United States: 10 Crucial Facts Every Employer Should Know About H1B Visas

An H1B visa is a temporary working visa for professional positions, which allows foreign nationals to live and work in the U.S. for up to six years. This visa is an important tool for any employer to get the highly qualified technical expertise it needs to operate and grow its business. However, H1B visas carry with them certain obligations that employers must know and meet to comply with the law.

All applications for HB status (except for 2^nd extension requests) must include an extra $1000 contribution to an education and retraining fund used by the government for scholarship grants and training programs. Employers, not the H1B employee, must pay this contribution. Further, employers cannot require the H1B employee to repay them in any way for the cost of this fee. Employers that are elementary and secondary schools, colleges, universities, or non-profit research institutions do not have to pay the $1000 fee.

Crucial Fact #2 Prevailing Wage

All employers must pay the H1B employee the "prevailing wage" for the position. The prevailing wage is determined by salary surveys conducted by reliable sources. Unfortunately, the Department of Labor does consider most salary surveys reliable unless they meet specific criteria. As a result, the "safe harbor" wages information would be a prevailing wage determination made by the State Employment Security Agency (SESA) in the state where the job is located. If a wage source other than SESA is used, the Department of Labor may require the employer to pay at least the wage suggested by the SESA. In addition, the employers must offer the same benefits (health, life, disability, and other insurance plans, etc.) to the H1B employee as they do other U.S. workers.

Government regulations require that all employers file a Labor Condition Application (LCA) with the regional office of the U.S. Department of Labor before filing an H1B application. On the LCA, the employer must agree to four conditions:

• It will pay the H1B worker the prevailing wage or actual wage for the job, whichever is greater
• Employment of the H1B worker will not adversely affect the working conditions of U.S. workers similarly employer with the company
• There is no strike or lockout in the course of a labor dispute at the place of employment
• The bargaining unit representative has been publicly notified of the LCA. If there is no bargaining unit representative, the employer has posted the LCA at the principal place of business and every location where the H1 will work.

The H1B employee must also receive a copy of the LCA.

Crucial Fact #4 Recordkeeping

The employer must keep certain records for H1B workers. Namely, one day after the LCA is filed, the employer must have documentation that complies with LCA conditions. Specifically, the employer must maintain a public folder and a LCA folder containing information such as the prevailing wage determination, working conditions documents, the LCA, and other documents. This documentation must be maintained for a period of one year beyond the end of the employment period stated in the LCA.

Crucial Fact #5 Benching

"Benching" is strictly prohibited for H1B employees. Employers must pay these employees the required wage for the full amount of hours stated in the H1B application even if the employee has no assigned work or cannot work temporarily. For example, Employer A hires H1B employee full time to provide consulting services to clients. If H1B employee is temporarily between assignments, Employer A must continue to pay him the agreed upon full time wages. Also, employers must pay H1B employees no later than 30 days after the employee is enters the U.S. in H1B status, or 60 days after persons already in the U.S. obtain H1B status.

The U.S. Department of Labor is responsible for enforcing the LCA requirements. Consequently, the DOL can conduct an LCA investigation on its own or in response to a complaint made by any affected party (complaints must be filed no later than 12 months after the alleged violation). If the employer willfully and knowingly violates the requirements, then penalties will apply. Possible penalties range from $1000 fine to $35,000 and from one year to three years debarment (elimination) from filing H1B visa requests.

If the employer dismisses the employee before the end of authorized employment period, it will be responsible for reasonable costs of return transportation of the employee to his or her home country. However, this provision does not apply if the employee terminates employment or does not want to return home. We do not know of any incident where the INS has enforced this provision.

Although an H1B visa is employer-sponsored so that an employee may only work for the sponsoring employer, once an alien obtains H1B status, he or she can work for a new employer once the new employer files a new H1B petition for the employee. This rule allows H1B visa holders to start the new employment upon filing of a new H1B petition with the INS. To qualify for this provision, the individual must be in H1B status, the new petition must be filed before the expiration of the current period of the individual’s authorized stay, and the individual must not have been employed without authorization. If the new H1B petition is denied, work authorization for the individual ends.

Under current regulations, the costs and fees, including attorneys fees, associated with obtaining H1B status cannot be paid by the H1B employee if that payment would reduce the employee’s wage below the actual wage or prevailing wage (whichever is higher). In other words, if an employer requires the employee to pay the expenses associated with obtaining the H1, those costs must be deducted from the employee’s wage to determine whether the employer is paying the higher of the actual wage or prevailing wage. In addition, the attorney fees cannot be deducted from the employee’s paycheck.

Employers who are determined to have a large percentage of H1B workers are "H1B Dependent" and subject to special requirements and restrictions. First, H1B dependent employers are required to document their efforts to recruit U.S. workers. Second they must attest that: (1) they will not place the H1B employer with another employer unless they check and have no knowledge of whether the other employer has displaced or will displace a U.S. worker within 90 days before and 90 days after the H1B nonimmigrant is placed with the other employer; and (2) they will not displace or have not displaced any U.S. worker in their employ within the period of 90 days before and 90 days after the filing of an H1B petition. These attestations are not required if the H1B employee has a Master’s or higher degree or will be paid $60,000 or more.