Congress To Consider Significant Restrictions on H-1B and L-1 Visa Holders

On April 23, 2009, Senators Richard Durbin of Illinois and Charles Grassley of Iowa introduced legislation, known as the “H-1B and L-1 Visa Reform Act of 2009” (S. 887), that would radically alter both the H-1B and L-1 visa categories.

H-1B visas are used for skilled professionals such as scientists, engineers, teachers, certain health care workers, etc.  L-1 visas are available for certain managerial and “specialized knowledge” employees of multi-national companies seeking to transfer to the U.S. from a foreign affiliate.

While the prospects for enactment of any immigration legislation by Congress are always uncertain, the high unemployment levels caused by the recession could easily make this proposal politically attractive.

Employers of these highly skilled foreign nationals should be very concerned about the possible imposition of significant new administrative and financial burdens, as well as exposure to government investigations and civil penalties for violations of new program requirements. A summary of the major elements of the proposed legislation appears below.

H-IB AND L-1 VISA REFORM ACT OF 2009

TITLE I, H-1B FRAUD AND ABUSE PROTECTIONS

SUBTITLE A • Employer Application Requirements

SECTION 101 (Prevailing Wage for H-1B Workers)

The prevailing wage for an H-1B worker cannot be any less than Office of Economic Statistics (OES) skill level 2, which eliminates entry-level wage classifications for H-IB workers, even if the position is entry-level.  The wage must be the highest of:

a. Local prevailing wage;

b. Median average wage for all workers in the occupational classification in the area; or

c. Median wage for OES skill level 2.

A Department of Labor (DOL) H-1B job posting website will be created within 90 days of enactment of this legislation. Employers are required to post notice of the H-1B position for at least 30 days, including wages, minimum requirements, and how to apply. Unlike the current internal posting requirement that simply provides notice that an H-1B is being filed, this posting would invite interested applicants to apply for the job. An H-1B petition could not be filed with USCIS until after the 30-day posting period.

All employers would be required to attest to non-displacement of US workers 180 days before and after filing an H-1B petition, a requirement that previously only applied to willful violators, and H-1B dependent employers). The exception regarding non-displacement for exempt H-1B workers (those with a Master's degree or who are paid more than $60,000 per year) is eliminated. All H-1B employers would be required to document efforts to recruit U.S. workers for the position offered to the H-1B foreign national.

The placement of H-1B workers at the worksite of another employer is prohibited unless a waiver is obtained by the employer allowing such placement.

 

SECTION 102 (New Application Requirements)

Employers are prohibited from giving H-1B hires preference in recruiting If employers have more than 50 FTEs in the U.S., the combined total of H-1B and L-1 employees may not be more than half of the employer's total US workforce (FTE and part-time).

Employers must submit to the Department of Homeland Security (DHS) copies of IRS Forms W-2 for all H-1B employees.

SECTION 103 (Application Review Requirements)

DOL may review labor condition applications for clear indicators of fraud or misrepresentation. Current law limits DOL review to “completeness.” DOL may initiate its own investigation of labor condition applications if it finds clear indicators of fraud or misrepresentation (broadened from current law which limits DOL investigations to those involving formal complaints).

DOL's maximum allowed period for review of a filed labor condition application is extended from 7 days to 14 days.

 

SUBTITLE B - Investigation and Disposition of Complaints Against H-1B Employers

SECTION 111 (Audits and Investigations)

This section extends the period of time to file an H-1B complaint from 1 year to 2 years

DOL is not required to have reasonable cause to investigate a complaint and it may conduct compliance surveys and annual compliance audits of any H-1B employer, without cause.

DOL is required to conduct annual audits of:

a. At least 1% of all H-1B employers;

b. Every employer who employs more than 100 people in the US (FTE or part-time), and for whom H-1Bs make up more than 15% of the employer's total work force.

SECTION 112 (Investigations, Working Conditions and Penalties)

Employer debarment from having H-1B petitions approved is expanded to cases where there is a finding of a substantial violation in areas of actual wage violations, strike/lockout violations, failure to notify bargaining representative of the position, non-displacement violations, outplacement violations, recruitment violations, or failure to file W-2s for H-1B employees. (Under current law, the grounds for debarment are limited to strike/lockout violations, non-displacement violations, and outplacement violations.)

Civil fines are doubled to $2,000 per violation (currently $1,000 per violation). Employers can now also be liable to U.S. workers who were harmed by such a violation for lost wages and benefits.

 

SECTION 113 (Outplacement Waivers)

The placement of H-1B workers at worksite of another employer is prohibited unless the employer obtains a waiver from DOL. DOL may grant an outplacement waiver if:

a. The employer does not displace any US workers 180 days before and after the H-1B employee's placement;

b. The H-1B employee will be controlled and principally supervised by the employer, and not the company within which the employee is outplaced; and

c. The arrangement is not essentially "labor for hire."

The waiver must be granted or denied by DOL within 7 days of the application.

 

SECTION 114 (Initiation of Investigations)

DOL is no longer required to have reasonable cause to initiate an investigation. It can initiate an investigation on credible anonymous tips, even if those tips do not reveal a pattern or practice of violations. The "tip" can come from a DOL employee or officer or from DHS and the tip does not have to be lawfully obtained.

 

SECTION 115 (Information Sharing)

USCIS is required to share with the DOL information submitted along with H-1B petitions. DOL can use this information to initiate an investigation. The bill no longer allows good faith efforts to count as compliance. DOL no longer has to explain the basis of failure of compliance to the employer, and employers are no longer allowed 10 business days to correct any technical failure.

 

SUBTITLE C – H-1B Job Postings with the DOL

 

SECTION 121 (DOL Website)

DOL shall create a searchable, free-to-the-public job posting website for H-1B jobs, within 90 days of enactment. DOL may collaborate with private companies or nonprofits to create and maintain the website as well as establish rules and regulations regarding its use.

 

SECTION 122 (Government Authority and Requirements)

H-1B employees may submit a written request to employers for copies of all documents related to the employee's petition, including communications with the DOL or other government agencies. The employer must give the H-1B employee the original documents or certified copies of them within 21 days of receiving the written request.

 

SECTION 123 (Information Requirements for H-1B and L-1 Employees)

USCIS must provide all H-1B and L employees with brochures explaining their rights as well as their employers' obligations, contact information for making Federal complaints or obtaining help, and a copy of the petition submitted for the employee.

 

SECTION 124 (Additional DOL Employees)

DOL is authorized to hire 200 more employees to assist with administration of the H-1B program.

 

TITLE II, L-1 FRAUD AND ABUSE PROTECTIONS

 

SECTION 201 (Outplacement Restrictions)

The placement of L-1 employees at worksite of another employer for a cumulative period of more than one year is prohibited unless a waiver is obtained from DHS. "Outplacement" includes any work performed outside the petitioner's parent, subsidiary, or affiliate companies. DHS has discretion to grant a waiver (but is not required to) when:

a. The outplacement host has not displaced and does not intend to displace a U.S. worker within 180 days of receiving the L-1 employee;

b. The L-1 employee is not principally supervised and controlled by the outplacement host; and

c. The outplacement agreement is not essentially a "labor for hire" agreement. The placement must be "a placement in connection with the provision of a product or service for which specialized knowledge specific to the petitioning employer is necessary."

DHS must grant or deny a waiver within 7 days of receiving the waiver application.

 

SECTION 202  (Employment at New Offices)

L-1 employees who come to the US to open a new office are limited to an initial period of stay of one year and may not have been the beneficiary of two or more previous "new office" L-1 petitions during the preceding two years. This would prevent individuals from repeatedly filing "new office" L petitions to circumvent current L-1 requirements.

For a "new office" employer to be eligible for L-1 employees, the employer must:

a. Submit to the DHS an "adequate" business plan, as determined by the DHS;

b. Have a physical location sufficient to carry out the business plan; and

c. Have the financial resources to begin doing business immediately upon approval of the L-1 employee's petition.

Additionally, to maintain eligibility, the employer must actually begin "regular, systematic, and continuous" business operations on the day the L petition is approved, and these operations must continue "regularly, systematically, and continuously" throughout the entire time the L-1 employee is present.

To extend a "new office" L-1 employee's stay, the employer must submit a detailed application to the DHS demonstrating that the employer has the above-required business plan, location, and resources; and that the employee is an eligible L employee (has worked for the employer's group of companies abroad for at least one year). Additionally, the application must include:

a. A summary of the L-1 employee's original "new office" petition;

b. Evidence that the employer has "fully complied" with the previously-submitted business plan;

c. Documentary evidence supporting the truthfulness of representations made in the original petition;

d. Evidence that the "new office" employer has been doing business at the new office "through regular, systematic, and continuous provision of goods and services." The employer must have begun these "regular, systematic, and continuous" operations on the day the L-1 employee's petition was approved;

e. A statement describing the L-1 employee's duties since the petition was approved, as well as a statement describing the L-1 employee's intended duties for the extension period;

f. A statement disclosing the new office's staffing, including the number of employees and their titles;

g. Evidence of wages paid to all employees;

h. Evidence of the financial status of the new office;

DHS also has blanket authority to request "any other evidence or data."  It also has the discretion to extend a "new office" L employee even if the employer does not meet all of  the qualifications listed above. To be eligible for a discretionary extension, the employer must have been doing regular, systematic, and continuous business for at the six months immediately preceding the extension request, and the employer must demonstrate that any failure to meet any of the above requirements "was directly caused by extraordinary circumstances, " as determined by DHS.

 

SECTION 203 (Cooperation with the Secretary of State)

DHS is required to work with the Secretary of State to verify the existence of a company or office in the US, or in a foreign country.

 

SECTION 204 (Investigation of Complaints Against L-l Employers)

DHS may initiate its own investigation into any L employer. It may also initiate an investigation based on "specific credible information" from a reliable source, and DHS is not required to disclose that source to the investigated employer.  Information must be received within 2 years of the alleged employer violation. DHS is directed to create a new complaint or "tip" form.

DHS must give the employer a notice of intent to investigate and an opportunity to respond before beginning the investigation. However, DHS is not required to notify an employer if DHS believes that such notification would interfere with DHS investigation.

DHS will be required to conduct annual compliance audits of at least 1% of L employers, and conduct annual compliance audits of each L employer who has more than 100 employees and whose work force is 15% or more L employees.

 

SECTION 205  (Wage Rates and Working Conditions for L-1 Employees)

L-1 employees who are employed in the US for a cumulative period of over one year must be paid at least the “prevailing wage”. This wage must be the highest of the local prevailing wage, the median average wage, or the wage as determined by OES skill level 2.

L employers must submit IRS Forms W-2 to DHS for L employees who are employed in the US for a cumulative period of more than one year.

Employers may not require "early quitting" penalties or payments. DHS will determine if any required payment is a penalty or liquidated damages under state law. Employers must offer the same benefits to L employee as they do for U.S. workers (insurance plans, retirement and savings plans, cash bonuses, and non-cash compensation).

 

SECTION 206 (Penalties for Non-Willful Violations or Misrepresentations)

Upon a finding of a non-willful violation or misrepresentation, DHS is required to impose administrative remedies as the DHS Secretary deems appropriate. The maximum monetary penalty is $2,000 per violation and DHS may refuse to grant any L petitions for the employer for up to one year after the violation.

The employer may be liable to harmed employees for lost wages and benefits resulting from prevailing wage violations as well as whistleblower violations (see below).

In the case of willful violations or misrepresentations, DHS is required to impose administrative penalties. The maximum monetary penalty is $10,000 per violation and DHS may refuse to grant any L petitions for the employer for up to two years after the violation.

The employer may be liable to harmed employees (including U.S. workers who are harmed by the violation) for lost wages and benefits resulting from either prevailing wage or whistleblower violations.

 

SECTION 207 (Whistleblower Provision)

Employers may not retaliate against current employees, former employees, or employment applicants for whistle blowing under this legislation.