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[Federal Register: December 20, 2000 (Volume 65, Number 245)]
[Rules and Regulations]               
[Page 80159-80208]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr20de00-21]                         
 
[[pp. 80159-80208]] Labor Condition Applications and Requirements for Employers Using 
Nonimmigrants on H-1B Visas in Specialty Occupations and as Fashion 
Models; Labor Certification Process for Permanent Employment of Aliens 
in the United States

[[Continued from page 80158]]

[[Page 80159]]

lists of all the criteria which the Department would find meet the 
statutory test in the event of an investigation.
    The Department also wishes to specifically caution against 
recruitment practices and selection criteria or practices which have 
the effect of discriminating against U.S. workers or other groups of 
workers, as the comment by Miano recognizes. In this connection, 
workers are advised that the three federal agencies ordinarily 
recognized as responsible for enforcement of anti-discrimination laws 
are the Equal Employment Opportunity Commission (EEOC), the Department 
of Justice's Office of Special Counsel (OSC), and the Department of 
Labor's Office of Federal Contract Compliance Programs (OFCCP). The 
EEOC administers several statutes prohibiting discrimination in 
employment based on factors such as age, race, color, religion, sex, or 
national origin. OFCCP administers several statutes and an executive 
order prohibiting discrimination by Federal government contractors and 
subcontractors based on factors such as race, color, religion, sex, 
national origin, disability, and veteran status. EEOC and OFCCP offices 
are located throughout the United States and can be located in the blue 
pages of the telephone directory. Complaints can be made to the EEOC by 
telephone at: (202) 275-7377; see also their website at www.eeoc.gov. 
Complaints can be made to OFCCP by telephone at: (202) 693-0102, -0106, 
or by contacting the local offices, which can be located at its 
website, www.dol.gov/dol/esa/public/contacts/ofccp/ofcpkeyp.htm.
    OSC administers several statutes concerning employment 
discrimination based on national origin, citizenship status, and 
immigration document abuse. OSC can be contacted at P.O. Box 27728, 
Washington, DC 20038-7728; telephone: 1-800-255-7688 (workers) or 1-
800-255-8155 (employers); and e-mail address: osc.crt@usdoj.gov; see 
also OSC's website at www.USDOJ.gov/crt/osc.
    TCS described its own hiring practices, which it contended should 
be allowed as legitimate under the Department's regulations. 
Specifically, TCS recruits its employees from university campuses 
(apparently in India) and places them in a 12-to 18-month training 
program in India. At the same time requiring a three-year commitment 
from its employees, whom it sends on assignments in India and 
throughout the world. TCS suggested that the Department's proposal 
could be read to require TCS instead to recruit U.S. workers for 
assignments in the United States without regard to the employment terms 
and conditions it applies to its other employees--a requirement which 
it suggested could potentially subject it to anti-discrimination 
claims. TCS argued that the Department's proposal incorrectly focused 
on the recruitment/employment for the particular job listed on an LCA 
rather than the dependent employer's hiring criteria for a position 
with the dependent employer--a position that encompasses duties and 
responsibilities beyond those required for the performance of the 
particular job covered by an LCA. TCS explained that its employees, 
including those it places in H-1B positions, serve as team members of 
consulting groups that will move from job to job in the United States 
and elsewhere. It stated that it hires employees with this enduring 
employment relationship in mind, not for the employee's particular 
assignment to a job in the United States.
    Similar practices are described by Simmons, which asked whether a 
foreign-based employer may give preference to its own (foreign) 
workers, who are familiar with the specific technologies and protocols 
of an ongoing project, and whether it would be required to offer 
permanent as distinguished from temporary positions to employees in the 
U.S., since it otherwise would only temporarily transfer its permanent, 
foreign workers to perform the job in the U.S. Simmons also commented 
that it provides extensive training to its employees in India, and 
asked if it could require that U.S. workers have such skills, or would 
it be required to use the hiring criteria it utilized to hire the 
workers in India. Finally, Simmons asked if it could require U.S. 
workers to have the precise, specialized skills to meet a specific 
customer need.
    In the Department's view, an employer's recruitment obligation 
attaches to the position for which an H-1B worker is sought in the 
United States (the employer is obliged to take, in the words of the 
statute, ``good faith steps to recruit . . . United States workers for 
the job for which the [H-1B worker(s)] is or are sought''). 
Additionally, the employer is required to offer the job to the U.S. 
worker if the worker is at least as qualified as the H-1B worker. 
Accordingly, the focus must be on the particular job(s) in the United 
States which is/are covered by the LCA, not the position an H-1B 
applicant already occupies or will occupy with the dependent employer. 
An employer will fail to meet its recruitment obligation if it utilizes 
recruitment/selection criteria that have the effect of precluding an 
equally or better qualified U.S. worker from being hired for the 
position. The Department also notes that L visas, where the criteria 
are met, may be available as an alternative method to accommodate 
intra-company transfers.
5. What Documentation Would Be Required of Employers? (Sec. 655.739(i))
    Concerning documentation to show that good faith recruitment was 
conducted in accordance with industry-wide standards, the NPRM stated 
that an employer would not need to retain actual copies of 
advertisements, provided it kept a record of the pertinent details. The 
Department proposed that an employer's public access file need only 
contain information summarizing the principal recruitment methods used 
in soliciting potential applicants and the time frame in which such 
recruitment was conducted. The NPRM also requested comments on how 
employers can and should determine industry-wide standards and how to 
make the employer's determination available for public disclosure.
    With regard to documentation concerning pre-selection treatment of 
applicants for employment, the Department proposed in the NPRM that 
employers should retain any documentation they receive or prepare 
concerning the consideration of applications by U.S. workers, such as 
copies of applications and/or related documents, test papers, rating 
forms, records regarding interview and job offers. The Department 
stated its view that the EEOC already requires employers to retain such 
records and therefore this requirement imposes no new obligations on 
employers.
    With regard to the proposed documentation requirement, Senator 
Abraham stated: ``The intent is not to require employers to retain 
extensive documentation in order to be able retroactively to justify 
recruitment and hiring decisions, provided that the employer can give 
an articulable reason for the decisions that it actually made.'' 144 
Cong. Rec. S12751 (Oct. 21, 1998).
    AILA and ACIP cited Senator Abraham's statement in the 
Congressional Record for the principle that the ACWIA did not impose 
any extensive documentation requirements. ACIP, however, stated its 
belief that prudent employers of their own volition may want to retain 
documentation and that it is appropriate for the Department to provide 
guidance on how long employers should retain such documentation.
    The Department disagrees with the view that the ACWIA denies the

[[Page 80160]]

Department the usual regulatory authority to require recordkeeping as a 
means of ensuring compliance with an employer's statutory obligations--
either generally or with specific reference to the recruitment 
obligation. The fact that the H-1B program is primarily complaint-
driven with only attestations of compliance filed initially with the 
Department makes it all the more important that documentation be 
retained so that the Department can determine compliance in the event 
of an investigation. In response to AILA's comment about the length of 
time which documents must be retained, the Department notes that its 
standard record retention requirements are set forth in Sec. 655.760(c) 
of the regulation, which has been clarified as discussed in IV.B.3, 
above.
    With regard to documents concerning recruitment practices, the AFL-
CIO and Miano urged that employers be required to retain copies of all 
job advertisements or other recruiting efforts. AILA asserted that the 
Department's statement that an employer need not keep copies of 
advertisements is an illusory saving because as a practical matter 
saving these documents is the only way to document the information the 
Department proposed to require. AILA recommended that employers only be 
required to keep a summary of their recruitment for the past six 
months, similar to the requirements of the RIR procedures in the 
permanent labor certification program--especially when an employer is 
still recruiting for open positions and it is its practice to hire U.S. 
as well as H-1B workers. However, AILA stated that employers should not 
be required to keep recruitment information in public access files 
because it invites competitor intrusion into an employer's recruitment 
practices.
    The Interim Final Rule, like the proposal, requires employers to 
retain documentation of the recruiting methods used, including the 
places and dates of the recruitment, advertisements, or postings; the 
content of the advertisements and postings; and the compensation terms 
(if not included in the content). The Department continues to believe 
that copies of print advertisements are not necessary since publication 
can be verified if necessary. Rather, the documentation may be in any 
form, such as a copy of an order or response from the publisher, an 
electronic or print record of an Internet notice, or a memorandum to 
the file. Similarly, the documentation of recruitment of positions 
filled by H-1B nonimmigrants need not be segregated from other records 
provided it is available to the Department upon request in the event of 
an investigation.
    In addition, as proposed, the employer will be required to maintain 
a summary of the recruitment methods used and time frames of 
recruitment in its public access file. The Department does not believe 
that information in this summary nature will unduly disclose 
proprietary information since advertisements and attendance at job 
fairs are public in any event.
    ACIP was the only commenter responding to the Department's request 
for comments on how employers should determine industry-wide 
recruitment standards, stating only that it is unaware of any source 
that catalogues standard recruiting practices within an industry. The 
Department repeats its request for further information on this point. 
The Department has determined that employers will not be required to 
maintain evidence of industry practice. However, in the event of an 
investigation, the employer will be required to substantiate its 
assertion as to industry practice through credible evidence, such as 
through trade organization surveys, studies by consultative groups, or 
a statement from a trade organization regarding the industry norm(s). 
The Department will look behind such evidence as it deems appropriate 
in the context of the particular recruitment performed by an employer.
    With regard to documentation concerning pre-selection treatment of 
applicants, AILA disagreed with the Department's characterization of 
EEOC guidelines, stating that EEOC only requires that if documentation 
is created or retained, it must be done consistently. It also stated 
that it is impractical to expect an employer to retain what may be 
thousands of resumes submitted to it at a job fair, especially since 
many resumes do not even relate to positions offered.
    As discussed in detail in IV.D.8, above, in connection with the 
retention of records relating to displacement of U.S. workers, the 
Department disagrees with AILA's characterization of the EEOC 
requirements. The Department continues to believe that most employers 
are already required to preserve copies of the records listed and that 
retention of the documents is necessary to demonstrate fair treatment 
of U.S. applicants. ADEA regulations, for example, require an employer 
to preserve all records it makes, obtains or uses relating to ``[j]ob 
applications, resumes, or any other form of employment inquiry whenever 
submitted to the employer in response to his advertisement or other 
notice of existing or anticipated job openings, including records 
pertaining to the failure or refusal to hire any individual, * * * 
[j]ob orders submitted by the employer to an employment agency or labor 
organization for recruitment of personnel for job openings, * * * [a]ny 
advertisements or notices to the public or to employees relating to job 
openings, promotions, training programs, or opportunities for overtime 
work.'' 29 CFR 1627.3(b)(i).
    The Department emphasizes that it is not requiring employers to 
create any documents regarding treatment of applicants for employment, 
but rather to preserve those documents which are created or received. 
With regard to the comment regarding job fairs, this rule would not 
require employers to retain any resumes which do not relate to the 
positions to be filled by H-1B nonimmigrants. Nor does the Interim 
Final Rule require that any information relating to treatment of 
applications be maintained in the public access file.

F. What Are the Requirements for Posting of Notice? (Combined With 
Section O.5 of the Preamble to the NPRM) (Sec. 655.734(a)(1)(ii)(A) and 
(B))

    Section 212(n)(1)(C) of the INA, 8 U.S.C. 1182(n)(1)(C), requires 
that, at the time of filing the LCA, an employer seeking to hire an H-
1B nonimmigrant shall notify the bargaining representative of its 
employees of the filing or, if there is no bargaining representative, 
post notice of filing in conspicuous locations at the place of 
employment. As amended by the ACWIA, Section 212(n)(1)(C) further 
provides (where there is no bargaining representative) that the notice 
may be accomplished ``by electronic notification to employees in the 
occupational classification for which the H-1B nonimmigrants are 
sought.''
1. What Are the Requirements for Posting of ``Hard Copy'' Notices at 
Worksite(s) Where H-1B Workers Are Placed? (NPRM Section O.5) 
(Sec. 655.734(a)(1)(ii)(A))
    Regulations with respect to this notification requirement were 
published by the Department as a Final Rule on December 20, 1994 (59 FR 
65646, 65647). That Final Rule (set forth in the current Code of 
Federal Regulations) required, among other things, that an employer, 
who sends an H-1B worker to a worksite within the area of intended 
employment listed on the LCA which was not contemplated at the time of 
filing the LCA, post a notice at the worksite on or before the date the 
H-1B nonimmigrant begins work. 20 CFR 655.734(a)(1)(ii)(D). The purpose 
of the

[[Page 80161]]

provision was to enable employers to place H-1B workers at worksites 
where posting had not occurred without filing a new LCA. This provision 
was among those enjoined for lack of notice and comment by the court in 
National Association of Manufacturers v. Reich (NAM), 1996 WL 420868 
(D.D.C. 1996). On October 31, 1995, during the pendency of the NAM 
litigation, the Department republished the regulation for comment (60 
FR 55339).
    In the 1999 NPRM, the Department proposed for comment 
Sec. 655.734(a)(1)(ii)(A) (previously published for notice and comment 
in the October 31, 1995 proposed rule as Sec. 655.734(a)(1)(ii)(C) and 
(D)). The provisions regarding ``hard copy'' notice requirements 
remained essentially unchanged from the 1995 proposed rule. Subclause 
(A)(3) requires employers to post notice at worksites on or within 30 
days before the date the LCA is filed. Subclause (A)(4) requires that 
where the employer places an H-1B nonimmigrant at a worksite which is 
not contemplated at the time of filing the LCA, but is within the area 
of intended employment listed on the LCA, the employer is to post 
notice at the worksite (either by hard copy or electronically) on or 
before the date any H-1B nonimmigrant begins work there. The preamble 
explained that posting is not required if the location is not a 
``worksite,'' as discussed in proposed Appendix B of the NPRM.
    Fourteen commenters responded to the 1995 proposed rule on 
notification. Eight of those commenters (AILA, ACIP, Intel, Microsoft, 
Motorola, NAM, Complete Business Solutions, Inc. (CBSI), and Moon, 
Moss, McGill & Bachelder (Moon)) objected to posting at worksites not 
controlled by the LCA-filing employer. These commenters asserted that 
many employers' customers would not allow posting at their worksites. 
In addition, because the regulations define ``place of employment'' as 
the worksite or physical location at which the H-1B nonimmigrant's work 
is actually performed, some commenters expressed a concern that strict 
application of this definition of place of employment could lead to 
absurd and/or unduly burdensome notice requirements such as posting 
notice at a restaurant when an H-1B nonimmigrant has a business lunch, 
at a courthouse when the nonimmigrant makes a court appearance, or at 
an out-of-town hotel when the nonimmigrant attends a training seminar. 
One commenter (Microsoft), expressed concern about the burden of 
notification and suggested that the notice provision should not apply 
to employers who do not make great use of the H-1B nonimmigrant worker 
visa program.
    The Department received six comments on these provisions in 
response to the 1999 NPRM.
    The AFL-CIO emphasized the importance of giving notice to all 
affected employees, including employees of the secondary employer and 
employees of other staffing firms. The AFL-CIO stated that the purpose 
of the notice is to provide information to affected workers that they 
may have certain rights and that the employer has certain duties 
regarding placement of the H-1B worker which are not diminished because 
the worksite is ``short-term'' or ``transitory.''
    Four employer organizations (ACIP, AILA, ITAA, NACCB) commented on 
the issue of notification (whether hard-copy or electronic) to affected 
workers at third-party worksites. These groups contended that the 
statute requires an employer to notify only its own employees and that 
it is unreasonable to hold a primary employer responsible for notifying 
employees at worksites over which it lacks control. AILA gave as an 
example, workers such as service engineers who travel to a number of 
worksites during the course of a day or a week. AILA stated that if a 
client refuses to post notice, an H-1B worker cannot be sent to the 
site, resulting in a potential loss of business.
    One commenter (Latour) requested that the regulation specify that 
worksite posting requirements do not apply to rehabilitation 
professionals providing home health care.
    The Department has carefully considered the comments submitted in 
response to the 1995 proposed rule and the 1999 NPRM. The Department 
notes first that the statute requires that notice be posted at the 
place of employment. See Section 212(n)(1)(C)(ii). The Department's 
regulations have consistently defined ``place of employment'' as ``the 
worksite or physical location where the work is performed.'' 20 CFR 
655.715 (1992).
    This definition was modified slightly in the 1994 Final Rule 
(currently in effect) to provide ``where the work actually is 
performed.''
    Furthermore, the purposes of notification can only be satisfied by 
notice to all of the affected workers--i.e., all of the workers in the 
occupation in which the H-1B worker is employed at the place of 
employment, including employees of a third-party employer. This is 
critical because of the real possibility of displacement by the H-1B 
employees. Although this would only be a violation if the employer is 
an H-1B-dependent employer or willful violator, there remains a real 
possibility that U.S. workers of other employers could be harmed by the 
placement of the H-1B worker. Thus the notice alerts affected employees 
to the fact that an LCA has been filed and that H-1B workers will be 
placed at the worksite. Without such notice affected workers would not 
be able to file complaints regarding H-1B violations either with regard 
to themselves (if they are displaced because of a placement by an H-1B-
dependent employer or willful violator), or with regard to the H-1B 
workers (which might indirectly affect themselves).
    The Department observes that a number of employers' concerns with 
respect to notification of affected employees, either by hard copy 
posting or electronically, at third-party work sites, have been 
addressed by the interpretation of ``place of employment''/''worksite'' 
discussed in detail in IV.P.1 and .2 of the preamble and Sec. 655.715 
of the Interim Final Rule (see Appendix B of the NPRM). As stated in 
Sec. 655.715, the Department interprets ``place of employment'' as 
excluding locations where the H-1B worker's presence either is due to 
the developmental nature of his/her activity (e.g., management seminar; 
formal training seminar), or is short-term (not exceeding five 
consecutive workdays for any one visit) and transitory due to the 
nature of his/her job (e.g., computer ``troubleshooter,'' sales 
representative, trial witness). Under this interpretation, employers 
would not be required to give notice in many of the situations about 
which concerns have been expressed, but would be required to give 
notice in those instances where the Act and its purposes require. If a 
location does not constitute a ``worksite,'' the employer is not 
required to post notice.
    Although the Department recognizes that in some instances it may be 
inconvenient for an employer to post notice at a worksite controlled by 
another business (such as the customer of an employer), the Department 
notes that its experience in enforcement is that no employer has been 
unable to post notices at a customer's worksite when the operator, 
owner, or controller of the worksite was informed that posting was 
required by the statute and the regulations.
    The Department agrees with the comment that notice need not be 
provided where a rehabilitation professional is providing services in 
the client's home. The Interim Final Rule provides in paragraph (2) of 
the definition of ``place of employment'' in Sec. 655.715, that ``a 
physical therapist

[[Page 80162]]

providing services to patients in their homes within an area of 
employment'' is an example of a non-worksite location; in these 
situations notice must be posted at the worker's home station or 
regular work location.
2. What is Required for ``Electronic Posting'' of Notice to Employees 
of the Employer's Intention to Employ H-1B Nonimmigrants? 
(Sec. 655.734(a)(1)(ii)(B))
    The Department also proposed a regulation, 
Sec. 655.734(a)(1)(ii)(B), which would implement the ACWIA provision 
allowing electronic notification of employees. The ACWIA modified the 
statutory requirement for worksite posting of notices (where there is 
no collective bargaining representative), to permit an H-1B employer to 
use electronic communication as an alternative to posting ``hard copy'' 
notices in conspicuous locations at the place of employment.
    Senator Abraham explained: ``An employer may either post a physical 
notice in the traditional manner, or may post or transmit the identical 
information electronically in the same manner as it posts or transmits 
other company notices to employees. Therefore, use of electronic 
posting by employers should not be restricted by regulation.'' 144 
Cong. Rec. S12751 (Oct. 21, 1998).
    Congressman Smith elaborated: ``By providing this flexibility, 
Congress intended to improve the effectiveness of posting in the 
protection of American workers. Therefore, the electronic notification 
must actually be transmitted to the employees, not merely be made 
available through electronic means such as inclusion on an electronic 
bulletin board.'' 144 Cong. Rec. E2325 (Nov. 12, 1998).
    As the NPRM explained, in providing this alternative method for 
notification to affected workers, Congress indicated no intention of 
reducing the effectiveness of the notice requirement which has been an 
element of the H-1B program from its inception. The proposed regulation 
therefore provided that electronic notice may be accomplished by any 
means the employer ordinarily uses to communicate with is workers about 
job vacancies or promotion opportunities. Thus the NPRM stated that 
notice would be permitted through the employer's ``home page'' or 
``electronic bulletin board'' where employees as a practical matter 
have direct access; or through e-mail or other actively circulated 
electronic message such as the employer's newsletter, provided the 
employees have computer access readily available. Where such computer 
access is not readily available, the NPRM explained that notice may be 
accomplished by posting a ``hard copy'' at the worksite.
    The preamble further explained at Section O.5 that where the H-1B 
nonimmigrant(s) will be employed at the worksite of another employer, 
the H-1B employer is required to provide notice to the affected workers 
at that worksite. Thus, the H-1B employer may make arrangements with 
the other employer to accomplish the notice (e.g., the other employer 
may ``post'' the electronic notice on its Intranet or employee 
newsletter, or may ``post'' hard copy notice in conspicuous locations 
at the place of employment).
    The Department received 30 comments, including 22 from individuals, 
on the 1999 NPRM provisions regarding electronic notice.
    The individuals generally objected to the statutory provision 
allowing electronic posting as an alternative to hard copy posting, 
asserting that Internet posting alone allows companies to hide 
replacement of American workers with foreign workers. The AEA 
essentially expressed a similar view on electronic posting, noting that 
the Internet/Intranet method of notification is unworkable.
    The AFL-CIO commented that electronic posting should only be 
allowed if employers can show that all workers have access to e-mail or 
the Internet site, and that all notices are flagged to them. Another 
employee organization, IEEE, emphasized that to be an effective notice, 
electronic communications must be readily available and accessible to 
all affected U.S. and foreign workers.
    ACE, ACIP and SHRM commended the Department for its flexibility on 
methods of electronic posting. ACIP recommended that the Department 
distinguish between ``indirect'' and ``direct'' electronic notices, 
suggesting that where ``indirect'' notice is given, such as on a 
bulletin board, the employer should have to make the notice available 
for 10 days. If, however, the employer provides direct notice, such as 
e-mail to each employee, ACIP suggested that notice should only have to 
be sent to each affected employee once. SHRM urged the Department to 
allow an employer to document that notice has been given by permitting 
the employer to place a signed notice in the public access file 
regarding how notice was provided. AILA recommended amending the 
regulations to clarify that an employer may satisfy its electronic 
posting obligation by providing the notification on its internal 
network or website. AILA also recommended that with respect to 
employers which send the notice by e-mail, the regulation should 
specify that notification sent to a distribution group of ``affected 
workers'' satisfies the electronic posting requirement. Another 
commenter (Cooley Godward) sought clarification on the issue of how 
electronic posting can comply with the requirement of 
Sec. 655.734(a)(1)(ii)(A) that the LCA be posted in two or more 
conspicuous places, and on whether or not all four pages of the LCA 
must be posted.
    With regard to posting at third-party worksites, AILA suggested 
that a primary employer should be able to satisfy its obligation to 
document that an electronic posting was made at the work site of a 
third-party employer in any one of the following three ways: (1) A 
statement in the contract between the parties requiring the 
notification to be made; (2) a written statement by a responsible party 
at the third-party location; or (3) a printout of the electronic 
communication with a certification about when, how, and to whom it was 
sent.
    The statute does not give the Department the discretion to disallow 
electronic posting, as suggested by the individual commenters. The 
Department agrees with the AFL-CIO and the IEEE, however, that the 
critical consideration is that the notice is readily available and 
accessible to the affected workers. The Department believes that the 
proposed regulation, as drafted, meets these concerns. Posting must be 
by the means the employer ordinarily uses to communicate with its 
workers about job vacancies or promotion opportunities. Posting on the 
employer's ``home page'' or electronic bulletin board is allowed where 
employees as a practical matter have direct access to these resources. 
Where employees lack computer access, a hard copy must be posted or the 
employer may provide employees individual copies of the notice.
    The Interim Final Rule clarifies the operational requirements for 
electronic posting. Like the physical posting, the electronic notice 
need not incorporate a copy of the LCA, although it would be 
permissible since a copy of the LCA would satisfy the substantive 
requirements (see Sec. 655.734(a)(1)(ii)). (Employers are reminded that 
all H-1B nonimmigrants must be given a copy of the LCA. See 
Sec. 655.734(a)(2).) Like ``hard copy'' posting, electronic posting on 
a ``home page'' or electronic bulletin board must be posted for 10 
days. If direct notice is given to each affected employee, as through 
e-mail or ``hard copy'' notices, the notice need only be given once 
during the regulatory time

[[Page 80163]]

period. Notice by e-mail may be provided by notification to an e-mail 
group consisting of all of the affected employees. Electronic posting, 
unlike hard copy posting, need not be posted in two locations, provided 
all the affected employees, as a practical matter, have access to the 
website or bulletin board. Another method of posting would have to be 
used to reach those employees who do not have such access. For example, 
home care therapists may not have practical access to a computer at all 
as a part of their job. Where there is no such access, physical posting 
at two sites in the home office or individual copies of the notice 
would be necessary. The Department believes the existing documentation 
provision is broad enough to encompass electronic posting, both at the 
employer's own worksite and at another employer's worksite.
    The Interim Final Rule also clarifies that electronic notification, 
like other physical posting, shall be provided in the period on or 
before 30 days before the date the LCA is filed. Where H-1B 
nonimmigrants are placed at a worksite not contemplated when the LCA 
was filed, the notification shall be provided on or before the date the 
H-1B nonimmigrant begins work at the site.
    Finally, upon review of the provisions of the ACWIA, the Department 
has concluded that some modification of the required notice is 
appropriate. Specifically, the Department has concluded that the 
content of the notice should be modified to require dependent employers 
and willful violators to notify affected workers, through the methods 
provided herein, that they are H-1B-dependent or a willful violator, 
subject to the requirements for recruitment and non-displacement of 
U.S. workers. Where the employer is dependent (or a willful violator) 
but will employ only exempt workers, the notice must so provide, and 
further state that it is not subject to the recruitment and non-
displacement requirements. In addition, the notice about filing 
complaints with the Department of Justice for failure to offer 
employment to an equally or better qualified U.S. worker will only be 
required for H-1B-dependent employers and willful violators. Finally, 
because the full attestations are set forth in the cover sheet, Form 
ETA 9035CP, the provision in Sec. 655.734(a)(3) requiring employers to 
give copies of the LCA to all H-1B nonimmigrants has been modified to 
provide that copies of the cover sheet shall be given to the H-1B 
nonimmigrant upon request.

G. What Does the ACWIA Require of Employers Regarding Benefits to H-1B 
Nonimmigrants? (Sec. 655.731(c)(3), Sec. 655.732)

    Section 212(n)(2)(C)(viii) of the INA as amended by the ACWIA 
states that ``[i]t is a failure to meet a condition of paragraph 1(A) 
[the wage and working condition attestation requirements] * * * to fail 
to offer an H-1B nonimmigrant, during the nonimmigrant's period of 
authorized employment, benefits and eligibility for benefits (including 
the opportunity to participate in health, life, disability, and other 
insurance plans; the opportunity to participate in retirement and 
savings plans; and cash bonuses and noncash compensation such as stock 
options (whether or not based on performance) on the same basis, and in 
accordance with the same criteria, as the employer offers to United 
States workers.''
    Senator Abraham and Congressman Smith described the operation of 
this provision in similar terms. Senator Abraham explained:

    This obligation is only an obligation to make benefits available 
to an H-1B worker if an employer would make those benefits available 
to the H-1B worker if he or she were a U.S. worker. Thus, if an 
employer offers benefits to U.S. workers who hold certain positions, 
it must offer those same benefits to H-1B workers who hold those 
positions. Conversely, if an employer does not offer a particular 
benefit to U.S. workers who hold certain positions, it is not 
obligated to offer that benefit to an H-1B worker. Similarly, if an 
employer offers performance-based bonuses to certain categories of 
U.S. workers, it must give H-1B workers in the same categories the 
same opportunity to earn such a bonus, although it does not have to 
give the H-1B worker the actual bonus if the H-1B worker does not 
earn it.

144 Cong. Rec. S12753 (Oct. 21, 1998). See also the statement of 
Congressman Smith, 144 Cong. Rec. E2326.
    Senator Abraham continued:

    While this clause is not intended to require that H-1B workers 
be given access to more or better benefits than a U.S. worker who 
would be hired for the same position, it does not forbid an employer 
from doing so. For example, an employer might conclude that it will 
pay foreign relocation expenses for an H-1B worker whereas it will 
not pay such relocation expenses for a U.S. worker.

144 Cong. Rec. S12753 (Oct. 21, 1998).
    Congressman Smith, on the other hand, stated that ``[t]he statement 
`on the same basis' is intended to mean equal or equivalent treatment, 
not preferential treatment for any group of workers. Thus, if an 
employer offers benefits to American workers, it must offer those same 
benefits to H-1B workers.'' 144 Cong. Rec. E2326 (Nov. 12, 1998).
    Senator Abraham also explained that ``care must be taken to find 
the right U.S. worker to whom to compare the H-1B worker in terms of 
access to benefits. *  *  * If a particular benefit is available only 
to an employer's professional staff, then it only need be made 
available to an H-1B filling a professional staff position. If an 
employer's practice is not to offer benefits to part-time or temporary 
U.S. workers, then it is not required to offer benefits to part-time H-
1B workers or temporary H-1B workers employed for similar periods.'' 
144 Cong. Rec. S12753 (Oct. 21, 1998).
    Senator Abraham and Congressman Smith differed in their view as to 
the application of the provision to multinational corporations. Thus 
Senator Abraham stated:

    If an employer's practice is to have its U.S. workers brought in 
on temporary assignment from a foreign affiliate of the employer 
remain on the foreign affiliate's benefits plan, then it must allow 
its H-1B workers brought in on similar assignments to do the same. 
Likewise, in that instance, it need not provide the H-1B workers 
with the benefits package it offers to its U.S. workers based in the 
U.S. Indeed, even if it does not have any U.S. workers stationed 
abroad whom it has brought in this fashion, it should be allowed to 
keep the H-1B worker on its foreign payroll and have that employee 
continue to receive the benefits package that other workers 
stationed at its foreign office receive in order to allow the H-1B 
worker to maintain continuity of benefits. In that instance, the 
basis on which the worker is being disqualified from receiving U.S. 
benefits (that he or she is receiving a different benefits package 
from a foreign affiliate) is one that, if there were any U.S. 
workers who were similarly situated, would be applied in the same 
way to those workers. Hence the H-1B worker is being treated as 
eligible for benefits on the same basis and according to the same 
criteria as U.S. workers. It is just that the criterion that 
disqualifies him or her happens not to disqualify any U.S. workers. 
Or to put the point a little differently: The H-1B worker is being 
given different benefits from the U.S. workers not because of the 
worker's status as an H-1B worker but because of his or her status 
as a permanent employee of a foreign affiliate with a different 
benefits package.

Ibid.
    Congressman Smith had a different perspective:

    There is particular concern regarding such erosion in instances 
where a foreign affiliate of a petitioning employer is involved as 
the agent for payment of wages and provision of benefits to the H-1B 
workers. The statutory obligations must be fully met in such 
instances. Congress intends that the ultimate and complete 
responsibility for all employer obligations under this Act, 
including the provision of benefits to the H-1B worker equal to 
those offered the employer's

[[Page 80164]]

American workers based in the U.S., lies with the American (United 
States) employer who brings nonimmigrant workers into the country. 
Ultimately, it is the American employer, not the foreign subsidiary, 
pledging a benefit package similar to that of its American workers. 
Congress would expect the Secretary to look with particular care at 
circumstances involving a foreign subsidiary where there is an 
appearance of contrivance to avoid the obligation to provide equal 
wages and benefits to H-1B and American workers.

144 Cong. Rec. E2326 (Nov. 12, 1998).
1. What Does ``Same Basis and Same Criteria'' Mean With Respect to an 
Employer's Treatment of U.S. Workers and H-1B Workers With Regard to 
Benefits? (Sec. 655.731(c)(3), Sec. 655.732)
    In the NPRM, the Department proposed that: (a) An employer is 
required to offer H-1B workers the same benefit package it offers to 
U.S. workers; (b) the package must be offered on the same basis as it 
is offered to U.S. workers, i.e., the employer may not impose more 
stringent eligibility or participation requirements on the H-1B workers 
than those applied to U.S. workers; (c) the comparison between the 
benefits offered U.S. and H-1B workers should be between similarly 
employed workers, i.e., those in the same employment categories, such 
as full-time compared to full-time, professional to professional; and 
(d) the benefits actually provided to the H-1B workers, as 
distinguished from the benefits offered, might be different than those 
provided to U.S. workers because of an individual's choice among 
options. The Department also sought comments regarding whether the 
ACWIA would allow an employer to provide a different, but ``equivalent 
package'' to satisfy its benefits obligation, noting the difficulty of 
making an evaluation of the benefits--particularly a qualitative 
evaluation of the benefits, as distinguished from one based on the 
relative costs to the employer of providing such benefits.
    The Department further proposed that an employer, consistent with 
its attestation to adhere to minimum standards for H-1B workers, may 
provide greater benefits to H-1B workers than to U.S. workers. The 
Department acknowledged, however, that the phrases ``same basis'' and 
``same criteria,'' applied literally, could require that U.S. and H-1B 
workers be offered the same (or possibly equivalent) benefits.
    The Department noted the possible complications that might arise 
with respect to benefits afforded employees of a multinational 
corporate operation, particularly where the H-1B worker works in the 
U.S. for only a short period of time. In this situation, the NPRM 
noted, it might not be practical for the U.S. employer to provide the 
H-1B worker with benefits identical to those provided its U.S. workers. 
The Department proposed that while the U.S. employer may cooperate with 
its corporate affiliate in the worker's home country with regard to the 
payment of wages to the worker and the maintenance of his or her ``home 
country'' benefits (such as that country's retirement system), the U.S. 
employer remains ultimately responsible for ensuring that the H-1B 
worker is provided benefits at least equal to those offered U.S. 
workers. The Department stated that it would look closely into 
situations involving a foreign affiliate where there was the appearance 
of a contrived arrangement to avoid the U.S. employer's obligation to 
provide to its H-1B workers wages and benefits at least equal to those 
provided its U.S. workers. At the same time, the Department proposed 
that it would carefully examine the circumstances to consider non-
equivalent but nonetheless equitable benefits, including the H-1B 
worker's actual length of stay in the United States.
    The Department also proposed to modify Sec. 655.732 of the current 
regulations to clarify that an employer must provide the H-B worker 
with fringe benefits and working conditions at least equal to those 
provided U.S. workers. The NPRM noted that such a modification would 
make it clear that the requirement that the H-1B employer provide 
working conditions, including benefits, that will not adversely affect 
those provided similarly employed U.S. workers, requires consideration 
of similarly employed workers in the employer's own workforce and, in 
some circumstances, the prevailing conditions in the area of 
employment.
    Finally, the Department sought comment on whether it would be 
beneficial to develop a regulatory definition of ``benefits'' within 
the meaning of the ACWIA or merely to provide a list of examples. The 
NPRM noted that the ACWIA contemplates the inclusion of various forms 
of cash and non-cash compensation, such as bonuses and stock options, 
which ordinarily are considered wages.
    Several commenters, including AOTA, APTA, IEEE, and an attorney 
(Latour), generally endorsed the Department's NPRM approach in this 
area. IEEE stated that the Department's proposal ``will help implement 
the letter and the spirit of the law that the wages and working 
conditions of U.S. workers not be adversely affected'' and, at the same 
time, ``help to reduce the likelihood that employers will discriminate 
against H-1B workers by offering them less generous benefits.''
    Senators Abraham and Graham and AILA noted that the NPRM created 
some confusion by failing to make it clear that an employer must offer 
``benefits and eligibility for benefits'' on the same basis as offered 
to U.S. workers. Citing to Senator Abraham's statement in the 
Congressional Record, these commenters stated that this phraseology was 
important because workers must be or make themselves eligible to obtain 
benefits--e.g., by selecting a plan, providing partial payment, working 
for a period of time, or performing at a high level. Similarly, ACE 
requested the Department to make clear that a comparison should be made 
between the benefits offered to workers, not the benefits actually 
selected by the workers. ACE mentioned, as one example, ``cafeteria 
plans'' offered by many employers. Under these plans, it explained, 
employees choose certain benefits and not others for a variety of 
reasons.
    The Department agrees that the ACWIA requires an employer to offer 
H-1B workers benefits and eligibility for benefits on the same basis 
and in accordance with the same criteria as U.S. workers. Because 
employers often offer workers a choice of benefits, the ACWIA does not 
require that U.S. workers and H-1B workers actually receive the same 
benefits. Similarly, some employees may opt for ``family'' coverage of 
certain benefits, while others opt for ``individual'' coverage. 
Furthermore, as the commenters noted, workers may be required to meet 
certain criteria or take certain action to avail themselves of the 
benefits. However, an employer cannot satisfy its statutory requirement 
by ``offering'' benefits which it never actually provides to selecting 
workers. Thus, as discussed below, employers are required to retain 
documentation showing that employees actually receive the benefits that 
they have selected. While the Department believes that the NPRM 
comported with the statutory language, the Interim Final Rule clarifies 
these requirements in order to eliminate any ambiguity.
    AILA and ACIP agreed with the Department's proposal that an 
employer lawfully may offer and provide greater benefits to H-1B 
workers than those offered to U.S. workers. The AFL-CIO asserted the 
contrary position. In the AFL-CIO's view, an employer should be 
required to provide identical benefits to H-1B and U.S. workers, a 
result it argues is consistent with the ACWIA's ``same basis'' 
requirement. Senators

[[Page 80165]]

Abraham and Graham suggested that the statute would allow employers to 
offer benefit incentives above and beyond normal benefits to lure 
foreign-based employees with critical skills to work in the United 
States. The Senators suggested that so long as the packages are offered 
on the same basis to U.S. and foreign nationals based abroad, the 
practice should be permitted.
    In the Department's view, the statute does not require that H-1B 
workers and U.S. workers be offered the same benefits. While perhaps 
Section 212(n)(2)(C)(viii), read in isolation, could be read to require 
this result, this provision must be read in the context of the entire 
statute. Section 212(n)(2)(C)(viii) provides that it is a failure to 
meet paragraph (1)(A)--the wage requirements of the Act--to fail to 
provide the required benefits. Section 212(n)(1)(A)(i) in turn provides 
that the employer must offer wages that are ``at least'' those paid to 
similar workers. The Department notes, however, that an H-1B-dependent 
employer or willful violator, when it conducts good faith recruitment 
pursuant to section 212(n)(1)(G)(i), must offer U.S. workers the same 
compensation (including benefits) as it will offer the H-1B workers in 
the recruited positions. Furthermore, providing greater benefits to H-
1B workers may violate requirements of the various discrimination laws. 
The agencies that enforce discrimination requirements and their 
telephone numbers and website addresses are set forth above in IV.E.4, 
above.
    Senators Abraham and Graham asserted that the Department should 
look at the employer's entire benefits structure as it concerns 
``benefits eligibility for its workforce generally'' to make sure that 
the comparison is made to the right employees. These Senators and AILA 
suggested that comparisons could appropriately be made on such bases as 
part-time vs. full-time workers, positions requiring extensive travel 
vs. those that do not, relative seniority, the particular 
organizational component to which the workers are assigned, and whether 
the individual occupies a position for which special incentives should 
apply. Similarly, ACIP suggested that the Department look beyond a 
simple full-time/part-time distinction.
    The Department agrees that it should look at an employer's benefits 
structure. Employers commonly provide different benefits, for example, 
based on part-time vs. full-time status, seniority, union vs. non-
union, organizational component, etc. The Department agrees that H-1B 
workers should be provided benefits based on their position in the 
organizational structure, provided the employer utilizes the same 
distinctions on an organization-wide basis. However, the Department 
will not accept artificial distinctions which are not generally 
accepted in the industry and which have the result of denying benefits 
to H-1B workers on the basis that there are no comparable workers in 
the organization or which otherwise have the effect of discriminating 
between workers on the basis of citizenship, nationality, or other 
prohibited grounds.
    The Interim Final Rule incorporates these principles. The Interim 
Final Rule also prohibits employers from denying benefits based on the 
H-1B worker's temporary status since all H-1B workers, by virtue of 
their visa restrictions, are temporary workers. Thus, an employer by 
utilizing ``temporary'' as a basis for comparison could evade offering 
to these workers the benefits that typically would be paid to workers 
hired on a ``permanent basis,'' even though the tenure of workers in 
each group might be of comparable duration, thereby effectively 
nullifying the statutory provision. An employer would, however, be 
allowed to require that an H-1B workers meet eligibility and vesting 
requirements.
    Sun Microsystems suggested that to the extent there was a perceived 
need for greater scrutiny over fringe benefits, the Department's 
efforts should be restricted to dependent employers. The Department 
disagrees. Unlike some other provisions of the ACWIA, the ``same 
basis''/``same criteria'' provision applies to all H-1B employers.
    TCS asserted that the Department ``should clarify that, where 
length of service is applicable to the amount of the benefit, only the 
H-1B non-immigrant's length of service in the United States, and not 
the H-1B's entire length of service with the employer should be 
included in the calculation.''
    It is the Department's view that an employer is required to offer 
benefits on the same basis as it offers benefits to its U.S. employees. 
If an employer offers benefits based on length of service for the 
employer, it must offer benefits to its H-1B workers on that basis as 
well. (See the discussion below regarding treatment of multinational 
organizations.)
    APTA suggested that the INS inform all H-1B workers of their right 
to be offered the same benefits as U.S. workers, to better ensure that 
they receive the benefits due them. The Department notes that every H-
1B worker is required to receive a copy of the LCA, which contains a 
brief reference to this requirement. Section III.B of the Preamble, 
above, discusses in greater detail the Department's plans to 
disseminate information regarding the program's requirements.
    In response to the Department's query, BRI and AILA contended 
(without citing support for their position) that the ACWIA contemplates 
that an employer may satisfy the benefits attestation by offering H-1B 
workers different but ``equivalent'' benefit packages relative to the 
benefits offered to U.S. workers. BRI further stated that such benefits 
should be compared according to their monetary value.
    The Department has concluded, as a general matter, that the 
statute's ``same basis'' provision does not permit an employer to offer 
its H-1B workers benefits ``equivalent'' to but different from those 
offered its U.S. workers. The Department notes that these commenters, 
like other commenters, appeared to be concerned with benefits provided 
by multinational corporations, which are discussed separately below.
    Intel and ACIP stated that a few countries prohibit their citizens 
from owning stock in foreign corporations. Cooley Godward also raised 
the question of benefits such as stock options whose accrual will 
terminate after an H-1B employee's period of status ends.
    Although there is nothing which requires an employee to take 
advantage of a stock option, it is the Department's view that if an 
employer is aware that its H-1B worker(s) is prohibited from taking 
advantage of a stock option because of laws of the worker's home 
country, the employer should offer such worker(s) an alternative 
benefit of comparable value. With regard to the question of stock 
options or benefits which will accrue after termination of an H-1B 
worker's period of status, such benefits should be provided on the same 
basis as they would otherwise be provided to workers who are no longer 
in the firm's employ (or who have transferred back to the home office). 
If other workers have a right to exercise the option or receive the 
benefit even if they are no longer in the firm's employ, the same would 
be true with regard to H-1B workers.
    Turning to the question of treatment of employees of multinational 
firms, Senators Abraham and Graham asserted that the Department's 
proposal ``appear[s to provide no] consideration of the question of who 
the right similarly situated worker to compare [the transferee] is, and 
whether there actually is one.'' They, instead, suggested that the 
Department should focus on the transferee's status as a permanent 
employee with the

[[Page 80166]]

employer's foreign affiliate, rather than his or her status as an H-1B 
worker.
    TCS stated that it appreciated the Department's sensitivity to the 
issue of the application of the benefits requirement to employees who 
receive a range of benefits from their foreign employer and are only in 
the United States on short-term assignments in connection with their 
long-term employment with the foreign employer. TCS contended, however, 
that the requirement that H-1B workers be provided benefits equivalent 
to those received by U.S. workers is contingent upon the existence of 
``similarly employed'' workers in the United States. TCS argued that 
because it is an Indian company and its employees receive India-based 
benefits, they are not similarly employed to any computer engineers it 
might hire in the United States, and that TCS would therefore be 
relieved from any obligation to offer new benefits to its workers 
during the period of their temporary employment in the United States.
    ACIP commented that a ``length of status'' test ``wrongly assumes 
that the practice of maintaining a foreign benefits program is a matter 
of convenience, when, in fact, the practice is maintained because the 
disruption often causes the employee to lose vested interest in a 
benefit plan.'' Instead, they suggested, ``[t]he Department should 
adopt a rule that allows for a transferee to maintain his or her 
foreign benefits as long as such benefits plan is administered abroad 
continuously without interruption and as long as the company typically 
offers this option to all international transferees.'' Similar comments 
were made by AILA and Intel, which stated that it is in the employees' 
best interest to stay on ``home country'' pay and benefits. SIA also 
stated that if it is an employer's practice to have its workers 
continue to receive ``home country'' benefits when they are on a short-
period assignment in the United States, it should be allowed to 
continue to do so.
    Some commenters (ACIP, Intel, Latour) indicated that multinational 
corporations typically offer similar benefit packages to all their 
employees. Thus, ACIP stated that ``most employers already provide the 
same benefits to all workers and do not distinguish between U.S. and 
foreign nationals.'' At the same time, it noted that ``in dealing with 
a global workforce, it is sometimes necessary to provide different 
benefit packages to workers from different countries, depending upon 
the laws and social services of that country.'' Intel similarly stated 
that the vast majority of its regular full-time H-1B workers are on 
U.S. benefits; it noted that a small percentage of these workers are on 
their ``home country'' pay and benefits. Intel further stated that all 
its H-1B workers are put on U.S. medical benefits, because of ``out of 
country'' coverage problems. ACIP explained that currently employers 
may provide certain benefits to workers depending upon standards in the 
workers' home countries and the employer's international relocation 
policies. As stated by ACIP: ``Benefits may include relocation 
expenses, schooling for children, housing allowance, travel expenses, 
additional vacation time and assistance with health care or other items 
the worker is accustomed to receiving.''
    ACIP applauded the Department's effort to deal with this issue and 
supported the Department's statement that ``should the U.S. worker 
remain on the foreign plan, the U.S. employer will be held responsible 
for compliance with all H-1B regulations.''
    AILA's comment, that flexibility is needed to preserve the ability 
of the H-1B workers to preserve their existing ``home country'' 
benefits (which if interrupted could have significant and perhaps long-
term negative impact on the worker and the worker's family), was 
representative of several comments on this point.
    The Department has carefully considered the question of application 
of the benefits requirements of the ACWIA to multinational firms. The 
Department cannot agree with the construction of the statute that would 
deprive foreign-based employees of the benefit protections enacted by 
the ACWIA on the basis that they are not ``similarly employed.'' On the 
other hand, the Department believes it is appropriate to provide some 
accommodation for multinational corporate operations where ``home 
country'' benefits are equitably equivalent to the benefits provided to 
employees.
    The Department has crafted a two-part Interim Final Rule, 
distinguishing between workers who are in the United States for a short 
period of time (90 days or less) and workers who are in the United 
States for a longer period. Where H-1B workers permanently employed in 
their ``home country'' (or some other country) are not transferred to 
the United States but remain on the payroll of their permanent employer 
in their ``home country'' and continue to receive benefits from the 
``home country'' without interruption, the Department will require 
nothing further, provided the worker is in the United States for no 
more than 90 continuous days in any one visit to the United States. 
Moreover, the employer must also provide reciprocity to its U.S. 
workers i.e., U.S. workers based abroad and U.S. workers based in the 
United States must receive the benefits of their home work station (the 
station abroad or in the United States, respectively) when traveling on 
temporary business. It should be noted that this provision would allow 
H-1B workers who are not in the United States more than 90 continuous 
days in one trip to go back and forth between countries without any 
consideration to cumulative days of employment in the United States, 
provided there is no reason to believe the employer is trying to evade 
the Act's benefit requirements, such as where a worker remains in the 
United States most of the year but returns to the home country on brief 
visits.
    Once the H-1B worker has worked in the U.S. for more than 90 
continuous days (or from the point where the worker is transferred or 
it is anticipated that the worker will likely remain in the United 
States for more than 90 continuous days), the H-1B employer is required 
to offer that worker the same benefits on the same basis as provided to 
its U.S. workers unless: (1) The worker continues to be employed on the 
``home country'' payroll; (2) the worker continues to receive ``home-
country'' benefits without interruption; (3) the ``home-country'' 
benefits are equitable relative to the U.S. benefit package; and (4) 
the employer provides reciprocity (i.e., similar treatment as discussed 
above) to its U.S. workers (if any) on assignment away from their home 
work station. In the Department's view, this strikes an appropriate 
balance between meeting the statutory requirement (thereby protecting 
the benefits of U.S. workers employed in the U.S. against erosion), and 
protecting the H-1B worker's interest in preserving long-term ``home 
country'' benefits which may be threatened by the disruption of these 
benefits.
    Furthermore, as Intel noted in its comments, many health care plans 
fail to provide coverage, or fail to provide full coverage, outside 
their country's boundaries. Therefore any employer that offers health 
coverage to its U.S. workers must offer similar coverage (same plan and 
same basis) to its H-1B workers in the United States for more than 90 
continuous days unless the H-1B workers' home-country plan provides 
full coverage (i.e., coverage comparable to what they would receive at 
their home work station) for medical treatment in the United States.
    In addition, employers will be required to provide H-1B workers who 
are in the United States more than 90

[[Page 80167]]

continuous days those U.S. ``benefits'' which are paid directly to the 
worker--namely paid vacation, paid holidays, and bonuses. H-1B workers 
must also be provided working conditions and eligibility for working 
conditions (hours, shifts, vacation periods, etc.) on the same basis 
and criteria provided to U.S. workers.
    TCS argued that if the Department requires the same or even 
equivalent benefits for its workers, they will receive double 
benefits--the U.S. benefits plus their ``home country'' benefits. In 
the Department's view, TCS is mistaken. The Department's proposal 
tracks the ACWIA. Neither the proposal nor the statute requires the 
employer to continue to maintain ``home country'' benefits in such 
situations. While an employer in such situations, either by contract or 
otherwise, might be required to maintain such benefits (or it may 
decide to do so as a matter of company policy), the ACWIA does not 
impose such an obligation, nor does this rule.
    The Department received a number of comments regarding whether a 
multinational employer continuing ``home country'' benefits to H-1B 
workers need establish that the benefits provided are equivalent or 
equitable in relation to benefits provided U.S. workers. ACIP expressed 
the view that ``it [would be] extremely burdensome to put a dollar 
value on benefits received.'' Similarly, AILA stated that multinational 
employers should be able to provide equitable but non-equivalent 
benefits to H-1B workers. BRI, on the other hand, took the position 
that benefits should be equivalent, comparing their monetary value. The 
AFL-CIO, as discussed above, contended that employers should be 
required to provide identical benefits to H-1B and U.S. workers.
    The Department agrees that a multinational firm, under the 
circumstances described, should not be required to make a valuation of 
the benefits it offers and provides to U.S. and H-1B workers, but 
rather should be required, in the event of an investigation, to 
establish only that it provides benefits which are equitable in 
relation to U.S. workers' benefits. The Department finds very 
persuasive the arguments that it is in the workers' interest to allow 
employers to continue their permanent employees on ``home country'' 
benefits when working temporarily in the United States. At the same 
time, the Department believes that establishing benefits in terms of 
cost is unduly burdensome, and would not further the objective of 
establishing comparable benefits since there is no reason to believe 
even identical benefits abroad would cost the same as benefits in the 
United States.
    Only ACIP provided comments on the meaning of the phrase 
``equitable benefits.'' ACIP suggested that ``[t]he emphasis should be 
on whether the benefits package is equitable in light of basic human 
needs, similarity in treatment of all workers, how U.S. workers 
transferred abroad are treated, and the facts and circumstances of each 
H-1B worker.'' ACIP further stated: ``While we agree that the 
Department should look closely at `contrived cases,' we stress that the 
Department should look closely at the facts of each case to determine 
whether equitable benefits have been provided. * * * [T]he Department 
should not place undue emphasis on any one factor such as the 
employee's length of stay in the U.S.''
    The Department agrees that ``equitability'' between ``home 
country'' and U.S. benefits does not reduce to a bright-line test. In 
the event of an enforcement action, the Department will look into all 
the circumstances bearing upon the benefits to ensure that the H-1B 
worker's continued receipt of these benefits is not less advantageous 
to him than the benefits offered U.S. workers. This examination entails 
a qualitative rather than a quantitative review. In other words, an 
employer in these circumstances must be able to demonstrate that the 
worker's ``home-country'' benefits are equitable in relation to the 
benefits provided its U.S. workers based in the United States, 
similarity in treatment of all workers, how U.S. workers temporarily 
stationed abroad are treated, and the facts and circumstances of each 
H-1B worker. Where the employer makes this demonstration, and there is 
no appearance of contrivance to avoid payment of U.S. benefits, the 
Department will not second-guess the employer.
    Several commenters responded to the Department's request for 
comments on whether it should define ``benefits'' as that term is used 
in Section 212(n)(2)(C)(viii), which provides that the requirement to 
offer benefits and eligibility for benefits includes: ``the opportunity 
to participate in health, life, disability, and other insurance plans; 
the opportunity to participate in retirement and savings plans; and 
cash bonuses and noncash compensation such as stock options (whether or 
not based on performance). * * *''. Senators Abraham and Graham and 
AILA stated that they did not see the need for further defining 
``benefits,'' noting that the statute contains several examples of 
benefits. ACIP also stated that a regulatory definition was 
unnecessary, suggesting that instead the Department should examine the 
facts and circumstances of each case. TCS contended that the statutory 
list of benefits is exclusive; alternatively, it argued that the 
Department should specify the benefits so that employers do not have to 
guess about what is covered--e.g., is a separate office a benefit? ACIP 
asserted that ``[c]ertain cash and non-cash bonuses considered benefits 
under ACWIA are considered wages under other laws. Adopting definitions 
from other laws further confuses immigration law, does not address 
practices abroad, and may have unintended tax consequences.'' 
Similarly, ACIP, SHRM and Cowan & Miller commented that further 
definition of benefits is unnecessary. Rapidigm asked for clarification 
of the Department's statement.
    The Department agrees with the position of most commenters that the 
existing statutory definition is sufficient to administer effectively 
this aspect of the statute. The language of section 212(n)(2)(C)(viii) 
provides a fairly comprehensive list of the benefits that may be 
offered to workers in the U.S. While the use of ``including'' evinces 
an intention that the list is not exhaustive, the list, in the 
Department's view, is representative of the types of benefits that must 
be considered. Thus, an employer, by analogy, may determine whether 
other particular benefits should be taken into account. In this regard, 
the Department notes that the regulatory schemes under other 
employment-related statutes such as FMLA, the Equal Pay Act, the ADEA, 
and ERISA also provide guidance in this area. The Interim Final Rule 
takes this approach in lieu of an attempt to more fully define 
benefits. Under the Department's approach, it would appear clear that 
office accouterments--the example used by TCS--ordinarily would not 
constitute a benefit within the meaning of the statute. At the same 
time, it bears noting that the ACWIA does not relieve employers from 
any obligations they may have incurred through collective bargaining or 
otherwise with regard to particular working conditions, or of its 
obligation not to discriminate based on citizenship or national origin.
    With regard to the Department's stated intention to modify the 
current regulatory provision concerning the working condition 
attestation, ACIP, AILA, and TCS expressed the concern that the 
Department was seeking to impose a new requirement, i.e., that an 
employer was required to offer benefits to H-1B workers at least 
equivalent to the higher of those offered to their own U.S. employees 
or those prevailing in

[[Page 80168]]

the area. ACIP asserted that the Department lacks authority to require 
employers to consider conditions outside their own workforces. Rapidigm 
requested clarification on the meaning of the provision.
    After review of the ACWIA and the provisions of the H-1B program as 
a whole, the Department concurs with commenters that Congress intended 
that the requirement for offering benefits and eligibility for benefits 
to H-1B workers on the same basis and same criteria as they are offered 
to U.S. workers employed by the employer includes both benefits paid as 
compensation for services rendered and working conditions. The 
Department has therefore concluded that it is inappropriate to continue 
the provision in Sec. 655.732 which provides for consideration under 
some circumstances of prevailing conditions in the area of employment. 
Section 655.732 therefore is revised in the Interim Final Rule to 
clearly require that working conditions be provided to H-1B workers on 
the same basis and same criteria as they are offered to U.S. workers.
    The Department also believes that certain benefits appropriately 
are in the nature of compensation for service rendered, and have a 
monetary value to workers and monetary cost to employers. Such benefits 
include cash bonuses, paid vacations and holidays, and termination pay, 
which are paid directly to workers and are taxable when earned. Also 
included are benefits such as health, life and disability insurance, 
and deferred compensation such as retirement plans and stock options 
which are funded by employers, either directly as costs are incurred or 
through contributions to fringe benefit plans or insurance companies. 
The Department has concluded that such benefits are more in the nature 
of wages than working conditions, although the Department cautions that 
only benefits which meet the criteria of Sec. 655.731(c)(2) count 
toward satisfaction of the required wage since such benefits are not 
included in surveys used to determine the prevailing wage. On the other 
hand, benefits which do not have a direct monetary value to workers or 
cost to employers, are in the nature of working conditions, including 
matters such as seniority, hours, shifts, and vacation periods, and 
preferences relating thereto. Sections 655.731 and 655.732 are amended 
to reflect this distinction.
2. What Documentation Will Be Required? (Sec. 655.731(b))
    The Department proposed to require H-1B employers to retain copies 
of fringe benefit plans and summary plan descriptions provided to 
workers, including all rules relative to eligibility and benefits, and 
documents showing the benefits actually provided and how the costs are 
shared between the workers and the employer. The Department sought 
suggestions as to exactly what records would demonstrate the value of 
benefits and satisfy the other retention requirements. The Department 
expressed the view that such records already are required for IRS and 
ERISA purposes (although noting in the paperwork analysis, at 64 FR 
630, that a small percentage of employers might be required to keep 
records that otherwise would not be kept). In connection with the 
Department's query whether it might be possible to provide different 
``home country'' benefits to employees of a multinational corporate 
operation in lieu of those provided to U.S. workers, the Department 
sought comment on what records would be necessary to demonstrate the 
relative value of the ``home-country'' benefits and the benefits 
provided to U.S. workers.
    Many of the commenters opposed the notion of maintaining particular 
documentation in order to demonstrate compliance with the benefits 
attestation. ACIP and AILA asserted that the statute does not authorize 
the Department to require employers to retain documentation, suggesting 
that it is up to an employer to decide what documentation, if any, it 
should retain in order to demonstrate its compliance if it is 
investigated. Similarly, Senators Abraham and Graham stated: ``DOL is 
not authorized to require employers to maintain any particular 
documentation.'' The Department cannot, they asserted, include as part 
of the proposed LCA a ``new attestation'' that ``[the employer] will 
develop and maintain documentation of working conditions and 
benefits.''
    ACIP addressed particular burdens it perceived in retaining such 
documentation, noting, for example, that they already maintain such 
documentation in a location or in a format different than that 
contemplated by the Department. While ACIP recognized that the 
Department correctly stated that employers now keep documents related 
to their fringe benefit plans, ACIP stated that these documents may be 
housed in various departments and urged the Department to let the 
employer decide where documentation must be kept. ACIP further 
explained that much information is sensitive and confidential (e.g., 
stock option and incentive pay plans), requiring the Department, in its 
view, to allow an employer flexibility in documenting these benefits.
    Intel stated that summary plan descriptions are a U.S. requirement. 
It noted that no other countries required the same depth and detail 
regarding the documentation of benefits, though stating that about one-
half of its foreign subsidiaries have some benefits documentation. 
Intel explained that all its employees at orientation receive 
information regarding the company's benefits; in the U.S., it stated 
that employees receive a book that describes benefits, and that each 
year employees receive a particularized benefit portrait. Intel 
asserted that further documentation should not be required; it contends 
that a memorandum to the public access file that its employees are 
advised of the company's benefits at time of their hire should suffice.
    Satyam questioned whether current requirements under other statutes 
and regulations relating to the retention of benefits documents would 
suffice for H-1B purposes; it suggested that the Department should not 
require putting specific information in the public access file. It also 
inquired whether it would be necessary to retain information relevant 
to the comparison group. ITAA said that the Interim Final Rule should 
recite rather than refer to IRS and PWBA requirements. AILA expressed 
the concern that the Department will make it a violation to fail to 
keep copies of benefits documents in a public access file and that 
requiring documentation to be kept up front would impose a huge burden. 
AILA recommended instead that an employer, for example, be simply 
required to bear the burden of proving the ``equivalency'' of foreign 
benefits in the event of an investigation.
    None of the commenters took issue with the Department's statement 
that the documents sought are required already by IRS or ERISA.
    Based on our review of the comments received on the proposal, it is 
apparent that the documentation requirements proposed in the NPRM have 
been misunderstood. With the exception of documentation specifically 
required to be retained in the public access file, there is no 
requirement that information be kept in any particular format or place, 
or that information be segregated by LCA, by locality, by H-1B versus 
U.S. workers, or in any other way from the employer's records for the 
entire company.

[[Page 80169]]

    Nothing in the ACWIA suggests that documentation requirements are 
unauthorized or otherwise improper. To the contrary, section 212(n)(1) 
specifically requires employers to make the LCA ``and such accompanying 
documents as are necessary'' available for public examination. The 
Department believes that this provision clearly permits the Department 
to determine what documents must be created or retained by employers to 
support the LCA. The documentation that is required by the Interim 
Final Rule simply effectuates the more specific requirements imposed by 
the ACWIA. Furthermore, as the NPRM stated, the documents sought for 
the most part are already required by the IRS or ERISA, and would be 
kept by an ordinary prudent businessman in any event. Thus, the 
Department's ERISA regulations require at 29 CFR part 2520 that summary 
plan descriptions be provided to participants, and require employers to 
submit lengthy forms (Form 5500) to IRS with detailed information 
regarding their fringe benefits plans, which must be substantiated by 
records. In addition, EEOC rules under the ADEA, 29 CFR 1627.3(b)(2), 
require that every employer retain copies of all employee benefit 
plans, as well as copies of any seniority systems and merit systems 
which are in writing. Where the plan is not in writing, a memorandum 
fully outlining its terms and how it has been communicated to employees 
is required.
    The Department believes that it is essential that employers, in 
order to establish that H-1B workers have in fact been offered the same 
benefits as U.S. workers (or that the special benefit requirements for 
certain employees of multinational firms are met), retain a copy of any 
document provided to employees describing the benefits offered to 
employees, the eligibility and participation rules, how costs are 
shared, etc. (e.g., summary plan descriptions, employee handbooks, any 
special or employee-specific notices that might be sent). It is also 
important that employers keep a copy of all benefit plans or other 
documentation describing benefit plans and any rules the employer may 
have for differentiating among groups of workers. In addition, the 
employer will be required to retain evidence as to what benefits are 
actually provided to U.S. and H-1B workers. Where employees are given a 
choice of benefits, employers will be required to retain evidence of 
the benefits selected or declined by employees.
    For multinational employers who choose to keep H-1B workers on 
``home country'' benefit plans, the employer will be required to 
maintain evidence of the benefits provided to the worker before and 
after the employee went to the United States. In the event of an 
investigation, the employer will also be required to demonstrate that 
the other requirements for multinational firms are met, as 
appropriate--e.g., that the employer maintains reciprocity by treating 
U.S. workers coming to the United States temporarily from abroad the 
same as H-1B workers, and likewise continues U.S. workers temporarily 
overseas on U.S. benefits, that the worker was not in the United States 
for more than 90 continuous days, that ``home country'' benefits are 
equitable in relation to U.S. benefits, etc.
    With regard to the public access file, the employer need only 
maintain a summary of the benefits offered to U.S. workers in the same 
occupation as H-1B workers, including a statement explaining how 
employees are differentiated where not all employees in the occupation 
are offered the same benefits. If an employer has workers receiving 
``home country'' benefits, the employer may place a simple notation to 
that effect in the file. The public access file need not show the 
proprietary details of a plan (such as a stock option or incentive 
distribution plan), the costs of providing the benefits, or the choices 
made by individual workers.
    Since the regulations do not allow an employer to provide 
equivalent benefits as a general matter, and provide an ``equitable'' 
rather than an ``equivalent'' test for multinational benefits, no 
special documents regarding the cost of benefits are required.

H. What Does the ACWIA Require of Employers Regarding Payment of Wages 
to H-1B Nonimmigrants for Nonproductive Time? (Sec. 655.731(c)(7))

    On October 31, 1995, the Department republished for comment a 
provision of the December 20, 1994 Final Rule which articulated the 
Department's position regarding payment of the required wage for 
nonproductive time. This provision, Sec. 655.731(c)(5), required 
payment of the required wage beginning no later than the first day the 
H-1B nonimmigrant is in the United States and continuing throughout the 
nonimmigrant's period of employment, including periods when the 
nonimmigrant is in nonproductive status due to employment-related 
reasons such as training or lack of assigned work. The provision did 
not require payment of such wages where the nonproductive status is due 
to reasons unrelated to employment (e.g., caring for an ill relative), 
provided the nonimmigrant's unpaid status is acceptable to the INS and 
is not subject to a wage payment obligation under some other statute 
(e.g., Family and Medical Leave Act). The provision distinguished 
between full-time and part-time workers as provided on the I-129 
petition filed with INS, but stated that in the event a part-time 
employee regularly worked a greater number of hours than stated on the 
I-129, the employer would be held to the actual hours disclosed in the 
enforcement action. Section 655.731(c)(5) was among the provisions of 
the December 20, 1994 Final Rule which had been enjoined from 
enforcement, due to lack of notice and comment, by the court in 
National Association of Manufacturers v. United States Department of 
Labor.
    Subsequently, the ACWIA, amending section 212(n)(2) of the INA, 
enacted an explicit requirement, consistent with the Department's 
regulation, providing that it is a violation of the wage attestation in 
section 212(n)(1)(A) for an employer to fail to pay an H-1B worker the 
required wage for certain nonproductive time. Like the Department's 
regulation, an exception was created for nonproductive status which is 
due to non-work-related factors such as the worker's own, fully 
voluntary request, or circumstances rendering the worker unable to 
work. Under this provision, workers designated as full-time on the 
petition filed with INS must be paid full-time wages, and employees 
designated as part-time on the petition must be paid the hours 
designated in the petition. This obligation is effective ``after the H-
1B worker has entered into employment with the employer,'' but in any 
event, not later than 30 days after the worker's date of admission to 
the United States (if entering the country pursuant to the petition) or 
60 days after the date the worker ``becomes eligible to work for the 
employer'' (if already in the country when the petition is approved). 
The statute also contains a special provision regarding academic 
salaries which is discussed in IV.I, below.
    Congressman Smith and Senator Abraham, in their remarks after 
enactment of the ACWIA, noted that the most extreme examples of 
``benching'' occur when workers are brought to the United States on the 
promise of a certain wage, but only receive a fraction of that wage 
because the employer does not have enough work for the H-1B worker. 144 
Cong. Rec. E2326 (Nov. 12, 1998); 144 Cong. Rec. S12753-54 (Oct. 21, 
1998). They also both agreed that employers must pay full wages and 
benefits during an H-1B worker's non-productive status when that status 
is due to the employer's decision--based

[[Page 80170]]

on factors such as lack of work for the worker--or due to the worker's 
lack of a license or permit. Congressman Smith also remarked that 
Congress anticipated the Secretary's close scrutiny of 
``voluntariness'' in circumstances that appear to be contrived to take 
advantage of unpaid time. Senator Abraham listed the following examples 
of H-1B employees taking unpaid leave which he stated would not be 
considered ``benching'': leave under FMLA or other corporate policies, 
annual plant shutdowns for holidays or retooling, summer recess or 
semester breaks, or personal days or vacations. Senator Abraham also 
stated that this provision does not prohibit an employer ``from 
terminating an H-1B worker's employment on account of lack of work or 
for any other reason.'' Congressman Smith stated that an attempt by an 
employer to avoid compliance with the ``benching'' provision by laying 
off an American worker ``would trigger the enforcement and penalty 
provisions of the Act.''
    Congressman Smith and Senator Abraham agreed that the benching 
provision is not intended to preclude part-time H-1B employment, agreed 
to between the employer and the H-1B worker when the worker was hired. 
144 Cong. Rec. E2326 (Nov. 12, 1998); 144 Cong. Rec. S12754 (Oct. 21, 
1998). Congressman Smith stated that ``the employer's misrepresentation 
of this material fact should be scrutinized by the Secretary'' in 
determining whether a benching violation or misrepresentation has been 
made, with particular attention to whether U.S. workers would receive 
paid leave for nonproductive time. Senator Abraham stated that the Act 
is not intended to give the Secretary the authority ``to reclassify an 
employee designated as part-time based on the worker's actual workload 
after the employee begins employment.''
    In the NPRM, the Department proposed regulatory text which, except 
for the different statutory language triggering the beginning of the 
period in which the ``benched'' worker must be paid, is very similar to 
its current regulation. In the preamble, the Department stated that it 
was considering whether the H-1B worker ``enters into employment'' when 
he first makes himself available for work, such as by reporting for 
orientation or training, or when the worker actually begins receiving 
orientation or training or ``otherwise performs work or comes under the 
control of his employer.'' In commenting on the purpose of the 
``benching'' provision, the Department observed that an H-1B 
nonimmigrant is not permitted to be employed by another employer while 
``benched'' (unless another employer files a petition on behalf of the 
worker or the worker adjusts his or her status under the INA), and is 
without any legal means of support in the country. In contrast, a U.S. 
worker can seek other employment and would be eligible for Federal 
programs such as food stamps. The Department also observed that the 
employer, at any time, may terminate the employment of the worker, 
notify INS, and pay the worker's return transportation, thereby ceasing 
its obligations to pay for non-productive time under the H-1B program. 
The Department proposed that payment of wages would not be required 
where the nonproductive status is due to reasons unrelated to 
employment, unless such payment is required by INS as a condition of 
the worker maintaining lawful status, or is required by some other Act 
such as FMLA. On the other hand, the employer would not be relieved 
from the wage obligation for any required leave of absence, even if it 
includes U.S. workers.
    The Department received three comments on the 1995 proposed rule on 
this issue. Regarding the requirement in the 1995 NPRM that the 
employer pay the required wage for nonproductive time beginning no 
later than the first day the H-1B nonimmigrant is in the United States 
and continuing throughout the nonimmigrant's period of employment, AILA 
suggested that it would be more reasonable to require the employer to 
begin paying on the day that the nonimmigrant actually reports to work, 
provided that the date is no later than 30 days after the date the 
nonimmigrant enters the U.S. or otherwise becomes eligible to work for 
the employer. AILA also suggested that an exception be made where the 
nonimmigrant is given an unpaid leave of absence pursuant to a 
uniformly-enforced company policy. Similarly, another commenter, an 
electronics manufacturer (Motorola), complained that in the case of a 
temporary reduction in force, the employer would have to retain the H-
1B nonimmigrant at full salary, while U.S. workers are off the payroll.
    The Department received 33 comments on the 1999 NPRM proposals 
addressing the ACWIA's ``benching'' provisions. APTA stressed the 
importance of the Department ensuring that H-1B nonimmigrants are aware 
of their wage rights for nonproductive time. Miano commented that 
companies should not be allowed to use the H-1B program to create 
stables of available employees in anticipation of openings that do not 
yet exist, but should be required to demonstrate that an unfilled 
position actually exists.
    The Department agrees that it is important that H-1B nonimmigrants 
be aware of their rights. For this reason, Sec. 655.734(a)(3) requires 
that all H-1B nonimmigrants be provided a copy of the LCA which 
supports their petition. In addition, the Department is planning a 
comprehensive educational program, as discussed in III.B, above.
    AILA suggested that the Department add to its list of exceptions 
situations where objective economic reasons are present, such as annual 
retooling in the automobile industry for production model changes. ACIP 
and SIA urged the Department to adopt Senator Abraham's October 21, 
1998 comments as examples of what is not benching, i.e. leave under the 
Family and Medical Leave Act; or other corporate policies for no 
payment such as annual plant shutdowns for holidays or retooling, 
summer recess or semester breaks, or personal days or vacations. ACIP 
also urged that similar situations be included in the list of examples 
which do not constitute benching, such as disciplinary action, 
mandatory unpaid pre-employment training or orientation, mandatory 
vacation leave, and periods of downturn where all workers are treated 
the same. ACIP suggested that the facts and circumstances of each case 
be considered, including whether similarly-situated U.S. workers are 
placed on leave and whether H-1B workers knew before accepting 
employment of the possibility of such leave. ACIP and SIA encouraged 
the Department to exercise flexibility to avoid the potential effect of 
companies laying off U.S. workers to avoid the benching of H-1B workers 
by allowing for periods attributable to regular, objective business 
occurrences such as cyclical business downturns, holiday plant 
shutdowns, and plant retooling. They observed that when these events 
occur all workers are treated equally, according to the same standards.
    The AFL-CIO and other commenters observed that the provision's 
prohibition against ``benching'' may lead employers to treat H-1B 
employees better than U.S. workers, and may create the situation where 
an employer retains an H-1B worker over an American worker during a 
lay-off to avoid paying full wages to the H-1B worker. The AFL-CIO 
stated its belief that U.S. workers who are laid off to avoid the 
benching provision may have grounds for a discrimination complaint 
based on nationality and immigration status and that the regulation 
should so indicate.
    The Department believes that the statutory language is clear. The 
statute

[[Page 80171]]

requires payment, after a nonimmigrant has entered into employment with 
an employer, whenever nonproductive status is due to a decision by the 
employer or to the nonimmigrant's lack of a permit or license. In 
contrast, payment is not due when the nonproductive time is due to non-
work-related factors, such as the voluntary request of the nonimmigrant 
for an absence or circumstances rendering the nonimmigrant unable to 
work. Therefore the Department cannot interpret the Act to allow 
employers to be relieved from payment for periods where the employer's 
business is shutdown, regardless of whether it affects U.S. workers as 
well, whether for economic downturn, annual retooling, or holiday 
shutdown; nor can the employer be relieved from liability for mandatory 
vacation, pre-employment training, or disciplinary action. All of these 
situations are caused by the employer, rather than at the voluntary 
request of the nonimmigrant. The Department notes that training or 
orientation required of an employee before productive work starts has 
always been considered compensable time under the Fair Labor Standards 
Act, and that the Department has required payment for such time in its 
enforcement of the H-1B attestation requirements since the injunction 
entered in the NAM litigation. If an employer finds need to discipline 
an H-1B nonimmigrant, it must find a method other than loss of pay, or 
it may terminate the employment relationship.
    The Department understands the concern expressed regarding the 
possibility of an employer laying off U.S. workers while continuing to 
pay H-1B workers because of its obligation to continue paying H-1B 
workers during periods of nonproductive status. Congressman Smith 
suggested that an employer's action in laying off U.S. workers to avoid 
placing H-1B workers in nonproductive status for which they must be 
paid would be a violation of the ACWIA. We agree, with respect to H-1B-
dependent employers and willful violators, where the required showing 
for a prohibited displacement under section 212(n)(1)(E) or (F) is 
made. In addition, we note that a displacement in connection with a 
willful violation of the attestation requirements or a willful 
misrepresentation can bring enhanced penalties pursuant to section 
212(n)(2)(C)(iii). Additionally, other laws provide U.S. workers with 
rights and remedies for an employer's discriminatory practices. The 
names, telephone numbers, and websites of the three federal agencies 
responsible for enforcement of anti-discrimination laws are set forth 
in IV.E.4, above.
    The Department notes that--in determining whether the statutory 
criteria have been met, including the exception for nonpayment based on 
``the voluntary request of the nonimmigrant for an absence''--it will 
look closely at any situation where there is any question about whether 
the period of nonproductive time is truly voluntary. The Department 
will not under any circumstances consider the employer to be relieved 
of wage liability where there is a plant shutdown. Nor will the 
Department relieve an employer from liability simply because the 
employee agreed to periods without pay in the employment contract.
    ACIP and AILA questioned the basis for the Department's proposed 
requirement that workers be paid where required by other statutes such 
as FMLA or the ADA, and that the worker's period of unpaid leave be 
consistent with maintenance of status under INS regulations.
    The Department intended to say nothing more than that an employer 
must comply with other laws. The Department notes that FMLA only 
requires paid leave where the employer has a paid leave plan and either 
the employer or the employee wishes to substitute the paid leave for 
unpaid FMLA leave. Since the employer is required to offer H-1B workers 
the same benefits as U.S. workers, an employer would be required to 
provide H-1B workers with paid leave under any circumstances in which 
it is provided to U.S. workers. Enforcement of this requirement during 
periods where the employee voluntarily takes leave or is unable to 
work, is in accordance with the benefit obligations at section 
212(n)(2)(C)(viii). The Department also wishes to point out, as stated 
by both Senator Abraham and Congressman Smith, that during periods of 
nonproductive time, employers are required to provide fringe benefits 
as well as wages.
    ACIP and AILA agree with the proposal that an employer may choose 
to terminate an H-1B worker without violating the benching provision. 
ACIP also suggests that employers should not be held liable for the 
nonimmigrant's failure to leave the country.
    The Department agrees that an employer is no longer liable for 
payments for nonproductive status if there has been a bona fide 
termination of the employment relationship. The Department would not 
likely consider it to be a bona fide termination for purposes of this 
provision unless INS has been notified that the employment relationship 
has been terminated pursuant to 8 CFR 241.2(h)(11)(i)(A) and the 
petition canceled, and the employee has been provided with payment for 
transportation home where required by section 214(E)(5)(A) of the INA 
and INS regulations at 8 CFR 214.2(h)(4)(iii)(E). In accordance with 
current INS policy (see 76 Interpreter Releases 378), once an employer 
terminates the employment relationship with the H-1B nonimmigrant, 
regardless of any arrangements for severance pay or benefits, that H-1B 
employee must either depart the United States upon termination of his 
or her services, or seek a change of immigration status for which he or 
she may be eligible. Therefore, under no circumstances would the 
Department consider it to be a bona fide termination if the employer 
rehires the worker if or when work later becomes available unless the 
H-1B worker has been working under an H-1B petition with another 
employer, the H-1B petition has been canceled and the worker has 
returned to the home country and been rehired by the employer, or the 
nonimmigrant is validly in the United States pursuant to a change of 
status.
    Commenters also offered their views on the phrase ``entered into 
employment,'' one of the alternative triggers for an employer's 
obligation to pay the H-1B worker wages during periods of nonproductive 
status. The Department proposed that this term means the date when the 
H-1B worker makes himself/herself available for work, e.g., reports for 
orientation or training, performs work for the employer, or is under 
the control of the employer. One attorney-commenter (Hammond) expressed 
appreciation for this ``bright line test'' and described the 30-day 
allowance as reasonable.
    The Department received twenty essentially identical comments on 
this issue from individuals who urged payment of wages to nonimmigrants 
immediately on their arrival to the United States. The AEA suggested 
that the H-1B visa holder be given a firm starting date from his/her 
employer and that wages start from that date. AOTA commented that 
``entered into employment'' should mean when the nonimmigrant makes 
himself or herself available for work. ACIP urged the Department to 
look at the facts of the case, but urged as a general matter that an H-
1B worker has entered into employment when he or she has reported to 
the worksite, has been placed on the payroll, and has completed an I-9 
form; ACIP stated that H-1B workers should not be required to be paid 
for short periods of unpaid

[[Page 80172]]

training or orientation or medical examinations, since U.S. workers are 
not. AILA suggested that ``entered into employment'' occurs when the 
employee actually commences the orientation, training or work because 
ACWIA, in mandating payments by the 30-day and 60-day deadlines, 
appears to provide the employer with discretion regarding the starting 
date prior to those deadlines.
    The statutory language does not permit the Department to define the 
term ``entered into employment'' as the date the H-1B worker arrives in 
the United States. Likewise, payment of wages by the employer cannot be 
required before the H-1B petition is approved. On the other hand, the 
Department notes that the Fair Labor Standards Act itself requires that 
where there is an employment relationship (including where the worker 
has been promised employment, even if the employee is not yet on the 
payroll), both H-1B and U.S. workers be paid for orientation or 
training time required by the employer.
    The Department has concluded that the term ``entered into 
employment'' means the date on or after the date of need on the H-1B 
petition when the worker makes himself or herself available for work or 
otherwise comes under the control of the employer and includes all 
activities thereafter, such as waiting for an assignment, going to an 
interview or meeting with a customer, attending orientation, studying 
for a licensing examination.
    Several employers, attorneys and organizations also commented on 
the meaning of the phrase ``eligible to work for the employer.'' (Sixty 
days thereafter an H-1B nonimmigrant already in the United States 
legally under another visa (e.g., F-1 student visa) or on another H-1B 
visa with another employer must be paid for nonproductive time, even if 
the H-1B nonimmigrant has not yet entered into employment.) One law 
firm (Hammond) encouraged flexibility on the 60-day test. An employer 
(BRI) urged that ``eligible to work for the employer'' should be based 
on the agreement of employment terms between the employer and employee 
and determined by the date an employment agreement is entered into 
between the employer and employee or the completion of the visa 
process, whichever comes last.
    ACIP and Intel requested a specific exception from the benching 
regulations for export control licenses. ACIP explained that an 
employee who awaits a license to practice his or her profession in the 
United States, and is subject to the ACWIA benching provisions, is 
distinguishable from an export control license which must be procured 
by an employer in a process which can take three to six months. 
Therefore, ACIP suggested that the rule provide that where an export 
license and H-1B petition were filed concurrently but the export 
license is not approved within the 60-day window, the employer has an 
additional 90 days to obtain the license before being required to 
rescind the H-1B petition or pay the worker.
    The Department continues to believe that an employee is eligible to 
work on the date of need stated in the petition, provided that the 
petition has been processed and the employee has either received a visa 
or had his/her status adjusted (where the employee is in the United 
States). The Department sees no basis for any exception based on the 
export control license. Clearly the employee is legally eligible to 
work, but work is simply not available (even if due to circumstances 
beyond the employer's control). The Department agrees that a worker 
need not be compensated if the H-1B nonimmigrant voluntarily chooses 
not to make himself or herself available for work, such as where the 
nonimmigrant has not yet finished school or chooses to remain with 
another employer in order to finish a project. In each case, although 
the H-1B nonimmigrant is eligible to work for the employer, he or she 
need not be paid because of the nonimmigrant's voluntary action. The 
Department notes, however, that the nonimmigrant may be out of status 
if he or she does not report to work on the date of need.
    In response to the NPRM's proposals on nonproductive pay for part-
time workers, Senators Abraham and Graham and AILA objected to the 
regulatory language requiring workers be paid for hours that exceed the 
part-time number of hours on the INS petition where in practice the 
worker regularly works a longer schedule. AILA seeks to allow an 
employer which has less work than anticipated after filing an I-129 
petition for full-time work, to secure approval of a new I-129 petition 
for part-time work, after which the employer is obliged to pay only for 
the part-time work.
    In addition, Latour commented that the traditional 40-hour week is 
rapidly changing. It stated that some firms engage workers to perform a 
project which is completed in less than a year, and then the worker has 
several months off and may ``moonlight'' at a second job (presumably 
under a second petition). Latour assumed this practice would be 
considered ``part-time,'' and suggest that DOL focus on three issues in 
determining if there is a violation of the ``benching'' provision: (1) 
Whether the prevailing wage is being paid; (2) whether the worker is 
making a plausible living; (3) whether the nature of the employment 
schedule is usual and reasonable for the type of work.
    The Department agrees that nonproductive pay is based on the number 
of hours per week on the H-1B petition. The LCA has therefore been 
amended to alert employers that their H-1B employees should not 
regularly work more than the number of hours shown on the petition, 
which may be expressed as a range of hours. If the H-1B worker normally 
works full-time or a greater number of hours than shown on the 
petition, the Department will examine the facts and circumstances and 
charge the employer with misrepresentation where appropriate. In light 
of the importance of the distinction between part-time and full-time 
employment for purposes of the employer's wage obligations, the 
Department has modified the proposed LCA form to specify that the 
employer is to designate that the position(s) covered will be either 
part-time or full-time; a combination of part-time and full-time 
positions cannot be entered on a single LCA form.
    The Department cautions employers that time spent in training or 
studying to get a license is ordinarily compensable hours worked under 
the Fair Labor Standards Act without regard to any rules on payment for 
nonproductive time under the H-1B program.
    The Department agrees with AILA's comment that an employer may 
secure approval of a new H-1B petition for part-time work, after which 
the employer is obliged to pay only for the part-time work. The 
nonproductive pay computation is based on the petition that is in 
effect at the time the H-1B worker is in nonproductive status. 
Correspondingly, before INS approves a new petition that changes the 
work time (part-time to full-time or vice versa), the employer will 
need to file a new LCA that reflects the change.
    Finally, the Department disagrees that the scenario described by 
Latour is part-time work. Rather, it is full-time work with periods 
where no work is available due to actions of the employer, rather than 
the employee. This period of non-productive work must be paid unless 
the worker is temporarily unable to return to work because of alternate 
commitments or other factors within the control of the employee.

[[Page 80173]]

I. What Special Rule Does the ACWIA Provide for Academic Salaries? 
(Sec. 655.731(c)(4))

    The ACWIA provision on non-productive time (``benching'') 
(discussed in IV.H, above) has a special rule permitting ``a school or 
other education institution'' to apply an established salary practice 
which might result in an H-1B worker appearing to be ``unpaid'' for 
some part of a calendar year. See Section 212(n)(2(C)(vii)((V) of the 
INA as amended by the ACWIA. Specifically, that provision allows an 
education institution to disburse an annual salary to its H-1B workers 
and U.S. workers in the same occupational classification over fewer 
than 12 months if: (1) The H-1B worker agrees to the compressed annual 
salary payments prior to commencing payment, and (2) the salary 
practice does not otherwise cause any violation of the H-1B worker's 
authorization to remain in the United States.
    Congressman Smith and Senator Abraham both explained that this 
provision ``is intended to make clear that a school or other 
educational institution that customarily pays employees an annual 
salary in disbursements over fewer than 12 months may pay an H-1B 
worker in the same manner without violating clause (vii), provided that 
the H-1B worker agrees to this payment schedule in advance.'' 144 Cong. 
Rec. E2326 (Nov. 12, 1998); 144 Cong. Rec. S1275 (Oct. 21, 1998). 
Congressman Smith explained that Congress ``specifically limited this 
exemption to schools and educational institutions in recognition of 
their unique salary patterns.'' 144 Cong. Rec. E2326. Senator Abraham, 
on the other hand, stated:

    Because Congress is not aware of all the possible kinds of 
legitimate salary arrangements that employers may establish, the 
situation covered by subclause (V) may be merely illustrative of 
other kinds of legitimate salary arrangements under which an 
employee's rate of pay may vary. Accordingly, so long as an H-1B 
worker is not being singled out by such a salary arrangement, it is 
not Congress's intent that such a salary arrangement be treated as 
suspect under or violative of clause (vii) merely because there is 
no special provision like subclause (V) addressing it. To the 
contrary, if it is an arrangement that the employer routinely uses 
with U.S. employees as well as H-1B workers, it should be treated as 
presumptively not a violation of that clause.''

144 Cong. Rec.S1275 9 (Oct. 21, 1998).
    The one commenter on this provision, ACE, urged the Department to 
follow the law as written with no further regulation.
    As the Department explained in the NPRM, the Department believes 
that this provision is directed to the common practice b