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Hurtling (and Hurting) Down the H-1B Road: All Parts Compiled

by Angelo A. Paparelli

"You're driving along the [H-1B] highway lickety-split, see. You're in a hurry and you're worried about whether you're goin' to lose your job and . . . about whether there's enough oil [and] that knock in the motor. You see, modern man lives in condi-tions of strain, affect we students of psychology call it. You go along staring straight in front of you, crazy to get someplace and what do you see?"[1]

For several years now, U.S. employers, foreign professionals, and the immigration lawyers who counsel them have been driving down the H-1B autobahn. As with life itself, the H-1B road is less of a destination than a journey. At times a multi-lane highway, at others a dizzying curlicue like Mulholland Drive, and at still others a salt-carved stretch of potholes on a wintry Midwestern street, this H-1B road much traveled never lacks for critics or supporters. Along the way, one encounters aggrieved parties, industry champions, displaced workers (for-eign and domestic), Inside-the-Beltway admirers and detractors, proponents and opponents among the bar, academia and the media, and Web sites galore, some thoughtful and others merely strident. [2]

To many, the H-1B road ahead is deceptively familiar, in a "been there, done that" way. The multi-lane highway will suddenly turn into a two-lane road as the 195,000-person H-1B yearly quota reverts to 65,000 on October 1 of the coming fiscal year, and H-1B dependency attestations fall by the wayside.[3] As many employers race to get in under the H-1B numerical cap using the tried and true strategies of the past,[4] the roadway will likely be littered by new obstacles and possibly some pleasing shortcuts for the well-prepared traveler.

This article will offer a sherpa's-eye view down the vertiginous H-1B road, and report on some of the likely boulders along the way. Don't expect a Michelin Guide, however, because there's just too much terra incognita to traverse. The article will instead operate on the simple premise that the past is prologue, and will address current Department of Labor (DOL) enforcement activities and review a selection of recent Administrative Law Judge (ALJ) decisions for helpful H-1B reconnoitering.

DOL'S WAGE & HOUR DIVISION: WRECKING CREW OR 24-HOUR ROAD SERVICE?

In the recent past, the Wage and Hour Division (WHD), the DOL's enforcement arm within the Employment Standards Administration, has clearly shown itself to be an agency on a mission, pursuing enforcement actions with unprecedented gusto. On all measurement scores (number of complaints, investigations, and final determinations, and amount of back wages owed), the WHD in the latest reporting period has far outpaced its historic annual record since the WHD was first assigned H-1B enforce-ment responsibilities in 1991.[5]

The flurry of WHD enforcement activity has resulted-quite predictably-in the imposition of the debarment penalty by the Department of Homeland Security (DHS), Bureau of Citizenship and Immi-gration Services (BCIS), a prohibition on the em-ployment-based immigrant and nonimmigrant spon-sorship of aliens for periods ranging from one to three years or longer.[6]

DOL enforcement activity is likely to increase in the years ahead, particularly as the WHD works through the backlog of complaints precipitated by a prolonged recessionary economy, the resulting dis-gruntlement of laid-off U.S. and foreign workers,[7] and the heightened scrutiny given this visa category by the media, academics, congressional inquisitors, and government agencies.[8] Under the American Competitiveness and Workforce Improvement Act,[9] the DOL is precluded from engaging in self-directed investigations except in limited circumstances[10] but other government agencies (such as the DHS or the Department of State's consular officials) are likely to be recognized to possess appropriate standing as aggrieved parties authorized to complain about H-1B violations.[11]

Given this heavy emphasis on enforcement, H-1B employers are well advised to conduct a volun-tary self-audit of all labor condition applications (LCAs),[12] public access folders,[13] and required documentation before that fateful WHD knock on the door.[14] To the agency's credit, however, the published decisions resulting from orders of the WHD Administrator have reflected a fair degree of even-handedness toward employers, perhaps more than a cynical observer might expect from a bureaucracy dedicated to protecting the rights of workers.

ADMINISTRATIVE LAW JUDGE DECISIONS: DRIVING THE H-1B THROUGH STRAIGHT-AWAYS AND ROUNDABOUTS

Although published decisions of Administrative Law Judges (ALJs) interpreting the DOL's LCA regulations were first reported in 1993, many of the early cases involved orders approving stipulations of the parties and consent decrees.[15] Increasingly, how-ever, ALJs have offered extensive analysis of several key provisions of H-1B law and regulation. This article will therefore survey a number of the more significant decisions and offer commentary. Rather than provide a precis of each decision, the article will instead offer a general legal overview and then address specific noteworthy issues. As we explore the pub-lished cases, employers and their counsel should consider the extent to which employers can or should rely on these ALJ decisions. Although lacking precedential value, the decisions do offer insight into what ALJs have done in the past and how they think on major issues of LCA compliance. Whatever the persuasive weight of the particular decisions, it would be prudent for conscientious employers to avoid the mistakes made in these reported decisions as they craft their own LCA compliance posture.

GETTING THE LAY OF THE LAND: NO SUBSTITUTE FOR "REAL LAWYERING"

If the ALJ decisions offer one overarching message, it is that LCA cases require mastery of (a) substantive H-1B law and regulations, and (b) the Rules of Practice and Procedure for Administrative Hearings before the Office of Administrative Law Judges.[16] As a result, the cases make clear that pro se parties and lawyers unwilling to invest the time to gain the requisite expertise litigate H-1B administrative claims at their peril. Numerous decisions turn on the party bearing the burden of proof, the admission or exclusion of evidence under a typically strict reading of the rules of evidence, the pre-trial framing of the specific claims to be tried, and the skill of the participating lawyers. Another recurrent theme is that the party whose positions are endorsed by the WHD Administrator often prevails before the ALJ. This is not to suggest that the ALJs are mere rubberstamps for the DOL, but that the WHD's own trial lawyers are effective advocates, particularly where the other side is not represented by competent counsel.

One significant case that illustrates these overrid-ing themes is Administrator, Wage and Hour Division v. Mohan Kutty, M.D. et al. (Kutty).[17] The case offers a virtual roadmap of what can go wrong when an individual respondent, apparently unschooled or self-taught in H-1B arcana, proceeds without the benefit of counsel at the administrative hearing. [18] In Kutty, the ALJ admitted into evidence at the hearing the respondent's lengthy deposition taken as a defendant in a civil lawsuit brought by various foreign physicians. The judge also admitted a letter from Dr. Kutty's prior immigration counsel advising him of H-1B employer-compliance obligations. Despite the obviously privileged character of the letter, Dr. Kutty had voluntarily provided the attorney's letter to the WHD investigator.

With these two damning documents in hand, the outcome of the case became quite predictable. Together they showed that the employer knew of the H-1B requirements yet recklessly failed to comply. As a result, the ALJ assessed almost $1 million in back wages and over $100,000 in civil fines against Dr. Kutty and his medical corporations, and debarred him for at least two years for multiple H-1B violations. While there can be no assurance that the result would have differed had Dr. Kutty been represented by competent counsel at the hearing, a tal-ented lawyer could have asserted the attorney-client privilege to prevent the submission to the WHD investigator of the former immigration lawyer's CYA [19] letter. A seasoned litigator also could have argued before the ALJ that live testimony of respondent should be presented at the hearing so that credibility could be assessed and counsel's objections could be interposed, where appropriate, for the sake of the administrative record.[20]

DRIVER'S TRAINING: BASIC RULES OF THE ROAD

Kutty and other recent cases make clear that the road leading up to the ALJ hearing can be bumpy or smooth depending on the employer's handling of the WHD investigation. An employer's decision whether to cooperate with the investigator or interpose procedural and substantive objections may well depend on strategic decisions of the employer's counsel and the existence and condition of the public access files and other required business records. [21] Eventually, however, if the claimant or the respondent requests a hearing, administrative litigation ensues.

Statutory Time Constraints and Limitations Period

The INA requires the WHD administrator to make a determination within 30 days after a complaint is filed, and provide 60 days for a party to request an administrative hearing. The ALJ must then render a finding no later than 60 days after the hearing. [22] The respondent in Kutty asserted that the WHD administrator's failure to meet these deadlines bars prosecution of the case before the ALJ and restricts the administrator in prosecuting the case to the facts known at the time of the initial investigation and to the remedies sought in the complaint. The ALJ rejected both assertions, holding that the seemingly mandatory nature of the time deadlines in the INA are not jurisdictional but merely directory because the statute does not specify a consequence for failure to comply with the prescribed time limits. [23]

The court also considered the assertion that some of the backwage claims brought by the administrator fell outside the one-year H-1B limitations period within which to conduct an investigation or hearing.[24] The ALJ likewise rejected this argument, holding that as long as a backwage claim was brought within the one-year limitations period, the calculation of the amount of back wages owed could include amounts for the entire period of H-1B admission. Thus, a back wage claim brought to hearing within the third year of an H-1B alien's period of authorized admission could include wage deficiencies for the entire three-year period notwithstanding the statutory one-year limitations period.

Issue Inclusion/Preclusion

The recent ALJ cases offer guidance on how a party may fall into, or avoid, a particularly unsettling pothole, namely, an 11th-hour broadening of the issues to be considered in the administrative hearing. In Administrator, Wage and Hour Division v. Novinvest, LLC (Novinvest), the ALJ reviewed the propriety of an early-resignation fee charged by an H-1B respondent to its H-1B workers even though the claim that the fee constituted an unlawful penalty was not included in the administrator's determination letter. In Santiglia v. Sun Microsystems, Inc. (Santiglia), however, the court refused to consider claimant's assertion, made for the first time in his pre-hearing statement, that respondent's policy of filing "blanket LCAs" constituted a failure to accurately specify, and therefore a misrepresentation of, the number of H-1B workers sought. Why did the two ALJs reach seemingly contrary conclusions?

In Santiglia, the court noted that under 29 CFR §18.43(c), issues not raised in pretrial papers or proceedings but nonetheless tried with the express or implied consent of the parties shall be treated as if they had been raised in the pleadings. The respondent in that case, however, had filed a pre-trial motion in limine requesting that the court exclude the blanket-LCA/misrepresentation claims. The court reasoned that consideration of last-minute claims would deprive the administrator of the statutory power to determine whether a complaint warrants investigation and provide a claimant with an other-wise undeserved right to an appeal and a hearing. The Santiglia court did consider, however, other later-asserted claims (alleging the improper use of a manager's signature on LCAs and H-1B petitions, and asserting that an alleged misrepresentation as to the employment of H-1B aliens adversely affected U.S. workers). The court considered these claims because the respondent did not object and because the latter claim was treated as merely a more precise articulation of a claim in Mr. Santiglia's complaint.

On a similar theory, the court in Novinvest addressed the propriety of a contractually-stipulated provision for reimbursement by the employee of an "investment fee" (characterized by the administrator as an early-termination penalty) that was first raised in pre-trial papers. In a pre-hearing submission the respondent argued that state-court default judgments upholding the contractual provision should stand as a binding res judicata determination in the ALJ proceeding. Respondent also cross-examined workers at the hearing about judgment amounts (including the contractual penalty) assessed against them in state civil court actions. At the conclusion of the hearing, the administrator moved to conform the agency's letter determination following its pre-hearing investigation to the evidence produced at the administrative hearing and expressly asked the court to resolve the early-termination-penalty issue.

The ALJ proceeded to rule that the penalty issue was properly raised at the hearing because the parties impliedly consented to trying the issue before the court and because the issue of the early-termination-penalty was already contained in a claim within the original complaint (viz., whether the respondent had failed to pay the required H-1B wage by taking the penalty as an unauthorized deduction).

The lesson to be learned from these cases is apparent: If a party wants a particular claim included in, or excluded from, consideration by the ALJ, then conscious and unflinching measures must be taken to accomplish that objective. A claimant must include all conceivable issues in the initial complaint, whereas a respondent must clearly and promptly object to the last-minute raising or trying of any issues not included in the claimant's complaint or the administrator's letter determination.

Burden of Proof and the Rules of Evidence

The recent ALJ decisions also make clear that customary legal principles will carry the day in the conduct of the hearing and in the courts' decisions. Thus, where the evidence supporting and opposing a particular claim is evenly balanced, the party bearing the burden of proof will not prevail.[25] Likewise, mere assertions unsupported by admissible evidence will not be sustained.[26]

Burma-Shave Signs Along the H-1B Road

Readers of a certain age will recall the low-tech driving entertainment offered from the late 1920s to early 1960s by the Burma-Shave company, a purveyor of shaving cream, on a succession of signposts along the highways and byways of America. [27] The recent ALJ decisions perform much the same function by waking us up to road hazards in H-1B jurisprudence.

H-1B is all the rage
But be sure to pay
The prevailing wage.

PREVAILING WAGE OBLIGATION

Recent ALJ decisions offer helpful guidance on H-1B prevailing wage obligations. [28] ALJs have been quite willing to order back-wage payments to complainants, as shown in Kutty ($ 980,000+), Novinvest ($57,000+) and Chelladurai v. Infinite Solutions, Inc. (Infinite Solutions) ($2,273). [29] The routes taken to arrive at these backwage orders have been circuitous and instructive.

Sources of Prevailing Wages

In Kutty, the WHD investigator calculated the prevailing wages based on the rate provided by the State Employment Security Agency or SESA, [30] or if a SESA wage was unavailable, by reliance on the mean wage published by the Economic Research Institute (ERI). The ALJ then generally accepted these calculations and proceeded to order back wages accordingly. Use of the SESA wage, given its blessing in the DOL regulations, [31] is not objectionable. Reliance on the ERI "mean" wage is puzzling, however, since DOL officials have generally indicated that ERI is not an acceptable source of prevailing wages. The DOL has maintained that, because the ERI publication is not a single survey but rather a compilation of surveys, there is a possibility that some employers may have participated in multiple ERI blended surveys and thus been counted more than once. Given this distinct possibility of multiple counting, DOL officials have concluded that the calculation cannot, with certainty, produce an arithmetic mean.[32]

In Blue Star Infotech, the complainant sought back wages claiming that the administrator should not have accepted a non-SESA published wage source (the American Electronics Association 1998 benchmark survey) used by the employer. Complainant maintained that the administrator and the ALJ must use a SESA wage (in this case, the 1999 Metropolitan and Balance State Area Occupational Employment and Wage Estimates study). The ALJ rejected the claim, holding that (a) "the DOL is under no obligation to compare legitimate prevailing wage rate surveys when it has concluded that the survey utilized by [the employer] satisfies the criteria set forth in the regulations"; and (b) the complainant failed to establish that the employer's non-SESA wage source did not comply with the DOL regulations. [33]

Your Hummer may be indestructible,
But the conclusion is ineluctable:
Your business expenses are not
Authorized or deductible.

Authorized and "Un"Authorized Deductions
Attorneys Fees

Under DOL regulations, an employer that deducts amounts from an H-1B employee's compensation is treated as failing to pay the required wage if the resulting sum is less than the amount otherwise due (i.e., the higher of the prevailing or actual wage). The same outcome holds where employers require H-1B workers to absorb, pay or reimburse the "business expenses" of the employer and the wage thereby dips below the required level.

One particularly controversial DOL position taken in the December 2000 Interim Final Rule is the determination that the employer may not require the H-1B worker to pay-directly or indirectly-attorney fees for the preparation of the LCA and the H-1B petition fees since these are considered an employer business expense. The ALJ in Kutty upheld the DOL's interpretation by including in the back-wage obligation the cost of attorney fees for preparation of H-1B petitions (to the extent that employee payment of these amounts caused the salary to dip below the required H-1B wage). The court took the surprising step, however, of going beyond the DOL regulation and requiring the employer to repay to H-1B employees as back wages any attorney fees paid to procure J-1 waivers of the two-year home-country physical presence requirement of INA §212(e). While acknowledging that inclusion of J-1 waiver fees is debatable, the ALJ refused to say that "including [J-1] waiver costs in the category of employer business expenses is unreasonable, as the [J-1] waiver must be obtained before an H-1B visa can be issued." [34]

Interestingly, however, the ALJ accepted the WHD investigator's exclusion from employer business expenses of amounts for (a) state medical licenses, and (b) applications submitted to the Drug Enforcement Administration for permission to write prescriptions for controlled drugs. Such expenses conceivably could also be included as employer obligations on the same basis as the court reasoned that J-1 waiver fees should be included in the backwage calculation. Perhaps, the investigator and the court determined sub silentio that such expenses are personal [35] to the individual or required by law to be performed by the alien. In any event, the distinction between personal and business expenses remains unclear and is likely ripe for further litigation.

Liquidated Damages or Early Resignation Penalty

In Novinvest, the ALJ examined the propriety of a $5,000 "investment fee" in an employment contract which applied if an employee resigned before the agreed term of employment. The court determined that the employer failed to establish that this contractual provision met the regulatory require-ments for an authorized deduction. Under the contract, the worker agreed that the employer would use this fee "'to hire, train and process employees." The court also held that the fee did not qualify as legitimate liquidated damages even though the employer relied on a state court default judgment in its favor. The court reasoned that the employer did not convincingly show that the fee was intended to benefit the employee. The employer offered testimony that the fee was used to recoup expenses for recruiters, long distance communication costs and time spent "helping to acclimate the employee." In the absence of receipts, however, the court refused to accord much weight to the testimony.

This ruling seems questionable on at least three grounds. First, a liquidated-damages clause rarely can be seen to benefit the employee (unless a court were to reason that the employee benefits by receiving a contract for a fixed term of employment rather than employment terminable at will). Second, the employer had secured a judgment from the state court upholding the fee, and state law determinations are the touchstone under the DOL's interim final rule and ACWIA for the interpretation of a liquidated-damages provision. [36] Third, the lack of documentation ought not be a bar to enforcing a legitimate liquidated-damages clause since such damages typically are allowed by contract when the prospect of incurring damages for a future breach are clearly foreseeable but the precise amount cannot be reasonably ascertained. Apparently, future litigation will be needed to distinguish permissible liquidated damages from forbidden penalties.

THE H-1B ROAD MAY BE CLEAR
FROM WHERE YOU SIT,
BUT DON'T BE DENYING
ANY BENEFITS.

Equal-Benefits Opportunity

ACWIA introduced a requirement that H-1B workers and similarly situated U.S. workers be given an equal opportunity to partake of an em-ployer's benefits programs. The DOL in its Interim Final Rule included the equal-benefits obligation in the required wage. [37] One recent case, Blue Star Infotech, addressed the benefits obligation with interesting results. There, the complainant asserted that she was denied "a Bay Area cost of living allowance, a family round trip airline ticket to India, and commission incentives" valued collectively at over $25,000. The DOL administrator maintained that such incentives did not constitute "appropriate fringe benefits" but rather "contractual benefits negotiated between individual nonimmigrant H-1B workers and the employer, and are governed by state law." The DOL administrator also asserted that the DOL has no jurisdiction over state employment contracts. [38] The court rejected complainant's argument. The ALJ held that no other workers were similarly employed and that in any event the complainant was paid in excess of the prevailing wage. The court also noted that "[h]ad Blue Star's alleged failure to pay commissions brought her actual wage below the prevailing wage, this would be actionable under the H-1B regulations." Consequently, the court suggested that she take up her claim "in another forum," presumably referring to the state court.

If the car breaks down,
Pull out the wrench,
But when there's no work,
Do not bench.

The No-Benching Obligation

ACWIA and the DOL's Interim Final Rule prohibits an H-1B employer from failing to pay the required wage during non-productive periods unless nonpayment is at the voluntary request of the employee. In Novinvest and Kutty, the ALJs had little difficulty in finding a benching violation notwithstanding the assertion of a number of ultimately unsuccessful arguments, e.g., that the employees (a) did not commence employment, (b) "voluntarily" signed ex post facto requests for leave, and (c) lacked a proper medical license. In Kutty, the respondent (with no lack of chutzpah) argued unsuccessfully that the employer should not be required to pay wages since the INS should never have approved the H-1B petitions in the first instance.

You thought your wages were H-1B portable
But the judge took a look,
And found your claim insupportable.
H-1B Portability and the Required Wage Obligation

In Infinite Solutions, the complainant sought H-1B back wages for services rendered during various visits she made to respondent's offices, maintaining that she was eligible for employment and deserving of compensation under the principle of H-1B portability.[39] When the respondent filed the LCA on behalf of the complainant, she had been working at a different H-1B employer, but was terminated by that first employer. It appeared that respondent then agreed to sponsor an H-1B change-of-employer petition as "a favor" to the claimant and offered an "expected annual salary" of $65,000. The court found that the activities performed by claimant at the respondent's offices ("sending e-mails, interviewing, and taking a computer course") were aimed at finding work for complainant but were not performed as "work" on behalf of the respondent. In addition, the court accepted the testimony of the employer that, had he intended to take advantage of the H-1B portability provisions, "[h]e would have so stated in the application." In denying wages on the basis of H-1B portability, the court concluded that the "facts simply do not support the existence of, nor a common intent to create, an employment relationship at any point prior to the approval of the H-1B application." [40]

Driving with the sunroof open,
You may roast,
Just be sure that two LCAs
You correctly post.
LCA Posting Obligation

In Santiglia, the employer posted two LCAs-one in the corporate offices and the other at the worksite in a different city. While noting that the employer was not barred from posting at corporate headquarters, the ALJ ruled that the regulations require the posting of two LCAs at the physical location where the H-1B employee would be working. The court declined to impose a civil monetary penalty, however, by finding that since one LCA was posted in the correct location, "there was no substantial violation of the posting requirement." [41]

Each day your car gets older and older,
But be sure to keep and show
Your Public Access Folder.
Public Access Obligation

Santiglia also offers guidance on the employer's duty to keep and make available on request H-1B public access folders (PAFs). The case holds that an employer:

May require a person requesting an opportunity to inspect the PAF to make an appointment, and sign a log book before being given access to the PAFs;
May limit access to one box of PAFs at a time;
May refuse to allow copying or photographing of PAFs;
May omit from the PAFs the names of H-1B aliens and the "specific wage being paid a specific H-1B worker"; and
May limit inspection of the PAFs to the principal place of employment and need not provide access at the job site; but
May not refuse repeated requests to review the PAFs.[42]

In Kutty, however, the employer produced no PAFs whatsoever. The court entered into evidence a letter from the employer's former immigration lawyer advising Dr. Kutty of the obligation to maintain such records. Finding that this knowing failure to follow the law amounted to recklessness, the ALJ fined respondent $800 for each failure to maintain a PAF.

To drive the H-1B highway
You must concentrate,
But against an aggrieved party
Do not retaliate.
Whistle-Blowing Provisions

Two recent cases address the DOL regulatory ban on retaliation against an H-1B worker for engaging in "protected conduct" by complaining of an employer's violation of the H-1B requirements.[43] In Blue Star Infotech, the ALJ refused to find an employer to have violated the prohibition against retaliation because the complainant's claims involved alleged discrimination in violation of the regulations of the Equal Employment Opportunity Commission and the California Department of Fair Employment and Housing. As the court ruled, "such complaints do not fall within the purview of [INA §] 212(n)" or the corresponding regulations. The court also held that no retaliation was proven merely because complainant expressed dissatisfaction with a new incentive policy, and the employer suggested that she "go to the Dept. of Labor with [her] question."

In Kutty, however, the ALJ found employer retaliation when Dr. Kutty fired H-1B workers after their lawyer complained to Dr. Kutty and the DOL that the H-1B workers' salaries had been improperly reduced. The court found that retaliation was a contributing factor leading to the firings even though the employer's inability to afford the salaries also played a role. Thus, applying a "mixed-motive" analysis, the ALJ concluded that unlawful retaliation had occurred and ordered payment of $36,000 in fines.

Ignore H-1B road rules,
And for a time you may sail,
But disregard corporate formalities,
And the judge will "pierce your corporate veil."

Personal Liability for H-1B Back Wages and Fines

In Kutty, the ALJ assessed almost $1 million in back wages and civil fines against various corporate entities that had served as H-1B employers for several doctors. Because the corporate employers were defunct and virtually penniless, however, the court examined whether payment for wages owed and fines arising from numerous H-1B violations could be assessed against the companies' sole shareholder, Dr. Kutty. Applying Tennessee law, the court adopted a traditional analysis to pierce the corporate veil and hold Dr. Kutty personally responsible for paying back wages and fines. The ALJ found that: (a) the corporations were undercapitalized; (b) financial transactions were not properly recorded; (c) Dr. Kutty exercised sole control and held sole ownership of the entities; (d) assets in the companies were treated as interchangeable with personal assets; and (e) dealings were not at arms length. Although holding Dr. Kutty personally liable, the ALJ took pains, however, to note: "In the ordinary course of events, the individual signing the LCA and H-1B petitions on behalf of a corporation would not be considered the [H-1B] employer in his or her indi-vidual capacity."

END OF THE H-1B ROAD?

Willie Nelson, who turned 70 years young earlier this year, knows first-hand about run-ins with the federal government (having crossed swords and lost with the Internal Revenue Service in a celebrated tax case of the late 1980s). Willie surely knows about the hardscrabble life. The nation's many H-1B stakeholders would be well advised to consider Willie's timeless wisdom. There's no end to the H-1B road as long as this country continues to need bright professionals to fulfill the demand for foreign workers and fund the Boomers' Social Security retirement pensions.[44] So as Willie might sing if he knew about the H-1B visa:

I can't wait to get on the [H-1B] road again.
On the [H-1B] road again,
Goin' places that I've never been.
Seein' things that I may never see again.
[45]

See here for the H-1B Program Data Table.

This article is slightly modified from the versions which appeared in 8 Bender's Immigr. Bull. 1022 (June 15, 2003) and as part of the conference materials at the 2003 annual conference of the American Immigration Lawyers Association. Copyright retained by Angelo Paparelli.

^[1] The author offers apologies to readers of the works of John Dos Passos (1896-1970), U.S. novelist, poet, playwright, and painter, for lifting (wholly out of context) the lines quoted in the text from a character in a Dos Passos play. For the full quotation, see Ike in Fortune Heights, act 1, sc. 2, "A Likely Lad," Three Plays, Harcourt, Brace and Company (1934).

^[2] For a listing of large corporate users of the H-1B program access the link to the Web site of the Bureau of Citizenship and Immigration Services. For a decidedly antagonistic view from academia, see the Congressional testimony of UC Davis Professor, Norman Matloff, decrying the H-1B program as a form of "De Facto Indentured Servitude". For anti-H-1B Web sites see, e.g., the "H-1B Hall of Shame" Web site at: http://www.zazona.com/ShameH1B; see also the following Web sites with self-explanatory names: http://www.nomoreh1b.com, http://programmersguild.org/Guild/h1babuse.htm, http://www.betterimmigration.com/h1bvisa.html, and http://www.hireamericancitizens.org.

^[3]The attestation requirements will sunset on October 1, 2003, the start of fiscal year (FY) 2004, and the date the number of available H-1B petition approvals reverts to 65,000. See INA §214(g)(1)(A) and statutory note. For more on H-1B dependency, see A. J. Vasquez-Aspiri & A. Paparelli, Awakening a Slumbering Giant: The Department of Labor's Interim Final Rule on H-1B Dependency, 78 Interpreter Releases 685 (Apr. 23, 2001).

^[4]See, e.g., H. Gordon, "INS Issues New Rules for H-1B Cap Gap," Immigration Law Today (AILA Monthly Mailing) July/Aug. 1999; N-J. Merritt & D. Weigle, "Total Client Care," 1998-99 Immigration and Nationality Law Handbook, Vol. II, p. 13; see also, 8 CFR §214.2(f)(5)(vi) and (j)(1)(vi).

^[5] For example, WHD back-wage orders in the first three quarters of Fiscal Year 2002 reached $4.2 million, compared with the cumulative sum of $5.6 million for the fiscal years 1992-2001. Similarly, the number of investigations ranged from 30 to 42 in Fiscal Years 1996-1998, but then jumped to 104 (FY 1999), 120 (FY 2000), 200 (FY 2001) and 190 (for the partial FY 2002 ending September 30, 2002). See "H-1B Program Data," provided on April 10, 2003 by Thomas Shierling, DOL Employment Standards Administration, attached as Appendix A (published with permission).

^[6] Under §212(n)(2)(C)(ii) of the Immigration and Nationality Act of 1952 (INA), Pub. L. 82-414, 66 Stat. (codified as amended at 8 USC §§1101 et seq.), the issuance of a notice by the Secretary of Labor that an employer has engaged in certain proscribed violations of H-1B compliance obligations provided in the INA or the DOL regulations precludes the Immigration and Naturalization Service (the delegate of the Attorney General) from approving employment-based "peti-tions filed with respect to that employer" for a period of at least one year. For the DOL's role in issuing the notice of violations warranting debarment, see 20 CFR §655.855(d). The duties of the INS in effectuating debarment have been transferred to the BCIS by the Homeland Security Act of 2002, Pub. L. 107-296, 116 Stat. 2135 (See AILA InfoNet at Doc. No. 02120240). A recent listing of debarred employers is contained in a BCIS Headquarters memorandum by Act-ing Assistant Commissioner Thomas E. Cook (HQ 70/6.1, 6.2, March 13, 2003), entitled "Organizations Ineligible for Approval of Immigrant and Nonimmigrant Petitions Under Section 212(n)(2)(C)(ii) of the Act" (See AILA InfoNet at Doc. No. 03032127).

^[7] Y. Robertson, "Avoiding the Abyss: H-1B Strategies when Facing Reductions in Force," 2 Immigration and Nationality Law Handbook 72 (2001-02 ed.), updated and republished in 34th Annual Immigration & Naturalization Institute, 167 (Practicing Law Institute, Oct. 18, 2001); S. Mailman & S. Yale-Loehr, "When H-1B Workers Lose Their Jobs," 6 Bender's Immigr. Bull. 851 (Sept. 1, 2001).

^[8] See, e.g., Report to Congressional Requesters, United States General Accounting Office, U.S. General Accounting Office, January 2002, entitled "Immigration Benefit Fraud [:] Focused Approach Is Needed to Address Problems," GAO-02-66, and additional reports cited therein, accessible at http://www.gao.gov.

^[9] American Competitiveness and Workforce Improvement Act of 1998 (ACWIA), Title IV of Pub. L. 105277 (Oct. 21, 1998); 112 Stat. 2381. For background on ACWIA, see Paparelli and Robertson, "The Labor Department's Role in the H-1B Visa Program: Protector Of Workers Or Enemy Of The Future?," 76 Interpreter Releases 785 (May 24, 1999).

^[10] See INA §212(n)(2)(F) and (G).

^[11] See 20 CFR §655.715, definition of "Aggrieved [P]arty," which provides in relevant part: "A government agency which has a program that is impacted by the employer's alleged non-compliance with the labor condition application."

^[12] The Labor Condition Application is Form ETA-9035 (paper version) or ETA-9035E (online version).

^[13] Documents that must be included in the "public access file," sometimes also referred to as a "public disclosure file" (see the DOL's prefatory comment to its Interim Final H-1B Rule, 65 Fed. Reg. at 80112-114), are itemized at 20 CFR §655.760.

^[14] For a detailed treatment of H-1B audits, both before and after WHD involvement, see Alan Tafapolsky, "Bingo: A Proactive Approach to DOL Audits", 5th Annual California Chapters Handbook (AILA 2002) (Tafapolsky article), and A. Paparelli and J. I. Burkemper, "Skeletons in the Closet: LCA Audits in the Age of H-1B Uncertainty," 73 Interpreter Releases 22 (June 3, 1996).

^[15] See the USDOL/OALJ Reporter for many published ALJ decisions (including all of the cases discussed in this article). The first published case offering substantive analysis of the H-1B visa program is Eva Kolbusz-Kijne v. Technical Career Institute, Inc., 1993-LCA-4, Decision & Order (ALJ Oct. 14, 1993), Final Decision & Order (Sec'y July 18, 1994). For an analysis of this case and other early ALJ decisions, see, Ted J. Chiappari, "Survey of Labor Condition Application Enforcement Proceedings," 73 Interpreter Releases 673 (May 20, 1996), C. Shusterman and D. Neal, "Survey and Analysis of H-1B Labor Condition Application Decisions," 72 Interpreter Releases 49 (Jan. 9, 1995), and M. Pivec, "Observations on the Enforcement of H-1B Labor Condition Application Requirements," 71 Interpreter Releases 705 (May 27, 1994). The present article will focus on decisions published in the last two years, given that the later cases have addressed changes to the H-1B category brought about by recent legislation, viz., ACWIA and the American Competitiveness in the 21st Century Act, Pub. L. No. 106-313, 114 Stat. 1251 (AC21), and the DOL's promulgation of an Interim Final Rule, amending 20 CFR Parts 655 and 656 and implementing ACWIA. See 65 Fed. Reg. 89110 et seq. (Dec. 20, 2000).

^[16] The rules are codified at 29 CFR Part 18, and are accessible on the Web at: http://www.oalj.dol.gov/librules.htm.

^[17] Case Nos. 2001-LCA-00010 to 00025 (Oct. 9, 2002).

^[18] While Dr. Kutty was represented by counsel in certain preliminary matters, the ALJ granted counsel's request to withdraw from representation, and Dr. Kutty proceeded pro se at the administrative hearing.

^[19] "CYA"-as most attorneys know-stands for "cover your assets."

^[20] In Kutty, although the respondent did object to the use in the ALJ proceeding of evidence gained through discovery by an attorney for H-1B aliens in private litigation, including Dr. Kutty's deposition, the objection was limited to the assertion that the deposition had been "taken under false colors" and that respondent had been given insufficient time to conduct discovery of his own. The ALJ rejected these assertions as lacking factual support but did not offer extended discussion of the legal rationale for admitting a deposition taken in civil litigation as an exhibit in the administrative case. Kutty at 65-66. While such a deposition may ultimately be treated as admissible in an H-1B administrative hearing, competent defense counsel could have attempted to postpone the taking of the civil deposition until after the conclusion of the ALJ hearing. WHD investigations must be concluded and determinations made within 30 days of the filing of a complaint, a respondent is given 60 days thereafter to request a hearing. See INA §212(n)(2)(B).

^[21] See Tafapolsky article, supra, fn. 14.
^[22] INA §212(n)(2)(B).
^[23] Kutty at 66. In reaching these conclusions, the Kutty court relied on non-H-1B cases, and cited Administrator v. HCA Medical Center Hospital, USDOL/OALJ Reporter (HTML), ARB No. 1994-ARN-1, 7-9 (ARB June 30, 1999), a case interpreting the investigative time frames of the Immigration Nursing Relief Act of 1989, Public Law 101-238, 103 Stat. 2099 (INRA). There the court held that the time frame for INRA investigations did not bar the later discovery by the administrator of facts demonstrating the respondent's failure to pay prevailing wages. Practitioners should note that while this interpretation of INRA's time limitations may be per-missible here, INRA's use as substantive authority in H-1B cases involving non-dependent H-1B employers would arguably be inappropriate since - unlike the nurse cases in INRA - the H-1B provisions do not require evidence of affirmative efforts to recruit U.S. workers. Compare ETA Form 9035 and attestations required of general H-1B employers with those required of H-1B dependent employers and other H-1B petitioners previously found to be so-called "willful violators."
^[24]See INA §212(n)(2)(A).
^[25]See, e.g., Ramachandran v. Blue Star Infotech, and Administrator, Wage and Hour Division (Blue Star Infotech), Case No. 2002-LCA-8 (ALJ, June 4, 2002) (where neither party submitted evidence showing a timely or untimely LCA posting, the evidence is equal, and claimant, the prosecuting party, failed to carry the burden of proof).
^[26]See Santiglia, supra (unauthenticated emails asserting that LCAs had not been properly posted at the H-1B employer's work-site may not be admitted into evidence and thus could not serve to corroborate claimant's testimony; hence, claimant did not carry burden of proving alleged failure to post LCAs). Similarly, see Novinvest, supra (respondent's failure to offer evidence that H-1B workers authorized a deduction from wages of an amount as liquidated damages under a contractual provision requiring payment by the employee upon resignation from the job before the agreed term of employment).

^[27]Here are typical examples of this quaint literary genre:
He tried
To cross
As fast train neared
Death didn't draft him
He volunteered.
Altho insured
Remember, kiddo
They don't pay you
They pay
Your widow.
For several more examples of Burma-Shave messages, visit: www.fiftiesweb.com/burma.htm; www.nidlink.com/~dgookin/burma_shave; http://seniors-site.com/funstuff/ burma.html.
^[28] The DOL's operative H-1B regulation requires payment of the required wage, i.e., the higher of the prevailing wage in the geographic area of employment or the actual wage paid by the employer to similarly qualified workers at the employer's establishment. Since none of the recent cases addressed the actual wage obligation, the discussion in the text will be limited to prevailing wage issues.
^[29]Case No. 2003-LCA-00004 (ALJ, Feb. 7, 2003).
^[30]The DOL has changed the H-1B lexicon. SESAs are now known as State Workforce Agencies or SWAs.
^[31]See 20 CFR §655.731(a)(2)(iii)(A).
^[32]The arithmetic mean or weighted average is required. See 20 CFR §655.731(a)(2)(iii)(A).
^[33] Accord: Santiglia at 13 (complainant's assertion that pre-vailing wages should be determined by LCAs received near to one another in time fails for lack of evidence).
^[34] Kutty at 71.
^[35] Compare the DOL's discussion of employer business ex-penses in the prefatory comment to the Dec. 20, 2000, In-terim Final Rule (65 Fed. Reg. at 80198) where the agency- in referring to a prior Notice of Proposed Rulemaking-conceded that "H-1B nonimmigrants are permitted to pay the expenses of functions which by law are required to be per-formed by the nonimmigrant such as translation fees and other costs related to the visa application and processing."
^[36] Although the ALJ addressed requirements of an enforceable liquidated damages provision under Georgia law, and found the employer's proof wanting, the court did not address the effect of a Georgia state court judgment upholding the contractual provision for liquidated damages. ^[37] See 20 CFR §655.805 (a)(2), which declares it an H-1B violation to fail "to pay wages (including benefits provided as compensation for services)."
^[38]Contra: Kutty at 74 ("The statute [i.e., the INA's H-1B required-wage obligation] governs, not the employment agreement.").
^[39] See A. Paparelli and J. Lee, "A Moveable Feast": New and Old Portability under AC21 §105," accessible on the Web at: http://www.ilw.com/articles/2001,0702-Paparelli.shtm.
^[40] Infinite Solutions at 4.
^[41] Santiglia at 16. Applying Blacks Law Dictionary, 1280 (5th ed. 1979), the ALJ defined substantial compliance as "compliance with the essential requirements, whether of a contract or statute." Under this standard, the respondent's posting violation was treated as insubstantial.
^[42] Id. at 11-13. Although the employer had denied complainant the opportunity to review PAFs between March 31 and July 29, 2002, the court found the violation was neither sub-stantial nor willful: "The Complainant had access before March 31, 2002, and was given access again after the Re-spondent was told [by the DOL investigator] it could not deny the Complainant access."
^[43] See 20 CFR §655.801(a).
^[44]See Testimony of Federal Reserve Board Chairman Allen Greenspan Before the Special Committee on Aging, U.S. Senate, February 27, 2003, found at: www.federalreserve.gov/boarddocs/testimony/2003/20030227/default.htm#f2 ("Immigration, if we choose to expand it, could prove an even more potent antidote for slowing growth in the working-age population. As the influx of foreign workers in response to the tight labor markets of the 1990s showed, immigration does respond to labor shortages.").
^[45] On The Road Again, written by Willie Nelson (© MI Full Nelson Music), from "Willie Nelson Live," ©1976, RCA Victor.

About The Author

The author thanks noted practitioner, Gary Endelman, for editing this article and offering his especially insightful commentary.

Angelo A. Paparelli, certified as a Specialist in Immigration and Nationality Law by the State Bar of California, has been practicing business-sponsored immigration law for 25 years. He is a nationally recognized speaker, published author and leading expert on cutting-edge, business-related immigration issues-including the immigration consequences of mergers, acquisitions, reorganizations and other business changes, consular visa practice, audits of employers' compliance with immigration regulations, and work visas for executives and professionals. From 1991 to 1996, Mr. Paparelli served as co-Chairman of the Immigration and Nationality Law Committee of the ABA's Section on International Law and Practice. He also served from 1988 to 1994 as an elected member of AILA's Board of Governors. He is named in the 1990-2004 editions of Best Lawyers in America under category of Immigration Law. Mr. Paparelli received the President's Award at the June 2001 AILA Annual Conference for his contributions to the Association in liaison with the INS on the immigration consequences of mergers, acquisitions and other forms of entity restructuring. He is a graduate of the University of Michigan (B.A., 1971) and Wayne State University Law School (J.D., 1976). He is the managing partner of Paparelli & Partners LLP, http://www.entertheusa.com/, a firm in Irvine, California that practices exclusively immigration and nationality law.

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

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