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Law360 (April 27, 2020, 6:21 PM EDT) --
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| David Grunblatt |
The challenge was and now is particularly acute for employee populations that include H-1B workers, as the U.S. Department of Labor regulations provide an array of special protections for that visa classification.[1]
Temporary layoffs or furloughs would not be available as this would be improper benching prohibited pursuant to Section 655 of Title 20 of the Code of Federal Regulations.[2]
Discharging or terminating the employment of the H-1B employee would require the employer to initiate the bona fide termination process to protect itself against a possible claim for back pay in the future.[3] The protocol includes the requirement to notify U.S. Citizenship and Immigration Services of the termination, resulting in the cancellation of the H-1B petition supporting that employee's employment. To rehire, a new H-1B petition would be needed, this in an adjudicating environment that is hostile to such petitions.
Reducing the employee's hours in any significant way would usually result in a change of classification for the H-1B worker from full-time to part-time which would require the filing of a new labor condition application, or LCA, also triggering the requirement to file an amended H-1B petition with USCIS.[4]
Failure to file an amended H-1B petition could result in the assessment of civil penalties pursuant to Title 20 of the Code of Federal Regulations, Section 810, for willful failure pertaining to wages and working conditions[5] and, perhaps even worse, a claim of violation of status against the employee, possibly triggering a Notice of Intent to Revoke the petition.
While there might be some limited adjustment that could be made within the full-time employment category, it at best is limited to a reduction in hours to 35 hours per week as this is the minimum number of hours that the labor department's Wage and Hour Division will accept as full-time employment for H-1B workers as enumerated in Title 20 of the Code of Federal Regulations, Section 655.[6]
This too may be problematic as the Wage and Hour Division indicates that the guaranteed minimum number of hours to be paid for all periods to the H-1B worker is the number of hours that the employee reports on the Form I-129 petition for the nonimmigrant worker, which, if higher than 35 hours per week, perhaps cannot be adjusted.[7]
What About Reducing Salary and Other Compensation?
The Required Wage
As noted in the Wage and Hour Division Fact Sheet No. 62G, the H-1B employer must pay its H-1B workers at least the required wage. The required wage is the higher of the prevailing wage or the employer's actual wage for similarly employed workers.[8]
The actual wage is the wage rate paid by the employer to all individuals with experience and qualifications similar to the H-1B nonimmigrants' experience and qualifications for the specific employment in question at the place of employment. The actual wage established by the employer is not an average of the wage rate paid to all workers employed in the occupation. If there are no similarly employed workers, the actual wage is the wage paid to the H-1B worker.[9]
Actual Wage Is Fluid
Actual wage as it relates to the H-1B employee is fluid as it corresponds to what is applicable to the general work population. As an example, if similarly situated employees get an annual 10% raise, the H-1B employee may and should get such a raise.
There would be no requirement to amend the LCA or file an amended petition as this comes within the framework of the actual wage profile that would be part of the original public access file. Such changes and additions of other benefits which occur over the lifetime of the H-1B petition would be noted in the public access file and nothing more need be done.
Actual Wage and Reduction in Salary: Across-the-Board Reduction
If everything is related to the actual wage, then in a circumstance where there is an across-the-board reduction in salary for all employees similarly situated as defined under the Department of Labor regulations and pursuant to Wage and Hour DiHD guidelines, it would be appropriate and permissible to reduce the wage of the H–1B employee as long as that reduction is consistent with the actual wage paid to all other similarly situated employees.
No new LCA or amendment of the H-1B petition should be required, but rather a notation in the public access file, similar to any other update or notation which is made for changes consistent with the actual wage.
Of course, this assumes that the reduction does not go below the prevailing wage. The regulation mandates payment of the required wage which is the higher of the prevailing wage or the actual wage.
Accordingly, this flexibility would only be relevant and useful in a situation where the employee is being paid an actual wage which is higher than the prevailing wage, so at least some limited adjustment downward might be possible.
Eliminating Other Benefits
An employer might decide on other cost-cutting initiatives which impact all employees, including the H-1B visa holders, such as reducing employer contributions to employee health care payment plans. This, if done in a way which is permissible for all similarly situated workers, would be permissible for the H-1B worker as well.
What is the actual wage and benefits for the H-1B worker depends on what is appropriate, permitted and implemented for the similarly situated workers.
Where the Petition Form I-129 Lists a Higher Salary
A concern has been raised that administrative law judges may disregard the formula for the required wage, and rely on the salary listed in the I-129 petition as binding. Given that employment law has addressed and permitted many adjustments in the COVID-19 environment, I would venture to argue that such administrative law judge findings in the future are a minimal risk.
Furthermore, it is clearly the case that the regulation strictly defines parameters as to appropriate salary, according to a specific definition of required wage. The DOL regulations give two exclusive alternatives — actual wage as defined therein, or prevailing wage, which ever one is higher.
As a colleague, Bill Stock has indicated during the course of an email discussion of this issue, there is a regulatory definition of required wage: It includes two elements — higher of prevailing wage or actual wage. The canon of interpretation known as "inclusio unius" clearly applies.[10]
Under this canon, the listing of two or more alternatives demonstrates the intention to exclude any other alternatives. Therefore the regulation should not be interpreted to include other alternative potential definitions of wage levels, such as the wage level indicated on Form I-129.
Conclusion
There are real challenges in applying cost-cutting initiatives to H-1B employees. You cannot furlough them. You cannot terminate them without voiding their underlying petitions. You cannot significantly change their hours, if you can change them at all without filing an amended petition. Even a reduction in salary, which we conclude is permissible, is limited to the prevailing wage as listed in the current LCA.
And we haven't even addressed what the implications are if H-1B employees are employed at their proper salaries on a full-time basis while their colleagues have been subjected to these changes and thus de facto the H-1B workers are being treated better as compared to the rest of the employee population. A topic for another article.
David Grunblatt is a partner and co-head of the immigration and nationality group at Proskauer Rose LLP.
The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.
[1] 20 C.F.R. Subpart H: §700 through 855.
[2] See WHD Fact Sheet No. 62I: Must an H-1B employer pay for nonproductive time?; 20 C.F.R. 655.731(c)(7)(i).
[3] 20 C.F.R. 655.731(c)(7)(i); 8 C.F.R. §214(h)(11)(i)(A)); 8 U.S.C.A. §1182(n)(2)(C)(vii)(I).
[4] See Labor Condition Application Form 9035 and 20 C.F.R. 655.731 (c)(7)(i).
[5] 20 C.F.R. 810 (b)(2)(i).
[6] 20 C.F.R. 655736 (a)(2)(iii)(A).
[7] WHD Fact Sheet No. 62G: Must an H-1B worker be paid a guaranteed wage?
[8] Supra.@ 7.
[9] 20 C.F.R. 755.715.
[10] https://www.merriam-Webster.com/legal/expressio%20unius%20est%20exclusio%20alterius.
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