January 5, 1999 federal registerSep 09, 2002 · January 5, 1999 Part IV Department of Labor Employment and Training Administration 20 CFR Parts 655 and 656 Labor Condition Applications

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TuesdayJanuary 5, 1999

Part IV

Department of LaborEmployment and Training Administration

20 CFR Parts 655 and 656Labor Condition Applications andRequirements for Employers UsingNonimmigrants on H–1B Visas inSpecialty Occupations and as FashionModels; Labor Certification Process forPermanent Employment of Aliens in theUnited States; Proposed Rule

628 Federal Register / Vol. 64, No. 2 / Tuesday, January 5, 1999 / Proposed Rules

DEPARTMENT OF LABOR

Employment and TrainingAdministration

20 CFR Parts 655 and 656

RIN 1215–AB09

Labor Condition Applications andRequirements for Employers UsingNonimmigrants on H–1B Visas inSpecialty Occupations and as FashionModels; Labor Certification Processfor Permanent Employment of Aliensin the United States

AGENCY: Employment and TrainingAdministration, Labor, in concurrencewith the Wage and Hour Division,Employment Standards Administration,Labor.ACTION: Notice of Proposed Rulemaking;request for comments.

SUMMARY: The Department of Labor isproposing regulations to implementrecent legislation and clarify existingDepartmental rules relating to thetemporary employment in the UnitedStates of nonimmigrants under H–1Bvisas. Specifically, the Departmentpublishes this notice of proposedrulemaking to obtain public commenton issues to be addressed in regulationsto implement changes made to theImmigration and Nationality Act (INA)by the American Competitiveness andWorkforce Improvement Act of 1998(ACWIA). For certain of these ACWIAissues, the Department is proposingregulatory language for comment; forother issues, the Department isidentifying concerns and its proposedapproach to addressing them oralternative approaches, on all of whichcomments are requested. In addition,the Department is providing anopportunity for additional comments oncertain provisions which werepreviously published for comment as aProposed Rule in 1995 (60 FR 55339).

The Department is also proposing tomodify regulations to implement anACWIA provision which modifies themethodology for the determination ofthe prevailing wage under thePermanent Labor Certification program(20 CFR Part 656), but is not proposingspecific regulatory text at this time. Thismethodology is also applicable toprevailing wages for the H–1B program.The Department is working in closecooperation with the Immigration andNaturalization Service (INS) indeveloping these regulations, sincecertain definitions and terms must beconsistently applied by the two agenciesin their respective regulations.

After receiving public comments onthis notice of proposed rulemaking, theDepartment plans to publish an InterimFinal Rule (inviting further comment)and a Final Rule (after reviewing all thecomments received).DATES: Submit written comments byFebruary 4, 1999. The Departmentencourages submission of comments assoon as possible before that date. Anycomments received by the Departmentafter that date will be part of therulemaking record and will beconsidered, fully, in subsequentrulemaking, but they may not receivefull consideration in the interimimplementing regulations. Congressexpressed its intent that the Departmentact swiftly to issue regulations bywaiving the customary 60-day commentperiod.ADDRESSES: Submit written commentsconcerning Part 655 to DeputyAdministrator, Wage and Hour Division,ATTN: Immigration Team, U.S.Department of Labor, Room S–3502, 200Constitution Avenue, NW, Washington,DC 20210. If you want to receivenotification that we received yourcomments, you should include a self-addressed stamped post card. You maysubmit your comments by facsimile(‘‘FAX’’) machine to (202) 219–5122.This is not a toll free number.

Submit written comments concerningPart 656 to the Assistant Secretary forEmployment and Training, ATTN:Division of Foreign Labor Certifications,U.S. Employment Service, Employmentand Training Administration,Department of Labor, Room N–4456,200 Constitution Avenue, NW,Washington, DC 20210. If you want toreceive notification that we receivedyour comments, you should include aself-addressed stamped post card. Youmay submit your comments by facsimile(‘‘FAX’’) machine to (202) 208–5844.This is not a toll-free number.FOR FURTHER INFORMATION CONTACT: OnPart 655, contact either of the following:

Michael Ginley, Director, Office ofEnforcement Policy, Wage and HourDivision, Employment StandardsAdministration, Department of Labor,Room S–3510, 200 Constitution Avenue,NW, Washington, DC 20210. Telephone:(202) 693–0745 (this is not a toll-freenumber).

James Norris, Chief, Division ofForeign Labor Certifications, U.S.Employment Service, Employment andTraining Administration, Department ofLabor, Room N–4456, 200 ConstitutionAvenue, NW, Washington, DC 20210.Telephone: (202) 219–5263 (this is nota toll-free number).

On Part 656, contact James Norris,Chief, Division of Foreign LaborCertifications, U.S. EmploymentService, Employment and TrainingAdministration, Department of Labor,Room N–4456, 200 ConstitutionAvenue, NW, Washington, DC 20210.Telephone: (202) 219–5263 (this is nota toll-free number).

SUPPLEMENTARY INFORMATION:

I. Paperwork Reduction Act

The H–1B visa program is a voluntaryprogram that allows employers totemporarily secure and employnonimmigrants admitted under H–1Bvisas to fill specialized jobs in theUnited States. (Immigration andNationality Act (INA), 8 U.S.C. 1101 etseq.). The statute, among other things,requires that an employer pay an H–1Bworker the higher of its actual wage orthe locally prevailing wage, to protectU.S. workers’ wages and moderate anyeconomic incentive or advantage inhiring temporary foreign workers. Underthe Immigration and Nationality Act(INA), as amended by the ImmigrationAct of 1990 and the Miscellaneous andTechnical Immigration andNaturalization Amendments of 1991, anemployer seeking to employ an alien ina specialty occupation or as a fashionmodel of distinguished merit and abilityon an H–1B visa is required to file alabor condition application with andreceive certification from theDepartment of Labor before theImmigration and Naturalization Service(INS) may approve an H–1B visapetition. The labor conditionapplication (LCA) process isadministered by the Employment andTraining Administration (ETA);complaints and investigations regardinglabor condition applications are theresponsibility of the Wage and HourDivision, Employment StandardsAdministration (ESA).

This proposed rule would implementstatutory changes in the H–1B visaprogram made to the INA by theAmerican Competitiveness andWorkforce Improvement Act of 1998(ACWIA) (Title IV of Pub. L. 105–277,Oct. 21, 1998; 112 Stat. 2681). TheACWIA, among other things,temporarily increases the maximumnumber of H–1B visas permitted eachyear; temporarily requires new non-displacement (layoff) and recruitmentattestations by ‘‘H–1B dependent’’employers (as defined by ACWIA) andby employers found to have committedwillful violations or misrepresentations;and requires all employers of H–1Bworkers to offer the same fringe benefits

629Federal Register / Vol. 64, No. 2 / Tuesday, January 5, 1999 / Proposed Rules

to H–1B workers as it offers to U.S.workers.

A. Labor Condition Application (LCA)Summary: The process of protecting

U.S. workers begins with a requirementthat employers file a labor conditionapplication (Form ETA 9035) with theDepartment. In this application theemployer is required to attest: (1) that itwill pay H–1B aliens prevailing wagesor actual wages, whichever are greater;(2) that it will provide workingconditions that will not adversely affectthe working conditions of U.S. workerssimilarly employed; (3) that there is nostrike or lockout at the place ofemployment; and (4) that it has publiclynotified its employees of its intent toemploy H–1B workers. In addition, theemployer must provide the informationrequired in the application about thenumber of aliens sought, occupationalclassification, wage rate, the prevailingwage rate and the source of such wagedata, the date of need and period ofemployment.

Need: Pursuant to ACWIA, newattestation requirements becomeapplicable to H–1B dependentemployers or willful violators afterpromulgation of implementingregulations. The LCA, currentlyapproved by OMB under OMB No.1205–0310, is being revised to identifyH–1B dependent employers and willfulviolators and provide for theirattestation to the new requirements, andto accommodate electronic processing.

Respondents and frequency ofresponse: ACWIA increased the numberof available H–1B nonimmigrant visasfrom 65,000 to 115,000 in fiscal years1999 and 2000 and to 107,500 in fiscalyear 2002. Besides the increase in LCAsfiled for these additional workers, theproposed regulation provides that H–1Bdependent employers could be requiredto file new LCAs. It is estimated that249,500 LCA’s will be filed annually by50,000 H–1B employers (dependent andnondependent). This estimate is basedon the assumption that the alternativeLCA format preferred by the Departmentis selected.

Estimated total annual burden: Theonly added LCA burden is foremployers to determine if they aredependent. In most cases employerswill be able to immediately answer thisquestion, without review of their payrollrecords. Where dependent or non-dependent status is not readilyapparent, employers would be requiredto make a mathematical calculation todetermine if they must make theadditional attestations required of an H–1B employer. (See C. below for furtherexplanation.) The time required to

review records and make thedetermination is estimated to take anaverage of 30 minutes per employer.Since it is estimated that only 50 H–1Bemployers will find it necessary to makethis calculation, out of a total of 50,000H–1B employers, the estimate of theaverage time necessary to complete theform remains at 1 hour. Total annualburden is 249,500 hours.

B. Documentation of Corporate IdentitySummary: Currently, the regulatory

requirement is that a new laborcondition application (LCA) must befiled when an employer’s corporateidentity changes and a new EmployerIdentification Number (EIN) is obtained.Under the proposed rule, an employerwho merely changes corporate identitythrough acquisition or spin-off needmerely document the change in thepublic file (including an expressacknowledgement of all LCA obligationson the part of the successor entity),provided it satisfies the InternalRevenue Code definition of a singleemployer, found at 26 U.S.C. 414 (see 8U.S.C. 1182(n)(3)(C)(ii)).

Need: The regulation is designed toeliminate a burden on businesses to filea new LCA, while at the same timeensuring that the public is aware of thechanges and that the employer willcontinue to follow its LCA obligations.

Respondents and Proposed Frequencyof Response: It is estimated that 500 H–1B employers will be required to file thesubject documentation annually.

Estimated total annual burden: It isestimated that the recording and filingof each such document will take 15minutes for a total annual burden of 125hours.

C. Determination of H–1B DependencySummary: An H–1B employer must

calculate the ratio between the numberof H–1B workers it employs and thenumber of full-time equivalentemployees (FTEs) to determine whetherit meets the statutory definition of an H–1B dependent employer . (8 U.S.C. 1182(n)(3)(A)). When it is a close question,this determination would ordinarily bemade by examination of an employer’squarterly tax statement and last payrollor other evidence as to average hoursworked by part-time employees toaggregate their hours into FTEs, togetherwith a count of the number of workersemployed under H–1B petitions.Documentation of this determinationmust be made where non-dependentstatus is not readily apparent and amathematical determination must bemade. A copy of this determinationmust be placed in the public disclosurefile. In addition, if an employer changes

from dependent to non-dependentstatus, or vice versa, a simple statementof the change in status must be placedin the public disclosure file. Anemployer must retain hours workedrecords or other evidence of the averagework schedules of part-time employeesonly, and copies of H–1B petitions forits H–1B workers.

Need: Documentation of adetermination of an H–1B dependencywhere it is a close question is necessaryto determine employer compliance withH–1B requirements, and to advise thepublic of an employer’s status. Theunderlying documentation must beretained to allow the Department tocheck this determination.

Respondents and proposed frequencyof response: All employers will berequired to keep the underlyingdocumentation. It is estimated thatapproximately 50 H–B employers willbe required to review their records inorder to make the determination, with25 employers who are found not to bedependent employers required todocument this determination annually.

Estimated annual burden: The makingand documentation of each suchdetermination will take approximately15 minutes, and occur at least twiceannually, for a total annual burden of12.5 hours.

D. Filing of Copy of INS Documentationfor Exempt H–1B Employees in PublicAccess File

Summary: The ACWIA provisionsregarding non-displacement andrecruitment of U.S. workers do notapply where the LCA is used only forpetitions for exempt H–1B workers. (8U.S.C. 1182(n)(1)(E)(ii)) Where theImmigration and Naturalization Service(INS) determines a worker is exempt,employers are required to maintain acopy of such documentation in thepublic access file.

Need: Determinations as to whether ornot H–1B workers meet therequirements to be classified as exemptH–1B nonimmigrants will be madeinitially by the INS in the course ofadjudicating the petitions filed onbehalf of H–1B nonimmigrants bydependent employers. In the event of aninvestigation, it is anticipated thatconsiderable weight will be given to theINS determination that H–1Bnonimmigrants were exempt based onthe educational attainments of theworkers, since INS has considerableexperience in evaluating the educationalqualifications of aliens. Retention ofcopies of such determinations will aidDOL in determining compliance withthe H–1B requirements.


Respondents and frequency ofresponse: It is estimated that 28,125such documents will need to be filedannually.

Estimated total annual burden: Eachsuch filing will take approximately oneminute for an annual burden ofapproximately 468.8 hours.

E. Record of Assurance of Non-displacement of U.S. Workers at SecondEmployer’s Worksite

Summary: 8 U.S.C. 1182(n)(1)(F)(ii)generally requires an H–1B dependentemployer not to place H–1Bnonimmigrant with another employerunless it has first inquired as to whetherthe other employer will displace a U.S.worker. The proposed regulation wouldrequire an employer seeking to place anH–1B nonimmigrant with anotheremployer to secure and retain either awritten assurance from the secondemployer, a contemporaneous writtenrecord of the second employer’s oralstatements regarding non-displacement,or a prohibition in the contract betweenthe H–1B employer and the secondemployer.

Need: Pursuant to ACWIA, 8 U.S.C.1182(n)(2)(E), an H–1B employer may bedebarred for a secondary displacement‘‘only if the Secretary of Labor foundthat such placing employer * * * knewor had reason to know of suchdisplacement at the time of theplacement of the nonimmigrant with theother employer.’’ Congress clearlyintended that the employer make areasonable inquiry and give due regardto available information. In order toassure that the purposes of the statuteare achieved, the Department isdeveloping a regulatory provision torequire that the H–1B employer make areasonable effort to inquire aboutpotential secondary displacement and todocument those inquiries.

Respondents and proposed frequencyof response: It is estimated thatapproximately 150 employers will placeH–1B nonimmigrants with secondaryemployers where assurances arerequired.

Estimated total annual burden: It isestimated each such assurance will takeapproximately 5 minutes and each suchemployer will obtain such assurances 5times annually for an annual burden of62.5 hours.

F. Documentation of Non-Displacementof U.S. Workers

Summary: ACWIA (8 U.S.C.1182(n)(1)(E) prohibits H–1B dependentemployers and willful violators fromhiring an H–1B nonimmigrant if theirdoing so would displace a U.S. workerfrom an essentially equivalent job in the

same area of employment. Theregulations will require H–1Bdependent employers to keep certaindocumentation with respect to eachformer worker in the same locality andsame occupation as any H–1B worker,who left its employ 90 days before orafter an employer’s petition for an H–1Bworker. For all such employees, theDepartment proposes that covered H–1Bemployers maintain the name, last-known mailing address, occupationaltitle and job description, and anydocumentation concerning theemployee’s experience andqualifications, and principalassignments. Further, the employer isrequired to keep all documentsconcerning the departure of suchemployees and the terms of any offersof similar employment to such U.S.workers and responses to those offers.

Need: These records are necessary forthe Department to determine whetherthe H–1B employer has displacedsimilar U.S. workers with H–1Bnonimmigrants.

Respondents and proposed frequencyof response: It is estimated that 200 H–1B-dependent and willfully violatingemployers will need to maintaindocumentation for any workers wholeave their employment during theprescribed period.

Estimated total annual burden: Norecords need be created to comply withthese requirements, since the EqualEmployment Opportunity Commission(EEOC) already requires under itsregulations that the records describedabove be maintained.

G. Documentation of U.S. WorkerRecruitment

Summary: Pursuant to ACWIA (8U.S.C. 1182(n)(1)(G)), H–1B dependentemployers are required to make goodfaith efforts to recruit U.S. workersbefore hiring H–1B workers. Under theregulations, H–1B employers will berequired to retain documentation of therecruiting methods used, including theplaces and dates of the advertisementsand postings or other recruitmentmethod used, the content of theadvertisements or postings, and thecompensation terms. In addition, theemployer must retain anydocumentation concerningconsideration of applications of U.S.workers, such as copies of applicationsand related documents, rating forms, joboffers, etc. The Department has alsorequested comments regarding howemployers should determine industry-wide standards, and how to make thisdetermination available for publicdisclosure to U.S. workers and others.

Need: The documentation notedabove is necessary for the Department ofLabor to determine whether theemployer has made a good faith effort torecruit U.S. workers and for the publicto be aware of the recruiting methodsused and the industry standard.Retention of the records regardingconsideration of applications is requiredto ensure employers have given goodfaith consideration of applications fromU.S. workers.

Respondents and proposed frequencyof response: It is estimated that annually200 H–1B dependent employers willneed to document their good faithefforts to recruit U.S. workers.

Estimated total annual burden: Thefiling of such records will takeapproximately twenty minutes peremployer for an annual burden ofapproximately 66.7 hours. The retentionof documents relating to applications byU.S. workers is already required byEEOC regulations, and therefore noadditional burden is created.

H. Documentation of Fringe Benefits

Summary: Pursuant to ACWIA (8U.S.C. 1182(n)(2)(C)(viii)), all employersof H–1B employees are required to offerbenefits to H–1B workers on the samebasis and under the same terms asoffered to similarly employed U.S.workers. The regulations requireemployers to retain copies of all fringebenefit plans and any summary plandescriptions, including all rulesregarding eligibility and benefits,evidence of what benefits are actuallyprovided to individual workers and howcosts are shared between employers andemployees.

Need: These records are necessary forthe Department to determine whetherthe H–1B nonimmigrants are offered thesame fringe benefits as similarlyemployed U.S. workers.

Respondents and proposed frequencyof response: Records are required to beretained for all H–1B employers,estimated to total 50,000. Becausecopies of fringe benefit plans andrecords are generally required to bemaintained by the Pension and WelfareBenefits Administration (PWBA) andInternal Revenue Service (IRS)regulations, there should be noadditional recordkeeping burden fromthese requirements. It is also believedthat a prudent businessman would keepthese records, in the order course ofbusiness, in any event. However,because some plans such as unfundedvacation plans and cash bonuses maynot be documented, it is estimated thatapproximately 5%, or 2,500 employers,will need to record and retain some


documentation which would nototherwise be kept.

Estimated annual burden: It isestimated that 2,500 employers willspend approximately 15 minutes eachdocumenting unwritten plans for anannual burden of 625 hours.

I. Wage Recordkeeping RequirementsApplicable to Employers of H–1BNonimmigrants

Summary: The Department has alsorepublished and asked for comment onseveral provisions of the December 20,1994 Final Rule (59 FR 65646), whichwere published for notice and commenton October 31, 1995 (60 FR 55339). AllH–1B employers are required todocument their objective actual wagesystem to be applied to H–1Bnonimmigrants and U.S. workers. Theyare also required to keep payroll recordsfor non-FLSA exempt H–1B workersand other employees for the specificemployment in question. This proposalwould decrease the burden onemployers of keeping hourly payrecords for U.S. workers, requiring suchrecords only if the worker is either notpaid on a salary basis, or if the actualwage is stated as an hourly wage. For H–1B workers, such records must also bekept if the prevailing wage is expressedas an hourly rate.

Need: The statute requires that theemployer pay H–1B nonimmigrants thehigher of the actual or prevailing wage.In order to determine whether theemployer is paying the required wage,the Department must be able toascertain the system an employer usesto determine the wages of non-H–1Bworkers. The Department also believesthat it is essential to require theemployer to maintain payroll records forthe employer’s employees in thespecific employment in question at theplace of employment to ensure that H–1B nonimmigrants are being paid atleast the actual wage being paid to non-H–1B workers or the prevailing wage,whichever is higher.

Respondents and proposed frequencyof response: The Department estimatesthat approximately 50,000 employersemploy H–1B nonimmigrants. Thedocumentation of the actual wagesystem must be done only one time foreach employer. Hourly pay recordswould have to be prepared with respectto all affected employees each payperiod.

Estimated annual burden: TheDepartment estimates that the publicburden is approximately 1 hour peremployer per year to document theactual wage system for a total burden tothe regulated community of 50,000hours in a year. The payroll

recordkeeping requirements arevirtually the same as those required bythe Fair Labor Standards Act (FLSA)and any burden required is subsumed inOMB Approval No. 1215–0017 for thoseregulations at 29 CFR Parts 516, exceptwith respect to records of hours workedfor exempt employees. There will be noburden for U.S. workers since as apractical matter, hours worked recordswill be required for U.S. workers onlyif they are not exempt from FLSA, or ifthey are exempt but paid on an hourlybasis (certain computer professionals).The Department estimates that 55,000H–1B workers will be paid on a salarybasis. Hours worked records would berequired for these workers only if theprevailing wage is expressed as anhourly rate—estimated to be 17 percentof all cases. The Department estimates aburden of 2.5 hours per worker per year,for 9350 workers, and a total of 23,375hours.

Retention of Records: Pursuant tosection 655.760(c) of Regulations, 20CFR Part 655, copies of the LCAs, andits documentation are to be kept for aperiod of one year beyond the end of theperiod of employment specified on theLCA or one year from the date the LCAwas withdrawn, except that if anenforcement action is commenced, theserecords must be kept until theenforcement procedure is completed asset forth in Part 655, Subpart I. Therecordkeeping requirements in thisproposed rule would be subject to thesame retention period, except, asrequired by 20 CFR 655.760(c), thepayroll records for the H–1B employeesand other employees in the sameoccupational classification, which mustbe retained for a period of three yearsfrom the date(s) of the creation of therecord(s); if an enforcement proceedingis commenced, all payroll records are tobe retained until the enforcementproceeding is completed as set forth inPart 655, Subpart I. The existing recordretention requirements in 20 CFR655.760(c) have been approved by OMBunder OMB No. 1205–0310.

Total public burden: H–1B employersand employees of H–1B employers maybe from a wide variety of industries.Salaries for employers and/or theiremployees who perform the reportingand recordkeeping functions requiredby this regulation may range fromseveral hundred dollars to severalhundred thousand dollars where theCorporate Executive Office of a largecompany performs some or all of thesefunctions themselves. Absent specificwage data regarding such employers andemployees, respondent costs areestimated at $25 an hour. Total annualrespondent hour costs for all

information collections are estimated at$8,105,887.50 ($25.00 x 324,235.5hours).

Request for comments: The public isinvited to provide comments on thisinformation collection requirement sothat the Department of Labor may:

(1) Evaluate whether the proposedcollections of information are necessaryfor the proper performance of thefunctions of the agency, includingwhether the information will havepractical utility;

(2) Evaluate the accuracy of theagency’s estimates of the burdens of thecollections of information, including thevalidity of the methodology andassumptions used;

(3) Enhance the quality, utility andclarity of the information to becollected; and

(4) Minimize the burden of thecollections of information on those whoare to respond, including through theuse of appropriate automated,electronic, mechanical, or othertechnological collection techniques orother forms of information technology,e.g., permitting electronic submission ofresponses.

Written comments should be sent tothe Office of Information and RegulatoryAffairs, Office of Management andBudget, Attention: Desk Officer forEmployment Standards Administration,U.S. Department of Labor, Washington,D.C. 20503. Office of Management andBudget, Attention: Desk Officer forEmployment Standards Administration,U.S. Department of Labor, Washington,DC 20503.

II. BackgroundOn November 29, 1990, the

Immigration and Nationality Act wasamended by the Immigration Act of1990 (IMMACT) (Pub. L. 101–649, 104Stat. 4978) to create the ‘‘H–1B visaprogram’’ for the temporaryemployment in the United States (U.S.)of nonimmigrants in ‘‘specialtyoccupations’’ and as ‘‘fashion models ofdistinguished merit and ability.’’ TheH–1B provisions of the INA wereamended on December 12, 1991, by theMiscellaneous and TechnicalImmigration and NaturalizationAmendments of 1991 (MTINA) (Pub. L.102–232, 105 Stat. 1733). Furtheramendments were made to the H–1Bprovisions of the INA on October 21,1998, by enactment of ACWIA.

These cumulative amendments of theINA assign responsibility to theDepartment of Labor (Department orDOL) for implementing severalprovisions of the Act relating to thetemporary employment of certaincategories of nonimmigrants who have


been granted entry into the UnitedStates by INS. The H–1B provisions ofthe Act govern the temporary entry offoreign ‘‘professionals’’ to work in‘‘specialty occupations’’ in the U.S.under H–1B visas. 8 U.S.C.1101(a)(15)(H)(i)(b), 1182(n), and1184(c). The H–1B category of specialtyoccupations consists of occupationsrequiring the theoretical and practicalapplication of a body of highlyspecialized knowledge and theattainment of a Bachelor’s or higherdegree in the specific specialty as aminimum for entry into the occupationin the U.S. 8 U.S.C. 1184(i)(1). Inaddition, an H–1B nonimmigrant in aspecialty occupation must possess fullState licensure to practice in theoccupation (if required), completion ofthe required degree, or experienceequivalent to the degree and recognitionof expertise in the specialty. 8 U.S.C.1184(i)(2). The category of ‘‘fashionmodel’’ requires that the nonimmigrantbe of distinguished merit and ability. 8U.S.C. 1101(a)(15)(H)(i)(b).

The ACWIA made numeroussignificant changes in the H–1Bprovisions. One such change is thetemporary increase in the maximumnumber of H–1B visas over the nextthree fiscal years: for fiscal years 1999and 2000, the cap is 115,000; for fiscalyear 2001, the cap is 107,500; and forfiscal year 2002 (and thereafter), the capreturns to the original 65,000. Anothersignificant change is the imposition ofadditional attestation requirements forcertain employers to provide betterprotections to some U.S. workers. Theadditional attestation requirementsapply to an ‘‘H–1B dependentemployer’’ and an employer who hasbeen found to have committed a willfulfailure or misrepresentation withrespect to the H–1B requirements (forease of reference, referred to as a‘‘willful violator’’). H–1B-dependentand willful violating employers mustattest that they have not displaced andwill not displace a U.S. worker from ajob that is essentially like the job forwhich an H–1B worker(s) is beingsought, that they will not place an H–1B worker with another employerwithout making an inquiry to assuresuch displacement will not take place,that they have taken good faith steps torecruit U.S. workers for the job forwhich the H–1B workers are sought, andthat they will offer the job to anyequally or better qualified U.S. worker.A labor condition application (LCA) foran H–1B worker who is ‘‘exceptional,’’an ‘‘outstanding professor orresearcher,’’ or a ‘‘multinationalmanager or executive’’ within the

meaning of Section 203(b)(1) of the INA,is not subject to the recruitmentprovision. Both the displacementprotection and the recruitment/hiringprotection become effective upon thedate of the Department’s final regulationand expire with respect to LCAs filedbefore October 1, 2001. An H–1Bdependent employer or willful violatorfiling an LCA which will be used onlyfor ‘‘exempt’’ H–1B workers is notrequired to comply with the newattestation requirements.

Also enacted via the ACWIA is a newfee of $500, to be collected by INS, forinitial petitions and first extensionsfiled on or after December 1, 1998 andbefore October 1, 2001. Institutions ofhigher education, or related or affiliatednonprofit entities, nonprofit researchorganizations, or Governmental researchorganizations are exempt from the newfee. The fees are to be used for jobtraining, low-income scholarships, andprogram administration/enforcement.The ACWIA includes other generallyapplicable worker protections,specifically whistleblower protection,prohibitions against fee reimbursementand penalizing an H–1B worker whoterminates employment prior to a dateagreed with the employer, and arequirement that the employer paywages during nonproductive time ifsuch time is not due to reasonsoccasioned by the worker. The ACWIAalso requires employers to offer H–1Bworkers fringe benefits on the samebasis and in accordance with the samecriteria as U.S. workers. The ACWIAspecifies new civil money penaltiesranging from $1,000 to $35,000 perviolation, along with debarment. Newinvestigative procedures are created,authorizing the Department to conduct‘‘random’’ investigations of willfulviolators during the five-year periodafter the finding of such violation, andestablishing an alternative investigationprotocol based on informationindicating potential violations obtainedfrom sources other than aggrievedparties.

The ACWIA mandates a particularmethod of computation of the localprevailing wage for employees of certaintypes of employers: institutions ofhigher education (as defined in section101(a) of the Higher Education Act);nonprofit entities related or affiliatedwith such institutions; nonprofitresearch organizations; andGovernmental research organizations.Under the ACWIA provision, theprevailing wage level is to take intoaccount only employees at suchinstitutions and organizations.

The rulemaking history, as publishedin the Federal Register, is as follows:

March 20, 1991, Advance Notice ofProposed Rulemaking, 56 FR 11705.

August 5, 1991, Proposed Rule, 56 FR37175.

October 22, 1991, Interim Final Rule,56 FR 54720.

January 13, 1992, Interim Final Rule,57 FR 1316.

October 6, 1993, Proposed Rule, 58 FR52152.

December 30, 1993, Interim FinalRule, 58 FR 69226.

December 20, 1994, Final Rule, 59 FR65646.

January 19, 1995, Final Rule, 60 FR4028.

September 26, 1995, Notice, 60 FR49505.

October 31, 1995, Proposed Rule, 60FR 55339.

April 22, 1996, Proposed Rule, 61 FR17610 (Part 656).

May 3, 1996, Final Rule, 61 FR 19982.September 30, 1996, Final Rule, 61 FR

51013.November 30, 1998, Final Rule, 63 FR

65657 (Part 656).

III. The Process of Developing ProposedRegulations

In developing proposed regulations,the Department has identified a numberof issues arising from the provisions ofthe ACWIA. On some of these issues,the Department is proposing regulatorylanguage and is seeking comments onthose proposals. But on other issues, theDepartment has not yet developedregulatory language and, in this notice,is seeking public comments on theissues and possible regulatoryapproaches or alternatives which are setforth.

In addition, the Department iscontinuing to examine severalprovisions that were previouslyaddressed in a Notice of ProposedRulemaking published in the FederalRegister on October 31, 1995 (60 FR55339–55348). The Departmentconsiders it appropriate to provide, viathis notice, an additional opportunityfor public comment on those provisions.Some of these existing Final Ruleprovisions are affected by the enactmentof ACWIA, and for some affectedprovisions the Department has not yetdeveloped new or modified regulatorylanguage. Other Final Rule provisionsare being republished for comment,with limited proposed changes asdiscussed below.

After review of the commentsreceived, the Department intends topublish an Interim Final Rule, invitingcomments on that rule, which willcontain the full regulatory text. TheDepartment will then review thecomments and issue a Final Rule.


The Department requests commentson each of the following issues andproposals, and on any other relatedmatters concerning the temporaryemployment in the U.S. ofnonimmigrants under the H–1B visaprogram.

A. What Constitutes an ‘‘Employer’’ forPurposes of the ACWIA Provisions?

In enacting certain new LCAattestations for ‘‘H–1B-dependent’’ (andcertain other) employers in the ACWIA,Congress directed (in the definition ofH–1B-dependent employer) that ‘‘anygroup treated as a single employerunder subsection (b), (c), (m), or (o) ofsection 414 of the Internal RevenueCode of 1986 shall be treated as a singleemployer.’’ These provisions, found at26 U.S.C. 414(b), (c), (m) and (o),concern the circumstances in whichseparate businesses are treated as asingle employer for purposes of theInternal Revenue Code (IRC).Specifically, the IRC provisions concerntreatment of a controlled group ofcorporations (§ 414(b)); partnerships,proprietorships, etc., under commoncontrol (§ 414(c)); an affiliated servicegroup (§ 414(m)); as well as separateorganizations, employee leasing, andother arrangements (§ 414(o)). SeeInternal Revenue Service (IRS)regulations at 26 CFR 1.414(b)–1,1.414(c)–1. See also 26 CFR 1.414(q)–1T.

Further, the Department isconsidering the effect and implicationsof adopting this single definition of‘‘employer’’ for all purposes under thisprogram, to the extent it may serve toaccommodate common businessactivities and facilitate administrationand enforcement of the program. TheDepartment is interested in learningfrom commenters the consequences of aregulation which would provide thatwhere an ‘‘employer’’ files an LCA andthereafter undergoes some change ofstructure (e.g., buy-out by a successorcorporation; corporate restructuring ofsubsidiaries), the ‘‘employer’’ for LCApurposes would be the entity whichsatisfies the Internal Revenue Codedefinition of a single employer. TheDepartment is considering whether andhow, under this approach, it may beable to modify its position that a newLCA must be filed when the corporateidentity changes and a new EmployerIdentification Number (EIN) is obtained.Thus an employer which merelychanges its corporate identity throughacquisition or spin-off would be allowedto document this change in its publicdisclosure file (including an expressacknowledgment of all LCA obligationson the part of the successor entity),

provided that it satisfies the InternalRevenue Code definition of a singleemployer.

The Department seeks comments onthis proposed regulation and on otherrelated matters, such as whether andhow the Internal Revenue Codeinterpretation of ‘‘single employer’’should be used for other purposes in theH–1B program, such as corporaterestructuring, and whether anotherapproach should be utilized to addresscorporate restructuring.

B. Which Employers are ‘‘H–1B-dependent’’ for Purposes of the ACWIAProvisions?

The ACWIA requires new non-displacement and recruitmentattestations by ‘‘H–1B-dependentemployers’’ and by employers foundafter the date of enactment to havecommitted a willful violation ormisrepresentation during the 5-yearperiod preceding the filing of the LCA(see item M.2 below, regarding the‘‘finding’’ of such violations). TheACWIA definition of ‘‘H–1B-dependentemployer’’ provides a formula forcomparing the number of H–1Bnonimmigrants to the total number offull-time equivalent employees(including H–1B nonimmigrants) in theemployer’s workforce. ‘‘Exempt H–1Bnonimmigrants’’ are not included in theH–1B-dependency computation duringa certain period after enactment of theACWIA (i.e., the longer of the period ofsix months from the date of enactment(until April 21, 1999), or the date of theDepartment’s interim final rule on thisprovision).

The Department is developingregulations on the following issues, andseeks comments on these and any otherrelated matters.

1. What Is a ‘‘Full Time EquivalentEmployee’’?

The ACWIA definition of ‘‘H–1B-dependent employer’’ includes a termthat is not defined: ‘‘full-time equivalentemployees’’ (FTEs), as part of thecalculation to determine an employer’sH–1B dependency status based on theratio between the number of H–1Bworkers (a ‘‘head count’’) and FTEs (theemployer’s workforce of employees,expressed as FTEs). Thus ACWIAdefines an ‘‘H–1B-dependent employer’’as an employer that has—

• 25 or fewer full-time equivalentemployees who are employed in theUnited States, and employs more than 7H–1B nonimmigrants;

• At least 26 but not more than 50full-time equivalent employees who areemployed in the United States, and

employs more than 12 H–1Bnonimmigrants; or

• At least 51 full-time equivalentemployees who are employed in theUnited States; and employs H–1Bnonimmigrants in a number that isequal to at least 15 percent of thenumber of such full-time equivalentemployees.

For larger employers (at least 51 full-time equivalent employees), the numberof H–1B workers is the numerator andthe number of FTEs is the denominatorin this computation; if 15 percent ormore of the employer’s workforce areH–1B workers, as computed in thisratio, then the employer is ‘‘H–1B-dependent.’’

The term ‘‘full-time equivalent’’ lendsitself to various interpretations, some ofwhich could significantly increase anemployer’s possible paperwork burden.One interpretation would requiremaintaining a record and computing thehours worked in a period of time (ayear, a workweek, or some intermediateperiod of time) for each worker in theentire workforce. For example, the totalof all hours worked by all employeeswould be divided by the full-time‘‘standard’’ in order to arrive at the FTEfigure. Such an approach wouldnecessitate collection and maintenanceof hourly records for all workers, notjust hourly wage earners. Moreover, thecomplexity of such an approach and therelated computations could make itdifficult for employers to recognize ifand when they become H–1B-dependent. A less onerous approachwould allow an employer to simplycount the number of workers it employson a full-time basis, using somestandard threshold (e.g., 35 hours perweek or more) for identifying a ‘‘full-time’’ schedule. This approach wouldonly additionally require a showing ofthe average weekly hours worked bypart-time employees, through hoursworked records or by evidenceregarding their standard workingschedules. (It has been the Department’sexperience that hours worked recordsare ordinarily kept for part-time workerssince they are ordinarily paid on anhourly basis and typically are notexempt from the Fair Labor StandardsAct.) The number of FTEs in theworkforce would then be determined byaggregating the average hours of thepart-time workers, dividing that total bythe standard for a full-time schedule,and adding the resulting number to thenumber of full-time workers in theworkforce.

The Department proposes a procedureby which the determination would bemade by an examination of theemployer’s quarterly tax statement (or


similar document) to determine thenumber of workers on the payroll(assuming there is no issue as towhether all employees are listed on thetax statement), and a furtherexamination of the last payroll (or thepayrolls over the previous quarter if thelast payroll is not representative) orother evidence as to average hoursworked by part-time employees, toaggregate the average hours of the part-time workers into FTEs based on theemployer’s definition of full-timeemployment. The Department wouldaccept an employer’s definition of full-time employment, provided that it is atleast 35 hours or more per week; in theabsence of such an employer definition,the Department would use 40 hours perweek as a full-time schedule. However,in no case would a single employeecount as more than one FTE, even if theemployee commonly worked morehours per week than the ‘‘full-time’’schedule. Finally, it should be notedthat the count would be made only ofemployees of the employer, includingboth H–1B nonimmigrants and U.S.workers, but would not include bonafide consultants and independentcontractors who do not meet theemployment relationship test describedbelow (see item D.1). It is important tonote that the number of H–1Bnonimmigrants (the numerator in the H–1B-dependency ratio) would bedetermined by the number of H–1Bnonimmigrants employed by theemployer in the period reviewed—asimple ‘‘head count’’—without regard totheir full-time or part-time status.

The Department seeks comments onits proposed approach to determiningfull-time equivalency, and any otherapproaches which might be used toaccurately make the determinationwithout undue paperwork burden.

2. When Must an Employer DetermineH–1B Dependency?

The ACWIA definition of ‘‘H–1B-dependent employer’’ and the new LCAattestation elements that are required ofsuch an employer do not clearly definethe timing of the dependencydetermination. Certainly such adetermination must be made when anew LCA is filed. The two issues to beresolved are when a new LCA must befiled, and what obligations, if any, anemployer has if its dependency statuschanges.

The Department is particularlyconcerned about the obligations ofemployers who already hold or maysoon obtain certified LCAs. TheDepartment’s current regulationsprovide that an LCA is valid for threeyears from its date of certification,

during which time the employer mayfile petitions for H–1B workers based onthat LCA (not to exceed the number ofpositions shown on the LCA). The newrecruitment and displacementattestation provisions of the ACWIA areexpressly applicable to LCAs filed by acertain subset of H–1B employers afterthe date of issuance of the Department’sinterim final regulations. We expect thatmost H–1B-dependent employers haveLCAs in effect and that many suchemployers may file additional LCAsduring the period prior to the effectivedate of the regulations. Therefore—ifthis issue is not directly addressed bythese regulations—these H–1B-dependent employers could avoid anyapplication of the law’s newdependency provisions, which areapplicable only to applications filedbefore October 1, 2001, by continuing touse current or newly certified LCAs.Since this would, as a practical matter,potentially nullify these ACWIArequirements for all or many H–1B-dependent employers, the Departmentproposes that any current (or non-dependent) LCA will become invalid forH–1B-dependent employers byoperation of these regulations withrespect to any future H–1B petitions(including extensions), although anemployer’s obligations under the LCAwould continue with respect to all H–1B nonimmigrant petitions under thatLCA. The regulations would, therefore,require that all H–1B-dependentemployers with existing LCAs file newLCAs if they wish to petition for anynew H–1B nonimmigrants (or if theywish to seek the extension of anyexisting H–1B visas) on or after theeffective date of the interim finalregulations. Similarly, an employer withan existing LCA which is not H–1B-dependent on the effective date of theregulations but which later becomes H–1B-dependent, would be required to filea new LCA if it wishes to petition fornew H–1B nonimmigrants (or seekextensions of existing H–1B visas) atany time after the date it becomesdependent. An employer who fails totake such action but instead uses anexisting LCA contrary to theseregulations would be subject tosanctions, including debarment andcivil money penalties. The Departmentseeks comments on this proposedapproach and on any other approacheswhich might be used to ensure that U.S.workers are provided with theprotections which the Act intendedwith regard to H–1B-dependentemployers.

As suggested above, the Departmentalso recognizes that the makeup of an

employer’s workforce, and the ratio ofH–1B nonimmigrants to total FTEs,could change significantly over thethree-year validity period of an LCA.Thus an employer which is not H–1B-dependent at the time it files an LCAunder these regulations might laterbecome dependent, or an employerwhich is initially H–1B-dependentmight later become non-dependent. TheDepartment, after careful consideration,has concluded that, in order for theCongressional intent for the newprovisions to be appropriatelyimplemented, an employer’s H–1Bdependency may need to beredetermined as the composition of theworkforce changes after the filing of theLCA, where the employer plans to takeactions which require recruitment andnon-displacement commitments by H–1B-dependent employers (or theirclients).

Thus, the Department proposes thatan employer would be required to makea determination of dependency not justprior to or on the effective date of theseregulations, but when it files any newLCA or H–1B petition (includingextensions) after that date. If anemployer is not H–1B-dependent at thetime an LCA is filed, it would have acontinuing obligation to ensure that if itlater becomes H–1B-dependent andwishes to file new H–1B petitions(including extensions), it takes the stepsnecessary to comply with therequirements of the law and theDepartment’s regulations applicable todependent employers during the periodit is H–1B-dependent, with respect to allH–1B nonimmigrant petitions filedunder that LCA. Similarly, if anemployer which is initially dependentand files an LCA so indicating itsdependency later determines that it hasbecome not dependent, it would not berequired to comply with the attestationelements applicable to dependentemployers with respect to any H–1Bworkers during any period in which itis not dependent.

The Department believes that thisapproach is necessary to properlyeffectuate the law’s new requirementsand does not believe that thiscontinuing obligation places any undueburden on employers. As a practicalmatter, the Department’s experience inthe H–1B program is that the largemajority of employers which use theprogram clearly will not meet the testfor H–1B-dependency and that mostprogram users would, therefore, beentirely unaffected by this ACWIAprovision and the Department’sregulations. With regard to the smallminority of employers who would meetthe H–1B-dependency test, the


Department’s experience is that mostsuch employers employ H–1B workersin such a large proportion that theywould almost certainly be subject to thenon-displacement and recruitmentrequirements during the entire LCAvalidity period. As a practical matter,therefore, any continuing obligation foran employer to monitor its workforceratio would apply only in the very rareinstance where the H–1B-dependencydetermination is a close question for a‘‘borderline’’ employer on the effectivedate of these regulations, or upon thedate of a subsequent LCA filing orpetition and thereafter.

The Department also consideredwhether the same issues would arisewith respect to employers found afterthe effective date of ACWIA to havecommitted willful violations ormisrepresentations. However, a findingof a willful violation ormisrepresentation would commonlyresult in debarment and consequently,invalidation of all the employer’s LCA’s.The employer would then be required tofile a new LCA(s) to petition foradditional H–1B nonimmigrants (or toextend petitions) after the debarmentperiod ends, attesting to the newattestation elements for H–1Bdependent employers and willfulviolators.

The Department seeks comments onits proposal, and specifically whetherthere are other ways to effectivelyaccomplish the statutory intent that H–1B-dependent employers comply withthe new attestation elements. Forexample, another possible regulatoryapproach could be to have thedependency up-date determined on aset, regular basis, such as for eachcalendar quarter. Alternatively, theDepartment could limit the use of anattestation to a shorter period, such as90 or 180 days, instead of the currentthree years.

3. What Kind of Records Are RequiredConcerning the H–1B-DependencyDetermination?

The Department is considering severalmatters relating to documentation. First,the Department is examining the issueof the kind of record which might needto be made by an employer concerningits determination of whether it is or isnot H–1B-dependent at the time that anLCA is completed and filed. It is theDepartment’s view that no record needsto be created or maintained to showhow an employer made thatdetermination when its H–1B-dependency or non-dependency statusis apparent, and it files an LCAreflecting that obvious status. Asdiscussed above, the Department

believes that for the vast majority ofemployers there is either such a smallor large proportion of H–1Bnonimmigrants employed that anemployer’s dependency status will notbe a close question. With regard to anemployer for which the H–1B-dependency or non-dependency statusis not readily apparent, the question ofappropriate records is more difficult.The Department believes that it isimportant that the employer make thisdetermination with proper care andconsideration. Further, the Departmentbelieves that, in the event of an inquiryby an affected U.S. worker (concerningpossible rights regarding displacementor recruitment) or an investigation bythe Department, documentation of anemployer’s determination that it is notH–1B-dependent needs to be availableto ascertain and evaluate the method bywhich the determination was made.Therefore the Department proposes thatsuch documentation be requiredwherever the determination that anemployer is not dependent is not readilyapparent and a mathematicalcalculation must be made (i.e., wherethe ratio of H–1B workers to U.S.workers is close to that set forth in thestatute for dependency). TheDepartment solicits comments onwhether the regulations need to definean explicit standard (for example, allcircumstances where H–1B workers are10 percent or more of the workforce) todetermine the subset of employerswhich must make and retain suchdocumentation when an attestation ismade.

The Department also is consideringwhether a record must be kept of anemployer’s H–1B-dependency statusdeterminations (if any) which are madeafter the filing of an LCA which is usedin support of a petition for an H–1Bnonimmigrant worker. The Departmentbelieves that—in order that U.S. workersare aware of their rights concerningnondisplacement and recruitment, andthat the Administrator is able to conductfair and effective investigations on thosematters—a record needs to bemaintained of an employer’sdetermination if at any time anemployer which was non-dependentdetermines that it is dependent, or if anemployer which was dependentdetermines that it is non-dependent.The Department is therefore proposingthat a copy of the determination and,where an employer determines that it isnot dependent, the underlyingcomputation, be placed in the publicdisclosure file.

The Department also requestscomments on whether it would befeasible and appropriate to specify that

no record of an employer’scomputations would be necessary, if thedetermination could be made frompublicly available documents. Thisapproach presents some difficulties, inthat, for example, a publicly availablelist of an employer’s employees may notshow the workers’ full-time or part-timestatus, or may not accurately reflect thenumber of workers who meet the‘‘employment relationship’’ test, andthese documents may not be readilyavailable to U.S. workers. TheDepartment therefore solicits commentsas to the feasibility of this approach andwhether there are any generallyavailable public documents whichwould normally contain the requiredinformation.

It is also necessary that an employerhave the underlying records necessaryto make the dependency determination.The records required to determine thenumber of workers on the payroll arerequired by § 655.731(b) of the existingregulations. An employer would also berequired to have a record of the hoursworked by part-time workers, or adocument showing their normal workschedule if no records of their hours ofwork are maintained. As discussedabove (see item B.1), it has been theDepartment’s experience that most part-time workers are paid on an hourlybasis and, therefore, that employersmaintain hours-worked records for suchworkers. Finally, the employer wouldneed to maintain copies of its H–1Bpetitions, in order to determine thenumber of H–1B nonimmigrants on itspayroll.

The Department seeks comments onall of these issues and possibleapproaches.

4. What Information Will Be Requiredon the LCA Regarding an Employer’sStatus as H–1B-Dependent?

The Department expects that everyemployer will need to read theinstructions for determining H–1Bdependency and make a determinationthat it is or is not dependent, in orderto determine whether to attest todependency. In most cases, theDepartment expects that thedetermination will be so clear that theemployer will not need to make anymathematical calculation. TheDepartment also believes that it isimportant that those employersconstituting the vast majority of thosefiling LCAs not be subject to anyunnecessary burden because of therelatively small number of employerswho are dependent.

The Department believes that therevised attestation form (LCA), at aminimum, should require that every


employer which is H–1B-dependentaffirmatively acknowledge its status andobligations by checking a box attestingto its dependency and its compliancewith the additional attestationrequirements concerning non-displacement and recruitment of U.S.workers. Further, as discussed above,the Department proposes that H–1B-dependent employers which filed anLCA before these regulations becomeeffective, may not use such an LCA insupport of an H-1B petition filed afterthe effective date, or, if they do notbecome dependent until sometime afterthe effective date of the regulations, maynot use such an LCA in support of anH–1B petition filed after they becomedependent.

The question arises as to whatinformation should be required ofemployers who are not H–1B dependentwhen they file an LCA after the effectivedate of these regulations. TheDepartment is considering threealternative revisions to the LCA form forsuch employers:

1. The employer would expresslyattest that it is not dependent and thatif it later becomes dependent, it willcomply with the additional attestationrequirements; or

2. The employer would not have toattest that it is not dependent, but theLCA would clearly state—and bysigning the form the employer wouldagree—that the employer is required tocomply with the additional attestationrequirements if it does becomedependent; or

3. The employer would not have toattest that it is not dependent, but theLCA would clearly state that it couldnot be used in support of any H–1Bpetition filed after the employer becamedependent.

Under all of the alternatives anemployer will be expected to make aninitial determination as to whether it isor is not dependent; to remain cognizantas to its status if it later files a new H–1B petition; and would commitmisrepresentation if it falsely fails toattest that it is dependent. The first twoalternatives do not require the filing ofa new LCA should a formerly non-dependent employer becomedependent, but such employer will beobliged to comply with the substantiveobligations of the additional attestationelements applicable to dependentemployers. The third alternative wouldparallel the approach proposed for H–1B dependent employers with LCAsfiled before the effective date of theregulations in that an employer whichinitially was not dependent would berequired to file a new LCA if it laterbecame dependent and would be subject

to sanctions, including debarment andcivil money penalties, if it failed to doso.

The Department is concerned aboutthe burden of requiring the filing of anew LCA as well as the burden ofrequiring the overwhelming majority ofemployers who are not dependent tocheck a box so attesting. TheDepartment therefore proposes to utilizethe second alternative, where the non-dependent employer would not berequired to check any additionalbox(es). The Department is aware thatunder this alternative the lack of suchidentification will make it particularlyimportant that the form clearly lay outthe obligations of employers. TheDepartment therefore seeks commentson the above alternatives, and the layoutand clarity of the proposed attestationform, attached as Appendix I as well asany other comments on these andrelated matters.

5. What Changes Are Proposed for theLabor Condition Application Form andthe Department’s ProcessingProcedures?

Based on the preceding discussion,the Department is publishing for publiccomment a proposed revised LaborCondition Application form (ETA 9035),and providing advance public notice ofa planned change in the existing systemfor processing LCAs. At present, suchapplications are submitted by mail, faxor private carrier to one of ten ETAregional offices with jurisdiction, as setforth in § 655.720. The Department hasbeen developing the capacity toautomatically receive and, in manycases, automatically process LCAssubmitted. The Department intends toimplement an automatic systemwhereby all faxed LCAs will beprocessed in Philadelphia and SanFrancisco beginning in January 1999.This new capacity requires changes inthe LCA form as well as in the filinginstructions.

The Department has redesigned theLCA form (attached as Appendix I) toboth reflect the statutory changes in theACWIA and facilitate the automatedreceipt and processing of applications.With the exception of the changesoccasioned by the provisions of theACWIA, as discussed in this proposedrulemaking, the proposed revisions tothe LCA form are merely aesthetic. TheDepartment’s revised processingprocedures will not require anysubstantive changes with respect to theinformation required of employers inpreparing the LCA. When theDepartment publishes the Interim FinalRule pursuant to this proposal,contingent upon approval by the Office

of Management and Budget, the revisedform will become the sole form forpublic use; thereafter, prior versions ofthe ETA 9035 will not be accepted forprocessing.

The Department proposes that, afterthe effective date of the Interim FinalRule, all LCAs—whether submitted byfax or not—will be filed with one of twoETA regional offices. Employers withinthe jurisdiction of ETA’s current Boston,New York, Philadelphia, and Atlantaregions will submit LCAs only to thePhiladelphia regional office; employerswithin the jurisdiction of ETA’s currentChicago, Kansas City, Dallas, Denver,Seattle and San Francisco regions willsubmit LCAs only to the San Franciscoregional office. There will be anautomated back-up capacity in theWashington, D.C. headquarters forautomated processing of LCAs, in theevent of a system failure in one of theregional offices.

The proposed revised LCA form canbe completed in several ways—inhandwriting, in typewriting, or throughuse of a new ‘‘form filler’’ electronicprogram that will be generally availableto program users. The new LCA formwill be posted and thereafter can bedown-loaded and printed from theDepartment’s World Wide Web site athttp://www.doleta.gov. The ‘‘formfiller’’ electronic program will also beavailable to be down-loaded from thisweb site, or can be obtained from ETAheadquarters, on request, via e-mail oron diskette. This ‘‘form filler’’ electronicprogram will enable the user to easilycomplete the LCA form with a font thatcan be reliably read by the Department’sautomated LCA processing system.

The Department proposes that, underthe Interim Final Rule, the LCA form—whether completed using the ‘‘formfiller’’ program, in typewriting, or inhandwriting—will be submitted byemployer applicants to one of the twoETA regional offices either by facsimiletransmission (fax), which is preferred,or by mail or private carrier. The InterimFinal Rule and the LCA form itself willso indicate and will provide theappropriate fax numbers. TheDepartment anticipates that LCAssubmitted by fax can be readily receivedand processed by the automated system,and that a response—approval orrejection—can be returned to theemployer’s sending FAX number (i.e.,the telephone number designated in the‘‘Return Fax Number’’ block on the LCAform), usually within 48 hours ofsubmission/receipt by ETA. Foremployer-applicants without thecapacity to send the LCA by FAX andreceive ETA’s response to the employer-applicants’ sending FAX machine, the


LCA may still be submitted by mail orother delivery in hard-copy paper form(either typewritten or handwritten) tothe two ETA regional offices withjurisdiction Such non-FAX submissionswill be processed by the ETA office bybeing faxed internally or scannedelectronically into the automatedsystem, and the ETA decision will bemailed to the submitter.

The automated processing system willelectronically scan the incomingfacsimile, extract the informationcontained in the LCA, record theinformation to a database, and—in mostcases—make the appropriatedetermination to approve/certify orreject the application, with littleintervention by system administrators.As under the current manually-operatedsystem, the LCA will be approved/certified and faxed (or mailed) back tothe submitter if the appropriate boxesare checked and the requiredinformation is provided on the form. Ifthe LCA is incomplete or containsobvious inaccuracies, it will be rejectedunder the automated system as it isunder the manually-operated system.

Comments are requested on theproposed electronic transmissionsystem described and on the proposedform to be utilized.

C. What H–1B Worker Would be an‘‘Exempt H–1B Nonimmigrant’’?

The ACWIA provisions concerningnon-displacement and recruitment ofU.S. workers do not apply where theonly H–1B workers sought in the LCAat issue are ‘‘exempt H–1Bnonimmigrants.’’ In addition, for alimited time after the ACWIA’senactment, determining whether theemployer is H–1B-dependent does notinclude ‘‘exempt’’ H–1B workers. TheACWIA contains alternative definitionsof ‘‘exempt H–1B nonimmigrant’’ as one‘‘who * * * receives wages (includingcash bonuses and similar compensation)at an annual rate equal to at least$60,000; or * * * [who] has attained amaster’s or higher degree (or itsequivalent) in a specialty related to theintended employment.’’

The Department notes that thestatutory language seems clear—an H–1B-dependent employer, or an employerfound to have committed willfulviolations, is required to comply withthe new attestation elements unless theonly workers employed pursuant to theLCA are exempt workers. The non-displacement obligation, for example,applies for the period beginning 90 daysbefore and ending 90 days after thefiling of any H–1B petition supported bythe LCA. The Department thereforereads the statute as requiring that an

employer which uses an LCA in supportof a petition for any non-exempt workermust comply with the new attestationswith respect to all of its H–1Bnonimmigrants employed pursuant tothe LCA, even the exempt H–1Bnonimmigrants.

The Department recognizes thatemployers commonly apply for multiplepositions, and often for multiplelocations, on the same LCA. Further, theDepartment recognizes that when anemployer recruits U.S. workers, it oftencannot know whether in fact the H–1Bworker for whom it eventually petitionswill qualify as exempt or non-exempt,since it is not uncommon for bothexempt and non-exempt workers to bequalified for the same job. In any event,the Department points out that an H–1B-dependent (or willful violating)employer is free to file separate LCAsfor its exempt and non-exempt workers,thereby obviating the requirement ofcomplying with the new attestationelements for its exempt workers.

Determinations as to whether or notH–1B workers meet the requirementsnecessary to be classified as exempt H–1B nonimmigrants will be made initiallyby the Immigration and NaturalizationService (INS) in the course ofadjudicating the petitions filed onbehalf of H–1B nonimmigrants byemployers. Employers should maintain,in the public access file, a copy of theINS determinations with the petitionsapproved for exempt H–1B workers. Inthe event of an investigation, it isanticipated that considerable weightwill be given to INS’ determinations thatH–1B nonimmigrants, based on theeducational attainments of the workers,were ‘‘exempt’’ since INS hasconsiderable experience in evaluatingthe educational qualifications of aliens.However, with respect to H–1B workersclaimed to be exempt on the basis ofannual wages, employers will beexpected in the event of an investigationto be able to document that such H–1Bnonimmigrants received sufficient payto satisfy the statutory wage ‘‘floor’’ of$60,000.

The Department seeks comments onthis proposed regulation, and on anyother related matter including but notlimited to the following questions.

1. How Would the $60,000 Annual Ratebe Determined?

The ACWIA sets the wage ‘‘floor’’ foran ‘‘exempt’’ H–1B nonimmigrant at$60,000 annually, which is to include‘‘cash bonuses and similarcompensation.’’ In order to ensure thatthis statutory standard is in fact met, theDepartment is of the view that thisstandard should be interpreted

consistent with the existing DOLregulations for determining if anemployer has satisfied its other wageobligations under the H–1B program (20CFR 655.731(c)(3)). Future (i.e., unpaidbut to-be-paid) cash bonuses and similarcompensation would be ‘‘counted’’toward the required wage if theirpayment is assured, but not if they areconditional or contingent on some eventsuch as the employer’s annual profits(unless the employer guarantees that theworker will receive payment of at least$60,000 per year, in the event the bonuscontingency is not met). In addition,such bonuses and compensation are tobe paid ‘‘cash in hand, free and clear,when due * * *,’’ meaning that theymust have readily determinable marketvalue, be readily convertible to cashtender, and be received by the workerwhen due (which must be within theyear for which the employer wants to‘‘count’’ the compensation).

Similarly, in assessing payment to anH–1B nonimmigrant claimed to be‘‘exempt,’’ the Department interprets thestatutory language ‘‘* * * receiveswages (including cash bonuses andsimilar compensation) at an annual rateequal to at least $60,000; * * *’’ tomean that the worker actually receivesthe $60,000 compensation in the year.Therefore, an H–1B nonimmigrantworking part-time, whose actual annualcompensation is less than $60,000,would not qualify as exempt on thisbasis, even if the worker’s earnings, ifprojected to a full-time work schedule,would theoretically exceed $60,000 in ayear.

The Department seeks comments onthis proposal and any alternativeapproaches that would ensure the$60,000 wage standard for ‘‘exempt’’workers would be met.

2. How Would the ‘‘Equivalent’’ of aMaster’s or Higher Degree beDetermined?

The second definition of ‘‘exempt H–1B nonimmigrant’’ requires that thenonimmigrant ‘‘has attained a master’sor higher degree (or its equivalent) in aspecialty related to the intendedemployment.’’ Based on the language ofthis provision, the Department and theINS are of the view that workexperience cannot be converted to the‘‘equivalent’’ of an academic degree atthe master’s level or higher. TheACWIA’s language differs from INAsection 214(i) (8 U.S.C. 1184(i)), whichexplicitly authorizes a ‘‘timeequivalency’’ approach. Section 214(i)provides that one of the ways to meetthe requirements of a bachelor’s orhigher degree (or its equivalent) is byexperience in the specialty equivalent to


the completion of such a degree and‘‘recognition of expertise in thespecialty through progressivelyresponsible positions relating to thespecialty.’’ The contrast between theseINA provisions demonstrates that whenCongress intended to authorize a ‘‘timeequivalency,’’ such authorization wasexpressly stated. Further, the statementof one of the sponsors of the legislationshows the intent of Congress: ‘‘the term‘or its equivalent’ refers only to anequivalent foreign degree. Any amountof on-the-job experience does notqualify as the equivalent of an advanceddegree.’’ (144 Cong. Rec. H8571–05,H8584, Sept. 24, 1998, remarks of Rep.Smith). The Department’s proposedregulation, therefore, does not allow awork experience equivalency andrecognizes only those foreign academicdegrees as would be equivalent to amaster’s or higher degree in the U.S.

The Department is consulting withthe INS on this matter, and will work inclose cooperation with that agency indeveloping regulations. As indicatedabove, the Department will giveconsiderable weight to INSdeterminations concerning the academiccredentials of H–1B nonimmigrants whoare claimed to be ‘‘exempt.’’ Employersshould note that INS’ review ofacademic credentials for itsdetermination on ‘‘exempt H–1Bnonimmigrants’’ is distinct from itsreview of academic credentials for itsdetermination on ‘‘specialtyoccupations’’ under Section 214(i) of theINA and 8 CFR 214.2(h)(4).

The Department seeks comments onthis regulatory proposal, and on anyother or alternative interpretations ofthe ‘‘equivalency’’ provision.

3. How is ‘‘a Specialty Related to theIntended Employment’’ Defined?

The H–1B nonimmigrant who holdsan advanced academic degree would be‘‘exempt’’ only if that degree is in ‘‘aspecialty related to the intendedemployment.’’ The Departmentproposes to make it clear that, in orderfor the degree specialty to be sufficiently‘‘related’’ to the employment, thespecialty must be generally accepted inthe industry or occupation as anappropriate or necessary credential orskill for the person who undertakes theemployment in question. Any‘‘specialty’’ which is not generallyaccepted as appropriate or necessary tothe employment would not besufficiently ‘‘related’’ to afford the H–1Bworker status as an ‘‘exempt H–1Bnonimmigrant.’’

The Department is consulting withthe INS on this matter, and will work inclose cooperation with that agency in

developing regulations. As indicatedabove, the Department will giveconsiderable weight to INSdeterminations concerning the academiccredentials of H–1B nonimmigrants whoare claimed to be ‘‘exempt.’’ Again,employers should note that INS’ reviewof academic credentials for itsdetermination on ‘‘exempt H–1Bnonimmigrants’’ is distinct from itsreview of academic credentials for itsdetermination on ‘‘specialtyoccupations’’ under Section 214(i) of theINA and 8 CFR 214.2(h)(4).

The Department seeks comments onthis regulatory proposal, and on anyother or alternative interpretations ofthe ‘‘related’’ provision.

4. Should the LCA be Modified toIdentify Whether it Will be Used inSupport of Exempt and/or Non-ExemptH–1B Nonimmigrants?

The ACWIA provides that ‘‘[a]napplication is not described in thisclause [i.e., is not subject to the newattestation requirements] if the only H–1B nonimmigrants sought in theapplication are exempt nonimmigrants.’’The Department is considering whetheran employer’s intention to use theattestation for exempt and/or non-exempt H–1B nonimmigrants should beindicated on the LCA, or whether thisissue should be addressed in some otherway. The Department recognizes thatemployers may wish to use separateLCAs for exempt and non-exempt H–1Bworkers, so they would not be requiredto comply with the attestations withrespect to any exempt H–1B workers. Asexplained in the introductorydiscussion, the statutory language seemsto require that an employer whichinitially believed its LCA would be usedonly for exempt H–1B nonimmigrantswould have been obliged to complywith the attestations with respect to allof its H–1B workers under the LCA—exempt and non-exempt—if it later usedthat LCA in support of a petition for anynon-exempt worker.

The Department therefore consideredwhether there would be any advantageto requiring such separate attestations.The Department is aware, however, thatfor many occupations, such as ininformation technology, two differentworkers might both be qualified for thesame job, but because of education, forexample, one might be exempt andanother non-exempt. Therefore anemployer might not know in advancewhether the worker will be exempt.

At the same time, the Departmentbelieves it is important than an H–1B-dependent employer which intends touse the LCA only for exempt H–1Bworkers attest that the LCA will only be

used to petition for such workers. TheINS has made this request so as to allowboth INS and the Department to knowfor which H–1B workers the ‘‘exempt’’status must be ascertained. TheDepartment therefore proposes torequire such an attestation on the LCA.Of course, this requirement would notprevent an H–1B-dependent employerfrom either using separate LCAs for itsexempt and non-exempt workers, orusing one LCA for all H–1B workers(both exempt and non-exempt) andcomplying with the new attestationelements for all such workers.

Comments are sought on thisproposed approach and on any otheralternatives.

D. What Requirements Apply Regardingno ‘‘Displacement’’ of U.S. WorkersUnder the ACWIA?

The ACWIA imposes new obligationson an H–1B-dependent employer (seediscussion in items A and B, above) andan employer found to have committedwillful violations within the 5 yearspreceding the filing of an LCA(beginning on or after the date of theACWIA’s enactment). Such an employeris prohibited from ‘‘displacing’’ a U.S.worker who is ‘‘employed by theemployer’’ or is employed by someother employer at whose worksite thesponsoring employer places an H–1Bnonimmigrant where there are ‘‘indiciaof employment’’ between the H–1Bworker and that other employer. Theprohibition on displacement within theemployer’s own workforce applies for90 days before and 90 days after the dateof filing of any H–1B petition based onthe LCA. The prohibition on‘‘secondary’’ displacement, at anotheremployer’s worksite, applies for 90 daysbefore and 90 days after the placementof H–1B worker(s) at the worksite. Theseprohibitions do not apply to theplacement of ‘‘exempt’’ H–1B workers,if the employer’s LCA involves only‘‘exempt’’ nonimmigrants. (Seediscussion in item C, above).

The Department recognizes that thenon-displacement provisions in theACWIA raise several issues, andproposes regulatory provisions on eachof the following matters. TheDepartment seeks comments on all ofthese proposed provisions, and on anyother related matters.

1. What Constitutes ‘‘Employed by theEmployer,’’ for Purposes of Prohibitinga Covered Employer From DisplacingU.S. Workers in its Own Workforce?

The ACWIA provides that a U.S.worker ‘‘employed by the employer’’ isprotected from displacement by thatemployer’s H–1B workers. However, the


ACWIA contains no definition of thephrase ‘‘employed by the employer.’’ Inthis circumstance, where Congress hasnot specified a legal standard foridentifying the existence of anemployment relationship, theDepartment is of the view that SupremeCourt precedent requires the applicationof ‘‘common law’’ standards inanalyzing a particular situation todetermine whether an employmentrelationship exists. Nationwide MutualInsurance Co. v. Darden, 503 U.S. 318(1992). See Community for CreativeNon-Violence v. Reid, 490 U.S. 730(1989). Mindful of the Supreme Court’steaching that since the common-law testcontains ‘‘no shorthand formula ormagic phrase that can be applied to findthe answer, * * * all of the incidents ofthe relationship must be assessed andweighed with no one factor beingdecisive’’ (NLRB v. United Ins. Co. ofAmerica, 390 U.S. 254, 258 (1968)), theDepartment proposes regulatorylanguage setting out factors that wouldindicate the existence of an employmentrelationship under the common law test.These factors would include:

• The firm or the client has the rightto control when, where, and how theworker performs the job;

• The work does not require a highlevel of skill or expertise;

• The firm or the client rather thanthe worker furnishes the tools,materials, and equipment;

• The work is performed on thepremises of the firm or the client;

• There is a continuing relationshipbetween the worker and the firm or theclient;

• The firm or the client has the rightto assign additional projects to theworker;

• The firm or the client sets the hoursof work and the duration of the job;

• The worker is paid by the hour,week, month or an annual salary, ratherthan for the agreed cost of performing aparticular job;

• The worker does not hire or payassistants;

• The work performed by the workeris part of the regular business (includinggovernmental, educational, and non-profit operations) of the firm or theclient;

• The firm or the client is itself inbusiness;

• The worker is not engaged in his orher own distinct occupation or business;

• The firm or the client provides theworker with benefits such as insurance,leave, or workers’ compensation;

• The worker is considered anemployee of the firm or the client for taxpurposes (i.e., the entity withholdsfederal, state, and Social Security taxes);

• The firm or the client can dischargethe worker; and

• The worker and the firm or clientbelieve that they are creating anemployer-employee relationship.

(Factors adapted from EEOC PolicyGuidance on Contingent Workers,Notice No. 915.002, Dec. 3, 1997). TheDepartment is aware that theseanalytical factors—all of which aredrawn from the Supreme Court’sdecision in Darden—may be expressedsomewhat differently. See, e.g.,Restatement (Second) of Agency§ 220(2) (1958) (listing nonexhaustivecriteria for identifying master-servantrelationship); Rev. Run. 87–41, 1987–1Cum. Bull. 296, 298–299 (providing 20factors as guides in determiningwhether an individual qualifies as acommon-law ‘‘employee’’ in various taxlaw contexts). The Department is alsoaware that some factors, such as thelevel of the worker’s skill or expertise,have little relevance in the context ofthis program where, by the terms of theAct, all of the H–1B workers andsimilarly employed U.S. workers areskilled.

The Department recognizes that thereare a number of legal standards—otherthan the common law test—fordetermining the existence of anemployment relationship. For example,it would appear that the standard mostanalogous to the H–1B workerprotection provisions would be thatfound in the Fair Labor Standards Act,which provides minimum wage andovertime wage protections to‘‘employees.’’ In addition, there is somesuggestion of a preference on the part ofsome Members of Congress for the useof the Internal Revenue Servicestandards for the identification of anemployment relationship under theACWIA provisions (see Cong. Rec.S12751, Oct. 21, 1998; remarks of Sen.Abraham). While the Departmentconsiders both the FLSA and taxstandards (which contain some specialexemptions from the common law test)to be inappropriate under this statute, inlight of the Supreme Court precedentsdiscussed above, the Department wouldcarefully consider any comments whichsuggest and support these or otheralternate tests for determining whetheran employment relationship exists.

The Department seeks comments onthe proposed regulation applying thecommon law standards, and on anyother, related matters regarding theappropriate factors.

2. What Constitute ‘‘Indicia of anEmployment Relationship,’’ forPurposes of the Prohibition onSecondary Displacement of U.S.Workers at Worksites Where theSponsoring Employer Places H–1BWorkers?

In a provision described herein as the‘‘secondary displacement prohibition,’’the ACWIA prohibits the displacementof U.S. workers employed by another(‘‘secondary’’) employer, if an H–1B-dependent employer (or willful violator)intends or seeks to place its own H–1Bworkers with that other employer in asituation where, among other things,there are ‘‘indicia of an employmentrelationship between the nonimmigrantand such other employer.’’ TheDepartment, after careful consideration,has concluded that this term—‘‘indiciaof an employment relationship’’—identifies a relationship which is lessthan an employment relationship butmore than the H–1B worker’s mereperformance of duties at the secondaryemployer’s worksite (such as beingdispatched for a brief part of a work dayto diagnose or repair equipment at thatother employer’s location). Further, theDepartment has concluded that, forpurposes of clarity and consistency, thestandards indicative of ‘‘indicia of anemployment relationship’’ with thesecondary employer should beconsistent with and a sub-set of thecriteria which are used in determiningan employment relationship betweenthe covered (or ‘‘primary’’) employerand its own U.S. workers for purposesof the displacement prohibitionconcerning such workers (i.e., U.S.workers ‘‘employed by the employer’’).The Department considered proposingthat indicia of employment would befound to exist wherever a certainnumber of these criteria are met, butdoes not believe such a quantitativestandard to be appropriate since thedetermination requires consideration ofall of the relevant facts of therelationship, with no single factor or setof factors decisive.

The Department reviewed the factorsconsidered in determining employmentrelationship, as discussed above, andproposes a sub-set of those factorswhich it believes are most useful indetermining whether indicia ofemployment are present in evaluating aplacement at another company’sworksite (here referred to as ‘‘theclient’’). The sub-set does not includethose factors which are relevant todetermining whether a worker is anemployee of any company (e.g. worker’sskill level). Such factors do not seemrelevant where the H–1B worker is an


acknowledged employee of some entity(i.e., the company filing the LCA), andwould virtually never arise in asecondary placement of the H–1Bworker (e.g., client’s payment of wagesand benefits to worker). The sub-set offactors the Department believes arerelevant ‘‘indicia of an employmentrelationship’’ include:

• The client has the right to controlwhen, where, and how the workerperforms the job;

• The client furnishes the tools,materials, and equipment;

• The work is performed on thepremises of the client;

• There is a continuing relationshipbetween the worker and the client;

• The client has the right to assignadditional projects to the worker;

• The client sets the hours of workand the duration of the job;

• The work performed by the workeris part of the regular business (includinggovernmental, educational, and non-profit operations) of the client;

• The client is itself in business; and• The client can discharge the worker

from providing services to the client.(See discussion in item D.1 above).

The Department seeks comments on thisregulatory standard, including thefactors to be considered and the mannerin which the factors might be applied orweighed.

The Department recognizes thatalternative approaches may be available,such as some standard other than thecommon law factors, or having noregulatory standard. The Departmentseeks comments on any such alternativeapproaches, and on any other, relatedmatters including, but not limited to,the possible contents and consequencesof a regulation which would applydifferent standards.

3. What Constitutes an ‘‘EssentiallyEquivalent Job,’’ for Purposes of theNon-Displacement Provisions ofACWIA?

The ACWIA definition of theprohibited displacement of a U.S.worker states, in part, that suchdisplacement is ‘‘lay[ing] off the [U.S.]worker from a job that is essentially theequivalent of the job for which thenonimmigrant or nonimmigrants is orare sought. A job shall not be consideredto be essentially equivalent of anotherjob unless it involves essentially thesame responsibilities, was held by aUnited States worker with substantiallyequivalent qualifications andexperience, and is located in the samearea of employment as the other job.’’This definition, thus, requires threecomparisons to determine whether

displacement occurs: jobresponsibilities; workers; and locations.

The Department is of the view that thejob responsibility comparison mustfocus on the core elements of andcompetencies for the job, such assupervisory duties, or design andengineering functions, or budget andfinancial accountability. Peripheral,non-essential duties that could betailored to the particular abilities of theindividual workers would not bedeterminative in the comparison of thejobs. In other words, the jobresponsibilities must be similar andboth workers capable of performingthose duties. In this connection, theDepartment believes it may be useful toutilize standards under the Equal PayAct (29 U.S.C. 206(d)(1)) fordetermining the essential equivalence ofjobs. These standards focus on actualjob duties and responsibilities, ratherthan a comparison of sometimesartificial job titles and positiondescriptions, and recognizes that preciseoverlap between jobs is not necessary toachieve essential equivalence (see theregulations at 29 CFR 1620.13 et seq.).Like the Equal Pay Act, ACWIA’sremedial purpose could be thwarted byrequiring a match of insubstantialaspects of jobs as a condition fordetermining their equivalence. TheDepartment therefore seeks commentson the appropriateness of adapting thesestandards to ACWIA.

As to the qualifications andexperience of the workers, theDepartment considers the comparison tobe confined to matters which are normaland customary for the job, and whichare necessary for successfulperformance of the job. Thus, while itwould be appropriate to comparewhether the workers in question arequalified by virtue of education, skillsand experience to perform the job, itwould not be appropriate to comparetheir relative ages or their ethnicidentities, nor whether they are exactlyalike—which would virtually never bethe case—in their educationalbackground and work experience. Forexample, an H–1B worker who is ‘‘over-qualified’’ for a particular job could still‘‘displace’’ a U.S. worker.

The area of employment is defined inACWIA as ‘‘the area within normalcommuting distance of the worksite orphysical location where the work of theH–1B nonimmigrant is or will beperformed. If such worksite or locationis within a Metropolitan StatisticalArea, any place within such area isdeemed to be within the area ofemployment.’’ This statutory definitionis much the same as the Department’scurrent regulatory definition of ‘‘area of

intended employment’’ for prevailingwage purposes (20 CFR 655.715). (Seeitem P.5, below.)

The Department proposes regulatorylanguage to implement these provisionsand seeks comments on these and anyother related matters.

4. How Does the ACWIA DistinguishBetween a Prohibited ‘‘Lay Off’’ and aPermissible Termination of anEmployment Relationship?

The ACWIA distinguishes a ‘‘lay off’’of a U.S. worker from certain othercircumstances in which a worker’semployment relationship may end. TheACWIA’s non-displacement prohibitionapplies only to a ‘‘lay off.’’

The ACWIA specifies that, eventhough an H–1B worker may be placedin a job similar to one formerly held bya U.S. worker, no ‘‘displacement’’ or‘‘lay off’’ is considered to have occurredif the U.S. worker left the job through‘‘voluntary departure or voluntaryretirement.’’ As a logical and obviousmatter, the requirement of‘‘voluntariness’’ is crucial to theeffectiveness of this provision inassuring appropriate protections of U.S.workers’ jobs in situations wherenonimmigrants are being hired. TheDepartment takes the view that thetotality of the circumstances must beconsidered in assessing whether a U.S.worker’s departure was ‘‘voluntary.’’Therefore, the Department will look towell-established principles concerning‘‘constructive discharge’’ of workerswho are pressured to leave employment(e.g., a resignation letter would not beconclusive proof of ‘‘voluntariness’’where other information indicatescoercion). The Department proposes aregulation that reflects this fair,common sense view of ‘‘voluntarydeparture or voluntary retirement.’’

The ACWIA also specifies that no‘‘lay off’’ is considered to have occurredwhere the U.S. worker’s loss ofemployment is caused by the expirationof a grant or contract, other than atemporary employment contract enteredinto in order to evade the employer’sobligations under the attestation. TheDepartment believes that this languagewas designed to address the commonsituation where scientists and otheracademic personnel at universities areexpressly hired to work under a contractor grant from another institution. Wheresuch funding is lost, and the worker isnot replaced because the project fundedby the contract or grant ends, therewould be no lay off within the meaningof the ACWIA. Similarly, a staffing firmor other commercial firm may hire anemployee expressly to work on aspecific project under a contract it has


obtained from another entity. If thecontract project ends and is notrenewed, and the employer does nothave a practice of then moving itsemployees to work under othercontracts, or placing its employees on acall-back list or its equivalent, but ratherterminates the employment relationshipfor lack of work, there would be no layoff. The Department does not believe,however, that this ACWIA provisionapplies to the common situation wherea staffing firm, which places employeesat other businesses, does not hireemployees for a specific client contract,and (upon the expiration, termination,or loss of a client contract) ordinarilywould move its employees to performwork under a different contract or on adifferent project. In such a situation, theDepartment may find a displacementhas occurred if an employer terminatesemployment of its U.S. workers andhires H–1B workers to performessentially the same job under adifferent contract at a different worksitein the same area of employment. TheDepartment notes that the ACWIAprovision expressly excludes temporaryemployment contracts entered into toevade the employer’s obligations. TheDepartment intends to closely scrutinizesituations under commercial contractsand grants, as well as employmentcontracts, where it appears that suchevasion may be occurring. TheDepartment recognizes, however, thatthere are situations where employmentcontracts, like the commercial contractsdescribed above, are excluded from theAct’s definition of ‘‘lays off.’’ Suchsituations might include, for example,visiting professors who are hired for asemester or a year because of theirspecial expertise. The expiration of sucha contract would not constitute a ‘‘layoff’’ of the U.S. worker, unless thecircumstances showed some subterfugeor contrivance by the employer to avoidthe ACWIA prohibition.

The Department seeks comments onthis proposed approach, and on anyrelated matters.

5. What Constitutes ‘‘a SimilarEmployment Opportunity’’ for a U.S.Worker, Which—if Offered—Would NotConstitute a Prohibited ‘‘Lay Off’’ orDisplacement of That Worker?

The ACWIA further provides that,even though an H–1B worker is placedin a job formerly held by a U.S. worker,no ‘‘displacement’’ or ‘‘lay off’’ isconsidered to have occurred if the U.S.worker was first offered but refused ‘‘asimilar employment opportunity withthe same employer.’’ This provisionthus allows an employer an affirmativedefense to its displacement of a U.S.

worker if the employer can establishthat it offered a bona fide transferopportunity to the worker. TheDepartment interprets the ACWIAlanguage to require not just that the U.S.worker be offered another job with asimilar title, but that the offer mustinvolve a similar opportunity in termssuch as a similar level of authority andresponsibility, a similar opportunity foradvancement within the organization,similar tenure and work scheduling.

The Department proposes a regulationto reflect this statutory requirement of‘‘opportunity’’ for the U.S. worker whohas lost a job. At a minimum theDepartment believes that an offer of a‘‘similar employment opportunity’’must be a bona fide offer, rather than anoffer designed so as to induce theemployee to refuse, or with theexpectation that the employee willrefuse the offer.

The Department seeks comments onthis proposed regulatory provision, andon any other related matters.

6. What Constitutes ‘‘Equivalent orHigher Compensation and Benefits’’ fora U.S. Worker, for Purposes of the OtherJob Offer to That Worker so as to NotConstitute a Prohibited ‘‘Lay Off’’ orDisplacement?

The ACWIA provides that noprohibited ‘‘lay off’’ of a discharged U.S.worker has occurred, if the U.S. workeris offered another employmentopportunity with the same employer ‘‘atequivalent or higher compensation andbenefits than the position from whichthe employee was discharged.’’ It wouldappear obvious that an ‘‘opportunity’’could not be considered to provide‘‘equivalent or higher compensation andbenefits’’ if that ‘‘opportunity’’ wouldprovide the worker a lower disposableincome or would require the worker toincur expenses that drive down his/herfinancial standing. By specifying‘‘equivalent or higher’’ pay and benefits,Congress must have intended that theU.S. worker be offered a positive, ratherthan negative, ‘‘employmentopportunity.’’ In this regard, one of thesponsors of the ACWIA compromiselegislation stated that ‘‘[t]he intent ofCongress is that the ‘similaremployment opportunity with the sameemployer at equivalent or highercompensation and benefits’ would be ameaningful offer. It is Congress’ intentthat an employer should not be able toevade liability for a violation of thedisplacement attestation because anoffer of an alternative employmentopportunity was made withoutconsiderations such as relocationexpenses and cost of living differentialsif the alternative position was in a

different geographical location.’’ (SeeCong. Rec. E2324, Nov. 12, 1998,remarks of Rep. Smith). Assuming theregulations provide that a ‘‘similaremployment opportunity’’ may includea transfer to another commuting area,the Department takes the position thatan alternative ‘‘opportunity’’ offered tothe U.S. worker must take intoconsideration matters such as cost ofliving differentials and relocationexpenses (e.g., a New York City‘‘opportunity’’ offered to a worker ‘‘laidoff’’ in Kansas City would provide awage adjustment from the Kansas Citypay scale and would include relocationcosts). The Department is alsoconsidering adapting relevantprovisions of regulations definingequivalent compensation and benefitsunder the Equal Pay Act regulations (seeitem D.3, above) and of the Family andMedical Leave Act regulations, 29 CFR825.215(c)–(d). The Department seekscomments on this proposal and on anyrelated matters that encompass thisconcept.

7. What is Required of an H–1B-dependent (or Willful Violator)Employer Which Seeks InformationAbout Displacement or PotentialDisplacement of U.S. Workers at aSecond Employer’s Worksite?

The ACWIA’s secondarydisplacement prohibition requires thatcertain H–1B employers (H–1B-dependent; willful violator) not placeany H–1B worker at another employer’sworksite (to work under ‘‘indicia ofemployment’’ with such secondaryemployer), ‘‘unless the [H–1B] employerhas inquired of the other employer as towhether, and has no knowledge that ...the other employer has not displaced orintends to displace a United Statesworker employed by the otheremployer’’ within the period of 90 daysbefore and 90 days after the H–1Bworker’s placement at that worksite.The ACWIA further specifies (in theenforcement and penalties provisions)that the H–1B employer may bedebarred for a secondary displacement‘‘only if the Secretary of Labor foundthat such placing employer ... knew orhad reason to know of suchdisplacement at the time of theplacement of the nonimmigrant with theother employer.’’ The language andstructure of these provisionsdemonstrates that Congress intended forthe H–1B employer to take proactivesteps to ascertain whether placement ofH–1B workers would correspond withthe lay off of similarly-employed U.S.workers. In enacting this provision,Congress clearly intended that theemployer make a reasonable inquiry and


give due regard to available information.Simply making a pro forma inquirywould not insulate a covered employerfrom liability should the secondaryemployer displace a U.S. worker from asimilar job which would be performedby an H–1B worker.

The Department recognizes that theACWIA obligation concerning‘‘secondary displacement’’ could easilybe subverted if a placing H–1B employerwere merely to make a pro formainquiry and rely on a pro forma reply.Thus, in order to assure that thepurposes of the statute are achieved, theDepartment proposes to develop aregulatory provision to require that theH–1B employer make a reasonableminimal effort to inquire about potentialsecondary displacement. TheDepartment believes that a covered H–1B employer may demonstrate sucheffort through a variety of methods thatinclude, but are not limited to, thefollowing:

• Securing and retaining a writtenassurance from the secondary employerthat it has not and does not intend todisplace a similarly-employed U.S.worker within the period 90 days beforeand 90 days after the placement of anH–1B worker at the work site; or

• Preparing and retaining a note tothe file, prepared at the same time orpromptly after receiving the secondaryemployer’s oral statement (including thesubstance of the conversation, the dateof the communication, and the names ofthe individuals involved) that thesecondary employer has not and doesnot intend to displace a similarly-employed U.S. worker within the period90 days before and 90 days after theplacement of an H–1B worker at thework site; or

• Including a secondary displacementclause in the contract between the H–1Bemployer and the secondary employer,whereby the secondary employer wouldagree that it has not and will notdisplace similarly-employed U.S.workers at the work site at any timewithin the period 90 days before and 90days after the placement of an H–1Bworker.

Further, even with such assurance, aplacing H–1B employer should not beable to ignore other information thatcomes to its attention—such asnewspaper reports of relevant lay-offsby the secondary employer—if suchinformation becomes available before itsplacement of H–1B workers with thatother employer. Under suchcircumstances, the employer would beexpected to recontact the secondaryemployer and receive credibleassurances that no lay offs are planned

or have occurred in the applicable timeframe.

The Department seeks comments onthe methods described above, and anyother methods for demonstrating that aplacing employer has made a reasonableinquiry concerning potential secondarydisplacement of U.S. workers.

8. What Documentation Will beRequired of Employers About ACWIA’sNon-Displacement Provisions?

The ACWIA prohibits the smallaffected class of H–1B employers—H–1B-dependent or willful violators—fromhiring H–1B workers if their doing sowould displace similar U.S. workersfrom an essentially equivalent job in thesame area of employment. The employerwill not be considered to have displacedthe U.S. worker if that worker leftvoluntarily, was dismissed for a validreason, or turned down the employer’soffer of a similar employmentopportunity with equivalent or highercompensation and benefits (aspreviously discussed).

The Department proposes to requirethat covered H–1B employers retaincertain documentation with respect toeach U.S. worker in the same localityand same occupation as any H–1Bnonimmigrants hired, and who left itsemploy in the period 90 days before orafter the employer’s petition for the H–1B worker(s). In addition, because anemployer generally takes action toeffectuate a layoff at a point before aworker’s employment terminates, suchdocumentation would be required forany such employee for whom theemployer has taken any action duringthe period 90 days before or after thepetition to cause the employee’stermination (e.g., a notice of futuretermination of the employee’s job). Forall such employees, the Departmentproposes that covered H–1B employersmaintain the name, last-known mailingaddress, occupational title and jobdescription, as well as anydocumentation concerning theemployee’s experience andqualifications, and principalassignments. In addition, theDepartment proposes that the employermaintain copies of all documentsconcerning the departure of suchemployees, such as notification by theemployer of termination of employmentprepared by the employer or theemployee and any responses thereto,evaluations of the employee’s jobperformance, etc. Finally, the employerwould be required to retain copies of theterms of any offers of similaremployment to such U.S. workers andthe employee’s response thereto.Because EEOC regulations (29 CFR

1602.14) currently require retention ofall personnel or employment records,the Department does not believe thatthis requirement in the H–1B regulationwould impose any new burden onemployers.

The Department seeks comments onthis proposed regulation, and on anyrelated matters.

E. What Requirements Does the ACWIAImpose Regarding Recruitment of U.S.Workers, and Which Employers areSubject to Those Requirements?

The ACWIA requires that an H–1B-dependent employer (or employer foundby DOL to have committed willful H–1Bviolations within a 5-year period) take‘‘good faith steps to recruit, in theUnited States using procedures thatmeet industry-wide standards andoffering compensation that is at least asgreat as that required to be offered to H–1B nonimmigrants . . ., United Statesworkers for the job for which thenonimmigrant or nonimmigrants is orare sought.’’ The Department is chargedwith enforcing this obligation, while theAttorney General administers a specialarbitration process to addresscomplaints regarding an H–1Bemployer’s companion obligation to‘‘offer the job to any United Statesworker who applies and is equally orbetter qualified for the job for which thenonimmigrant or nonimmigrants is orare sought.’’ The ACWIA furtherprovides that ‘‘[n]othing insubparagraph (G) [this new attestationelement on recruitment] shall beconstrued to prohibit an employer fromusing legitimate selection criteriarelevant to the job that are normal orcustomary to the type of job involved,so long as such criteria are not appliedin a discriminatory manner.’’ An H–1Bemployer is not subject to theserecruitment requirements if its laborcondition application involves only‘‘exempt’’ H–1B workers, or if the H–1Bworker has ‘‘extraordinary ability,’’ or isan ‘‘outstanding professor or researcher’’or a ‘‘multinational manager orexecutive,’’ as defined in section203(b)(1)of the INA.

It should be noted that the statutoryattestation language requires theemployer to affirm the statement that,‘‘prior to filing the application—[theemployer] has taken good faith steps torecruit. . .’’ This language appears to bebased on the presumption thatemployers file LCAs for individualworkers at the time the need for thatworker arises. In fact, however,employers may and often do file oneLCA for many workers and use that LCAinto the future in support of H–1Bpetitions filed when the actual


employment need does arise. Forexample, an LCA filed for 100 computerprogrammers may be used up to 100times over a period of months or evenyears (through the three year validityperiod) in support of separate petitionsfor individual workers.

Given this common practice byemployers, it is not reasonable toassume Congressional intent to requirea separate LCA for each worker,particularly in light of the existingregulatory provision allowing the listingof multiple positions and work locationson a single application, which was notaltered by ACWIA. At the same time, itis not reasonable to assume thatCongress expects employers using theH–1B program (in this case, only H–1B-dependent employers and willfulviolators) to be able to attest—on theLCA filing date—that they have alreadyrecruited in good faith in the U.S. forevery job for which they may wish topetition for H–1B workers over thethree-year life of the LCA, and further,that they already have offered that jobto every equally or better qualified U.S.worker who applies. As a practicalmatter, it would be virtually impossiblefor employers to be able to conduct suchrecruitment, since they have not yetidentified every job opportunity whichmight arise at some point in the LCA’sthree-year validity period, for which theemployer might wish to file an H–1Bpetition for an H–1B worker. In thiscontext, the Department believes thatthe ‘‘good faith recruitment’’ attestationmust be read, interpreted and applied tomean that the employer promises—andagrees to be held accountable—that ithas or will recruit with respect to anyjob opportunity for which theapplication is used, whether thatrecruitment occurs before or after theapplication is filed (if the application isto be used in support of multiplepetitions for future workers). TheDepartment invites comments on thisapproach and any alternativesuggestions for how to appropriatelybalance employers’ practices under theprogram with their good faithrecruitment obligations in the context ofthe statutory language on this laborcondition statement.

The Department recognizes that theACWIA requirements for a small sub-setof H–1B employers to recruit U.S.workers present several points on whichviews might differ. Therefore, theDepartment proposes a regulationaddressing the following matters andseeks comments on all of these points,as well as on any other related matters.

1. How are ‘‘Industry-wide Standards’’for Recruitment to be Identified?

The benchmark for minimal U.S.worker recruitment under the ACWIA is‘‘industry-wide’’ procedures. Thisprovision allows employers to usenormal recruiting practices which arecommon among similar employers intheir industry in the United States (eventhough, in some cases at least, thesehave been demonstrably unsuccessfulby virtue of the employer seeking accessto foreign labor markets). The statutedoes not require employers to complywith any specific recruitment regimenor practice, nor does the Departmentbelieve it is authorized to prescribe anyexplicit regimen. In this regard, theDepartment is of the view that the H–1B-dependent employer should look, inparticular, to those recruitmentstrategies by which employers in anindustry have successfully recruitedU.S. workers; through this rulemakingproposal, the Department solicits andwill consider the views of majorindustry associations, employeeorganizations, and other interest groupsconcerning successful recruitmentpractices and strategies.

The Department is considering anumber of options regarding the type orlevel of recruitment necessary, rangingfrom prescribing specific requiredrecruitment efforts to simply allowingemployers to pursue what they perceiveto be industry standard procedures.

There are a number of recognizedmethods for successfully soliciting U.S.worker applicants, including:advertising in general distributionpublications, trade or professionaljournals, or special interest (e.g., ethnic-oriented) publications; America’s JobBank or other Internet sites advertisingjob vacancies; outreach to trade orprofessional associations; use of publicand/or private employment agencies,referral agencies, or ‘‘headhunters;’’outreach to colleges, universities,community/junior colleges andbusiness/trade schools; job fairs; contactwith labor unions; and recruitment,development or promotion from withinan employer’s organization (or itscompetitors), including workers whomay have been displaced from similarjobs. The Department’s expectation isthat good faith recruitment willordinarily involve several of thesemethods of solicitation, both passive(where potential applicants find theirway to an employer’s jobannouncements, such as toadvertisements in publications and theInternet) and active (where theemployer takes proactive steps toidentify and get information about it’s

job openings into the hands of potentialapplicants, such as through job fairs,outreach at universities, use of‘‘headhunters,’’ and providing trainingto incumbent employees in theemployer’s organization).

The Department is consideringwhether the regulation should recognizethat if an employer uses at least three ofthese recognized solicitation tools (atleast one or two of which are active), itwill be presumed to meet the ‘‘goodfaith’’ standard in this regard. Thisapproach would, in effect, create apresumption for employers which donot wish to demonstrate industrypractice for recruitment. An employerwhich did not use at least three of theseapproaches could still demonstrate its‘‘good faith’’ by showing that itsrecruitment methods comport with theindustry norm, as discussed below.However, the Department believes thatgood faith recruitment must, at aminimum, involve solicitation effortswhich include advertising in relevantand appropriate print media or theInternet (where common in theindustry), in publications and atfacilities commonly used by theindustry (e.g., higher educationinstitutions), as well as solicitation ofU.S. workers within the employer’sorganization. Of course, an employerwould have to use good faith in therecruitment conducted. For example, anemployer would be expected toadvertise for a reasonable period oftime, and would be expected to do soin those publications and to attendthose job fairs which would ordinarilybe read or attended by the types ofworkers being recruited. TheDepartment seeks comments as towhether this approach offers aneffective means of implementing theAct’s objectives, including specificallywhether such a presumption should beestablished and, if so, whether it shouldinvolve at least three recognizedsolicitation tools or some other number.

The Department considers itimportant that there be a generalrecognition that good faith recruitmentmust involve some active methods ofsolicitation, rather than just passivemethods such as posting jobannouncements at the employer’s worksite(s) or on its Internet web page. TheDepartment’s view is that ‘‘industry-wide standards’’ do not mean the lowestcommon denominator—i.e., theminimum recruitment or least effectivemethods in attracting U.S. workers usedby companies in an industry. Rather,solicitation must be at a level andthrough methods and media which arenormal, common or prevailing in anindustry—the ‘‘standard’’—including at


least the medium most prevalently usedin the industry and employing thosestrategies that have been shown to besuccessfully used by employers in anindustry to recruit U.S. workers.

The Department believes that, as ageneral matter, the statutory intent ofthe recruitment attestation is besteffectuated if employers are required toutilize the recruitment methods of theset of employers which primarilycompete for the same types of workersas those who are the subjects of the H–1B petitions to be filed pursuant to theLCA. For example, a hospital,university, or computer softwaredevelopment firm would be required touse the standards utilized by the healthcare, academic, or informationtechnology industries, respectively, inhiring workers in the occupations inquestion. Similarly, a staffing firm,which places its workers at job sites ofother employers, would be required toutilize the standards of the industrywhich primarily employs suchworkers—e.g., the health care industry,if the staffing firm is placing physicaltherapists (whether in hospitals, nursinghomes, or private homes); or theinformation technology industry, if thestaffing firm is placing computerprogrammers, software engineers, orother such workers. These firms arecompeting for the same kind of workersand the ‘‘industry standard’’ shouldrecognize that fact and not reward lackof success in attracting U.S. workers bysome sectors of an industry.

The Department seeks comments onthis proposed regulation and on anyother related matters, including anypossible alternative regulatory standardsand their contents and consequences.

2. What Constitute ‘‘Good Faith Steps’’in Recruitment?

The essential requirement for goodfaith recruitment, as mandated by theACWIA, is that employers maintain afair and level playing field for allapplicants and be able to show that theyhave not skewed their recruitmentprocess against U.S. workers. TheDepartment believes that ‘‘good faith’’recruitment does not involve only thesteps taken to communicate/advertisejob openings and solicit applications(ending upon the employer’s receipt ofthe applications), but also encompassespre-selection treatment of theapplicants. The level playing field forU.S. applicants mandated by theACWIA cannot be guaranteed if onlythose steps taken to find potentialapplicants and solicit applications areconsidered; the pre-selection treatmentof applicants must also be considered ifgood faith is to be assured. For example,

an application screening processtailored to favor H–1B workers andbypass U.S. applicants would representas much a violation of the good faithrecruitment requirement as a failure toseek U.S. applicants in the first place.

The Department does not propose anyspecific regimen or practice for pre-selection treatment of applications andapplicants. However, in circumstanceswhere H–1B employers aredemonstrably unsuccessful (or lesssuccessful than their competitors) inhiring U.S. workers, the Departmentintends to scrutinize the recruitmentprocess, including pre-selectiontreatment, to insure that U.S. workersare given a fair chance for considerationfor a job, rather than being ignored orrejected through some tailored screeningprocess based on an employer’spreferences or prejudices with respect tothe make up of its workforce. Examplesof such processes could include apractice of interviewing H–1Bapplicants but not U.S. applicants withequivalent qualifications, or assigningdifferent staff to the screening orinterviewing of H–1B and U.S.applicants.

The Department solicits comments onthis issue and the relevance of theseexamples in identifying less than ‘‘goodfaith’’ recruitment, and the existence ofany other practices with a similar designor impact.

The Department is of the view that—as a practical matter—there may be littlereason to examine the particulars of anemployer’s recruitment efforts if theresults of those efforts amplydemonstrate the employer’s good faithin employing U.S. workers. Thus, theDepartment is considering whether tocraft a presumption of good faithrecruitment based on an employer’shiring of a significant number of U.S.workers and, thereby, accomplishing asignificant reduction in the ratio of H–1B workers to U.S. workers in theemployer’s workforce. Of course, such apresumption would not affect anindividual worker’s claim that he/shewas discriminated against inrecruitment or otherwise, or anindividual U.S. worker’s complaint thathe/she was equally or better qualifiedthan an H–1B worker and was not givenan offer of employment (a matter whichis under the jurisdiction of theDepartment of Justice). The Departmentseeks comments on the possibility, thecontents, and the consequences of sucha presumption.

The Department’s regulation willinclude notification of its intention torefer any potential violations of U.S.discrimination statutes revealed through

this scrutiny to the appropriateenforcement agency.

In addition, the Department’sregulation will inform employers thatthe assessment of ‘‘good faith’’recruitment will be based on the wholerecruitment process, but will notinclude an examination or ‘‘secondguessing’’ of the work-related screeningcriteria or the hiring decision(s) withregard to any particular applicant(s) (amatter specifically assigned by theACWIA to the Attorney General’sprocedures).

The Department seeks comments onthis proposed regulation and on anyother related matters.

3. How are ‘‘Legitimate SelectionCriteria Relevant to the Job That areNormal or Customary to the Type of JobInvolved’’ to be Identified andDocumented?

In conducting the ACWIA-mandated‘‘good faith’’ recruitment of U.S.workers, an affected H–1B employer isspecifically authorized to apply‘‘legitimate selection criteria relevant tothe job that are normal or customary tothe type of job involved.’’ This statutorystandard, thus, has several parts. Thecriteria must be legitimate, which wouldexclude any criteria which would, inthemselves, be violative of anyapplicable laws (e.g., age, sex, race). Thecriteria must be relevant to the job,which would require a nexus betweenthe criteria and the job’s duties andresponsibilities. And the criteria mustbe normal or customary to the type ofjob involved, which would be based onthe practices and expectations of theindustry rather than on the preferencesof a particular employer. TheDepartment considers that thisrequirement would be satisfied, forexample, if the employer uses criteriataken from the North AmericanIndustrial Classification System(NAICS) being developed to replace theStandardized OccupationalClassifications. With regard to selectionstandards, the language and purpose ofthe statute mandate that the employer isnot to impose spurious hiring criteriathat discriminate against U.S. applicantsin favor of H–1B workers; suchemployer actions would subvert theobligation to hire an ‘‘equally or betterqualified’’ U.S. worker. (See Cong. Rec.E2324, Nov. 12, 1998; Cong. Rec.S12751, Oct. 21, 1998).

In evaluating an employer’s ‘‘goodfaith’’ recruitment in the pre-selectiontreatment of applicants andapplications, the Department will limitits scrutiny of screening criteria (asopposed to processes) to those factorsset forth in the law.


The Department is proposing aregulatory provision which informs theemployer of these standards foracceptable hiring criteria. TheDepartment seeks comments on thisproposal and on any other relatedmatters.

4. What Actions Would Constitute aProhibited ‘‘Discriminatory Manner’’ ofRecruitment?

In prohibiting the employer’sapplication of otherwise-legitimatehiring criteria ‘‘in a discriminatorymanner,’’ the ACWIA mandates that theemployer conduct recruitment on a fairand level playing field for all applicantswithout skewing the recruitmentprocess against U.S. workers. Obviously,the use of hiring criteria prohibited byany applicable discrimination law (e.g.,sex, race, age, national origin) wouldconstitute a prohibited ‘‘discriminatory’’recruitment. The Department isproposing a regulatory provision whichwill inform the employer of these basicstandards, and that solicitation and pre-selection screening processes or criteriathat are applied in a disparate manner—either between foreign and U.S.workers, or for those jobs where H–1Bworkers are involved (as opposed tothose where they are not involved)—shall constitute discriminatoryrecruitment. Employers will also bealerted to the Department’s compliancewith the Congressional intent that‘‘[e]mployers who consistently fail tofind U.S. workers to fill positionsshould receive the Department’s specialattention in this context of ‘good faith’recruitment’’ (See Cong. Rec. E2325,Nov. 12, 1998).

The Department seeks comments onthis proposed regulation and on anyother related matters.

5. What Documentation Would beRequired of Employers?

In order for an employer todemonstrate that it has engaged in goodfaith recruitment of U.S. workers inaccordance with industry-widestandards, and that the compensationoffered is at least as great as that offeredto H–1B nonimmigrants, an employerwill be required to maintain certaindocumentation. The Departmentbelieves that it should not be necessaryfor the employer to retain actual copiesof advertisements, etc., provided that itmaintains documentation of therecruiting methods used, including theplaces and dates of the advertisementsand postings or other recruitmentmethods used, the content of theadvertisements and postings, and thecompensation terms (if such are notincluded in the content of the

advertisements and postings). Inaddition, the Department proposes thatthe employer’s public disclosure filecontain information summarizing theprincipal recruitment methods used andthe time frame in which suchrecruitment was conducted.

The Department requests commentson how employers can and shoulddetermine industry-wide standards, forexample, by obtaining credible evidencesuch as trade organization surveys,studies by consultative groups, or astatement from a trade organizationregarding the industry norm(s). TheDepartment also seeks comments onhow to make the employer’sdetermination available for publicdisclosure to U.S. workers and others.

In order to ensure that good faithrecruitment was conducted, theDepartment proposes that employersretain any documentation they havereceived or prepared concerning theconsideration of applications by U.S.workers, such as copies of applicationsand/or related documents, test papers,rating forms, records regardinginterviews, job offers, etc. As discussedabove with regard to documentation onthe non-displacement attestationelement (see item D.8), the EEOCregulations already require thatemployers retain all personnel oremployment records, and theDepartment therefore believes that thisrequirement in the H–1B regulationwould create no new obligation foremployers.

The Department seeks comments onthis proposed regulation and on anyother related matters, including anypossible alternative recordkeepingrequirements.

F. What is Required for ‘‘ElectronicPosting’’ of Notice to Employees of theEmployer’s Intention to Employ H–1BNonimmigrants?

The ACWIA modified the existingstatutory requirement for worksiteposting of notices (where there is nocollective bargaining representative), topermit an H–1B employer to useelectronic communication as analternative to posting ‘‘hard copy’’notices in conspicuous locations at theplace of employment. In providing thisalternative method for notification toaffected workers, Congress in no wayindicated an intention to reduce theeffectiveness of the notice requirementwhich has been an element of the H–1Bprogram from its inception. Thus, theACWIA provision must be understoodto mean that the electronically postednotices are readily available to theaffected workers. An employer mayaccomplish this by any means it

ordinarily uses to communicate with itsworkers about job vacancies orpromotion opportunities, includingthrough its ‘‘home page’’ or ‘‘electronicbulletin board’’ to employees who have,as a practical matter, direct access to thehome page or electronic bulletin board;or through E–Mail or an activelycirculated electronic message such asthe employer’s newsletter. Whereemployees are not on the ‘‘intranet’’which provides direct access to thehome page or other electronic site butdo have computer access readilyavailable, the employer may providenotice to such workers by directelectronic communication such as E–Mail. If the employees lack suchelectronic access, notification may byprovided by physical (‘‘hard copy’’)posting at the worksite.

The Department proposes regulatorylanguage to convey this requirement, ina revision of the regulation on worksitenotices (see item O.5, below, concerningrepublication for further comments).The Department seeks comments on thisproposal, as well as on any alternativestandard and its possible consequencesfor affected workers.

G. What Does the ACWIA Require ofEmployers Regarding Benefits to H–1BNonimmigrants?

The ACWIA has added to the H–1Bstatute an express statement of theinherent obligation of all H–1Bemployers, under the first attestationelement on wages and workingconditions, ‘‘to offer to an H–1Bnonimmigrant, during thenonimmigrant’s period of authorizedemployment, benefits and eligibility forbenefits (including the opportunity toparticipate in health, life, disability, andother insurance plans; the opportunityto participate in retirement and savingsplans; and cash bonuses and non-cashcompensation, such as stock options(whether or not based on performance)on the same basis, and in accordancewith the same criteria, as the employeroffers to United States workers.’’ TheDepartment proposes regulatoryprovisions that implement thisobligation regarding benefits. TheDepartment seeks comments on thefollowing and related matters.

1. What Does ‘‘Same Basis and * * *Same Criteria’’ Mean With Respect to anEmployer’s Treatment of U.S. Workersand H–1B Workers With Regard toBenefits?

In enacting an explicit statement of anemployer’s obligation to offer the H–1Bworker benefits ‘‘on the same basis, andin accordance with the same criteria, asthe employer offers to [United States]


workers,’’ Congress emphasized itsintention that the wages and workingconditions of U.S. workers not beadversely affected through theemployment of H–1B workers at wagesand fringe benefit levels less than thoseprovided to U.S. workers. It is theDepartment’s view that an employer’sobligation to provide benefits to workers‘‘on the same basis, and in accordancewith the same criteria, as the employersoffers to [U.S.] workers’’ requires that anemployer offer to its H–1B workers thesame benefit package as is offered toU.S. employees, and on the same basisas it is offered to U.S. workers. In otherwords, an employer may not providemore strict eligibility or participationrequirements for H–1B workers. Ofcourse, the benefits actually providedwould not have to be identical, since,for example, one worker might choosefamily health insurance coverage, andanother individual coverage, and yetanother might choose not to have healthbenefits because he or she did not wantto pay the employee’s share of thepremium in a co-pay package. Thecomparison of the ‘‘basis’’ and ‘‘criteria’’should take into account the categoriesor types of workers to whom thebenefits are being provided (e.g., full-time workers compared to full-timeworkers; professional staff compared toprofessional staff); in other words, thecomparison is between similarly-employed workers. The Department alsoseeks comments as to whether the‘‘same basis’’ requirement would allowan employer to provide a different, butequivalent, package of benefits. TheDepartment recognizes that determiningthe equivalency of benefits could bequite burdensome for both employersand the Department—particularly if thetest were a qualitative evaluation ofbenefits, as distinguished from acomparison of the cost to employers.

The Department further understandsthat this provision would allow anemployer to provide greater oradditional benefits to H–1B workersthan are offered to U.S. workers—that,with respect to H–1B workers, therequirement sets a benefits floor, but nota ceiling. This construction of thestatutory language is consistent with theACWIA directive that the fringe benefitsobligation is imposed under attestation(1)(A), which embodies the concept thatthe prescribed wages and workingconditions are minimums which mustbe afforded the H–1B workers.

The Department recognizes that analternative interpretation of the benefitsstandard would interpret the ACWIAphrases ‘‘same basis’’ and ‘‘samecriteria’’ to mean literally that theyrequire the same (or possibly

equivalent) treatment of similarly-situated U.S. and H–1B workers withrespect to benefits. Such aninterpretation would not permit morefavorable treatment to either U.S.workers or H–1B nonimmigrants withregard to benefits.

The Department is also aware thatthere is a possibility of complicationswith respect to the ‘‘benefits’’obligations of a U.S. employer that ispart of a multinational corporateoperation, particularly where an H–1Bworker works in the U.S. for only ashort period of time. The Departmentrecognizes that under thesecircumstances it may not be practical forthe U.S. employer to provide the H–1Bworker with exactly the same benefitsprovided to its U.S. workers. TheDepartment proposes to provide thatwhile U.S. employers may cooperatewith their corporate affiliate(s) in the H–1B worker’s home country with regardto payment of wages and maintenanceof benefits (such as that country’sretirement system), the U.S. employer isresponsible for compliance with theACWIA requirements. This concernarises where a foreign affiliate of apetitioning employer is involved as theagent for payment of wages andprovision of benefits to H–1B workers.The statutory obligations must be fullymet in such instances. The ultimateresponsibility for all employerobligations under this Act, including theprovision of benefits to the H–1B workerat least equal to those offered its U.S.workers, must lie with the U.S.employer which brings nonimmigrantworkers into the country. Ultimately, itis the U.S. employer, not the foreignsubsidiary, pledging the H–1B worker abenefit package like that of its U.S.workers. The Department will look withparticular care at circumstancesinvolving a foreign subsidiary wherethere is an appearance of contrivance toavoid the sponsoring employer’sobligation to provide at least equalwages and benefits to H–1B and U.S.workers. At the same time, theDepartment will carefully examine thecircumstances in such cases to considernon-equivalent but nonethelessequitable benefits, including in light ofthe actual length of stay of the H–1Bworker in the U.S.

Further, the Department proposes tomodify section 655.732 of the existingregulations concerning fringe benefitspursuant to the ‘‘working conditions’’attestation, to make it clear that anemployer must provide the H–1Bworker at least the fringe benefits andworking conditions provided to theemployer’s U.S. workers. Thismodification would make it clear that

the requirement that the employerprovide working conditions that willnot adversely affect the workingconditions, including fringe benefits, ofU.S. workers similarly employednecessarily requires consideration ofsimilarly employed workers in theemployer’s own work force, as well asto prevailing conditions in the area ofemployment in some circumstances.

Finally, the Department seekscomments as to whether the Departmentshould define ‘‘benefits’’ within themeaning of the ACWIA or simply givea list of examples. Although ‘‘benefits’’are defined in various programs such asthe Employee Retirement IncomeSecurity Act of 1974 and the ServiceContract Act, the Department notes thatthe ACWIA provision on ‘‘benefits’’clearly contemplates the inclusion ofvarious forms of cash and non-cashcompensation, such as bonuses andstock options, which are ordinarilyconsidered wages.

The Department seeks comments onthese matters, as well as on any otherrelated matters.

2. How will Various Benefits beEvaluated, and What DocumentationWould be Required?

The new statutory language mandatesthat all employers of H–1Bnonimmigrants offer benefits to H–1Bworkers ‘‘on the same basis and inaccordance with the same criteria’’ asoffered to similarly-employed U.S.workers. To allow the Department todetermine whether this statutoryobligation has been met, the Departmentbelieves it will be necessary at aminimum that employers retain copiesof fringe benefit plans and summaryplan descriptions provided to workers,including all rules regarding eligibilityand benefits, evidence of what benefitsare actually provided to individualworkers, and how costs are sharedbetween employers and employees.

As discussed above, the Department isconsidering whether the statute willpermit H–1B nonimmigrants to beprovided different benefits or greaterbenefits, such as through an affiliate intheir home country. If different benefitsare provided, the Department believesan employer must be required to keepdetailed information regarding thebenefits provided to the H–1B workerand information to demonstrate thevalue of these benefits, as well as thebenefits provided to U.S. workers. TheDepartment solicits suggestionsregarding exactly what records would benecessary for such determinations.

It is the Department’s understandingthat these records are currently kept formost fringe benefits, pursuant to the


requirements of the EmployeeRetirement Income Security Act of 1974and the Internal Revenue Service.

The Department seeks comments onthis proposal and any related matters.

H. What Does the ACWIA Require ofEmployers Regarding Payment of Wagesto H–1B Nonimmigrants for‘‘Nonproductive Time’’?

In response to concerns andinformation about many situations inwhich H–1B workers were brought foremployment in the United States butwere then ‘‘benched’’ in anonproductive status and paid little ornone of the required wages, Congressenacted an explicit requirement—consistent with the Department’sregulation—that the employer paywages to an H–1B worker in‘‘nonproductive status’’ in certaincircumstances. This obligation iseffective ‘‘after the H–1B worker hasentered into employment with theemployer,’’ but otherwise not later than30 days after the worker’s date ofadmission into the U.S. (if entering thecountry pursuant to the petition) or 60days after the date the worker ‘‘becomeseligible to work for the employer’’ (ifalready present in the country when thepetition is approved). The Department isconsidering whether the H–1B worker‘‘enters into employment’’ when he firstmakes himself available for work, suchas, for example, by reporting fororientation or training, or when heactually begins receiving orientation ortraining or otherwise performs work orcomes under the control of hisemployer. Once the worker ‘‘enters intoemployment’’ (or after the 30 or 60 dayperiod expires), the ‘‘benching’’ rulesapply. Subject to the qualificationsdiscussed below, an H–1B worker whois already present in the U.S. isconsidered by the Department to be‘‘eligible to work for the employer’’ (andthus covered by the ‘‘benching’’ rules)upon the completion of the visaissuance process; matters such as theworker’s obtaining a State license wouldnot be relevant to this determination.

In a nutshell, the ‘‘benching’’provisions forbid an employer paying anH–1B worker less than the requiredwage for nonproductive time, except insituations where the nonproductivestatus is due either to the worker’s owninitiative or to circumstances renderingthe worker unable to work. TheDepartment’s enforcement experiencehas demonstrated that some employersbring H–1B workers into this countryand then, for a variety of reasons,‘‘bench’’ the workers in non-productivestatus and fail to pay them the wagesattested on the LCA. Most frequently,

such ‘‘benching’’ occurs where theemployer lacks work to assign to the H–1B worker, or the worker is engaged intraining or development activities (suchas orientation in the employer’soperations or studying for a licensingexam). It is entirely appropriate—asCongress recognized in the ACWIAenactment—for an employer to beprohibited from evading its wageobligations to such workers, who areunder the employer’s control andentitled to the LCA-attested wages. TheACWIA provisions recognize, however,that the employer should not be liableto pay wages for the worker’s timewhich is nonproductive for reasonsunattributable to the employer, such asthe worker’s hospitalization orrequested leave-of-absence (consistentwith the conditions related to the H–1Bworker’s maintenance of legal status inthe U.S.).

There is no authorization for areduction in the prescribed wage rate forany H–1B worker who is innonproductive status due toemployment-related conditions such astraining, lack of assigned work, lack ofa license, or other such reasons. The H–1B program was not intended andshould not operate to provide an avenuefor nonimmigrants to enter the U.S. andawait work at the employer’s choice orconvenience. Instead, the H–1Bprogram’s purpose is to enableemployers to employ fully-qualifiednonimmigrants for whom employmentopportunities currently exist. When theH–1B worker is ‘‘benched’’ and notbeing paid his/her required wagesduring nonproductive time, the workeris not permitted to be employed by anyother employer (indeed, suchemployment would expose both theworker and the other employer to INSsanctions). The H–1B worker who is‘‘benched’’ is without any legal meansof support in this country. Thus, an H–1B worker affected by a temporaryreduction in force or a temporary shut-down of the employer’s operationscould not accept any other employment(except with an LCA-certified employerwho files a petition for the worker, orwith another employer able to providesome other adjustment of thenonimmigrant’s status under the INA).In contrast, U.S. workers in a reductionin force or temporary shut-down wouldbe able to seek employment elsewhereand, in addition, could be eligible forFederal programs such as food stamps,Aid to Families with DependentChildren, and other similar benefits notavailable to the H–1B nonimmigrants.(See, e.g., 7 CFR 273.4; 45 CFR 233.50)Where an employer does not have

sufficient work for the H–1B worker tomake the payment of his/her requiredwages feasible or advantageous for theemployer, such employer may, at anytime, terminate the employment of theH–1B worker, notify the INS, pay for theworker’s return to his/her country oforigin as required by Section 214(c)(5)of the INA and INS regulations at 8 CFR214.2(h)(4)(iii)(E) (1995), and no longerbe subject to the H–1B program’srequired wage.

In all particulars, the ACWIAprovision is a statutory enactment of theDepartment’s current regulation, theenforcement of which (along with someother provisions) was enjoined by adistrict court on AdministrativeProcedure Act procedural grounds(National Association of Manufacturersv Reich, No. 95–0715, D.D.C. July 22,1996). The Department has previouslypublished this regulatory provision fornotice and comment (60 FR 55339, Oct.31, 1995), and is now republishing it forfurther comments. The Departmentencourages commenters to review theprevious Final Rule and Notice ofProposed Rulemaking (60 FR 4028 and60 FR 55339) in making theirsubmissions. (See item O, below.)

The Department proposes to modifythe existing regulation, to implementthe ACWIA provision and to requirethat the employer pay the H–1Bworker’s wages when the worker is innonproductive status due toemployment-related reasons such astraining or lack of assigned work. Theregulation does not require payment ofsuch wages where the nonproductivestatus is due to reasons unrelated toemployment (such as the worker’svoluntary request and convenience ornon-work-related circumstancesrendering him/her unable to work),unless such payment is required by INSas a condition of the H–1B workers’continued maintenance of lawful statusin the United States, or is required bysome other statute, such as the Familyand Medical Leave Act. Thus, therequired wage need not be paid to theworker who—on his/her owninitiative—requests ‘‘time off’’ toconduct research on mattersunconnected to his/her employment, orrequests a delay in his/her first day ofwork in order to have an opportunity totour the U.S. before undertaking dutiesof employment. However, the employerwould not be relieved of the wageobligation to H–1B worker(s) for anyrequired leave of absence, even if suchleave of absence includes U.S. workers.


I. What Special Rule Does the ACWIAProvide for Academic Salaries?

The ACWIA provision on ‘‘benching’’has a special rule permitting ‘‘a schoolor other education institution’’ to applyan established salary practice whichmight result in an H–1B worker being inan ostensibly ‘‘unpaid’’ status for somepart of a calendar year. This provisionspecifies that the institution ispermitted to disburse an annual salaryover fewer than 12 months if twoconditions are met:

• the H–1B worker agrees to thecompressed salary payments prior tocommencing employment, and

• the salary practice does nototherwise cause any violation of the H–1B worker’s authorization to remain inthe U.S.

The Department understands thisprovision to be directed to the commonpractice by which colleges, universities,and other educational institutionsdisburse faculty salaries over a nine-orten-month period, with no salarypayments during the summer or someother period during which the facultymember may be away from theinstitution, which INS recognizes.

The Department is proposingregulatory language to implement thisACWIA provision, and seeks commentson the proposal and any related matters.

J. What Actions or CircumstancesWould be Prohibited as a ‘‘Penalty’’ onan H–1B Nonimmigrant Leaving anEmployer’s Employment?

The ACWIA prohibits an employerfrom ‘‘requir[ing] an H–1Bnonimmigrant to pay a penalty forceasing employment with the employerprior to a date agreed to by thenonimmigrant and the employer.’’ TheDepartment is authorized to ‘‘determinewhether a required payment is a penalty(and not liquidated damages) pursuantto relevant State law.’’ This provisionembodies well-established principles inemployment contract law. Under thoseprinciples, Congress sought to assurethat the application of State law wasdeterminative (rather than theSecretary’s independent interpretationof what constitutes ‘‘liquidateddamages’’ under State law) so that non-punitive payments, serving tocompensate an employer for matterssuch as the loss of proprietaryinformation, would be permissible butthat punitive payments would not.

The Department proposes a regulationthat would apprise employers and H–1Bworkers that an employer’s ability toenforce ‘‘agreed damage’’ provisions ina contract between the parties is limited.The proposed rule would require

employers to obtain a State courtjudgment as a condition for seeking toenforce such provisions (i.e., anemployer may not obtain such recoveryfrom the worker without a State courtjudgment). In the Secretary’s view, thisbest effects the statutory prohibitionagainst the enforcement of penalties byleaving to State courts the resolution ofwhat may be difficult legal questions. Inparticular cases, for example, it will benecessary to determine the applicableState law to apply, requiringconsideration of, among other factors:where the agreement was entered into,and, if entered into in another country,whether that Nation’s laws get factoredinto the analysis; whether the partieshave agreed that the contract will beadministered in accordance with thelaws of a particular State (and, if so,whether it is appropriate to defer totheir choice); where the employee waslocated at the time of the termination;and where the employer seeks toenforce the provision. The regulationwould not set out particular guidelines,since it would not be feasible orappropriate to digest the law of all theStates in this rule.

In proposing this approach, theDepartment considered the alternativeof establishing a procedure by which theDepartment would determine whether aparticular employment agreementprovides for acceptable ‘‘liquidateddamages.’’ In the Department’s view, theState courts are much better versed thana Federal administrative forum toanswer the various legal questionsposed by any agreement between anemployer and an H–1B worker, and toconclusively determine whether aparticular provision runs afoul of Statelaw. The Department has no particularexpertise in interpreting State law, norin discerning from the existing Statedecisional and statutory law (whichmay not be easily analogized to the H–1B context) the principles that a Statecourt would apply in the particularcontext of a dispute between anemployer and an H–1B worker.

The Department also intends to makeit clear that since the ACWIA does notpermit employers to acceptreimbursement from an H–1B worker ofthe additional $500 fee imposed on H–1B employers (see section K, below), inno event may the employer collect thefee under the guise of liquidateddamages. The Department is alsoconcerned about attempts by employersto collect liquidated damages wheretheir violations of the INA, thisprogram, or other employment law mayhave caused an H–1B worker to ceaseemployment. The Departmentanticipates that State courts will often

recognize that under thesecircumstances the claimed paymentwould constitute a penalty rather thanliquidated damages, or that the paymentotherwise would be unenforceable. TheDepartment seeks comments as towhether guidelines on this issue wouldbe appropriate and authorized by thestatute.

The Department seeks comments onits regulatory proposal and on anyrelated matters.

K. What Standards Apply to Determineif an Employer Received a ProhibitedKickback of the Additional $500 FilingPetition fee From an H–1B Worker?

The ACWIA prohibits an employerfrom ‘‘requir[ing] an alien who is thesubject of a [visa] petition . . . forwhich a fee is imposed under section214(c)(9), to reimburse, or otherwisecompensate, the employer for part or allof the cost of such fee. It is a violationfor such an employer otherwise toaccept such reimbursement orcompensation from such an alien.’’ Thereferenced filing fee is the additional$500 filing fee enacted by the ACWIA,which is applicable to H–1B petitionsfiled before October 1, 2001. The effectof this ACWIA provision is to make theemployer solely and entirelyresponsible for the additional $500filing fee; the H–1B worker is not in anymanner to pay or absorb the cost of anyof the fee. The Department takes theposition that the employee is not to beforced, encouraged, or permitted torebate any part of the fee to theemployer—directly or indirectly, e.g.,through an intermediary such as anattorney, relative or co-worker.

The Department proposes a regulatoryprovision making this requirementclear, and seeks comments on thisproposal and any related matters.

L. What Penalties and Remedies Applyif the Employer Imposes anImpermissible Penalty or Receives anImpermissible Rebate?

The ACWIA enforcement provisionon penalties and kickbacks is self-contained in that it provides its ownsanctions authority. The Departmentmay impose a civil monetary penalty of$1,000 for each violation (willful ornon-willful) and, in addition, may orderthe employer to reimburse the worker(or the Treasury, if the worker cannot belocated) for any such payment. Theprovision does not authorize debarmentfor these penalty and kickbackviolations. The Department seekscomments on its regulatory languageimplementing this ACWIA provision,and on any related matters.


M. How did the ACWIA Change DOL’sEnforcement of the H–1B Provisions?

The ACWIA adds two new specificavenues for conducting investigations,explicitly protects employees who seekto exercise their rights against employerretaliation, and enhances the monetaryand debarment sanctions againstemployers who willfully violate therequirements of this part. TheDepartment proposes to modify SubpartI of the current regulations to reflectthese new provisions, integrating theminto the existing regulatory scheme. TheDepartment requests comments on eachof the enforcement-related issuesidentified below and on any otherrelated matters, including but notlimited to the Department’s receipt ofallegations of employer violations, theinvestigation and adjudication or otherresolution of such allegations, and theextent of the Department’s authority toremedy violations.

1. What Changes has the ACWIA Madein the DOL’s Enforcement Based onComplaints From ‘‘Aggrieved Parties’’?

The ACWIA adds to the Department’sauthority to investigate ‘‘aggrievedparty’’ complaints, by (1) specificallyauthorizing the Department to conduct‘‘random’’ investigations of employerswhich have been found to have willfullyviolated their obligations under the H–1B program, and (2) establishing aspecific protocol for investigations ofpossible violations based on informationfrom sources other than aggrievedparties.

2. What Procedure Does the ACWIAProvide for Random Investigations?

The ACWIA authorizes specialDepartmental scrutiny of any employerwhich has been found by the Secretary,after ACWIA’s enactment on October 21,1998, to have committed a willfulfailure to meet an LCA condition or awillful misrepresentation. The samespecial scrutiny is authorized where anemployer is found by the AttorneyGeneral to have willfully failed to meetits obligation to offer a job to an‘‘equally or better qualified’’ U.S.worker. ‘‘Random’’ investigations ofsuch an employer may be conducted fora period of up to five years, beginningon the date of the finding of the willfulviolation.

The Department proposes a regulatoryprovision which will interpret the‘‘finding’’ of willful violation—whichtriggers such special scrutiny—to be theagency’s final action concerning theviolation (e.g., the Secretary’s decisionafter opportunity for a hearing;settlement agreement between the

Department and the employer; or theAttorney General’s decision after anarbitration proceeding). Thisinterpretation comports with theDepartment’s current regulationconcerning the debarment notice whichis sent to the Attorney General after thecompletion of the DOL hearing andreview process. 20 CFR 655.855(a); 59FR 65657 (Preamble to Final Rule). TheDepartment seeks comments as towhether it should instead use an earlierdate, such as the Wage and HourAdministrator’s investigation finding orthe ALJ’s finding.

3. What Procedure Does the ACWIAProvide for Investigations Arising FromSources Other Than Aggrieved Parties?

The ACWIA provides for theinvestigation of possible violationswhich come to the Secretary’s attentionbased on information from sources otherthan aggrieved parties. Under thisACWIA provision (which will sunset onSeptember 30, 2001), the Departmentwill establish procedures for the receiptand recording of such information,notification where appropriate toemployers regarding possible violations,and certification by the Secretary for aninvestigation where there is reasonablecause to infer the possibility of suchviolations and other statutoryconditions are satisfied. The focus ofsuch investigations will be on whetheran employer has willfully failed to meetits statutory obligations, has engaged ina pattern or practice of such failure, orwhere its failure is ‘‘substantial’’ andaffects multiple employees.

The ACWIA specifies that theallegations must be put in writing,either by the ‘‘source’’ or by a DOLemployee on behalf of the source, ‘‘[o]na form developed and provided by theSecretary . . .’’. The Department isdeveloping this form, which like otherDOL forms, will go through the normalOffice of Management and Budgetclearance process. When cleared, theform will be publicly available fromDepartmental offices and other sources.

The Department proposes a revisionof Subpart I of the regulations torecapitulate the new investigativeprotocol (along with the ‘‘random’’investigation process), so as to providean integrated procedure for enforcementactivities, which would includereceiving and processing allegations ofand information pertaining to violationsof H–1B requirements, initiating andconducting investigations, providinghearings and notifications, andimposing appropriate penalties andremedies.

4. What Protections are Provided to‘‘Whistleblowers’’ by the ACWIA?

The ACWIA provides explicitprotection for employees who exercisetheir H–1B rights by complaining abouta violation of the Act or cooperatingwith an investigation. An employer maynot ‘‘intimidate, threaten, restrain,coerce, blacklist, discharge, or in anyother manner discriminate against[such] employee.’’ For purposes of thisprotection, ‘‘employee’’ is broadlydefined to include former employeesand applicants for employment. Likemost whistleblower statutes, the ACWIAprovision protects ‘‘internal’’complaints—to the employer or anyother person. The ACWIA provision is,in essence, a statutory enactment of theDepartment’s long-existingwhistleblower regulation for the H–1Bprogram.

To facilitate whistleblower protectionby providing special assurances tononimmigrants who might lodgecomplaints and be subject to retaliationfrom employers, the ACWIA directs theDepartment and the Attorney General todevise a process to enable such a personto remain in the U.S. and seek otheremployment for a period not to exceedthe maximum length of time authorizedfor an employee in the H–1Bclassification (provided that the personis ‘‘otherwise eligible’’ to remain and beemployed in this country). Congressintends that this process would beexpeditious and easy to use. (SeeS12752, Oct. 21, 1998; remarks of Sen.Abraham) The Department and the INSare working in close cooperation todevelop this authorization procedure.

5. What Changes Does the ACWIA Makein Enforcement Remedies and Penalties?

Before the ACWIA’s enactment, theH–1B provisions of the INA providedone level of civil money penalty (CMP)(‘‘up to $1,000 per violation’’) and onelevel of debarment from the sponsorshipof aliens for employment (‘‘at least oneyear’’). The ACWIA establishes a three-tier scheme for sanctions and remedies,depending upon the nature and severityof the violations. In each of the threetiers, as in the previous statutoryprovision, the Department is authorizedto impose ‘‘such . . . administrativeremedies as the Secretary determines tobe appropriate.’’ The three tiers are:

• $1,000-per-violation maximumCMP, plus a one-year minimumdebarment, for a failure to meetobligations pertaining to strike/lockoutor non-displacement of U.S. workers; asubstantial failure pertaining tonotification, LCA specificity, orrecruitment of U.S. workers; or a


misrepresentation of material fact on theLCA.

• $5,000-per-violation maximumCMP, plus a two-year minimumdebarment, for a willful violation of anyattestation element, a willfulmisrepresentation of a material fact onthe LCA; or retaliation against awhistleblower.

• $35,000-per-violation maximumCMP, plus a three-year minimumdebarment, for a willful violation of anattestation element or a willfulmisrepresentation of a material fact onthe LCA which involves thedisplacement of a U.S. worker.

The ‘‘appropriate administrativeremedies’’ authorized in all of theseACWIA provisions would, in theDepartment’s view, include theimposition of curative actions such asproviding notice to workers andaffording ‘‘make-whole’’ relief fordisplaced workers, whistleblowers, orH–1B workers who failed to receiveproper wages, benefits or eligibility forbenefits.

The above-described penaltyprovisions do not apply to violations ofthe ACWIA prohibitions on penalizingan H–1B worker for early cessation ofemployment or kickback by the H–1Bworker of the additional $500 filing fee.As discussed above (see item l), theseviolations are subject to separatepenalties: $1,000 CMP for eachviolation, and restitution of any penaltyor kickback to the H–1B worker (or tothe Treasury, if the worker cannot belocated).

N. What Modification to Part 656 Doesthe ACWIA Provide for theDetermination of the Prevailing Wagefor Employees of ‘‘Institutions of HigherEducation,’’ ‘‘Related or AffiliatedNonprofit Entities,’’ ‘‘NonprofitResearch Organizations,’’ or‘‘Governmental ResearchOrganizations’’?

The ACWIA requires that thecomputation of the prevailing wage foremployees of institutions of highereducation, nonprofit entities related toor affiliated with such institutions,nonprofit research organizations andGovernmental research organizationsshould only take into account the wagespaid by such institutions andorganizations in the area ofemployment. This ACWIA directiveaffects both the H–1B program and thePermanent Labor Certification program,since both programs use the prevailingwage computation procedures set out inthe Permanent program regulation at 20CFR 656.40.

On March 20, 1998, the Departmentpublished a Final Rule amending its

Permanent Labor Certificationregulation to change the effects of the enbanc decision of the Board of AlienLabor Certification Appeals inHathaway Children’s Services (9–INA–386, February 4, 1994), which requiredprevailing wages to be calculated byusing wage data obtained by surveyingacross industries in the occupation inthe area of intended employment. TheFinal Rule, in effect, allows prevailingwage determinations made forresearchers employed by colleges anduniversities, Federally Funded Researchand Development Centers (FFRDC)operated by colleges and universities,and certain Federal research agencies tobe made by using wage data collectedonly from those entities. TheDepartment stated in the Preamble tothis Final Rule that the amendment tothe regulation also changed the wayprevailing wages are determined forthose entities filing H–1B laborcondition applications on behalf ofresearchers, since the regulationsgoverning the prevailing wagedeterminations for the Permanentprogram are followed by StateEmployment Security Agencies (SESAs)in determining prevailing wages for theH–1B program as well (see 54 FR13756).

The ACWIA provision goesconsiderably beyond the regulatoryamendments made by the Department,in that the ACWIA provisions extend toall nonprofit research organizations andGovernmental research organizations. Inaddition, the ACWIA provisions extendnot only to researchers, but to alloccupations in which institutions ofhigher education, nonprofit entitiesrelated to or affiliated with suchinstitutions, and nonprofit researchorganizations or Governmental researchorganizations may want to employ H–1Bworkers or aliens immigrating for thepurpose of employment.

The Department is consulting withthe INS on the definitional issues, sincethat agency is addressing similar issueswith regard to the implementation of theadditional $500.00 fee which theACWIA required for petitions on behalfof H–1B nonimmigrants. The employersexcluded from that fee are the same asthe employers specified in the ACWIAprovision concerning prevailing wagedeterminations. The Department workedwith the INS in developing thefollowing definitions contained in itsInterim Final Rule published onNovember 30, 1998 (63 FR 65657)—

An institution of higher education, asdefined in section 801(a) of the HigherEducation Act of 1965;

An affiliated or related nonprofitentity. A nonprofit entity (including but

not limited to hospitals and medical orresearch institutions) that is connectedor associated with an institution ofhigher education, through sharedownership or control by the same boardor federation, operated by an institutionof higher education, or attached to aninstitution of higher education as amember, branch, cooperative, orsubsidiary;

A nonprofit research organization orGovernmental research organization. Aresearch organization that is either anonprofit organization or entity that isprimarily engaged in basic research and/or applied research, or a U.S.Government entity whose primarymission is the performance orpromotion of basic and/or appliedresearch. Basic research is research togain more comprehensive knowledge orunderstanding of the subject understudy, without specific applications inmind. Basic research is also researchthat advances scientific knowledge, butdoes not have specific immediatecommercial objectives although it maybe in fields of present or potentialcommercial interest. Applied research isresearch to gain knowledge orunderstanding to determine the meansby which a specific, recognized needmay be met. Applied research includesinvestigations oriented to discoveringnew scientific knowledge that hasspecific commercial objectives withrespect to products, processes, orservices.

The INS Interim Final Rule alsoprovides, in relevant part, that anonprofit organization or entity is onethat is qualified as a tax exemptorganization under section 501(c)(3),(c)(4) or (c)(6) of the Internal RevenueCode of 1986 and has received approvalas a tax exempt organization from theInternal Revenue Service, as it relates toresearch or educational purposes.

The Department seeks comments onthe proper definitions of the entities towhich the ACWIA prevailing wageprovisions apply. The Department willshare these comments with INS in thedevelopment of definitions to apply toboth the INS and Departmentalregulations.

In order to determine prevailingwages as required by the ACWIA, it willbe necessary for the Department todetermine the appropriate universe(s) tosurvey, and to determine the availabilityof relevant, reliable data. The Act treatsthe four types of organizations in twogroups: educational institutions andrelated research organizations; othernonprofit research organizations andGovernmental research organizations.However, the Act does not seem torequire that prevailing wages must be


determined separately for those twogroups, as distinguished from a universeconsisting of all four groups, or surveysof the four types of organizationsseparately, or some other combination.

Furthermore, the Department hasreason to believe that it may not befeasible to identify the different kinds ofentities that might comprise educationalinstitutions’ related or affiliatednonprofit entities, or nonprofit researchorganizations. If those entitles cannot beidentified, it may not be possible toproperly define the universe that shouldbe surveyed to determine theappropriate prevailing wages. Onepossible alternative the Department isexploring is the use of the prevailingwage data it currently collects insurveying institutions of highereducation to determine prevailing wagesfor one universe consisting ofinstitutions of higher education,affiliated or nonprofit researchinstitutions, and nonprofit researchorganizations. Data currently beingcollected by the Office of PersonnelManagement may be able to be used todetermine prevailing wages for FederalGovernmental research organizations.

The Department seeks comments onthe appropriate universes to use indetermining prevailing wages for theentities (employers) mentioned in theACWIA, methods to developappropriate universe, and the feasibilityand appropriateness of the Department’susing data collected from institutions ofhigher education and FederalGovernmental research organizations todetermine prevailing wages.

O. What H–1B Regulatory Matters, inAddition to the ACWIA Provisions, areAddressed in This Notice of ProposedRulemaking?

The Department is re-publishing fornotice and comment some of theprovisions of the Final Rulepromulgated in December 1994 whichwere proposed for further comment onOctober 31, 1995, during the pendencyof the NAM litigation. That litigationresulted in an injunction against theDepartment’s enforcement of some ofprovisions on Administrative ProcedureAct (APA) procedural grounds (NationalAssociation of Manufacturers v. Reich,No. 95–0715, D.D.C., July 22, 1996; seeitem H above).

As indicated in the discussion of theACWIA provisions above, some portionsof these regulations are affected by theenactment of the ACWIA (e.g.,‘‘benching’’ or nonproductive time;posting of notice at worksites). For thoseACWIA-affected provisions, theDepartment proposes modifications inthe regulations and seeks comments on

the new regulatory language. Otherpreviously published provisions—notaffected by ACWIA—are being re-proposed with some modificationsbased on a review of the commentsreceived, as discussed below.

All comments received in response tothat earlier Notice of ProposedRulemaking will be fully consideredalong with comments received inresponse to this Proposed Rule.Commenters are urged to review theNotice of Proposed Rulemakingpublished on October 31, 1995 (60 FR55339). The re-published provisionsconcern the following issues.

1. What Are the Opportunities andGuidelines for Short-term Placement ofH–1B Workers at Worksite(s) Outsidethe Location(s) Listed on the LCA?

The most significant regulatoryprovision affected by the NAM decisionis the ‘‘short-term placement’’ rule (20CFR 655.735), which the Departmentwas enjoined from enforcing on APAprocedural grounds. This provision waspublished in the October 31, 1995,Proposed Rule. The Department nowprovides another opportunity forcomments, on a slightly-modifiedversion of the provision—allowing theemployer to track its ‘‘short-term’’placements at a location via a worker-by-worker count of days of employmentin the area (rather than a worksite tallyof cumulative workdays of all H–1Bworkers).

The short-term placement provisionwas promulgated in the Final Rule(published December 20, 1994; 59 FR65646), based on comments andsuggestions submitted in response to theOctober 6, 1993, Proposed Rule. Thisprovision—permitting short-termplacement of H–1B workers at worksitesoutside the area(s) of employment listedon the LCA—was intended to allowemployers greater flexibility indeploying their H–1B workers inresponse to business needs andopportunities in new areas. While theDepartment recognized that employerscould, in any instance, choose to file anew LCA for the new area ofemployment, the Department provided amechanism by which an employerdesiring to move quickly orcontemplating a temporary operation ina new location could be accommodatedunder the program without the delay orobligations involved in filing a newLCA. Simply put, the regulationauthorizes the employer to use H–1Bworker(s) in a non-LCA location (i.e.,location not covered by an existingLCA) for a total of 90 workdays withina three-year period, without having tofile a new LCA for that new location.

Thus, the employer could use H–1Bworkers to respond immediately to anopportunity or a problem in a non-LCAlocation, without waiting to prepare andfile an LCA for that location. If thesituation were resolved within theregulation’s ‘‘short-term’’ window (i.e.,if the H–1B worker(s) were no longerneeded at the location), then a new LCAwould never be required. But if the H–1B worker(s) would be needed in thenew location for a longer period, thenthe employer would have ample timewithin which to prepare and file a newLCA while already using the H–1Bworker(s) at the location. The regulationspecified that the ‘‘short-term’’ 90-dayperiod would be calculated by totalingall days of work by all H–1B workers inthe area of employment (thus coveringall worksites within that area),beginning with the first workday by anyH–1B worker at any worksite in thatarea. The 90-day period is appliedseparately for each new area ofemployment (e.g., 90 cumulativeworkdays for Los Angeles, 90cumulative workdays for SanFrancisco).

The Department has carefullyreviewed the comments received on theOctober 31, 1995, Proposed Rule and, inresponse to those comments, proposesto modify the regulation to countworkdays on a per-worker basis. Thus,the limit of 90 cumulative workdays(i.e., the end of the ‘‘short-termplacement’’ period) would be reachedwhen any H–1B worker works for 90days at any worksite or combination ofworksites in the new area ofemployment. As soon as one H–1Bworker has worked more than 90workdays within that area ofemployment, no more work could beperformed by any H–1B worker at anyworksite in that area unless and untilthe employer files and ETA has certifiedan LCA for the area. Therefore, theregulation, although based on a per-worker count of workdays, still appliesto the employer’s entire H–1B workforceand to all worksites in the new area ofemployment. For example, where an H–1B worker works 10 days at Worksite Xin Dallas and 80 days at Worksite Y alsoin Dallas, the employer has exhaustedits 90-day ‘‘short-term placement’’period and is, therefore, required to fileand have certified a new LCA for Dallasbefore any H–1B worker may work atany worksite in Dallas.

Under the proposed rule, as analternative to filing an LCA for a newarea of employment, an employer couldplace H–1B worker(s) at worksite(s) inthe new area—without filing a new LCA(and thus without satisfying the noticeand prevailing wage requirements for


such new area)—provided that theemployer complies with all three of thefollowing requirements:

• No H–1B worker(s) can work at anyworksite(s) in the new (non-LCA-covered) area of employment beyondthe cut off point of 90 cumulativeworkdays (unless the employer filedand ETA has certified an LCA for suchnew area);

• Each H–1B worker working in thenew area is compensated at the requiredwage rate applicable under theemployer’s already-certified LCA forthat worker’s original or permanentwork location plus travel-relatedexpenses in the new area (with theFederal government per diem travelexpense standards serving as the floor orminimum for such expenses); and

• No H–1B worker is placed at aworksite where there is a strike orlockout in the same occupationalclassification.

Of course, an employer could at anytime avoid the short-term placementoption simply by filing an LCA coveringthe new area of employment andcomplying with all the LCArequirements, including determinationof the prevailing wage rate for that areaand providing notice at worksites in thatarea. Once an LCA is filed and certifiedfor the new area of employment, theLCA would define the employer’sobligations and the short-termplacement option would no longerapply in any manner to H–1B workersor worksites in that area. Thus, theemployer would be required to pay atleast the prevailing wage for that area ofemployment to all H–1B workers placedat worksites there. Any H–1B worker ontemporary business in the new area—away from his/her permanent worksitelocated in some other area ofemployment—could continue to be paidat the required wage rate for his/herpermanent location. While the employerwould pay that worker’s travel costs(including food and lodging) whileaway from his/her permanent worklocation, the Federal government perdiem travel expense standards wouldnot be applicable as a ‘‘floor’’ (as theywould be for H–1B workers working inthe area under the short-term placementoption).

The short-term placement optionwould not apply when H–1B workersare sent to any new worksite(s) withinan area covered by an already-certifiedLCA filed by the employer. Such newworksite(s) would be fully subject to therequirements of that existing LCA,including payment of at least theprevailing wage, providing notice at thenew worksite, and providing a copy ofthe LCA to H–1B worker(s) placed at the

worksite (unless he/she had alreadyreceived a copy of the LCA).

a. When is the Short-term PlacementOption Available?

This option would be available onlywhen an employer wants to send its H–1B worker(s) (already in the U.S. underan LCA filed by the employer) to a newworksite which is in an area ofemployment for which the employerdoes not have an LCA in effect. Theoption would enable the employer tomeet its business needs, by sending H–1B worker(s) to the new worksite(s)without waiting to complete the LCAand revised petition process. After the90-workday limit is reached by any oneH–1B worker, the short-term placementoption would no longer be available forany workers; the employer would berequired to have an LCA in effect for thenew area and to be in full compliancewith all the LCA requirements.

The short-term placement optionwould not apply in any of the followingcircumstances:

• The H–1B worker being sent to thenew areas is initially coming into theU.S. from outside the country (i.e., sucha worker must be placed at a locationcovered by the LCA on which the H–1Bpetition is based);

• The H–1B worker is being relocatedto a new worksite within the same areaof employment for which the employeralready has a valid LCA (i.e., newworksite is covered by the same LCA asthe previous worksite); or,

• The H–1B worker is being relocatedfrom one area of employment toanother, but the employer has validLCAs covering both areas (i.e., newworksite is covered by a different LCAthan the LCA for the previous worksite).

The short-term placement optionwould be irrelevant in circumstanceswhere the employer is relocating H–1Bworkers (who are already in the U.S.)among worksites in areas covered byvalid LCAs. In these circumstances, theemployer would be required to complywith the LCA applicable to the newworksite (whether that is the same LCAapplicable to the area of the oldworksite, or a different LCA applicableto the area of the new worksite).Employers generally would be free torelocate H–1B workers among worksitesin areas of employment for which theyhave valid LCAs, provided that theemployer complies with all LCAobligations for the area—the relocationof an H–1B worker would be prohibitedif there were a strike/lockout involvingthe H–1B worker’s occupation at thenew worksite; a wage adjustment for therelocated worker might be required; newnotice at the worksite would not be

required (assuming notice was alreadyprovided at that worksite, either whenthe LCA was filed or when some otherH–1B worker was sent there).

The short-term placement option alsowould be irrelevant in circumstanceswhere the employer has an LCA ineffect for an area of employment andwants to relocate or temporarily placeH–1B worker(s) who would cause theLCA for that area to be ‘‘overcrowded’’or ‘‘overfilled’’ with H–1B workers (e.g.,raising the number of H–1B workers inthe area to 11 instead of the 10 statedon the certified LCA). The short-termplacement option does not authorize an‘‘extra’’ workforce of H–1B workers fortemporary assignments in an area ofemployment covered by an LCA. Thenumber of H–1B workers authorized forthat employer in that area is determinedby the employer’s LCA (or combinationof LCAs, if the employer has more thanone LCA in effect for the area).Employers have inquired whether an H–1B worker can be relocated, eventemporarily, to a worksite in an area ofemployment for which the employer hasa valid LCA, if the relocation of thatworker would raise the number of H–1Bworkers in that area to more than thenumber stated on the LCA. The short-term placement option cannot beinvoked by the employer in suchcircumstances, because the employerhas an LCA in effect for the area ofemployment and that LCA—applicableto all worksite in the area—iscontrolling. As a matter of enforcementdiscretion, the Department will lookcarefully at all the facts andcircumstances surrounding situations inwhich H–1B workers are relocatedamong LCA-covered locations in amanner that results in more H–1Bworkers being employed in an area thanare stated on the certified LCA(s) forthat area. Absent other violations, inthose circumstances that indicate goodfaith efforts by the employer to attemptto comply, the Department would notcite violations relating to the number ofH–1B workers employed in an area,provided that the number employeddoes not significantly exceed thenumber shown on the LCA. In othercircumstances, such as where there areother violations and/or the number ofH–1B workers employed in an areasignificantly exceeds the number statedon the LCA(s), the employer may becited for misrepresentation of a materialfact or for a ‘‘substantial failure’’ toaccurately state the informationspecified in the statute. In the situationidentified above—an eleventh H–1Bworker relocated to an area for whichthe LCA specifies ten H–1B workers—


the Department would not cite aviolation, so long as there were no otherviolations and there were indications ofthe employer’s good faith (such astaking timely steps to file an additionalLCA and a revised petition).

b. What Are the Standards for Paymentof the H–1B Worker’s Travel ExpensesUnder the Short-Term PlacementOption?

A component of the proposed short-term placement rule is a requirementthat employers who wish to availthemselves of this option must paytravel-related expenses at a level at leastequal to the rate prescribed for FederalGovernment employees on travel ortemporary assignment, as set out in theGeneral Services Administration (GSA)regulations 41 CFR Part 301–7 andChapter 301, Appendix A. TheDepartment believes that some uniformguidelines or benchmarks are necessaryso that employers do not require H–1Bworkers to absorb some or all travelexpenses themselves, or reimburse themat unreasonably low rates, while theworkers are in travel status under theshort-term placement option. Further,the Department is aware of nouniversally available source ofinformation on per diem and travelexpenses, other than the GSAregulations which are based on surveysof two-star hotels and comparablerestaurants. Therefore, the Departmentproposes to continue to use the GSAregulations as the benchmark.

The Department believes that someclarification of the requirements isappropriate. The proposed rule clarifiesthat the H–1B worker’s travel expenses(lodging, transportation, meals andincidentals) are to be paid for all daysin travel status (wages would not berequired for non-workdays). Theproposed rule also clarifies theapplication of the GSA standards tolodging, transportation, meals andincidental expenses. For lodging, theregulation would be modified to requirethe employer to reimburse no more thanthe worker’s actual cost of lodging up tothe GSA specified level for the locationin question, plus applicable taxes.Where the H–1B worker incurs nolodging cost, no payment to the workerfor lodging would be required. TheDepartment proposes that the employermay house its workers on travel incompany-owned or company-leasedaccommodations and make no‘‘lodging’’ payments to the workers,provided that such accommodations arereasonable and would be customarilyused by its U.S. workers in a similarcircumstance. The Department wouldconsider the furnishing of or

requirement to use overcrowded orotherwise unreasonableaccommodations, as has sometimesbeen found to be the case, to be anunacceptable method of meeting theemployer’s obligation to cover theworker’s lodging costs while on travel.If the employer provides a lodgingallowance to the worker, suchallowance would be required to coverthe worker’s actual expenses but neednot be more than the GSA rate for thelocation in question, plus applicabletaxes. For transportation, the employerwould be required to pay the actual costof transportation expenses, except thatwhere the worker uses a privately-owned vehicle, the employer must coverthe cost to operate the vehicle at the per-mile rate set out in 41 CFR 301–4, plusout-of-pocket expenses such as tolls andparking fees. For meals and incidentalexpenses, the employer would berequired to pay the H–1B worker at noless than the GSA per diem rate for thelocation. Back wages would be assessedbased on the GSA rates where theemployer fails to document actual costsor where the employer’s payments donot satisfy the GSA standards.

2. What Are an Employer’s WageObligations for an H–1B Worker’s‘‘Nonproductive Time’’?

As described above (see item H), theDepartment is publishing for furthernotice and comment the provision of theDecember 20, 1994 Final Ruleconcerning an employer’s obligation topay the H–1B worker’s required wagesfor certain ‘‘nonproductive’’ time, whichwas enjoined by the district court inNAM for procedural reasons. Inaddition, the Department is proposing amodification of this regulation toimplement the ACWIA provision whichadds some flexibility for the employerwith regard to an H–1B worker ‘‘whohas not yet entered into employment.’’

3. What Are the Guidelines forDetermining and Documenting theEmployer’s ‘‘Actual Wage’’?

The Department is publishing forfurther notice and comment AppendixA to Subpart H—Guidance forDetermination of the ‘‘Actual Wage,’’certain provisions of which wereenjoined by the court in the NAMlitigation for procedural reasons. Thisprovision was also published in theOctober 31, 1995, Proposed Rule. As thePreamble to that proposal stated, thecontents of Appendix A—whichconsists of examples and guidance onthe Department’s enforcement policyregarding the computation anddocumentation of the actual wage—hadfirst appeared, in slightly different

format, in the Preamble to the January13, 1992, Interim Final Rule.

Under Appendix A as proposed, theemployer would not be required tocreate or to document an elaborate‘‘step’’ or ‘‘grid’’ type pay system, suchas that used by Federal agencies forgovernment employees; no rigid orcomplex system is mandated by theregulations. The employer’s actual wagesystem may take into consideration anyobjective, business-related factorsrelating to experience, qualifications,education, specific job responsibilitiesand functions, specialized knowledgeand other legitimate business factors,including documented job performance.Whatever factors are used in theemployer’s actual wage system are to beapplied to H–1B nonimmigrant workersin the same, nondiscriminatory mannerthat they are applied to U.S. workers inthe occupational classification. Theemployer’s public access documentationmust include a description of its actualwage system. The description mayconsist of a summary document whichidentifies the business-related factorsthat are considered and which describesthe manner in which they areimplemented (e.g., stating the wage/salary range for the occupation in theemployer’s workforce and identifyingthe pay differentials assigned to factorssuch as holding an advanced degree orperforming supervisory duties). Theemployer’s description of its actualwage system should be sufficient toenable a third party—such as anemployee looking at the publicdisclosure file—to understand how thesystem would apply to a particularworker and to derive a reasonablyaccurate understanding of that worker’swage. Wage rates for each H–1B workermust be in the public access file.However, computation of an H–1Bworker’s particular wage need notappear in the public access file; thatinformation must be available in theworker’s personnel file maintained bythe employer. For clarity, theDepartment purposes to modifyAppendix A to include job performanceamong the legitimate business factorswhich may be taken into considerationin determining the actual wage.

4. What Records Must the EmployerKeep, Concerning Employees’ HoursWorked?

The Department seeks furthercomments on section § 655.731(b)(1) ofthe regulation, which requires theemployer to retain records for ‘‘allemployees in the specific employmentin question’’ (i.e., same occupation asthe H–1B worker). This provision,which has been enjoined by the NAM


court for procedural reasons, revisedformer § 655.730(e)(2)(i), which requiredthe employer to maintaindocumentation for ‘‘all otherindividuals with experience andqualifications similar to the H–1Bnonimmigrant for the specificemployment in question.’’ For virtuallyall employers, this change in theregulation had no impact onrecordkeeping because most recordsrequired under the H–1B programwould be the same as those alreadyrequired under the Fair Labor StandardsAct (‘‘FLSA’’). However, for employerswith salaried non-H–1B workers whosatisfy the FLSA exemption for ‘‘bonafide executive, administrative, orprofessional’’ employees (29 CFR Part541), the change resulted in arequirement not already imposed underthe FLSA: to keep records of hoursworked each day and each week forFLSA-exempt non-H–1B workers in the‘‘specific employment in question’’(regardless of their experience andqualifications) if the prevailing or actualwage is expressed as an hourly wage.

On September 26, 1995, theDepartment issued a Notice ofEnforcement Position (60 FR 49505)stating that, until further rulemaking,the Department would enforce§ 655.731(b)(1) of the Final Rule asstated, except that, with respect to anyadditional workers for whom that Ruleextended recordkeeping requirementsbeyond those specified in the InterimFinal Rule, the employer would need tokeep only those records which arerequired by the FLSA regulations at 29CFR Part 516.

In the October 31, 1995, ProposedRule, the Department proposed toamend § 655.731(b)(1) to make itconsistent with FLSA recordkeepingrequirements. Under the proposal,employers would be required to retainrecords of hours worked for non-H–1Bworkers in the specific employment inquestion (whether or not the non-H–1Bworkers have similar experience andqualifications) only if the non-H–1Bworkers are paid on an hourly basis orif the actual wage is expressed as anhourly rate. Since the first element ofthe FLSA Part 541 exemption test is thatthe employees be paid ‘‘on a salarybasis’’ (i.e., not paid hourly wages (29CFR 541.118)), the effect of thisproposal would be that records of hoursworked would be required for U.S.workers only if the worker is either notpaid on a salary basis, or if the actualwage is stated as an hourly wage. For H–1B workers, such records must also bekept if the prevailing wage is expressedas an hourly rate.

5. What are the Requirements forPosting of ‘‘Hard Copy’’ Notices atWorksite(s) Where H–1B Workers arePlaced?

The Department proposes forcomment a revision of§§ 655.734(a)(1)(ii)(C) and (D) of theregulation, which it previouslyrepublished for notice and comment inthe October 31, 1995, Proposed Rule.The Department proposes that thisprovision be modified to implement theACWIA provision concerning electronicnotification (see item F), but it would beunchanged with regard to ‘‘hard copy’’notices. Subparagraph (C) requiresemployers to post notice at worksites onor within 30 days before the date theLCA is filed. Subparagraph (D) requiresthat, where the employer places an H–1B nonimmigrant at a worksite which isnot contemplated at the time of filingthe LCA but is within the area ofintended employment listed on theLCA, the employer is to post notice atsuch worksite on or before the date anyH–1B nonimmigrant begins work there.Under both subparagraphs, such noticeis to remain posted for ten days. Theregulation provides that worksite noticemay be accomplished either by postinghard copies of the notice or byproviding electronic notice. Where theH–1B worker(s) will be employed at theworksite of another employer, the H–1Bemployer is required to provide noticeto the affected workers at that worksite,and may make arrangements with theother employer to accomplish the notice(e.g., have the other employer ‘‘post’’ theelectronic notice on its intranet oremployee newsletter) .

It should be noted that if a locationdoes not constitute a ‘‘worksite,’’ theemployer is not required to post noticethere. (See proposed Appendix B,below, regarding clarification of ‘‘placeof employment.’’) The requirement topost notice at the ‘‘place ofemployment’’ is statutory. 8 U.S.C.1182(n)(1)(C). The Department’sdefinition of ‘‘place of employment’’focuses on the ‘‘worksite’’ or placewhere the work is actually performed.This definition achieves the intent ofthe law’s notice requirement to informaffected employees that an LCA hasbeen filed and that nonimmigrants maywork at that place of employment.Without such information, potentiallyaffected employees would not be awareof employer obligations under andcompliance with the LCA conditions,and would be unlikely to be able to filecomplaints where the situation wouldwarrant it. As explained in proposedAppendix B, the Department hasreasonably interpreted ‘‘place of

employment’’ as not including locationswhere the H–1B worker’s presence isshort-sterm and transitory due to thenature of his/her job (e.g., computer‘‘troubleshooter’’; sales representative;trial witness) or due to thedevelopmental nature of his/her activity(e.g., management seminar; formaltraining seminar).

6. What Are the Time Periods or‘‘Windows’’ Within Which EmployersMay File LCAs?

The Department seeks furthercomment on two current regulatoryprovisions which restrict the timeperiods or ‘‘window’’ within whichLCAs may be filed—no earlier than 180days (6 months) prior to the startingdate of the employment periodidentified on the LCA, and no later than90 days (3 months) from the date of anyState Employment Security Agency(SESA) prevailing wage determinationused in the LCA. Both of theseprovisions are reproposed withoutmodification.

The October 31, 1995, Proposed Rulerepublished for notice and comment§ 655.730(b), which requires that theemployer file the LCA no earlier than 6months before the beginning date of thespecified period of employment. Thisprovision addressed the situation ofsome employers who were filing LCAsfor periods of employment months inthe future. The Department believesthat, because the prevailing wage andnotice obligations are based uponactions taken and conditions whichexist at the time the LCA is filed, suchpremature applications can defeat theintent of these statutory elements. Inone case, for example, an employer filedan LCA for a period of employment twoyears from the time of filing. Such anemployer could use a prevailing wagedetermination from an independentauthoritative source based on wageinformation which is up to four yearsold. By the time the nonimmigrantsactually enter the U.S. two years afterthe LCA date, the prevailing wageinformation would be as much as sixyears old. In addition, this employerwould post notice for ten days at thetime of filing the LCA, and then importthe nonimmigrants two years later. Bythat time, U.S. workers who mightotherwise file complaints regardingviolations of the LCA would be unawareof essential information listed on theposted LCA, such as the number ofnonimmigrants, rate(s) of pay, jobtitle(s), and the location wheredocumentation is kept.

The October 31, 1995, Proposed Rulealso republished for notice andcomment current


§ 655.731(a)(2)(iii)(A)(1), which requiresthe employer to file an LCA relyingupon a SESA prevailing wagedetermination within 90 days of theSESA’s issuance of the determination.The 90-day validity period of a SESAprevailing wage determination isdesigned to prevent the employer’s useof aged or stale wage determinations,which can adversely affect the wages ofU.S. workers. In the Department’s view,it is unreasonable to permit employersto use SESA determinations which aremore than three months old since thosedeterminations may well be based onwage information that is already yearsold, and they may be relied upon by theemployer for the entire 3-year validityperiod of the LCA (periodic updates ofthe prevailing wage not being requiredunder the Final Rule). An employer’suse of SESA prevailing wagedeterminations more than three monthsold would be inconsistent with thestatutory requirement that employerspay at least the wage which is prevailingat the time the LCA is filed.

It should be noted that employers arenot required to use SESAdeterminations in filing LCAs.Employers may, instead, determine theprevailing wage from other sources (i.e.,independent authoritative sources orother legitimate sources of wageinformation). Those sources are notsubject to a 90-day validity period, butmust satisfy the appropriate regulatorydefinitions or description.

7. How May an Employer Challenge aSESA-Issued Prevailing WageDetermination?

The Department seeks furthercomment on §§ 655.731(a)(2)(iii)(A)(1),655.731(d)(2), and 655.840(c) regardingthe use of the Employment Service(‘‘ES’’) complaint system to challengeany SESA prevailing wagedeterminations. These provisions wererepublished for notice and comment inthe October 31, 1995, Proposed Rule.

Irrespective of whether the SESAwage determination is obtained by theemployer prior to filing the LCA or bythe Wage and Hour Division in anenforcement proceeding, theseprovisions (taken together) requireemployers to assert any challenge to theSESA prevailing wage determinationunder the ES complaint system, ratherthan in an enforcement proceedingbefore the Office of Administrative LawJudges. In designing the program, theDepartment had envisioned that the EScomplaint process would be used for allchallenges of SESA prevailing wagedeterminations. However, aftersubstantial enforcement litigationexperience, the Department found that

some employers were insteadattempting to contest these wagedeterminations through the enforcementhearing provided under § 655.835. Thathearing process was not intended tohandle these prevailing wagechallenges, and the proposed regulatoryprovisions (which are currently ineffect) achieve the Department’s originalintent.

P. What Additional InterpretativeRegulations is the DepartmentProposing?

During the course of the Department’sadministration and enforcement of theH–1B program, a number of issues havebeen raised by employers and interestgroups regarding the interpretation andapplication of the existing regulations.In order to provide more completeguidance for these affected parties—andthereby facilitate compliance,administration, and enforcement underthe H–1B program—the Department ispublishing for comment a proposedAppendix B for Part H of the regulation.The interpretations presented inAppendix B are matters which havebeen discussed with employers andinterest groups in numerous outreachmeetings over the last several years. TheDepartment considers it appropriate toinclude these provisions in theregulations, either as an appendix or inthe regulatory text, and therefore isproviding a more formal process forinterested parties to express their viewsconcerning these interpretations.

The Department seeks comments onthe matters addressed in Appendix B(described below).

1. What Constitutes an H–1B Worker’s‘‘Worksite’’ or ‘‘Place of Employment’’for Purposes of the Employer’sObligations Under the Program?

The H–1B program’s attestationrequirements are largely focused on theH–1B worker’s ‘‘place of employment’’or ‘‘worksite.’’ That location—‘‘place’’or ‘‘site’’—determines the appropriateprevailing wage; that location is wherethe employer must provide notice toworkers concerning the employment ofH–1B nonimmigrants; and the strike/lockout prohibition is applicable to thatlocation. Thus, it is essential thatemployers be able to determine whethera particular location constitutes a‘‘worksite’’ (triggering the program’srequirements) or is, instead, a non-worksite at which the H–1B worker mayperform certain of his/her job duties fora short period of time. Appendix Bexplains that ‘‘worksite’’ ordinarilyencompasses any location at which theH–1B worker performs his/her jobduties, but does not include a location

at which the worker is engaged inemployee development activity (e.g.,receiving formal training) or at whichthe worker’s presence is due to thenature of his/her duties and is of shortduration (e.g., making a sales call on acustomer; testifying at a court hearing;conducting research at a library).

2. Under What Circumstances May anH–1B Worker ‘‘Rove’’ or ‘‘Float’’ FromHis/Her ‘‘Home Base’’ Worksite?

The Department recognizes that someemployers—due to the nature of theirbusinesses—need to move their H–1Bworkers from place to place in order tomeet the needs of clients or to respondto new business opportunities. Thispractice is described as having H–1Bworkers ‘‘rove’’ or ‘‘float’’ from their‘‘home base’’ locations. Because the H–1B program’s requirements focus on theH–1B worker’s ‘‘worksite’’ (see itemO.5), it is important that employers beable to determine the circumstancesunder which an H–1B worker maylegally be dispatched from his/her‘‘home base’’ worksite to otherlocation(s) to perform job duties. InAppendix B, the Department explainsthat every H–1B worker is, by law,covered by an LCA and that,consequently, there is no means bywhich an H–1B worker may ‘‘float’’ inthe U.S. economy without being subjectto the wage, working conditions, andother requirements of an LCA. However,as the Appendix further explains, an H–1B worker may legally be dispatchedfrom his/her home base location in anyof three circumstances—

• H–1B worker is dispatched to a‘‘non-worksite’’ location (see item O.5).The worker would still be covered byhis/her home base LCA.

• H–1B worker is dispatched to aworksite that is covered by an LCA(either the LCA for the home base, or adifferent LCA if the new location isoutside the home base LCA’s area). Theworker would be covered by the LCAapplicable to the new worksite.

• H–1B worker is dispatched for ashort-term placement under theregulation authorizing up to 90workdays of such placement in an areanot covered by an LCA (see item O.1,above). The worker would be covered byhis/her home base LCA.

3. What H–1B Related Fees and CostsAre Considered to Be an Employer’sBusiness Expenses?

The Department believes that wherethe employer is required by law toperform certain functions and no otherparty can legally perform thosefunctions, all expenses connected withsuch functions are the employer’s


business expenses, which must be borneby the employer without being imposedon the H–1B worker in any manner. Asexplained in Appendix B, theapplication of this analysis to the H–1Bprogram leads, necessarily, to theconclusion that all fees and costsconnected with the filing of the LCAand the H–1B petition (e.g., prevailingwage survey preparation; attorney fees;INS fees) are to be borne by theemployer since—by the express terms ofthe statute—the employer must file boththe LCA and the petition, and the H–1Bworker is not permitted to performeither of those functions. As furtherexplained in Appendix B, theDepartment recognizes that expensesconnected to the H–1B worker’s ownfunction of filing for and obtaining thevisa itself (e.g., translations of academicrecords) could appropriately be borneby the H–1B worker, since such costswould not necessarily be the employer’sbusiness expenses. This interpretation isfully consistent with the ACWIAprovision relating to the new $500petition filing fee (see item K).

4. When Is the Service Contract ActWage Rate Required to Be Applied asthe ‘‘Prevailing Wage’’?

The regulation provides that, if thereis an SCA wage determination for theoccupational classification in the area ofemployment for which an employer isfiling an LCA, that SCA wagedetermination is considered by theDepartment to constitute the prevailingwage for that occupation in that area.Appendix B explains that, because theSCA rates cover the occupation in thearea, these rates are applicable to theLCA, without regard to whetherindividual H–1B worker(s) eventuallyemployed under the LCA may havequalifications or job descriptions thatcould satisfy an exemption from the rateif he/she were working on an SCAcontract. Further, Appendix B explainsthat because the SCA wagedetermination for occupations in thecomputer industry are capped by statute(SCA, incorporating FLSA) at $27.63,even where the prevailing wage ishigher, the Department has instructedthe SESA not to issue a prevailing wagefrom the SCA wage determinationwhere that SCA wage is stated as$27.63.

5. How Are the ‘‘PMSA’’ and ‘‘CMSA’’Concepts Applied?

Appendix B explains that incomputing prevailing wages for an ‘‘areaof intended employment,’’ theDepartment will consider all locationswithin either a metropolitan statisticalarea (MSA) or a primary metropolitan

statistical area (PMSA) to constitute‘‘normal commuting distance’’ and,thus, subject to the same prevailingwage rates. Further, Appendix Bexplains that a consolidatedmetropolitan statistical area (CMSA)will not be used in this manner indetermining the prevailing wage rates(i.e., all locations within a CMSA willnot necessarily be deemed to be withinnormal commuting distance). TheDepartment has determined, based onits operational experience, that CMSAscan be too geographically broad to beused in this manner. As explained inAppendix B, the Department has notadopted any rigid measure of distanceas a ‘‘normal commuting area’’ (e.g., 20,30, 50 miles) and, therefore, locationsthat are outside any ‘‘statistical area,’’locations near the boundaries of MSAsand PMSAs, and locations within ornear the boundaries of CMSAs may bewithin normal commuting distance,depending on the factual circumstances.

6. How Does the ‘‘Weighted Average’’Apply in the Determination of thePrevailing Wage?

Appendix B explains that, due to theinadvertent omission of the word‘‘weighted’’ from one provision in theregulation, there has been a suggestionof confusion for an employer whichuses an ‘‘independent authoritativesource’’ to determine the localprevailing wage to be used on an LCA.When read together, the regulations onthe computation of the prevailing wagerequire the use of the ‘‘weightedaverage’’ statistical methodology. InAppendix B, the Department describesthis methodology and clearly states howand when it is to be used.

7. What is the Effect of a New LCA onthe Employer’s Prevailing WageObligation Under a Pre-Existing LCA?

Employers who, over a period of time,file several LCAs for the sameoccupation in the same area ofemployment—so as to increase theirstaff of H–1B workers—may well findthat these LCAs reflect a changingprevailing wage for that occupation andarea. There is a possibility for confusionin such situations, concerning theprevailing wage which is required forthe various H–1B workers. As explainedin Appendix B, the Departmentconsiders the employer’s prevailingwage obligation to any individual H–1Bworker to be prescribed by the LCAwhich supports the H–1B petition forthat worker. Thus, the employer isrequired to pay that worker at least theamount of that prevailing wage; adifferent prevailing wage appearing on adifferent LCA would not be applicable.

The employer is not required to‘‘adjust’’ the prevailing wage amountsfor the entire H–1B workforce, based ona new prevailing wage that appears ona new (later) LCA. However, as furtherexplained in Appendix B, the employerwould be required to make‘‘adjustments’’ for all H–1B workers inaccordance with the employer’s actualwage system (e.g., merit increases; costof living increases), since all H–1Bworkers are covered by the actual wagesystem (regardless of any differenceamong prevailing wage rates undervarious LCAs).

IV. SummaryThe Department welcomes comments

on any issues addressed in the proposedregulations—including the proposalscaused by the enactment of the ACWIA;the reproposal of provisions publishedfor comment in October, 1995; and theproposed interpretative provisions inAppendix B—as well as on any otherissues that commenters believe need tobe addressed.

V. Executive Order 12866This proposed rule is being treated as

a ‘‘significant regulatory action’’ withinthe meaning of Executive Order 12866,because of its importance to the publicand the Administration’s priorities.Therefore, the Office of Managementand Budget has reviewed the proposedrule. However, because this rule is not‘‘economically significant’’ as defined insection 3(f)(1) of E.O. 12866, it does notrequire a full economic impact analysisunder section 6(a)(3)(C) of the Order.

The H–1B visa program is a voluntaryprogram that allows employers totemporarily secure and employnonimmigrants admitted under H–1Bvisas to fill specialized jobs not filled byU.S. workers. The statute requires thatthe employer pay an H–1B worker thehigher of the actual wage or theprevailing wage, to protect U.S. workers’wages and eliminate any economicincentive or advantage in hiringtemporary foreign workers. This rulewould implement statutory changes inthe H–1B visa program enacted by theACWIA of 1998. The ACWIA (1)temporarily increases the maximumnumber of H–1B visas permitted eachyear; (2) temporarily requires, duringthe increased H–1B cap period, newnon-displacement (layoff) andrecruitment attestations by ‘‘H–1Bdependent’’ employers and employersfound to have committed willfulviolations or misrepresentations; (3)requires employers of H–1B workers tooffer the same fringe benefits to H–1Bworkers as it offers its U.S. workers; (4)requires an employer in certain cases to


pay an H–1B worker even if work is notavailable and the worker is placed in anon-productive status (but not for non-productive time due to non-work-related factors like a voluntary requestto be absent); and (5) provideswhistleblower protections to employees(including former employees andapplicants) who disclose informationabout potential violations or cooperatein an investigation or proceeding.

The direct, incremental costs that anemployer would incur because of thisrule above customary and usualbusiness expenses for recruitingqualified job applicants and retainingqualified employees in specialized jobsare expected to be minimal.Collectively, the changes proposed bythis rule will not have an annual effecton the economy of $100 million or moreor adversely affect in a material way theeconomy, a sector of the economy,productivity, jobs, the environment,public health or safety, or State, local,or tribal governments or communities.Therefore, the Department hasconcluded that this rule is not‘‘economically significant.’’

VI. Small Business RegulatoryEnforcement Fairness Act

The Department has similarlyconcluded that this proposed rule is nota ‘‘major rule’’ requiring approval by theCongress under the Small BusinessRegulatory Enforcement Fairness Act of1996 (5 U.S.C. 801 et seq.). It will notlikely result in (1) an annual effect onthe economy of $100 million or more;(2) a major increase in costs or prices forconsumers, individual industries,Federal, State or local governmentagencies, or geographic regions; or (3)significant adverse effects oncompetition, employment, investment,productivity, innovation, or on theability of U.S.-based enterprises tocompete with foreign-based enterprisesin domestic or export markets.

VII. Unfunded Mandates Reform Act of1995; Executive Order 12875

Title II of the Unfunded MandatesReform Act of 1995 (2 U.S.C. 1531 etseq.) directs agencies to assess theeffects of Federal regulatory actions onState, local, and tribal governments, andthe private sector, ‘‘ * * * (other than tothe extent that such regulationsincorporate requirements specificallyset forth in law).’’ For purposes of theUnfunded Mandates Reform Act, thisrule does not include any Federalmandate that may result in increasedannual expenditures in excess of $100million by State, local or tribalgovernments in the aggregate, or by theprivate sector. Moreover, the

requirements of the Unfunded MandatesReform Act do not apply to thisproposed rule because it does notinclude a ‘‘Federal mandate,’’ which isdefined to include either a ‘‘Federalintergovernmental mandate’’ or a‘‘Federal private sector mandate.’’ 2U.S.C. 658(6). Except in limitedcircumstances not applicable here, thoseterms do not include ‘‘a duty arisingfrom participation in a voluntaryprogram.’’ 2 U.S.C. 658(5)(A)(i)(II) and(7)(A)(ii). A decision by an employer toobtain an H–1B worker is purelyvoluntary, and the obligations arise‘‘from participation in a voluntaryFederal program.’’

For similar reasons, the proposed ruleis not an ‘‘unfunded mandate’’ withinthe meaning of Executive Order 12875.By its terms, section 1 of E.O. 12875applies to ‘‘any regulation that is notrequired by statute and that creates amandate upon a State, local or tribalgovernment.’’ The order requiresagencies to consult with State, local,and tribal governments whendeveloping regulatory proposalscontaining significant unfundedmandates. For the reasons noted, theproposed rule does not create anysignificant unfunded mandate on unitsof government.

VIII. Initial Regulatory FlexibilityAnalysis

The Regulatory Flexibility Act (5U.S.C. 601–612) requires agencies toprepare and make available for publiccomment an initial regulatory flexibilityanalysis, describing the anticipatedimpact of the proposed rule on smallentities. The following analysis has beenprepared to assess the impact of theproposed rule on small entities. Basedon this analysis, we have concluded thatthis rule will not have a significanteconomic impact on a substantialnumber of small entities. The impact ofthe rule derives from specific statutoryobligations set forth in the underlyingH–1B legislation, which DOL does nothave the discretion to alter. The direct,incremental costs are not believed to besignificant in any case. Moreover, asdiscussed below, most of the newcompliance obligations addressed inthis rulemaking apply to only a smallsubset of the full universe of employersthat participate in the H–1B program,namely, those that meet the newdefinition of ‘‘H–1B-dependentemployer,’’ which we estimate tonumber no more than 200. Evenassuming that all of the entities withinthis subset of 200 employers qualify as‘‘small,’’ the number is not consideredsubstantial.

1. Why Is This Action BeingConsidered?

On October 21, 1998, PresidentClinton signed into law the AmericanCompetitiveness and WorkforceImprovement Act of 1998 (ACWIA),which was enacted as Title IV of theOmnibus Consolidated and EmergencySupplemental Appropriations Act forFiscal Year 1999 (Public Law 105–277).ACWIA amended the Immigration andNationality Act (INA), as amended (8U.S.C. 1101 et seq.), relating to the H–1B visa program. Under the H–1Bvisaprogram, employers maytemporarily import and employnonimmigrants admitted into the U.S.under H–1B visas in specialtyoccupations and as fashion models,instead of employing U.S. workers,under certain conditions. Section 412(d)of ACWIA provides that some of theamendments made by ACWIA do nottake effect until the Departmentpromulgates implementing regulations,which are the subject of this proposedrulemaking. Under Section 412(e) ofACWIA, in order to promulgateimplementing regulations in a timelymanner, the Department of Labor mayreduce to 30 days the period for publiccomment on proposed regulations.

2. What Are the Objectives of, and theLegal Basis for, the Proposed Rule?

The proposed rule is issued pursuantto provisions of the INA, as amended,and the ACWIA, 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 (8U.S.C. 1182 note); and sec. 412(d) and(e), Pub. L. 105–277, 112 Stat. 2681. Itsobjectives are to enable employers tounderstand and comply with applicablerequirements under the amended H–1Bvisa program, and to advise employeesand applicants of the protectionsafforded by the amendments to U.S. andH–1B workers.

3. How Many Small Entities Will BeCovered by the Proposed Rule?

At least some parts of this proposedrule would apply to all employerswhich seek to temporarily employnonimmigrants admitted into the U.S.under the H–1B visa program inspecialty occupations and as fashionmodels. The obligations differ under thelaw and the rules for ‘‘H–1B-dependent’’employers from those that are not ‘‘H–1B-dependent.’’

The definition of ‘‘small’’ businessvaries considerably, depending on thepolicy issues and circumstances underreview, the industry being studied, andthe measures used. The size standards


1 Analysis of number of job openings certified inFiscal Year (FY) 1997 by occupationalclassification. A total of 180,739 LCAs were filedwith the Department in FY 1997, certifying 398,324job openings.

2 Major Group 73 includes the following SICindustries: Computer Programming Services (7371);Prepackaged Software (7372); Computer IntegratedSystems Design (7373); Computer Processing andData Preparation and Processing Services (7374);Information Retrieval Services (7375); ComputerFacilities Management Services (7376); ComputerRental and Leasing (7377); Computer Maintenanceand Repair (7378); and Computer Related Services,Not Elsewhere Classified (N.E.C.) (7379).

3 According to BLS, the following five SICscomprise the electronic equipment manufacturingindustry: 357, Computer and Office Equipment;365, Household Audio and Video Equipment; 366,Communications Equipment; 367, Electronic

Components and Accessories; and 381, Search andNavigation Equipment. These five SICs sharecommon need for high levels of computerprogrammers, analysts, engineers and othercomputer scientists. BLS has published data onestablishment size for the industry as a whole, butnot its five components. See Career Guide toIndustries, BLS Bulletin 2503, pp. 53–56, January1998. The products of this industry includecomputers and computer storage devices such asdisk drives; semiconductors (silicon or computerchips or integrated circuits) which are the core ofcomputers and other advanced electronic products;computer peripheral equipment such as printersand scanners; calculating and accounting machinessuch as automated teller machines; and otherelectronic equipment using highly skilled computerand other scientists and professionals.

4 BLS Bulletin 2503 (January 1998). Source: U.S.Department of Commerce, County BusinessPatterns, 1994.

5 SIC industries 8021 (Offices and Clinics ofDentists), 8042 (Offices and Clinics ofOptometrists), 8072 (Dental Laboratories), and 8092(Kidney Dialysis Centers) were subtracted from thetotal number of health service firms in SIC 80 forpurposes of this analysis, based on the assumptionthat such firms would not likely employ physicalor occupational therapists.

used by the U.S. Small BusinessAdministration (SBA) to define smallbusiness concerns according to theirStandard Industrial Classification (SIC)codes are codified at 13 CFR 121.201.SBA’s small size standards are generallyexpressed either in maximum number ofemployees or annual receipts (inmillions of dollars).

If we could construct a profile of eachbusiness that used H–1B workersshowing both the total number ofworkers employed and the portion thatare H–1B workers, together with totalannual receipts and the applicable SICindustry code, we could then applySBA’s size standards and gaugeprecisely how many of the affectedbusinesses are ‘‘small.’’ Unfortunately,the precise data required for thisanalysis are not available. However, weknow that nearly one-half (44.4 percent)of the job openings being certified underthe H–1B program are for computer-related occupations, and over one-fourth(25.9 percent) are for therapists(principally physical andoccupational).1 Looking just at thesecategories would present a view ofnearly three-fourths of all the certifiedjob openings under the H–1B program.

For Major Group 73, BusinessServices, the SBA’s small business sizestandards for SIC codes in whichcomputer-related occupations wouldlikely be employed are all at the $18million level (annual receipts).2 Datafrom the 1992 Census of ServiceIndustries: Establishment and Firm Size(published February 1995) indicate that39,511 out of a total 40,242 firms (or98.18 percent) have annual receipts lessthan $18 million.

The Business Services category wouldnot include other users of H–1B workersin computer-related occupations, suchas computer equipment manufacturers.For computer and other electronicequipment manufacturers, the SBA’ssmall size threshold is 1,000employees.3 In 1994 (latest data on size

distribution), 1.6 percent of theestablishments employed 1,000 or moreworkers (comprising 42.1 percent of theemployment in the industry).4 Therewere more than 14,000 establishmentsin this industry in 1996.

For Major Group 80, Health Services,the SBA’s small size threshold for allcategories within the group are at the $5million (annual receipts) level. Datafrom the 1992 Census of ServiceIndustries: Establishment and Firm Size(February 1995) indicate that 244,437out of a total 249,052 firms (or 98.15percent) have annual receipts less than$5 million.5

Based on the above data, the vastmajority (over 98 percent) of thebusinesses in the industries in whichH–1B workers are likely to be employedwould meet SBA’s definition of ‘‘small.’’However, as noted above, the newcompliance obligations under ACWIA(and, therefore, under these regulations)differ for employers who meet a newstatutory definition of being ‘‘H–1Bdependent’’ or have been found after theeffective date of ACWIA to havecommitted willful violations ormisrepresentations. Section 412(a)(3) ofACWIA defines ‘‘H–1B-dependentemployer’’ as an employer that has 25or fewer full-time equivalent employeesemployed in the U.S. and more than 7H–1B nonimmigrants, at least 26 but notmore than 50 full-time equivalentemployees and more than 12 H–1Bnonimmigrants, or at least 51 full-timeequivalent employees and a workforceof H–1B nonimmigrants comprising atleast 15 percent of its full-timeequivalent employees. ACWIA requiresH–1B-dependent employers andemployers found to have willfully

violated H–1B requirements to attestthat they will not displace (layoff) U.S.workers and replace them with H–1Bworkers in essentially equivalent jobs,that they will not place H–1B workerswith other employers without firstinquiring as to whether they intend todisplace U.S. workers, and that theyhave taken good faith steps to recruit inthe United States for U.S. workers to fillthe jobs for which they are seeking H–1B workers. An employer filing an LCApertaining only to ‘‘exempt H–1Bnonimmigrants’’ need not comply withthe non-displacement and good faithrecruitment attestations, regardless ofstatus as an H–1B-dependent or willfulviolator. ‘‘Exempt H–1Bnonimmigrants’’ are defined as thosewho earn at least $60,000 annually orwho have attained a master’s degree orits equivalent in a specialty related tothe intended employment.

The Department estimates thatapproximately 50,000 employers a yearfile LCA’s for H–1B nonimmigrants. TheDepartment estimates that not morethan ten (10) employers a year will befound to have committed willfulviolations. There are no data available todetermine precisely how many ‘‘H–1B-dependent’’ employers will exist underthe rule. We tried to estimate thenumber of ‘‘H–1B-dependent’’employers for purposes of this analysis,as follows. Although the test for H–1Bdependency varies with the size of theemployer, an employer must employ atleast seven (7) H–1B workers to bedependent. Therefore, if we assume thatevery H–1B-dependent employer hadthe smallest workforce threshold (25full-time equivalent employees) andtherefore subject to the ‘‘more thanseven H–1B’’ workers test, we canestimate the maximum potentialnumber of H–1B-dependent employersin computer-related fields and healthservices (using therapists) bydetermining how many of thoseemployers submitted LCAs seekingcertification of more than seven H–1Bnonimmigrants on a single LCA. Thisapproach undercounts the potentialnumber of H–1B-dependent employersbecause some employers requestingfewer than seven H–1B workers on asingle LCA may already employ otherH–1B workers or may file more than oneLCA. For purposes of this analysis,therefore, we calculated the number ofemployers for which more than five (5)H–1B nonimmigrants were certified ona single LCA to work in computer-related fields or as therapists in FY1997, to estimate an upper-bound limitof the maximum potential number of H–1B-dependent employers. This yielded a


total of 1,425 employers (8.7 percent ofthe total in the sample). This approachfor setting the maximum upper limitgreatly overstates H–1B dependency,however, because many larger firmsemploying more than 25 full-timeemployees would automatically beincluded in the count of H–1Bdependents. For example, we know, thatmany major employers of H–1B workershave workforces larger than 25 full-timeequivalent employees. In addition, someemployers file LCAs certifying a needfor H–1B workers but for variousreasons never fill all the positions.Realistically, we estimate that the actualnumber of H–1B-dependent employersand willful violators under the rule tobe no more than from between 100 and200 employers.

4. What Are the Projected Reporting,Recordkeeping and Other ComplianceRequirements of the Proposed Rule,Which Small Entities Will They Affect,and What Type of Professional Skills areNeeded to Meet the Requirements?

The reporting and recordkeepingrequirements of this rule are describedabove in the Supplementary Informationsection entitled ‘‘Paperwork ReductionAct’’ and in various places throughoutthe preamble. They are also brieflysummarized here. In sum, the reportingand recordkeeping requirements of therule are not overly complex, and in mostcases simply require that a copy be keptof a record made for other purposes orthat a simple arithmetic calculation beperformed. There are no requirementsfor technical, specialized or professionalskills to comply with the reporting orrecordkeeping provisions of the rule.

As noted, most new recordkeepingand compliance requirements imposedby ACWIA and this rule apply only toemployers meeting the new definition of‘‘H–1B-dependent employer’’ oremployers found to have committedwillful violations or misrepresentations,which we estimate to number between100 and 200. To determine if it meetsthe new definition of ‘‘H–1B-dependentemployer,’’ an employer of H–1Bworkers must compare the number of itsH–1B workers to the number of full-timeequivalent employees. H–1B-dependentemployers and willful violators mustcomply with the new ‘‘non-displacement’’ and ‘‘good faithrecruitment’’ requirements of ACWIA.In many cases, it will be readilyapparent, at either end of the spectrum,whether an employer is or is not H–1Bdependent. When H–1B dependency isnot apparent or it is a close question, theemployer must make a mathematicaldetermination, and if it determines it isnot dependent, document the

determination in its public disclosurefile. In order to make the determination,employers will need to keep copies ofH–1B petitions and, for part-timeworkers, either hourly payroll records ora document showing the employee’sregular schedule.

The ACWIA provisions on non-displacement and recruitment of U.S.workers do not apply if the LCA is usedfor petitioning only ‘‘exempt H–1Bnonimmigrants.’’ If INS determines inthe course of adjudicating an H–1Bpetition that an H–1B nonimmigrant isexempt, the employer must keep a copyof the determination in the publicaccess file.

The proposed rule would require anH–1B-dependent employer or willfulviolator that is seeking to place an H–1B nonimmigrant with anotheremployer to secure and retain either awritten assurance from the secondemployer, a contemporaneous writtenrecord of the second employer’s verbalstatement, or a prohibition in thecontract between the two employers,stating that it has not displaced andintends not to displace a U.S. worker.

H–1B-dependent employers andwillful violators must maintaindocumentation that they have notdisplaced U.S. workers for a period 90days before and 90 days after theemployer petitions for an H–1B worker.The rule proposes that employersmaintain typical personnel records thatwould ordinarily be readily available,including name, last known mailingaddress, title and description of job, andany documentation kept on theemployee’s experience andqualifications and principalassignments, for all U.S. workers wholeft employment during the 180-daywindow. The employer must also keepall documents concerning the departureof any such U.S. employees and theterms of any offers of similaremployment made to them and theirresponses. No special records need to becreated to meet these requirements.EEOC requires under its regulations thatany such existing records be maintainedby employers.

H–1B-dependent employers andwillful violators must make good faithefforts to recruit U.S. workers usingprocedures that meet industry-widestandards before hiring H–1B workers.These employers will be required tokeep documentation of the recruitingmethods they used, including theplaces, dates, and contents ofadvertisements or postings, and thecompensation terms (if not included incontents of advertisements andpostings). These employers must alsosummarize in the public disclosure file

the principal recruitment methods usedand the time frame within which therecruitment was conducted. TheDepartment has requested comments onhow employers should determineindustry-wide standards, and how tomake this determination available toU.S. workers. We expect that mostemployers would ordinarily followindustry standards for recruitingqualified job applicants for specializedjobs. Thus, inasmuch as therequirements are based on industry-wide standards, meeting this statutorystandard should not impose significantburdens on affected employers in mostcases. To ascertain whether employershave given good faith consideration toU.S. worker/applicants, the proposedregulation would also require retentionof applications and related documents,rating forms, job offers, etc. Retention ofsuch records is already required byEEOC, so no additional burden will beimposed.

All employers of H–1B workers mustoffer fringe benefits to H–1B workers onthe same basis and terms as offered tosimilarly-employed U.S. workers. Todocument that they have done so,employers must keep copies of theirfringe benefit plans and summary plandescriptions, including rules oneligibility and benefits, evidence ofwhat benefits are actually provided toworkers, and how costs are sharedbetween employers and employees.Because regulations of the Pension andWelfare Benefits Administration and theInternal Revenue Service generallyrequire employers to keep copies ofsuch fringe benefit information, meetingthis requirement should not impose anyadditional burdens on most affectedemployers, and in the few cases wheresuch information is not currentlyretained, it is anticipated that theadditional burden will be minor.

The Department has also republishedand asked for comment on severalprovisions of the December 20, 1994Final Rule (59 FR 65646), which werepublished for notice and comment onOctober 31, 1995 (60 FR 55339). Asexplained above, H–1B workers arerequired to be paid at least the actualwage or the prevailing wage, whicheveris higher. To ensure this requirement ismet, employers are required to includein the public access file documentsexplaining their actual wage system,and to maintain payroll records for thespecific employment in question forboth their H–1B workers and their U.S.workers. This proposal modifies thepayroll recordkeeping requirement withrespect to U.S. workers, to require thathours worked records be retained onlyif the employee is not paid on a salary


basis or the actual wage is expressed asan hourly rate. In virtually all cases,these employees would be paid hourlyand hourly pay records would thereforebe kept.

5. Are There Any Federal Rules ThatDuplicate, Overlap or Conflict WithThis Proposed Rule?

Title VII of the Civil Rights Act of1964 (42 U.S.C. 2000e et seq.), enforcedby the U.S. Equal EmploymentOpportunity Commission (EEOC),prohibits national origin discriminationby employers with 15 or moreemployees (see 29 CFR 1606). TheImmigration Reform and Control Act of1986 (see 8 U.S.C. 1324b; 8 U.S.C.1103(a)), enforced by the U.S.Department of Justice, prohibits nationalorigin discrimination by employers withbetween four (4) and 14 employees(those not covered by Title VII), andcitizenship-status discrimination byemployers with at least four (4)employees (see 28 CFR 44). In addition,under ACWIA, an ‘‘H–1B dependent’’employer must attest that it has takengood faith steps to recruit in the U.S. forthe position for which it is seeking theH–1B worker, and that it has offered thejob to any U.S. worker/applicant who isequally or better qualified. TheDepartment of Labor is responsible forenforcing the required recruitment, andthe Department of Justice is responsiblefor administering an arbitration processdetailed in ACWIA if U.S. worker/applicants complain that they were notoffered a job for which they wereequally or better qualified, as required.

6. Are There Significant AlternativesAvailable Such as Differing Complianceor Reporting Requirements orTimetables for Small Entities?

The compliance and reportingrequirements of the proposed rule,together with those significantalternatives which have been identified,are discussed in the ‘‘SupplementaryInformation’’ section of the preambleabove. Different timetables forimplementing the statutoryrequirements for smaller businesseswould not appear to be consistent withthe statute. The legislation temporarilyincreases the maximum allowablenumber of nonimmigrants that may beadmitted into the U.S. to performspecialized jobs not filled by U.S.workers, and temporarily addscorresponding provisions intended toprotect the wages and workingconditions of U.S. workers in similarjobs during the same period.

7. Can Compliance and ReportingRequirements be Clarified,Consolidated, or Simplified Under theProposed Rule for Small Entities?

The compliance and reportingrequirements of the proposed rule, andeach of the alternatives consideredtogether with their expected advantagesand disadvantages, are described in thepreamble above. The Department hasattempted to keep new recordkeepingrequirements to the minimum necessaryfor the Department to ascertaincompliance and for the public to beaware of the primary documentationrelied on by the employer to satisfy thestatutory requirements. (See Section212(n)(1) of the INA.) In addition, mostrecordkeeping requirements are alreadyimposed by other statutes, or onlyrequire retention of documents whichwould be kept by a prudentbusinessman. Comments are invited onways to clarify or simplify thecompliance requirements for smallbusinesses without undermining theCongressional intent of the newstatutory provisions.

8. Can Other Standards be Used (Suchas Performance, Rather Than DesignStandards)?

The underlying legislation allowsemployers to temporarily import andemploy nonimmigrants admitted intothe U.S. under H–1B visas to fillspecialized jobs not filled by U.S.workers. As a condition of participatingin this voluntary program, the employermust pay the H–1B worker at least theprevailing wage or the actual wage(whichever is higher). Certainemployers of H–1B workers must alsoengage in good faith recruitment to tryto find qualified U.S. workers to filltheir job openings, and may not displace(lay off) a U.S. worker in order to hirean H–1B worker in the same job. Giventhe objectives of the applicable statutoryprovisions, the use of performancerather than design standards has beenconsidered and such alternatives, whereperceived to be appropriate, arediscussed. For example, the Departmentis considering a presumption of goodfaith recruitment based on theemployer’s hiring a significant numberof U.S. workers and, thereby,accomplishing a significant reduction inthe ratio of H–1B workers to U.S.workers in the employer’s workforce.The available alternatives that wereconsidered in developing this proposedrule are discussed in the preambleabove and are not repeated here.

9. Can Small Entities be Exempted FromCoverage of the Rule, or Any Part of theRule?

Exemption from coverage under thisproposed rule for small entities wouldnot be appropriate under the terms ofthe controlling H–1B statutorymandates. The ACWIA contains noauthority for the Department to grantsuch an exemption except to the extentthat the statute itself grants anexemption (e.g., the definition of ‘‘H–1B-dependent employer’’).

IX. Catalog of Federal DomesticAssistance Number.

This program is not listed in theCatalog of Federal Domestic Assistance.

List of Subjects in 20 CFR Part 655

Administrative practice andprocedure, Agriculture, Aliens,Employment, Forest and forestproducts, Health professions,Immigration, Labor, Longshore work,Migrant labor, Penalties, Reportingrequirements, Students, Wages.

Text of the Proposed Rule

The text of the proposed rule toamend 20 CFR chapter V appears below.(In addition to the proposed regulatorytext, other proposed changes to parts655 and 656 are discussed in thepreamble.)

PART 655—TEMPORARYEMPLOYMENT OF ALIENS IN THEUNITED STATES

1. The authority citation for Part 655is proposed to be revised to read asfollows:

Authority: Section 655.0 issued under 8U.S.C. 1101(a)(15)(H)(i) and (ii), 1182(m) and(n), 1184, 1188, and 1288(c); 29 U.S.C. 49 etseq.; sec. 3(c)(1), Pub. L. 101–238, 103 Stat.2099, 2103 (8 U.S.C. 1182 note); sec. 221(a),Pub. L. 101–649, 104 Stat. 4978, 5027 (8U.S.C. 1184 note); Title IV, Pub. L. 105–277,112 Stat. 2681; and 8 CFR 214.2(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)(15)(H)(ii)(b) and 1184; 29 U.S.C. 49 etseq.; 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 29U.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; 29U.S.C. 49 et seq.; and sec. 3(c)(1), Pub. L.101–238, 103 Stat. 2099, 2103 (8 U.S.C. 1182note).

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; 29U.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. 49et seq.; and sec. 221(a), Pub. L. 101–649, 104Stat. 4978, 5027 (8 U.S.C. 1184 note).

Subpart H—Labor ConditionApplications and Requirements forEmployers Using Non-Immigrants onH–1B Visas in Specialty Occupationsand as Fashion Models

2. In § 655.700, paragraph (a)(1) isproposed to be revised to read asfollows:

§ 655.700 Purpose, procedure andapplicability of subparts H and I.

(a) * * *(1) Establishes the following annual

ceilings (exclusive of spouses andchildren) on the number of foreignworkers who may be issued H–1B visasor otherwise accorded H–1Bnonimmigrant status):

(i) 115,000 in fiscal year 1999;(ii) 115,000 in fiscal year 2000;(iii) 107,500 in fiscal year 2001; and(iv) 65,000 in each succeeding fiscal

year;* * * * *

3. In § 655.715, a new definition of‘‘Employed or employed by theemployer’’ is proposed to be added, toread as follows:

§ 655.715 Definitions.* * * * *

Employed or employed by theemployer means the employmentrelationship as determined under thecommon law, under which ‘‘noshorthand formula or magic phrase* * * can be applied to find the answer,* * * all of the incidents of therelationship must be assessed andweighed with no one factor beingdecisive’’ (NLRB v. United Ins. Co. ofAmerica, 390 U.S. 254, 258 (1968)), inconsidering the following factors thatwould indicate the existence of anemployment relationship:

(1) The firm or the client has the rightto control when, where, and how theworker performs the job;

(2) The work does not require a highlevel of skill or expertise;

(3) The firm or the client rather thanthe worker furnishes the tools,materials, and equipment;

(4) The work is performed on thepremises of the firm or the client;

(5) There is a continuing relationshipbetween the worker and the firm or theclient;

(6) The firm or the client has the rightto assign additional projects to theworker;

(7) The firm or the client sets thehours of work and the duration of thejob;

(8) The worker is paid by the hour,week, month or an annual salary, ratherthan for the agreed cost of performing aparticular job;

(9) The worker does not hire or payassistants;

(10) The work performed by theworker is part of the regular business(including governmental, educational,and nonprofit operations) of the firm orthe client;

(11) The firm or the client is itself inbusiness;

(12) The worker is not engaged in hisor her own distinct occupation orbusiness;

(13) The firm or the client providesthe worker with benefits such asinsurance, leave, or workers’compensation;

(14) The worker is considered anemployee of the firm or the client for taxpurposes (i.e., the entity withholdsfederal, state, and Social Security taxes);

(15) The firm or the client candischarge the worker; and

(16) The worker and the firm or clientbelieve that they are creating anemployer-employee relationship.* * * * *

4. In § 655.730, in paragraph (b), thefirst sentence is proposed to continue toread as follows:

§ 655.730 Labor condition application.

* * * * *(b) Where and when should a labor

condition application be submitted? Alabor condition application shall besubmitted, by U.S. mail, private carrier,or facsimile transmission, to the ETAregional office shown in § 655.720 ofthis part in whose geographic area ofjurisdiction the H–1B nonimmigrantwill be employed no earlier than sixmonths before the beginning date of theperiod of intended employment shownon the LCA. * * ** * * * *

5. In § 655.730, paragraph (d)(4)(i)(B)is proposed to be revised to read asfollows:

§ 655.730 Labor condition application.

* * * * *(d) * * *(4) * * *(i) * * *(B) If there is no such bargaining

representative, provides electronicnotice or posts notice of the filing of thelabor condition application inconspicuous locations in the employer’sestablishment(s) in the area of intendedemployment, in the manner describedin § 655.734(a)(1)(ii) of this subpart, andprovides a copy of the labor conditionapplication to the H–1B worker, in the

manner described in § 655.734(a)(2) ofthis subpart; and* * * * *

6. In § 655.731, the second sentence ofparagraph (a)(1) is proposed to beamended by adding the phrase ‘‘jobperformance,’’ after the phrase ‘‘jobresponsibility and function,’’.

7. In § 655.731, paragraph(a)(2)(iii)(A)(1) is proposed to continueto read as follows:

§ 655.731 The first labor conditionstatement: wages.

(a) * * *(2) * * *(iii) * * *(A) * * *(1) An employer who chooses to

utilize a SESA prevailing wagedetermination shall file the laborcondition application not more than 90days after the date of issuance of suchSESA wage determination. Once anemployer obtains a prevailing wagedetermination from the SESA and filesan LCA supported by that prevailingwage determination, the employer isdeemed to have accepted the prevailingwage determination (both as to theoccupational classification and wage)and thereafter may not contest thelegitimacy of the prevailing wagedetermination through the EmploymentService complaint system or in aninvestigation or enforcement action.Prior to filing the LCA, the employermay challenge a SESA prevailing wagedetermination through the EmploymentService complaint system, by filing acomplaint with the SESA. See 20 CFRpart 658.410 et seq. Employers whichchallenge a SESA prevailing wagedetermination must obtain a final rulingfrom the Employment Service complaintsystem prior to filing an LCA based onsuch determination. In any challenge,the SESA shall not divulge anyemployer wage data which wascollected under the promise ofconfidentiality.* * * * *

8. In § 655.731, paragraph (b)(1) isproposed to be revised to read asfollows:


* * * * *(b) Documentation of the wage

statement. (1) The employer shalldevelop and maintain documentationsufficient to meet its burden of provingthe validity of the wage statementrequired in paragraph (a) of this sectionand attested to on Form ETA 9035. Thedocumentation shall be made availableto DOL upon request. Documentationshall also be made available for public


examination to the extent required by§ 655.760(a) of this part. The employershall also document that the wagerate(s) paid to H–1B nonimmigrant(s)is(are) no less than the required wagerate(s). The documentation shall includeinformation about the employer’s wagerate for all other employees for thespecific employment in question at theplace of employment, beginning withthe date the labor condition applicationwas submitted and continuingthroughout the period of employment.The records shall be retained for theperiod of time specified in § 655.760 ofthis part. The payroll records for eachsuch 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; or(B) The actual wage is expressed as an

hourly rate; or(C) With respect only to H–1B

nonimmigrants, the prevailing wage isexpressed as an hourly rate;

(vi) Total additions to or deductionsfrom pay each pay period by employee;and

(vii) Total wages paid each payperiod, date of pay and pay periodcovered by the payment by employee.* * * * *

9. In § 655.731, paragraph(b)(3)(iii)(B)(1) is proposed to be revisedto read as follows:


* * * * *(b) * * *(3) * * *(iii) * * *(B) * * *(1) Reflect the weighted average wage

paid to workers similarly employed inthe area of intended employment;* * * * *

10. In § 655.731, paragraph (c)(4) isproposed to be deleted and reserved.

11. In § 655.731, paragraph (c)(5) isproposed to be revised to read asfollows:


* * * * *(c) * * *(5)(i) In accordance with the

standards specified in paragraphs (c)(5)(ii) and (iii) of this section, an H–1Bnonimmigrant shall receive the fullwage which the LCA-filing employer isrequired to pay, beginning on the datewhen the nonimmigrant enters into

employment with the employer andcontinuing throughout thenonimmigrant’s period of employment.In the case of an H–1B nonimmigrantwho has not yet entered intoemployment with an employer who hashad approved a labor conditionapplication and an H–1B petition forsuch nonimmigrant, the employer’sobligation to pay wages in accordancewith the standards specified inparagraphs (c)(5) (ii) and (iii) of thissection shall begin 30 days after the datethe nonimmigrant first is admitted intothe U.S. pursuant to the petition, or 60days after the date the nonimmigrantbecomes eligible to work for theemployer (if the nonimmigrant ispresent in the U.S. on the date of theapproval of the petition).

(ii) If the H–1B nonimmigrant is in anonproductive status for reasons such astraining, lack of license, lack of assignedwork or any other reason, the employerwill be required to pay the salariedemployee the full pro-rata amount due,or to pay the hourly-wage employee fora full-time week (40 hours or such othernumber of hours as the employer candemonstrate to be full-time employmentfor the occupation and area involved) atthe required wage for the occupationlisted on the LCA. If the employer’s LCAcarries a designation of ‘‘part-timeemployment,’’ the employer will berequired to pay the nonproductiveemployee for at least the number ofhours indicated on the I–129 petitionfiled by the employer with the INS. Ifduring a subsequent enforcement actionby the Administrator it is determinedthat an employee designated in the LCAas part-time was in fact working full-time or regularly working more hoursthan reflected on the I–129 petition, theemployer will be held to the factualstandard disclosed by the enforcementaction.

(iii) If, however, during the period ofemployment, an H–1B nonimmigrantexperiences a period of nonproductivestatus due to conditions unrelated toemployment which take thenonimmigrant away from his/her dutiesat his/her voluntary request andconvenience (e.g., touring the U.S. priorto commencing performance of dutiesfor employer, caring for ill relative) orrender the nonimmigrant unable towork (e.g., maternity leave, automobileaccident which temporarilyincapacitates the nonimmigrant), thenthe employer shall not be obligated topay the required wage rate during thatperiod, provided that the INS permitsthe employee to remain in the U.S.without being paid, and providedfurther that such period is not subject topayment under the employer’s benefit

plan or other statutes such as the Familyand Medical Leave Act (29 U.S.C. 2601et seq.) or the Americans withDisabilities Act (42 U.S.C. 12101 etseq.).* * * * *

12. In § 655.731, paragraph (d)(2) isproposed to continue to read as follows:


* * * * *(d) * * *(2) In the event the Administrator

obtains a prevailing wage from ETApursuant to paragraph (d)(1) of thissection, the employer may challenge theETA prevailing wage only through theEmployment Service complaint system.See 20 CFR part 658, subpart E.Notwithstanding the provisions of 20CFR 658.421 and 658.426, the appealshall be initiated at the ETA regionaloffice level. Such challenge shall beinitiated within 10 days after theemployer receives ETA’s prevailingwage determination from theAdministrator. In any challenge to thewage determination, neither ETA northe SESA shall divulge any employerwage data which was collected underthe promise of confidentiality.

(i) Where the employer timelychallenges an ETA prevailing wagedetermination obtained by theAdministrator, the 30-day investigativeperiod shall be suspended until theemployer obtains a final ruling from theEmployment Service complaint system.Upon such final ruling, the investigationand any subsequent enforcementproceeding shall continue, with ETA’sprevailing wage determination servingas the conclusive determination for allpurposes.

(ii) Where the employer does notchallenge ETA’s prevailing wagedetermination obtained by theAdministrator, such determination shallbe deemed to have been accepted by theemployer as accurate and appropriate(both as to the occupationalclassification and wage) and thereaftershall not be subject to challenge in ahearing pursuant to § 655.835 of thispart.* * * * *

13. In § 655.734, paragraph (a)(1)(ii) isproposed to be revised to read asfollows:

§ 655.734 The fourth labor conditionstatement: notice.

(a) * * *(1) * * *(ii) Where there is no collective

bargaining representative, the employershall, on or within 30 days before thedate the labor condition application is


filed with ETA, provide a notice of thefiling of the labor condition application.The notice shall indicate that H–1Bnonimmigrants are sought; the numberof such nonimmigrants the employer isseeking; the occupational classification;the wages offered; the period ofemployment; the location(s) at whichthe H–1B nonimmigrants will beemployed; and that the labor conditionapplication is available for publicinspection at the employer’s principalplace of business in the U.S. or at theworksite. The notice shall also includethe statement: ‘‘Complaints allegingmisrepresentation of material facts inthe labor condition application and/orfailure to comply with the terms of thelabor condition application may be filedwith any office of the Wage and HourDivision of the United StatesDepartment of Labor. Complaintsalleging failure to offer employment toan equally or better qualified U.S.worker, or an employer’smisrepresentation regarding suchoffer(s) of employment, may be filedwith the Department of Justice, 10thStreet & Constitution Avenue, N.W.,Washington, D.C. 20530.’’ The noticeshall be provided in one of the twofollowing manners:

(A) By posting a notice in at least twoconspicuous locations at each place ofemployment where any H–1Bnonimmigrant will be employed.

(1) The notice shall be of sufficientsize and visibility, and shall be postedin two or more conspicuous places sothat the employer’s workers at theplace(s) of employment can easily seeand read the posted notice(s).

(2) Appropriate locations for postingthe notices include, but are not limitedto, locations in the immediate proximityof wage and hour notices required by 29CFR 516.4 or occupational safety andhealth notices required by 29 CFR1903.2(a).

(3) The notices shall be posted on orwithin 30 days before the date the laborcondition application is filed and shallremain posted for a total of 10 days.

(4) Where the employer places any H–1B nonimmigrant(s) at one or moreworksites not contemplated at the timeof filing the application, but which arewithin the area of intended employmentlisted on the LCA, the employer isrequired to post notice(s) at suchworksite(s) on or before the date any H–1B nonimmigrant begins work, whichnotice shall remain posted for a total often days.

(B) By providing electronicnotification to employees in theoccupational classification for which H–1B nonimmigrants are sought. Suchnotification shall be given on or before

the date any H–1B nonimmigrant beginswork, and shall be available to theaffected employees for a total of tendays. Such notification shall be readilyavailable to the affected employees. Anemployer may accomplish this by anymeans it ordinarily uses tocommunicate with its workers about jobvacancies or promotion opportunities,including through its ‘‘home page’’ or‘‘electronic bulletin board’’ toemployees who have, as a practicalmatter, direct access to the home pageor electronic bulletin board; or throughE-Mail or an actively circulatedelectronic message such as theemployer’s newsletter. Whereemployees are not on the ‘‘intranet’’which provides direct access to thehome page or other electronic site butdo have computer access readilyavailable, the employer may providenotice to such workers by directelectronic communication such as E-Mail.* * * * *

14. Section 655.735 is proposed to berevised to read as follows:

§ 655.735 Special provisions for short-term placement of H–1B nonimmigrants atplace(s) of employment outside the area(s)of intended employment listed on laborcondition application.

(a) Subject to the conditions specifiedin paragraph (b) of this section, anemployer may place H–1Bnonimmigrant(s) at worksite(s) (place(s)of employment) within areas ofemployment not listed on theemployer’s labor conditionapplication(s) without filing new laborcondition application(s) for the area(s)of intended employment which wouldencompass such worksite(s).

(b) The following restrictions must befully satisfied by an employer whichplaces H–1B nonimmigrant(s) atworksite(s) (place(s) of employment)within areas of employment not listedon the employer’s labor conditionapplication(s):

(1) The employer has fully satisfiedthe requirements of §§ 655.730 through655.734 of this part with regard toworksite(s) located within the area(s) ofintended employment listed on theemployer’s labor conditionapplication(s).

(2) The employer shall not place,assign, lease, or otherwise contract outany H–1B nonimmigrant(s) to anyworksite where there is a strike orlockout in the course of a labor disputein the same occupationalclassification(s) as the H–1Bnonimmigrant(s).

(3) For every day of the H–1Bnonimmigrant’s(s’) placement outside

the LCA-listed area of employment, theemployer shall:

(i) Pay such worker(s) the requiredwage (based on the prevailing wage atsuch worker’s(s’) permanent work site,or the employer’s actual wage,whichever is higher);

(ii) Pay such worker(s) the actual costof lodging (for both workdays and non-workdays) up to the rate prescribed bythe General Services Administration(‘‘GSA’’) for Federal Governmentemployees on travel or temporaryassignment, plus applicable taxes, as setout in 41 CFR Part 301–7 and Ch. 301,App. A.; and

(iii) Provide such worker(s) per diemfor meals and incidental expenses (forboth workdays and non-workdays) atrate(s) no lower than the rate(s)prescribed by the GSA as set out in 41CFR Part 301–7 and Ch. 301, App. A.

(iv) Provide such worker(s) the actualcost of transportation expenses, exceptthat where the worker uses a privately-owned vehicle, the employer mustprovide such worker(s) the cost tooperate the vehicle at the rate(s) set outin 41 CFR Part 301–4, plus out-of-pocketexpenses for miscellaneous expensessuch as tolls and parking fees.

(4) The employer’s placement(s) of H–1B nonimmigrant(s) at any worksite(s)in an area of employment not listed onthe employer’s labor conditionapplication(s) shall be limited to a totalof ninety workdays for any H–1Bnonimmigrant within a three-yearperiod. For purposes of this section,‘‘workday’’ shall mean any day onwhich an H–1B nonimmigrant performsany work at any worksite(s) within thearea of employment. For example, threeworkdays would be counted where anonimmigrant works three non-consecutive days at three differentworksites, whether or not the employerowns or controls such worksite(s),within the same area of employment.

(c) Once any H–1B nonimmigrant hasworked 90 workdays in a three-yearperiod in any area of employment, theemployer may not continue to employH–1B nonimmigrant(s) in the sameoccupational classification at anyworksite(s) within the area ofemployment unless the employer hasfiled and received a certified laborcondition application for the area(s) ofintended employment encompassingsuch worksite(s) and performed allactions required in connection withsuch filing(s) (e.g., determination of theprevailing wage; notice to collectivebargaining representative; on-site noticeto workers), whether or not theemployer owns or controls suchworksite(s).


(d) The employer may notcontinuously rotate H–1Bnonimmigrants to an area ofemployment in a manner that woulddefeat the purpose of the short-termplacement option, which is to providethe employer with enough time to filean LCA for areas where it intends tohave a significant presence (e.g., anemployer may not rotate H–1Bnonimmigrants to an area ofemployment for 60-day periods, withthe result that nonimmigrants arecontinuously or virtually continuouslyemployed in the area of employment, inorder to avoid filing an LCA would befound to be in violation of these short-term placement provisions).

(e) The employer may at any time filea labor condition application for an areaof intended employment, performing allactions required in connection withsuch labor condition application. Uponcertification of such application, theemployer’s obligation to comply withparagraph (b)(3) shall terminate.(However, see § 655.731(c)(7)(iii)(C)regarding payment of business expensesfor employee’s travel on employer’sbusiness.)

15. Appendix A to Subpart H isproposed to be revised to read asfollows:

Appendix A to Subpart H—Guidance forDetermination of the ‘‘Actual Wage’’

In determining the required wage rate, inaddition to obtaining the prevailing wage, theemployer must establish the actual wage forthe occupation in which the H–1Bnonimmigrant is employed by the employer.For purposes of establishing itscompensation system for workers in anoccupational category, an employer may takeinto consideration objective standardsrelating to experience, qualifications,education, specific job responsibility andfunction, job performance, specializedknowledge, and other legitimate businessfactors. The use of any or all these factors isat the discretion of the employer. Theemployer must have and document anobjective system used to determine the wagesof non-H–1B workers, and apply that systemto H–1B nonimmigrants as well. It is notsufficient for the employer simply tocalculate an average wage of all non-H–1Bemployees in an occupation; the actual wageis not an ‘‘average wage’’.

The documents explaining the system mustbe maintained in the public disclosure file.The explanation of the compensation systemmust be sufficiently detailed to enable a thirdparty to apply the system to arrive at theactual wage rate computed by the employerfor any H–1B nonimmigrant. Thecomputation of the H–1B nonimmigrant’sindividual actual wage rate must bedocumented in the H–1B nonimmigrant’spersonnel file.

Assuming the actual wage is higher thanthe prevailing wage and thus is the requiredwage rate, if an employer gives its employees

a raise at year’s end or if the system providesfor other adjustments in wages, H–1Bnonimmigrants must also be given the raise(consistent with legitimate employer-established criteria such as level ofperformance, attendance, etc.). This isconsistent with Congressional intent that H–1B nonimmigrants and similarly employedU.S. workers be provided the same wages.

Where the employer’s pay system or scaleprovides adjustments during the validityperiod of the LCA—e.g., cost-of-livingincrease or other annual adjustments,increase in the entry-level rate for theoccupation due to market forces, or theemployee moves into a more advanced levelin the same occupation—the employer shallretain documentation explaining the changesand clearly showing that, after suchadjustments, the wages paid to the H–1Bnonimmigrant are at least the greater of theadjusted actual wage or the prevailing wagefor the occupation in the area of intendedemployment.

The following examples illustrate theseprinciples:

(1) Worker A is paid $10.00 per hour andsupervises two employees. Worker B, who issimilarly qualified and performssubstantially the same job duties except forsupervising other employees, is paid $8.00per hour because he/she has no supervisoryresponsibility.

The compensation differential isacceptable because it is based upon arelevant distinction in job duties,responsibilities, and functions: the differencein the supervisory responsibilities of the twoemployees. The actual wage in thisoccupation at the worksite for workers withsupervisory responsibility is $10.00 per hour;the actual wage in this occupation at theworksite for workers without supervisoryresponsibility is $8.00 per hour.

(2) Systems Analyst A has experience witha particular software which the employer isinterested in purchasing, of which none ofthe employer’s current employees haveknowledge. The employer buys the softwareand hires Systems Analyst A on an H–1B visato train the other employees in itsapplication. The employer pays SystemsAnalyst A more than its other SystemsAnalysts who are otherwise similarlyqualified.

The compensation differential isacceptable because of the distinction in thespecialized knowledge and the job duties ofthe employees. Systems Analyst A, inaddition to the qualifications and dutiesnormally associated with this occupation atthe employer’s worksite, is also speciallyknowledgeable and responsible for trainingthe employer’s other Systems Analysts in anew software package. As a result, SystemsAnalyst A commands a higher actual wage.However, if the employer employs othersimilarly qualified systems analysts who alsohave unique knowledge and perform similarduties in training other analysts in their areaof expertise, the actual wage for SystemsAnalyst A would have to be at leastequivalent to the actual wage paid to suchsimilarly employed analysts.

(3) An employer seeks a scientist toconduct AIDS research in the employer’s

laboratory. Research Assistants A (a U.S.worker) and B (an H–1B nonimmigrant) bothhold Ph.D’s in the requisite field(s) of studyand have the same number of years ofexperience in AIDS research. However,Research Assistant A’s experience is on thecutting edge of a breakthrough in the fieldand his/her work history is distinguished byfrequent praise and recognition in writingand through awards. Research Assistant B(the nonimmigrant) has a respectable workhistory but has not conducted research whichhas been internationally recognized.Employer pays Research Assistant A $10,000per year more than Research Assistant B inrecognition of his/her unparalleled expertiseand accomplishments. The employer nowwants to hire a third Research Assistant onan H–1B visa to participate in the work.

The differential between the salary paidResearch Assistant A (the U.S. worker) andResearch Assistant B (an H–1Bnonimmigrant) is acceptable because it isbased upon the specialized knowledge,expertise and experience of ResearchAssistant A, demonstrated in writing. Theemployer is not required to pay ResearchAssistant B the same wage rate as that paidResearch Assistant A, even though they mayhave the same job titles. The actual wagerequired for the third Research Assistant, tobe hired on an H–1B visa, would be the wagepaid to Research Assistant B unless he/shehas internationally recognized expertisesimilar to that of Research Assistant A. As setout in § 655.731(1)(A) the employer musthave and document the system used indetermining the actual wage of H–1Bnonimmigrants. The explanation of thesystem must be such that a third party mayuse the system to arrive at the actual wagepaid the H–1B nonimmigrant.

(4) Employer located in City X seeksexperienced mechanical engineers. In City X,the prevailing wage for such engineers is$49,500 annually. In setting the salaries ofU.S. workers, employer pays itsnonsupervisory mechanical engineers with 5to 10 years of experience between $50,000and $75,000 per year, using defined pay scale‘‘steps’’ tied to experience. Employer hiresengineers A, B, and C, who each have fiveyears of experience and similar qualificationsand will perform substantially the samenonsupervisory job duties. Engineer A isfrom Japan, where he/she earns theequivalent of $80,000 per year. Engineer B isfrom France and had been earning theequivalent of $50,000 per year. Engineer C isfrom India and had been earning theequivalent of $20,000 per year. Employerpays Engineer A $80,000 per year, EngineerB $50,000, and Engineer C $20,000 as theemployer has had a long-established systemof maintaining the home-country pay levelsof temporary foreign workers.

The INA requires that the employer pay theH–1B nonimmigrant at least the actual wageor the prevailing wage, whichever is greater,but there is no prohibition against paying anH–1B nonimmigrant a greater wage.Therefore, Engineer A may lawfully be paidthe $80,000 per year. Engineer B’s salary of$50,000 is acceptable, since this is theemployer’s actual wage for an engineer withEngineer B’s experience and duties. Engineer


C’s salary, however, at a rate of $20,000 peryear, is unacceptable under the law, evengiven the employer’s ‘‘long-established ‘homecountry’ system,’’ since $20,000 would bebelow both the actual wage and theprevailing wage. The latter situation is anexample of an illegitimate business factor,i.e., a system to maintain salary parity withpeers in the country of origin, which yieldsa wage below the required wage levels.

16. A new Appendix B to Subpart H isproposed to be added, to read as follows:

Appendix B to Subpart H—Guidance forDetermination of the ‘‘Place of Employment’’and Other Matters.

a. ‘‘Place of employment’’ or ‘‘worksite.’’The regulation defines ‘‘place of

employment’’ as ‘‘the worksite or physicallocation where the work actually isperformed’’ (§ 655.715). The Departmentrecognizes that some H–1B employers haveexpressed a concern that a strict or literalapplication of this definition might lead toabsurd and/or unduly burdensomecompliance requirements, particularly withregard to the employer providing requirednotices and adjusting the H–1B worker’swages to comport with different prevailingwages for various locations. These employershave inquired whether the ‘‘worksite’’definition would be applicable where, forexample, an H–1B worker has a businesslunch at a local restaurant, or appears as awitness in a court, or attends a trainingseminar at an out-of-town hotel.

1. The term ‘‘place of employment’’ or‘‘worksite’’ (defined as ‘‘physical locationwhere the work actually is performed’’) isinterpreted by the Department as notincluding any location where either of thefollowing criteria—1 or 2—is satisfied:

i. Employee developmental activity. An H–1B worker who is stationed and regularlyworks at one location may temporarily be atanother location for a particular individual oremployer-required developmental activitysuch as a management conference, a staffseminar, a business meeting or a formaltraining course (other than ‘‘on-the-job-training’’ at a location where the employee isstationed and regularly works). For the H–1Bworker participating in such activities, thelocation of the activity would not beconsidered a ‘‘place of employment’’ or‘‘worksite,’’ and that worker’s presence atsuch location—whether owned or controlledby the employer or by a third party—wouldnot invoke H–1B program requirements withregard to that employee at that location.However, if the employer uses H–1Bnonimmigrants as instructors or resource orsupport staff who continuously or regularlyperform their duties at such locations, thelocations would be ‘‘places of employment’’or ‘‘worksites’’ for any such employees and,thus, would be subject to H–1B programrequirements with regard to those employees.

ii. Employee’s job functions. The natureand duration of an H–1B worker’s jobfunctions may necessitate frequent changesof location with little time spent at any onelocation. For such a worker, a location wouldnot be considered a ‘‘place of employment’’or ‘‘worksite’’ if the following 3 requirementsare all met—

A. The nature and duration of the H–1Bworker’s job functions mandates his/hershort-time presence at the location. For thispurpose, either the H–1B worker’s job mustbe peripatetic in nature, in that the normalduties of the worker’s occupation (rather thanthe nature of the employer’s business)requires frequent travel (local or non-local)from location to location; or the H–1Bworker’s duties must require that he/shespend most work time at one location butoccasionally travel for short periods to workat other locations; and

B. The H–1B worker’s presence at thelocations to which he/she travels from the‘‘home’’ worksite is on a casual, short-termbasis, which can be recurring but notexcessive (i.e., not exceeding five consecutiveworkdays for any one visit); and

C. The H–1B worker is not at the locationas a ‘‘strikebreaker’’ (i.e., not performingwork in an occupation in which workers areon strike or lockout).

2. Examples of ‘‘non-worksite’’ locationsbased on worker’s job functions: a computerengineer sent out to customer locations to‘‘troubleshoot’’ complaints regardingsoftware malfunctions; a sales representativemaking calls on prospective customers orestablished customers within a ‘‘home office’’sales territory; a manager monitoring theperformance of out-stationed employees; anauditor providing advice or conductingreviews at customer facilities; a physicaltherapist providing services to patients intheir homes within an area of employment;an individual making a court appearance; anindividual lunching with a customerrepresentative at a restaurant; or anindividual conducting research at a library.

3. Examples of ‘‘worksite’’ locations basedon worker’s job functions: a computerengineer who works on projects or accountsat different locations for weeks or months ata time; a sales representative assigned on acontinuing basis in an area away from his/her ‘‘home office;’’ an auditor who works forextended periods at the customer’s offices; aphysical therapist who ‘‘fills-in’’ for full-timeemployees of health care facilities forextended periods; or a physical therapist whoworks for a contractor whose business is toprovide staffing on an ‘‘as needed’’ basis athospitals, nursing homes, or clinics.

4. Whenever an H–1B worker performswork at a location which is not a ‘‘worksite’’(under either criterion above), that worker’s‘‘place of employment’’ or ‘‘worksite’’ forpurposes of H–1B obligations is the worker’shome station or regular work location. Theemployer’s obligations regarding notice,prevailing wage and working conditions arefocused on the home station ‘‘place ofemployment’’ rather than on the above-described location(s) which do not constituteworksite(s) for these purposes.

5. In applying this interpretation of ‘‘placeof employment’’ or ‘‘worksite,’’ theDepartment will look carefully at situationswhich appear to be contrived or abusive. TheDepartment would seriously question anysituation where the H–1B worker’s purported‘‘place of employment’’ is a location otherthan where the worker spends most of his/her work time, or where the purported ‘‘areaof employment’’ does not include the

location(s) where the worker spends most ofhis/her work time. For example, where an H–1B worker is nominally ‘‘home-based’’ inCity A and is claimed by the employer to becovered by the LCA for City A, but spendsmost of his/her time in City B, going fromone customer location to another, theDepartment would consider City B to be theworker’s ‘‘area of employment’’ and, further,would expect the employer to have acertified LCA for City B and be in compliancewith all of the program requirements underthat LCA.

6. The Department’s interpretation of theregulation will not result in absurd or undulyburdensome situations, and should alleviatethe legitimate concerns of employers seekingto comply with the requirements of the H–1B program. However, employers shouldcarefully note that whether or not a locationis considered to be a ‘‘worksite’’/‘‘place ofemployment’’ for an H–1B worker, theemployer is required to providereimbursement to the H–1B worker forexpenses incurred in traveling to thatlocation on the employer’s business, sincesuch expenses are considered to be ordinarybusiness expenses of employers which maynot be transferred to employees(§§ 655.731(c)(7)(iii)(C); 655.731(c)(9)).

b. ‘‘Roving’’ or ‘‘floating’’ H–1B employees.The statute and regulations do not permit

the employment of H–1B workers as ‘‘roving’’or ‘‘floating’’ employees for whom noparticular LCA (and thus no specific set ofLCA requirements) would be applicable.While H–1B workers may move about(‘‘floating’’ or ‘‘roving’’ from their‘‘homebase’’ worksites), they are subject tothe following restrictions and standards.

(1) Employers are advised that, under theH–1B program, every H–1B worker isprotected by an LCA, and no H–1B workeris legally permitted to ‘‘rove’’ or ‘‘float’’without an applicable LCA prescribing theemployer’s obligations as to notice, wages,and all other program requirements for thatworker. Every H–1B worker has a ‘‘homestation,’’ ‘‘home office,’’ or ‘‘home base,’’regardless of frequency of travel or variationin job duties. The LCA for the worker’s‘‘home station’’ area of employmentprescribes the employer’s obligations as tothat worker, unless or until an LCA for someother area of employment becomesapplicable due to the nature and duration ofthe worker’s presence at worksite(s) in thatother area.

(2) Employers are cautioned that an H–1Bworker may legitimately and legally bedispatched from his/her home stationworksite—thus, ‘‘rove’’ or ‘‘float’’ from thatworksite—only in the following threecircumstances:

(i) Dispatch to non-worksite location(s). AnH–1B employee may leave his/her homestation worksite to perform job functions atlocation(s) which do not constitute‘‘worksites(s)’’ within the regulatorydefinition as interpreted by the Department(see subparagraph (a), above). The employer’sobligations as to that H–1B worker for worktime at that non-worksite location (e.g.,wages; travel expenses) are prescribed by theLCA for the worker’s home station area ofemployment, even if the non-worksite


location is within an area of employmentcovered by a different LCA.

(ii) Dispatch to worksite(s) within area(s) ofemployment covered by LCA(s). An H–1Bworker may leave his/her home stationworksite to perform job functions atworksite(s) within the same area ofemployment and thus covered by the sameLCA already applicable for that employee, orat worksite(s) in some other area ofemployment covered by a different LCA. Theemployer’s obligations as to that H–1Bworker for that work time (e.g., wages, travelexpenses) are prescribed by the home stationLCA unless the worker is permanentlyreassigned to the new area or is dispatchedto that area for an extended period of time(to be determined case-by-case, depending onthe nature of the employee’s job functionsand the employer’s operations in the area).When a different LCA becomes applicable forthe employee, the employer would berequired to assure compliance with that LCA(e.g., wage adjustments, if appropriate).

(iii) Dispatch to worksite(s) not covered byany LCA, pursuant to short-term placementoption. An H–1B worker may leave his/herhome station worksite to perform jobfunctions at worksite(s) not covered by anyLCA, provided the placement of the workerat such worksite(s) is in compliance with theshort-term placement option (§ 655.735).

c. Attorney fees and H–1B petition fees asemployer’s business expense.

(1) Under the regulations, an employer isnot permitted to impose its businessexpense(s) on its H–1B workers(§§ 655.731(c)(7)(iii)(C); 655.731(c)(9)). To theextent that an employer shifts any portion ofbusiness expense(s) to an H–1B worker, thataction constitutes a failure by the employerto satisfy the required wage obligation to thatworker, regardless of whether the requiredwage is the employer’s actual wage rate orthe local prevailing wage rate.

(2) The employer’s business expensesinclude costs incurred in the filing of an LCAwith ETA and of an H–1B petition with INS(regardless of whether the INS filing is tobring an H–1B nonimmigrant into the U.S.,or to amend, change, or extend an H–1Bnonimmigrant’s visa status). These filingfunctions are legal obligations of theemployer; the employer is required by law toperform these functions and the H–1Bnonimmigrant is not permitted by law to doso. Performance of such a legal obligation isnecessarily an integral part of the employer’sadministration of its business. Therefore, anycosts associated with such filings—includingattorney fees—are business expenses to beborne by the employer. The regulationsprohibit the employer from shifting suchexpenses to the H–1B worker(s), eitherdirectly (e.g., by the employer paying anattorney’s fees and then recouping the coststhrough deduction from the worker’s wages)or indirectly (e.g., by the employer requiringor encouraging the worker to pay for anattorney’s services to perform thesefunctions). Some employers have contendedthat they have experienced situations inwhich prospective H–1B nonimmigrantshave demanded the responsibility forobtaining and paying the attorney whoprepares the LCA and H–1B petition.

Employers are cautioned that their businessexpenses are not to be paid by thenonimmigrant, and that an employer cannotacquiesce to the nonimmigrant’s ‘‘demand forresponsibility’’ which amounts to shifting theemployer’s legal responsibilities to thenonimmigrant.

(3) Bona fide costs in connection with visafunctions which are required by law to beperformed by the nonimmigrant (e.g.,translation fees and other costs relating tovisa application and processing forprospective nonimmigrant residing outsidethe U.S.) do not constitute and will not beconsidered to be an employer’s businessexpense. The Department will, however, lookbehind what appear to be contrivedallocations of costs—such as attorney’s feesfor preparing the H–1B LCA and/or H–1Bpetition being assigned to thenonimmigrant’s visa application or topetitions for the nonimmigrant’s familymembers—should such situations appear tobe occurring.

d. SCA wage determinations as prevailingwage.

(1) Under the regulation, if there is aService Contract Act (‘‘SCA’’) wagedetermination for the occupationalclassification in the area of employment, thatSCA wage determination is considered by theDepartment to constitute the prevailing wagefor that occupation in that area(§ 655.731(a)(2)(i) and (iii)(A)). Therefore, theSCA wage rate will be issued by the SESAin response to a request for a prevailing wagedetermination and should be used by theemployer in the event that the employerchooses to determine the prevailing wagewithout consulting the SESA. However,where an SCA wage determination for anoccupational classification in the computerindustry states a rate of $27.63, that rate willnot be issued by the SESA and may not beused by the employer as the prevailing wage;that rate does not represent the actualprevailing wage but, instead, is reported bythe Wage and Hour Division in the SCAdetermination merely as an artificial ‘‘wagecap’’ as contemplated by an SCA exemptionprovision (see 29 CFR 4.156; 541.3). In suchcircumstances, the SESA and the employermust consult another source for wageinformation (e.g., Bureau of Labor Statisticsreport).

(2) For purposes of the determination ofthe H–1B prevailing wage for an occupationalclassification through the use of an SCA wagedetermination, it is irrelevant whether aparticular job or particular worker would beexempt from the SCA wage determination inthe performance of an SCA contract, throughapplication of the SCA/FLSA ‘‘professionalemployee’’ exemption test (i.e., duties andcompensation; see 29 CFR 4.156; 541.3).Thus, in issuing the SCA wage rate as theprevailing wage determination for theoccupational classification, the SESA willnot consider questions of employeeexemption, and in an enforcement action, theDepartment will consider the SCA wage rateto be the prevailing wage without regard towhether any particular H–1B employee(s)could be exempt from that wage as SCAcontract workers under the SCA/FLSAexemption. An employer who employs H–1B

employee(s) to perform services under anSCA-covered contract may find that the H–1B employees are required to be paid theSCA rate as the H–1B prevailing wage eventhough non-H–1B employees performing thesame services may be exempt from the SCArate pursuant to the SCA regulation.

e. ‘‘CMSA’’ and ‘‘PMSA.’’(1) There is some possibility for confusion

regarding the appropriate interplay amongseveral concepts or terms—area of intendedemployment, area of employment,metropolitan statistical area (‘‘MSA’’),primary metropolitan statistical area(‘‘PMSA’’), and consolidated metropolitanstatistical area (‘‘CMSA’’). The followingclarification is intended to alleviate anyconfusion and to facilitate compliance withH–1B program requirements.

(2) For purposes of determining theapplicable locally prevailing wage under theH–1B program, the procedures at 20 CFR656.40, governing the Permanent Alien LaborCertification Program, are to be used. Section656.40(a)(2)(i) ties the prevailing wage to the‘‘area of intended employment.’’ ‘‘Area ofintended employment’’ is defined at 20 CFR§ 656.3 as:

‘‘ * * * the area within normal commutingdistance of the place (address) of intendedemployment. If the place of intendedemployment is within a MetropolitanStatistical Area (MSA), any place within theMSA is deemed to be within normalcommuting distance of the place of intendedemployment.’’Pursuant to 44 U.S.C. 3504(d)(3), 31 U.S.C.1104(d), and Executive Order No. 10,253(June 11, 1951), the Office of Managementand Budget (OMB) defines MSAs and PMSAsfor use in Federal statistical activities. TheDepartment takes the position that where aworksite is within an MSA or PMSA asdefined by OMB, any other location withinthe MSA or PMSA shall be deemed to bewithin normal commuting distance of theworksite and, therefore, within the area ofintended employment for purposes of boththe permanent and H–1B programs. Thus,one prevailing wage determination for anoccupational classification would beapplicable throughout an MSA or PMSA.However, this concept of ‘‘commutingdistance’’ for prevailing wage purposes is notextended to all locations within a CMSA,because the Department has determined,based on its operational experience, thatCMSAs can be too geographically broad forthis purpose. Thus, all locations within aCMSA will not automatically be deemed tobe within ‘‘normal commuting distance.’’This does not mean, however, that a locationoutside of an MSA, PMSA, or for that mattera CMSA, cannot be ‘‘within normalcommuting distance’’ of a worksite that is, forexample, close to the border of the MSA andadjacent to the other location.

(3) The Department has not adopted anyrigid measure of distance involved in a‘‘normal commuting area’’ (e.g., 20, 30, 50miles), because, in the Department’s view, itis necessary that the concept afford sufficientflexibility to be able to reflect widely varyingfactual circumstances among differentlocations.

f. ‘‘Weighted average’’ in determiningprevailing wages.


(1) The regulation requires that a legitimatesource of wage information (other than onespecified in the regulations such as a SESAdetermination or an independentauthoritative source) must ‘‘reflect theweighted average wage paid to workerssimilarly employed in the area of intendedemployment’’ (§ 655.731(b)(3)(iii)(C)(1)). Theregulation also requires that an independentauthoritative source must ‘‘reflect the averagewage paid to workers similarly employed inthe area of intended employment’’(§ 655.731(b)(3)(iii)(B)(1)). Because the word‘‘weighted’’ was left out of the subparagraphdealing with independent authoritativesources, there have been some suggestions ofconfusion as to whether use of a weightedaverage of wages for an occupationalclassification is necessary only when theemployer uses ‘‘another legitimate source’’ ofwage information.

(2) When used in a statistical sense, theword ‘‘average’’ ordinarily refers to thearithmetic mean; i.e., a weighted average.The Department has always required that aweighted average be used in determining theprevailing wage (except where either theDavis-Bacon Act or the McNamara-O’HaraService Contract Act applies). It is DOL’slong-standing position—because Congressexpressly stated that prevailing wages for theH–1B program are to be determined inaccordance with the methodology used forthe permanent employment-basedimmigration program, which produces aweighted average—that the H–1B employer’sprevailing wage determination must be basedon a weighted average. (See 20 CFR656.40(a)(2)(i).) The word ‘‘weighted’’ wasinadvertently omitted from§ 655.731(b)(3)(iii)(B)(1).

g. Effect of New LCA on Prevailing WageObligation Under Old LCA.

(1) There is some possibility for confusionregarding the prevailing wage obligation ofan employer which has filed more than oneLCA for the same occupational classificationin the same area of employment. In suchcircumstances, the employer could have H–1B employees in the same occupationalclassification in the same area ofemployment, brought into the U.S. (oraccorded H–1B status) based on petitionsapproved pursuant to different LCAs (filed atdifferent times) with different prevailingwage determinations. Employers are advisedthat the prevailing wage rate as to anyparticular H–1B nonimmigrant is prescribedby the LCA which supports thatnonimmigrant’s H–1B petition. Theregulations require that the employer obtainthe prevailing wage at the time that the LCAis filed (§ 655.731(a)(2)). The LCA is valid forthe period certified by ETA, and theemployer must satisfy all the LCA’srequirements (including the ‘‘required wage’’which encompasses both prevailing andactual wage rates) for as long as any H–1Bnonimmigrants are employed pursuant tothat LCA (§ 655.750). Where newnonimmigrants are employed pursuant to anew LCA, that new LCA prescribes theemployer’s obligations as to those newnonimmigrants. The prevailing wagedetermination on the later/subsequent LCAdoes not ‘‘relate back’’ to operate as an

‘‘update’’ of the prevailing wage for thepreviously-filed LCA for the sameoccupational classification in the same areaof employment.

(2) Employers are cautioned that the actualwage component of the ‘‘required wage’’may, as a practical matter, eliminate anywage-payment differentiation among H–1Bemployees based on different prevailing wagerates stated in applicable LCAs. Every H–1Bworker is to be paid in accordance with theemployer’s actual wage system, and thus isto receive any pay increases which thatsystem provides.

Subpart I—Enforcement of H–1B LaborCondition Applications

17. § 655.800 is proposed to berevised to read as follows:

§ 655.800 Enforcement authority ofAdministrator, Wage and Hour Division.

(a) Authority of Administrator. Exceptas provided in § 655.806 of this part, theAdministrator shall perform all theSecretary’s investigative andenforcement functions under section212(n) of the INA (8 U.S.C. 1182(n)) andsubparts H and I of this part.

(b) Conduct of Investigations. TheAdministrator, either pursuant to acomplaint or otherwise, shall conductsuch investigations as may beappropriate and, in connectiontherewith, enter and inspect such placesand such records (and maketranscriptions or copies thereof),question such persons and gather suchinformation as deemed necessary by theAdministrator to determine complianceregarding the matters which are thesubject of the investigation.

(c) Availability of Records. Anemployer being investigated shall makeavailable to the Administrator suchrecords, information, persons, andplaces as the Administrator deemsappropriate to copy, transcribe,question, or inspect. No employersubject to the provisions of section212(n) of the INA (8 U.S.C. 1182(n))and/or subpart H or I of this part shallinterfere with any official of theDepartment of Labor performing aninvestigation, inspection or lawenforcement function pursuant to 8U.S.C. 1182(n) or subpart H or I of thispart. Any such interference shall be aviolation of the labor conditionapplication and these regulations, andthe Administrator may take such furtheractions as the Administrator considersappropriate. (Note: Federal criminalstatutes prohibit certain interferencewith a Federal officer in theperformance of official duties. 18 U.S.C.111 and 18 U.S.C. 1114.)

(d) Employee Protection. (1) Noemployer subject to subpart H or I ofthis part shall intimidate, threaten,

restrain, coerce, blacklist, discharge orin any other manner discriminateagainst an employee (which termincludes a former employee or anapplicant for employment) because theemployee has

(i) Disclosed information to theemployer, or to any other person, thatthe employee reasonably believesevidences a violation of section 212(n)of the INA or subpart H or I of this part;or

(ii) Cooperated or sought to cooperatein an investigation or other proceedingconcerning the employer’s compliancewith the requirements of section 212(n)of the INA or subpart H or I of this part.

(2) It shall be a violation of§ 655.805(a)(12) of this part for anyemployer to engage in such retaliatoryconduct. Such conduct shall be subjectto the penalties prescribed by section212(n)(2)(C)(ii) of the INA and § 655.810of this part, i.e., a fine of up to $5,000and debarment for at least two years,and such further action as theAdministrator considers appropriate.

(3) An employee who has filed acomplaint alleging that an employer hasdiscriminated against the employee inviolation of paragraph (d)(1) of thissection may be allowed to seek otherappropriate employment in the UnitedStates, provided the employee isotherwise eligible to remain and work inthe United States. Such employmentmay not exceed the maximum period ofstay authorized for a nonimmigrantclassified under section 212(n) of theINA (8 U.S.C. 1182(n)).

(e) Confidentiality. The Administratorshall, to the extent possible underexisting law, protect the confidentialityof any person who provides informationto the Department in confidence in thecourse of an investigation or otherwiseunder subpart H or I of this part.


§ 655.805 Complaints and investigativeprocedures.

(a) The Administrator shall receiveallegations that an employer subject tosubpart H or I of this part has violatedsection 212(n) of the INA or theseregulations from any aggrieved party (asdefined at § 655.715 of this part,including a government agency otherthan the Labor Department) or othersources where these sources meet theconditions prescribed by § 655.806 ofthis part, and shall conduct suchinvestigations as may be appropriate inaccordance with § 655.806 of this part(pertaining to allegations from othersources), § 655.807 of this part(pertaining to spot investigations), or asthe Administrator, on his or her own


initiative, directs. In conducting suchinvestigations, the Administrator shalldetermine whether an H–1B employerhas:

(1) Filed a labor condition applicationwith ETA which misrepresents amaterial fact; (Note: Federal criminalstatutes provide penalties of up to$10,000 and/or imprisonment of up to 5years for knowing and willfulsubmission of false statements to theFederal Government. 18 U.S.C. 1001;see also 18 U.S.C. 1546);

(2) Failed to pay wages as requiredunder § 655.731 of this part (includingpayment of wages for certainnonproductive time), for purposes of theassessment of back wages;

(3) Failed to provide fringe benefitsand other working conditions asrequired under § 655.732 of this part;

(4) Filed a labor condition applicationfor H–1B nonimmigrants during a strikeor lockout in the course of a labordispute in the occupationalclassification at the place ofemployment (see § 655.733 of this part);

(5) Failed to provide notice of thefiling of the labor condition applicationas required in § 655.734 of this part;

(6) Failed to be specific on the laborcondition application as to the numberof workers sought, the occupationalclassification in which the H–1Bnonimmigrants will be employed, or thewage rate and conditions under whichthe H–1B nonimmigrants will beemployed;

(7) Failed to comply with thedisplacement protections for U.S.workers (if applicable);

(8) Failed to make the requireddisplacement inquiry provision ofanother employer (if applicable);

(9) Failed to take good faith steps inrecruitment (if applicable);

(10) Required, accepted, or attemptedto require an employee to remit to theemployer payment for any part of theadditional $500 fee incurred in filing apetition in connection with theemployee’s visa (if applicable);

(11) Required or attempted to requirean employee to pay a penalty for ceasingemployment prior to an agreed upondate (see § 212(n)(2)(C)(vi)(I) of INA);

(12) Discriminated against anemployee as prohibited by § 655.800(d)of this part;

(13) Failed to make available forpublic examination the application andnecessary document(s) at the employer’sprincipal place of business or worksiteas required in § 655.760(c) of this part;

(14) Failed to retain documentation asrequired by § 655.760(c) of this part; and(15) Failed otherwise to comply in anyother manner with the provisions ofsubpart H or I of this part.

(b) Failures pertaining to theviolations (a)(1) through (a)(9) may becited as ‘‘willful’’ failures. Failurespertaining to the violations (a)(5), (6),and (9) may be cited as ‘‘substantial’’failures. The determination letter (see§ 655.815 of this part) shall specificallycite the appropriate finding and therequirement to notify the AttorneyGeneral and the Employment andTraining Administration as required forpurposes of debarment. See section655.855 of this part.

(c) For purposes of this part, ‘‘willfulfailure’’ means a knowing failure or areckless disregard with respect towhether the conduct was contrary tosection 212(n)(1)(A)(i) or (ii) of the INA,or §§ 655.731 or 655.732 of this part. SeeMcLaughlin v. Richland Shoe Co., 486U.S. 128 (1988); see also Trans WorldAirlines v. Thurston, 469 U.S. 111(1985).

(d) Pursuant to §§ 655.740(a)(1) and655.750 of this part, the provisions ofthis part become effective upon the dateof ETA’s notification that the employer’slabor condition application is certified,whether or not the employer hires anyH–1B nonimmigrants in the occupationfor the period of employment covered inthe labor condition application. Shouldthe period of employment specified inthe labor condition application expire orshould the employer withdraw theapplication in accordance with§ 655.750(b) of this part, the provisionsof this part will no longer be in effectwith respect to such application, exceptas provided in § 655.750(b)(3) and (4) ofthis part.

(e) Any aggrieved person ororganization (including bargainingrepresentatives and governmentalofficials) may file a complaint alleginga violation described in paragraph (a) ofthis section. The procedures for filing acomplaint and its processing by theAdministrator are set forth in thissection. Other persons with informationregarding an employer’s allegedviolation of section 212(n) of the INA orsubpart H or I of this part instead shouldfollow the requirements of § 655.806 ofthis part. With regard to complaintsfiled by any aggrieved person ororganization—

(1) No particular form of complaint isrequired, except that the complaint shallbe written or, if oral, shall be reducedto writing by the Wage and HourDivision official who receives thecomplaint.

(2) The complaint shall set forthsufficient facts for the Administrator todetermine whether an investigation iswarranted, in that there is reasonablecause to believe that a violation asdescribed in paragraph (a) of this

section has been committed. Thisdetermination shall be made within 10days of the date that the complaint isreceived by a Wage and Hour Divisionofficial. If the Administrator determinesthat the complaint fails to presentreasonable cause for an investigation,the Administrator shall so notify thecomplainant, who may submit a newcomplaint, with such additionalinformation as may be necessary. Nohearing pursuant to this subpart shall beavailable where the Administratordetermines that an investigation on acomplaint is not warranted.

(3) If the Administrator determinesthat an investigation on a complaint iswarranted, the complaint shall beaccepted for filing; an investigationshall be conducted and a determinationissued within 30 calendar days of thedate of filing.

(4) In the event that the Administratorseeks a prevailing wage determinationfrom ETA pursuant to § 655.731(d) ofthis part, or advice as to prevailingworking conditions from ETA pursuantto § 655.732(c)(2) of this part, the 30-dayinvestigation period shall be suspendedfrom the date of the Administrator’srequest to the date of theAdministrator’s receipt of the wagedetermination (or, in the event that theemployer challenges the wagedetermination through the EmploymentService complaint system, to the date ofthe completion of such complaintprocess).

(5) A complaint must be filed not laterthan 12 months after the latest date onwhich the alleged violation(s) werecommitted, which would be the date onwhich the employer allegedly failed toperform an action or fulfill a conditionspecified in the LCA, or allegedly tookan action which, through such action orinaction, demonstrates amisrepresentation of a material fact inthe LCA regarding such action orinaction. This jurisdictional bar doesnot affect the scope of the remedieswhich may be assessed by theAdministrator. Where, for example, acomplaint is timely filed, back wagesmay be assessed for a period prior toone year before the filing of a complaint.

(6) A complaint may be submitted toany local Wage and Hour Divisionoffice. The addresses of such offices arefound in local telephone directories.The office or person receiving such acomplaint shall refer it to the office ofthe Wage and Hour Divisionadministering the area in which thereported violation is alleged to haveoccurred.

(f) When an investigation has beenconducted, the Administrator shall,pursuant to § 655.815 of this part, issue


1 Note: The sections referenced in§ 655.806(e)(6)(i)(C) through (E) are underdevelopment. See discussion in the preamble.

a written determination as to whether ornot any violation(s) as described inparagraph (a) of this section has beencommitted.

19. A new § 655.806 is proposed to beadded, to read as follows:

§ 655.806 Allegations of employerviolations by persons other than aggrievedparties.

(a) Sources other than aggrievedparties may submit information allegingthat an employer may have violatedsection 212(n) of the INA or theseregulations by committing a willfulfailure to meet certain of the conditionsprescribed by section 212(n)(2)(G)(i) ofthe INA. Such information should besubmitted to the Administrator bycontacting any local Wage and HourDivision office. The Administrator shallreceive and process such information inaccordance with this subsection, subjectto the personal determination by theSecretary or the Acting Secretarypursuant to paragraph (e) of this sectionas to whether an investigation should becommenced based on the information.

(b) Information from sources otherthan aggrieved parties must besubmitted not later than 12 months afterthe latest date on which the allegedviolation(s) were committed. The 12-month period shall be applied in themanner described in § 655.805(e)(5) ofthis part.

(c) In submitting information, sourcesother than aggrieved parties areencouraged to utilize the form providedby the Administrator for this purpose.The Administrator will prepare the formwhere the source provides informationbut does not utilize the form.

(d) Where the Administrator receivesinformation from a source other than anaggrieved party, the Administrator (bymail or facsimile transmission) shallnotify the employer that the informationhas been received, describe the nature ofthe allegation in sufficient detail topermit the employer to respond (butwithout providing the identity of thesource), and request that the employerrespond to the allegation within 10 daysof its receipt of the notification. TheAdministrator may dispense with suchnotification if the Administratordetermines that such notification mightinterfere with an effort to secure theemployer’s compliance.

(e) Upon the receipt of suchinformation and review of theemployer’s response, if any, to theallegations, the Administrator willdetermine whether the allegationsshould be referred to the Secretary (orthe Acting Secretary in the case of theSecretary’s absence or disability) for adetermination whether an investigation

should be commenced by theAdministrator. The Administrator mayrequest authorization to commence aninvestigation where the followingconditions are satisfied:

(1) The source of the informationidentifies himself or herself;

(2) The source likely possessesknowledge of the employer’s practicesor employment conditions or theemployer’s compliance with the withthe requirements of this part;

(3) The source has provided specificcredible information alleging a violationof the requirements of this part;

(4) The information provided is otherthan the information submitted by theemployer to the Attorney General or theSecretary in securing the employment ofan H–1B nonimmigrant;

(5) The information originated from asource other than an officer or employeeof the Department of Labor, or, if itoriginated from an officer or employeeof the Department of Labor, it wasobtained in the course of a lawfulinvestigation; and (6) The informationin support of the allegations providesreasonable cause to believe that anemployer has

(i) Willfully failed to meet a conditionestablished by—

(A) Section 655.731 of this partrelating to wages or § 655.732 of thispart relating to working conditions;

(B) Section 655.733 of this partrelating to strikes or lockouts;

(C) Section 655.———of this partrelating to the displacement of U.S.workers (see Section 212(n)(1)(E) ofINA); 1

(D) Section 655.——— of this partrelating to displacement of U.S. workersby receiving employer (see Section212(n)(1)(F) of INA); or

(E) Section 655.——— of this partrelating to recruitment of qualified U.S.workers (see Section 212(n)(1)(G)(i)(I));or

(ii) Engaged in a pattern or practice offailures to meet a condition contained insubparagraph 6(i); or

(iii) Committed a substantial failure,affecting multiple employees, to meet acondition contained in paragraph(e)(6)(i) of this section.

(f) No investigation pursuant to thissection will be commenced unless theAdministrator requests authorizationfrom the Secretary (or the ActingSecretary under the circumstancesnoted above) and the Secretary or theActing Secretary personally certifiesthat the conditions listed in § 655.806(d)of this part have been met. If the

Secretary issues a certification, aninvestigation shall be conducted and adetermination issued within 30 daysafter the certification is received by thelocal Wage and Hour office undertakingthe investigation.

(g) No hearing shall be available froma decision by the Administratordeclining to refer allegations addressedby this section to the Secretary; andnone shall be available from a decisionby the Secretary certifying or decliningto certify that an investigation iswarranted.

(h) If following the Secretary’scertification, the Administratordetermines that a reasonable basis existsfor a determination that the employerhas violated a requirement of subpart Hor I of this part, the Administrator shallnotify the employer and other interestedparties of the Administrator’sdetermination and their right to ahearing, subject to the limitationestablished by paragraph (f) of thissection, under the procedure prescribedin § 655.815 of this part.

(i) The identity of the source ofinformation submitted to theAdministrator shall not be disclosed.

(j) This section shall expire onOctober 1, 2001 unless section212(n)(2)(G) of the INA is extended byfuture legislative action.

20. A new § 655.807 is proposed to beadded, to read as follows:

§ 655.807 Authority to investigateemployers found to have committed willfulviolations

(a) The Administrator may conductrandom investigations of an employerduring a five-year period beginning onthe date of one of the following findings(on or after October 21, 1998, the dateof the enactment of the ACWIA)—

(1) A finding by the Secretary that theemployer willfully failed to meet acondition of section 212(n) of the INA(pertaining to attestations in the laborcondition application; see § 655.730 etseq. of subpart H);

(2) A finding by the Secretary that theemployer willfully misrepresentedmaterial fact(s) in a labor conditionapplication (see § 655.730 et seq. ofsubpart H); or

(3) A finding by the Attorney Generalthat the employer willfully failed tomeet the condition of section212(n)(1)(G)(i)(II) of the INA (pertainingto an offer of employment to an equallyor better qualified U.S. worker).

(b) Where the Administratorundertakes such an investigation, theAdministrator shall issue adetermination in the manner providedby § 655.805(e) and § 655.815 of thispart.


(c) The Administrator’s authority toundertake such investigations does notaffect the Administrator’s authority toundertake investigations under othercircumstances (see §§ 655.805; 655.806).


§ 655.810 Remedies.(a) Upon determining that an

employer has failed to pay wages asrequired by § 655.731 of this part, theAdministrator shall assess and overseethe payment of back wages to any H–1Bnonimmigrant employed by theemployer in the specific employment inquestion. The back wages shall be equalto the difference between the amountthat should have been paid and theamount that actually was paid to suchnonimmigrant(s). The Administratormay appropriately impose anadministrative remedy or order for anyviolation of the Act.

(b) The Administrator may assessappropriate administrative remedies(including civil monetary penalties inan amount not to exceed $1,000 perviolation) for the following violations:

(1) A failure pertaining to strike/lockout, displacement, or contractorinquiry;

(2) A substantial failure pertaining tonotification, labor condition applicationspecificity, or recruitment; or

(3) A misrepresentation of materialfact on the labor condition application.

(c) The Administrator may assess acivil monetary penalty of $1,000—andalso issue an administrative orderrequiring the employer to return to theemployee (or pay to the U.S. Treasuryif the employee cannot be located) anymoney paid to the employer—for thefollowing violations:

(1) A penalty paid by the employee tothe employer for ceasing employmentwith the employer prior to a date agreedto by the employee and employer; or

(2) A payment or compensation by theemployee to the employer of theadditional $500 filing fee required forthe filing the petition under section214(c)(9) of the INA.

(d) The Administrator may assessappropriate administrative remedies(including civil monetary penalties inan amount not to exceed $5,000 perviolation) for the following violations:

(1) A willful failure pertaining towages/working conditions, strike/lockout, notification, labor conditionapplication specificity, displacement, orrecruitment;

(2) A willful misrepresentation of amaterial fact on the labor conditionapplication; or

(3) A discrimination, retaliation orintimidation against an employee (see§ 655.800(d)).

(e) The Administrator may assessappropriate administrative remedies(including civil monetary penalties inan amount not to exceed $35,000 perviolation) for a displacement violationwhich is accompanied by one of thefollowing violations:

(1) A willful failure pertaining towages/working condition, strike/lockout, notification, labor conditionapplication specificity, displacement, orrecruitment; or

(2) A willful misrepresentation of amaterial fact on the labor conditionapplication.

(f) The Administrator shall notify theAttorney General (pursuant to§ 655.855) for the implementation of thefollowing period(s) of disqualification ofthe employer from approval of anypetitions filed by or on behalf of theemployer:

(1) Disqualification for at least oneyear, for violation(s) specified inparagraph (b) of this section;

(2) Disqualification for at least twoyears, for violation(s) specified inparagraph (d) of this section; or

(3) Disqualification for at least threeyears, for violation(s) specified inparagraph (e) of this section;

(g) In determining the amount of thecivil money penalty to be assessed, theAdministrator shall consider the type ofviolation committed and other relevantfactors. The factors which may beconsidered include, but are not limitedto, the following:

(1) Previous history of violation, orviolations, by the employer under theINA and subpart H or I of this part;

(2) The number of workers affected bythe violation or violations;

(3) The gravity of the violation orviolations;

(4) Efforts made by the violator ingood faith to comply with theprovisions of 8 U.S.C. 1182(n) andsubparts H and I of this part;

(5) The violator’s explanation of theviolation or violations;

(6) The violator’s commitment tofuture compliance; and

(7) The extent to which the violatorachieved a financial gain due to theviolation, or the potential financial loss,potential injury or adverse effect withrespect to other parties.

(h) Appropriate administrativeremedies, which may be assessed by theAdministrator under subparagraphs (b),(d) and (e) of this section, include make-whole relief for displaced U.S. workers,whistleblowers, or H–1B workers whofailed to receive benefits or eligibilityfor benefits.

(i) The civil money penalties, backwages, and/or any other remedy(ies)determined by the Administrator to be

appropriate are immediately due forpayment or performance upon theassessment by the Administrator, orupon the decision by an administrativelaw judge where a hearing is timelyrequested, or upon the decision by theSecretary where review is granted. Theemployer shall remit the amount of thecivil money penalty by certified checkor money order made payable to theorder of ‘‘Wage and Hour Division,Labor.’’ The remittance shall bedelivered or mailed to the Wage andHour Division office in the mannerdirected in the Administrator’s notice ofdetermination. The payment orperformance of any other remedyprescribed by the Administrator shallfollow procedures established by theAdministrator. Distribution of backwages shall be administered inaccordance with existing proceduresestablished by the Administrator.

21. In § 655.815, paragraph (a) isproposed to be revised to read asfollows:

§ 655.815 Written notice and service ofAdministrator’s determination.

(a) The Administrator’sdetermination, issued pursuant to§§ 655.805, 655.806, or 655.807 of thispart, shall be served on thecomplainant, the employer, and otherknown interested parties by personalservice or by certified mail at theparties’ last known addresses. Whereservice by certified mail is not acceptedby the party, the Administrator mayexercise discretion to serve thedetermination by regular mail.* * * * *


§ 655.855 Notice to the Employment andTraining Administration and the AttorneyGeneral.

(a) The Administrator shall notify theAttorney General and ETA of the finaldetermination of any violation requiringthe Attorney General not to approvepetitions filed by an employer. TheAdministrator’s notification willaddress the type of violation committedby the employer and the appropriatestatutory period for disqualification ofthe employer from approval of petitions.Violations requiring notification to theAttorney General are identified in§ 655.810(f).

(b) The Administrator shall notify theAttorney General and ETA upon theearliest of the following events:

(1) Where the Administratordetermines that there is a basis for afinding of violation by an employer, andno timely request for hearing is madepursuant to § 655.820 of this part; or


(2) Where, after a hearing, theadministrative law judge issues adecision and order finding a violationby an employer, and no timely petitionfor review to the Secretary is madepursuant to § 655.845 of this part; or

(3) Where a petition for review is filedfrom an administrative law judge’sdecision finding a violation and theSecretary either declines within thirtydays to entertain the appeal, pursuant to§ 655.845(c) of this part, or the Secretaryaffirms the administrative law judge’sdetermination; or

(4) Where the administrative lawjudge finds that there was no violationby an employer, and the Secretary, uponreview, issues a decision pursuant to§ 655.845 of this part, holding that aviolation was committed by anemployer.

(c) The Attorney General, uponreceipt of notification from theAdministrator pursuant to paragraph (a)of this section, shall not approvepetitions filed with respect to thatemployer under sections 204 or 214(c)of the INA (8 U.S.C. 1154 and 1184(c))for nonimmigrants to be employed bythe employer, for the period of timerequired by the Act and described in§ 655.810(f).

(d) ETA, upon receipt of theAdministrator’s notice pursuant to

paragraph (a), shall invalidate theemployer’s labor conditionapplication(s) under subparts H and I ofthis part, and shall not accept for filingany application or attestation submittedby the employer under 20 CFR part 656or subparts A, B, C, D, E, H, or I of thispart, for the same calendar period asspecified by the Attorney General.

23. In § 655.840, paragraph (c) isproposed to continue to read as follows:

§ 655.840 Decision and order ofadministrative law judge.

* * * * *(c) In the event that the

Administrator’s determination(s) ofwage violation(s) and computation ofback wages are based upon a wagedetermination obtained by theAdministrator from ETA during theinvestigation (pursuant to § 655.731(d)of this part), and the administrative lawjudge determines that theAdministrator’s request was notwarranted (under the standards in§ 655.731(d) of this part), theadministrative law judge shall remandthe matter to the Administrator forfurther proceedings on the issue(s) ofthe existence of wage violation(s) and/or the amount(s) of back wages owed. Ifthere is no such determination andremand by the administrative law judge,the administrative law judge shall

accept such wage determination asaccurate. Such wage determination isone made by ETA, from which theemployer did not file a timely complaintthrough the Employment Servicecomplaint system or from which theemployer has appealed through the EScomplaint system and a final decisiontherein has been issued. See § 655.731of this part; see also 20 CFR 658.420through 658.426. Under nocircumstances shall the administrativelaw judge determine the validity of thewage determination or require sourcedata obtained in confidence by ETA orthe SESA, or the names ofestablishments contacted by ETA or theSESA, to be submitted into evidence orotherwise disclosed.* * * * *

Signed at Washington, DC, this 23rd day ofDecember, 1998.Raymond J. Uhalde,Deputy Assistant Secretary for Employmentand Training, Employment and TrainingAdministration.

John R. Fraser,Deputy Administrator, Wage and HourDivision, Employment StandardsAdministration.

Appendix I (Not to be codified in theCFR): Form ETA 9035.

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Documents

January 5, 1999 federal registerSep 09, 2002 · January 5, 1999 Part IV Department of Labor Employment and Training Administration 20 CFR Parts 655 and 656 Labor Condition Applications