), the administrative law judge 
shall remand the matter to the Administrator for further proceedings on 
the existence of wage violations and/or the amount(s) of back wages 
owed. If there is no such determination and remand by the 
administrative law judge, the administrative law judge shall accept as 
final and accurate the wage determination obtained from ETA or, in the 
event either the employer or another interested party filed a timely 
complaint through the Employment Service complaint system, the final 
wage determination resulting from that process. See Sec. 655.731; see 
also 20 CFR 658.420 through 658.426. Under no circumstances shall the 
administrative law judge determine the validity of the wage 
determination or require submission into evidence or disclosure of 
source data or the names of establishments contacted in developing the 
survey which is the basis for the prevailing wage determination.
* * * * *

    35. Section 655.845 is revised to read as follows:


Sec. 655.845  What rules apply to appeal of the decision of the 
administrative law judge?

    (a) The Administrator or any interested party desiring review of 
the decision and order of an administrative law judge, including 
judicial review, shall petition the Department's Administrative Review 
Board (Board) to review the decision and order. To be effective, such 
petition shall be received by the Board within 30 calendar days of the 
date of the decision and order. Copies of the petition shall be served 
on all parties and on the administrative law judge.
    (b) No particular form is prescribed for any petition for the 
Board's review permitted by this subpart. However, any such petition 
shall:
    (1) Be dated;
    (2) Be typewritten or legibly written;
    (3) Specify the issue or issues stated in the administrative law 
judge decision and order giving rise to such petition;
    (4) State the specific reason or reasons why the party petitioning 
for review believes such decision and order are in error;
    (5) Be signed by the party filing the petition or by an authorized 
representative of such party;
    (6) Include the address at which such party or authorized 
representative desires to receive further communications relating 
thereto; and
    (7) Attach copies of the administrative law judge's's decision and 
order, and any other record documents which would assist the Board in 
determining whether review is warranted.
    (c) Whenever the Board determines to review the decision and order 
of an administrative law judge, a notice of the Board's determination 
shall be served upon the administrative law judge, upon the Office of 
Administrative Law Judges, and upon all parties to the proceeding 
within 30 calendar days after the Board's receipt of the petition for 
review. If the Board determines that

[[Page 80238]]

it will review the decision and order, the order shall be inoperative 
unless and until the Board issues an order affirming the decision and 
order.
    (d) Upon receipt of the Board's notice, the Office of 
Administrative Law Judges shall within 15 calendar days forward the 
complete hearing record to the Board.
    (e) The Board's notice shall specify:
    (1) The issue or issues to be reviewed;
    (2) The form in which submissions shall be made by the parties 
(e.g., briefs);
    (3) The time within which such submissions shall be made.
    (f) All documents submitted to the Board shall be filed with the 
Administrative Review Board, Room S-4309, U.S. Department of Labor, 
Washington, DC 20210. An original and two copies of all documents shall 
be filed. Documents are not deemed filed with the Board until actually 
received by the Board. All documents, including documents filed by 
mail, shall be received by the Board either on or before the due date.
    (g) Copies of all documents filed with the Board shall be served 
upon all other parties involved in the proceeding. Service upon the 
Administrator shall be in accordance with Sec. 655.830(b).
    (h) The Board's final decision shall be issued within 180 calendar 
days from the date of the notice of intent to review. The Board's 
decision shall be served upon all parties and the administrative law 
judge.
    (i) Upon issuance of the Board's decision, the Board shall transmit 
the entire record to the Chief Administrative Law Judge for custody 
pursuant to Sec. 655.850.


    36. The title of Sec. 655.850 is revised to read as follows:


Sec. 655.850  Who has custody of the administrative record?

* * * * *

    37. Section 655.855 is revised to read as follows:


Sec. 655.855  What notice shall be given to the Employment and Training 
Administration and the Attorney General of the decision regarding 
violations?

    (a) The Administrator shall notify the Attorney General and ETA of 
the final determination of any violation requiring that the Attorney 
General not approve petitions filed by an employer. The Administrator's 
notification will address the type of violation committed by the 
employer and the appropriate statutory period for disqualification of 
the employer from approval of petitions. Violations requiring 
notification to the Attorney General are identified in Sec. 655.810(f).
    (b) The Administrator shall notify the Attorney General and ETA 
upon the earliest of the following events:
    (1) Where the Administrator determines that there is a basis for a 
finding of violation by an employer, and no timely request for hearing 
is made pursuant to Sec. 655.820; or
    (2) Where, after a hearing, the administrative law judge issues a 
decision and order finding a violation by an employer, and no timely 
petition for review is filed with the Department's Administrative 
Review Board (Board) pursuant to Sec. 655.845; or
    (3) Where a timely petition for review is filed from an 
administrative law judge's decision finding a violation and the Board 
either declines within 30 days to entertain the appeal, pursuant to 
Sec. 655.845(c), or the Board reviews and affirms the administrative 
law judge's determination; or
    (4) Where the administrative law judge finds that there was no 
violation by an employer, and the Board, upon review, issues a decision 
pursuant to Sec. 655.845, holding that a violation was committed by an 
employer.
    (c) The Attorney General, upon receipt of notification from the 
Administrator pursuant to paragraph (a) of this section, shall not 
approve petitions filed with respect to that employer under sections 
204 or 214(c) of the INA (8 U.S.C. 1154 and 1184(c)) for nonimmigrants 
to be employed by the employer, for the period of time provided by the 
Act and described in Sec. 655.810(f).
    (d) ETA, upon receipt of the Administrator's notice pursuant to 
paragraph (a) of this section, shall invalidate the employer's labor 
condition application(s) under this subpart I and subpart H of this 
part, and shall not accept for filing any application or attestation 
submitted by the employer under 20 CFR part 656 or subparts A, B, C, D, 
E, H, or I of this part, for the same calendar period as specified by 
the Attorney General.

PART 656--LABOR CERTIFICATION PROCESS FOR PERMANENT EMPLOYMENT OF 
ALIENS IN THE UNITED STATES

    1. The authority citation for Part 656 is revised to read as 
follows:

    Authority: 8 U.S.C. 1182(a)(5)(A), 1182(p)(1); 29 U.S.C. 49 et 
seq.; section 122, Pub.L. 101-649, 109 Stat. 4978.


    2. Section 656.3 is amended by removing the definition of Federal 
research agency.


    3. Section 656.40 is amended by revising paragraphs (a)(1) and (c), 
and the introductory text to paragraph (b), by redesignating paragraph 
(d) as (e), and by adding a new paragraph (d) as follows:


Sec. 656.40  Determination of prevailing wage for labor certification 
purposes.

    (a) * * *
    (1) Except as provided in paragraphs (c) and (d) of this section, 
if the job opportunity is in an occupation which is subject to a wage 
determination in the area under the Davis-Bacon Act, 40 U.S.C. 276a et 
seq., 29 CFR part 1, or the McNamara-O'Hara Service Contract Act, 41 
U.S.C. 351 et seq., 29 CFR part 4, the prevailing wage shall be at the 
rate required under the statutory determination. Certifying Officers 
shall request the assistance of the DOL Employment Standards 
Administration wage specialists if they need assistance in making this 
determination.
* * * * *
    (b) For purposes of this section, except as provided in paragraphs 
(c) and (d), ``similarly employed'' shall mean ``having substantially 
comparable jobs in the occupational category in the area of intended 
employment,'' except that, if no such workers are employed by employers 
other than the employer applicant in the area of intended employment, 
``similarly employed'' shall mean:
* * * * *
    (c) In computing the prevailing wage for a job opportunity in an 
occupational classification in an area of intended employment in the 
case of an employee of an institution of higher education, or a related 
or affiliated nonprofit entity; a nonprofit research organization; or a 
Governmental research organization, the prevailing wage level shall 
only take into account employees at such institutions and organizations 
in the area of intended employment.
    (1) The organizations listed in this paragraph (c) are defined as 
follows:
    (i) Institution of higher education is defined in section 101(a) of 
the Higher Education Act of 1965. Section 101(a), 20 U.S.C. 1001(a) 
(1999), provides that an ``institution of higher education'' is an 
educational institution in any State that--
    (A) Admits as regular students only persons having a certificate of 
graduation from a school providing secondary education, or the 
recognized equivalent of such a certificate;
    (B) Is legally authorized within such State to provide a program of 
education beyond secondary education;
    (C) Provides an educational program for which the institution 
awards a

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bachelor's degree or provides not less than a 2-year program that is 
acceptable for full credit toward such a degree;
    (D) Is a public or other nonprofit institution; and
    (E) Is accredited by a nationally recognized accrediting agency or 
association, or if not so accredited, is an institution that has been 
granted preaccreditation status by such an agency or association that 
has been recognized by the Secretary for the granting of 
preaccreditation status, and the Secretary has determined that there is 
satisfactory assurance that the institution will meet the accreditation 
standards of such an agency or association within a reasonable time.
    (ii) Affiliated or related nonprofit entity. A nonprofit entity 
(including but not limited to hospitals and medical or research 
institutions) that is connected or associated with an institution of 
higher education, through shared ownership or control by the same board 
or federation, operated by an institution of higher education, or 
attached to an institution of higher education as a member, branch, 
cooperative, or subsidiary;
    (iii) Nonprofit research organization or Governmental research 
organization. A research organization that is either a nonprofit 
organization or entity that is primarily engaged in basic research and/
or applied research, or a U.S. Government entity whose primary mission 
is the performance or promotion of basic and/or applied research. Basic 
research is general research to gain more comprehensive knowledge or 
understanding of the subject under study, without specific applications 
in mind. Basic research is also research that advances scientific 
knowledge, but does not have specific immediate commercial objectives 
although it may be in fields of present or potential commercial 
interest. It may include research and investigation in the sciences, 
social sciences, or humanities. Applied research is research to gain 
knowledge or understanding to determine the means by which a specific, 
recognized need may be met. Applied research includes investigations 
oriented to discovering new scientific knowledge that has specific 
commercial objectives with respect to products, processes, or services. 
It may include research and investigation in the sciences, social 
sciences, or humanities.
    (2) A nonprofit organization or entity within the meaning of this 
paragraph is one that is qualified as a tax exempt organization under 
Section 501(c)(3), (c)(4) or (c)(6) of the Internal Revenue Code of 
1986, 26 U.S.C. 510(c)(3), (c)(4) or (c)(6), and has received approval 
as a tax exempt organization from the Internal Revenue Service, as it 
relates to research or educational purposes.
    (d) With respect to a professional athlete as defined in section 
212(a)(5)(A)(iii)(II) of the Immigration and Nationality Act, when the 
job opportunity is covered by professional sports league rules or 
regulations, the wage set forth in those rules or regulations shall be 
considered the prevailing wage. Section 212(a)(5)(A)(iii)(II), 8 U.S.C. 
1182(a)(5)(A)(iii)(II) (1999), defines a professional athlete as an 
individual who is employed as an athlete by--
    (1) A team that is a member of an association of six or more 
professional sports teams whose total combined revenues exceed 
$10,000,000 per year, if the association governs the conduct of its 
members and regulates the contests and exhibitions in which its member 
teams regularly engage; or
    (2) Any minor league team that is affiliated with such an 
association.
* * * * *

    Signed at Washington, DC, this 11th day of December, 2000.
Raymond Bramucci,
Assistant Secretary, Employment and Training Administration.
T. Michael Kerr,
Administrator, Wage and Hour Division, Employment Standards 
Administration.

[The following three forms will not appear in the Code of Federal 
Regulations.]

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[FR Doc. 00-32088 Filed 12-19-00; 8:45 am]
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