By JoAnna Gavigan and Aron Finkelstein

Law360 (May 12, 2020, 7:31 PM EDT )

JoAnna Gavigan

Aron Finkelstein

The coronavirus pandemic has affected the U.S. and countries across the globe in unprecedented ways, including forced closures of several businesses under directives from both local and federal governments.

Indeed, right now, the majority of states continue to remain under state-level stay-at-home orders, forbidding the operation of nonessential businesses, and nonessential travel. Given this new environment, U.S. employers, foreign nationals and immigration practitioners are scrambling to understand how to ensure continued compliance with U.S. immigration programs, especially the H-1B program.

In fact, there are numerous reports of precarious situations for H-1B workers, with Bloomberg News reporting that nearly quarter of a million H-1B workers will be forced to depart the U.S. in the coming months.[1] The loss of these highly qualified workers will have devastating impact to the U.S. economy.

Acknowledging these unprecedented times, the U.S. Department of Labor's Office of Foreign Labor Certification, or OFLC, has thus far published three FAQs, offering guidance to U.S. employers of foreign nationals in both temporary and permanent positions.

These FAQs highlight that, given the unforeseen and disruptive impacts of the COVID-19 pandemic, the DOL is utilizing an expansive interpretation of pertinent regulatory guidelines.

For example, the OFLC has agreed to allow for extensions of relevant deadlines, and has even indicated that when H-2A nonimmigrant employees are unable to perform work due to COVID-19, "employers may be afforded some degree of flexibility."[2]

Likewise, in regards to the H-1B program, the DOL has reminded employers that if H-1B employees are required to work remotely, and their home office is within the same metropolitan statistical area, the employer can continue to employ that worker under the terms of the approved H-1B petition.[3]

While this guidance has certainly been welcomed by employers and practitioners alike, this article addresses a missed opportunity for the DOL to expand its interpretations of critical regulatory guidance relating to H-1B workers.

Indeed, the DOL has yet to provide any guidance on the impact of forced business interruptions directly resulting from or traceable to the COVID-19 pandemic on an employer's requirement to continue to pay the proffered wage to an H-1B employee when work is temporarily unavailable.

Specifically, Title 20, Section 655.731(c)(7) of the Code of Federal Regulations requires an employer to continue to pay an H-1B worker's wage during any period of nonproductive status that is at the direction of the employer. This is colloquially referred to as benching. The global pandemic has introduced considerations that were certainly not contemplated during the drafting of these regulations.

This article reviews the congressional intent underpinning the so-called anti-benching rule, and concludes that, due to the unprecedented nature of the coronavirus pandemic — which includes forced stay-at-home directives, federal social distancing guidelines and possible criminal prosecution for disobeying state orders — unproductive periods of employment during this time should not be considered "at the direction of the employer."

Current Regulatory Framework of No-Benching Provision

Pursuant to Section 655.731(a) of Title 20 of the Code of Federal Regulations, an H-1B employer is required to pay an H-1B employee, "the greater of the actual wage rate ... or the prevailing wage."

Importantly, both the prevailing wage, as designated by the DOL, and an employer's actual wage contemplate an employee being able to work in a productive status through the entire year, without forced interruption from the government.

Moreover, pursuant to Section 655.731(c)(7)(i), an employer is required to pay an employee even when that employee is "not performing work and is in nonproductive status due to a decision by the employer ... or any other reason except as specified in paragraph (c)(7)(ii)."[4]

Conversely, paragraph (c)(7)(ii) of the regulation states that during "a period of nonproductive status due to conditions unrelated to employment which take the nonimmigrant away from his/her duties or render the nonimmigrant unable to work ... the employer shall not be obligated to pay the required wage rate."[5]

Under an excessively strict interpretation of Section 655.731(c)(7)(i), an employer of an H-1B worker who is required to place the employee in nonproductive status as a result of COVID-19 forced business interruptions would be required to continue to pay its employees even while the H-1B worker is in nonproductive status.

However, forced closures and mandatory social distancing measures designed to combat an unprecedented global pandemic are not related to an H-1B worker's employment.

Furthermore, the COVID-19 restrictions are "conditions unrelated to employment," which is Section 656.731(c)(7)(ii)'s condition for lifting the wage obligation from the H-1B employer.

An H-1B employer that is forced to furlough an H-1B worker to ensure compliance with social distancing measures, or for other purposes relating to combating the spread of COVID-19, or responding to the changed landscape brought on by the pandemic, would not be doing so for the purposes of employment. This scenario assumes, of course, that the H-1B employment cannot be performed from the remote location where the H-1B employee is sheltering in place.

A review of the spirit and justification behind the no-benching requirement makes clear that a period of nonproductive status due to COVID-19 should be considered nonproductive status as contemplated by paragraph (c)(7)(ii) — i.e. not related to a decision by the employer. The plain language of the regulation is consistent with this interpretation.

History of the No-Benching Provision — American Competitiveness and the Workforce Improvement Act

In October 1995, the DOL first introduced this requirement of ongoing wage obligations for H-1B workers during nonproductive periods. Like the current iteration of the regulation, the provision as introduced did not require payment for periods of nonproductivity due to circumstances not related to employment.

This regulation was subsequently enjoined by court order when the U.S. District Court for the District of Columbia ruled that requiring an H-1B employer to pay an employee for nonproductive time was a separate and distinct duty from an employer's general obligation to pay the required wage, and thus required proper notice-and-comment publication.[6]

Thereafter, Congress incorporated this provision into the American Competitiveness and Workforce Improvement Act, or ACWIA, which President Bill Clinton signed into law on Oct. 21, 1998.

As detailed in the congressional record, the ACWIA was passed to protect the U.S. workforce by increasing enforcement and penalties within the H-1B program. One of the provisions included among these new enforcement provisions was the no-benching requirement taken from the DOL's promulgated rule.

According to Senate reports, Congress incorporated this provision to stop the practice of employers bringing H-1B workers to the U.S. under the false promise that the H-1B worker would be paid a certain wage, but paying the H-1B worker a lower wage once he was in the U.S.[7]

Specifically, under Section 413(a) of the act, an H-1B employer is required to pay the offered wage to the H-1B employee, even if the employee is placed into a nonproductive status, due to an employer's decision:

after the nonimmigrant has entered into employment with the employer, in nonproductive status due to a decision by the employer (based on factors such as lack of work), or due to the nonimmigrant's lack of a permit or license.[8]

Importantly, the ACWIA provided an exception to this requirement, stating:

This clause does not apply to a failure to pay wages to an H–1B nonimmigrant for nonproductive time due to nonwork-related factors, such as the voluntary request of the nonimmigrant for an absence or circumstances rendering the nonimmigrant unable to work.[9]

Following the passage of the ACWIA, the DOL promulgated new regulations for its enforcement.

On Jan. 5, 1999, the DOL published its draft of Title 20 Sections 655.731(c)(5)(i) through (iii) of the Code of Federal Regulations.[10] In that notice of proposed rulemaking, the DOL also provided insight into the justification for the no-benching provision, noting:

In a nutshell, the "benching" provisions forbid an employer paying an H-1B worker less than the required wage for nonproductive time, except in situations where the nonproductive status is due either to the worker's own initiative or to circumstances rendering the worker unable to work ...

The ACWIA provisions recognize, however, that the employer should not be liable to pay wages for the worker's time which is nonproductive for reasons attributable to the employer, such as the worker's hospitalization or requested leave-of-absence (consistent with the conditions related to the H-1B worker's maintenance of legal status in the U.S.).[11]

On Dec. 20, 2000, the DOL published the final rule, addressing numerous comments received during the notice and comment period. This included multiple comments suggesting that, in instances of plant closure, or other workforcewide reductions, H-1B workers should be treated the same as U.S. workers.

In response, the DOL reiterated that it considers periods of companywide closures, or workforce reductions to be periods of time when the payment to H-1B employees is required, as the statutory language requires that any nonproductive period at the request of an employer must be paid.

The DOL added:

In contrast, payment is not due when the nonproductive time is due to non-workrelated 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.[12]

A review of the statutory and regulatory history of these provisions make clear that the no-benching rule was designed to combat employers from hiring H-1B employees when there was not sufficient work, or for underpaying H-1B workers. Furthermore, the provisions requiring the employer to pay the offered wage during unproductive periods apply when the nonproductive period is solely in the control of the employer.

Periods of Unproductivity Due to Global Pandemics Should Not Be Considered Related to Employment

Clearly, at the time of drafting these regulations, the DOL did not contemplate the effect of a global pandemic and forced business closures.

Indeed, unlike forced plant closures due to annual retooling or holiday shutdowns, which are all at the control and request of the employer, forced closures due to government directives, or other mandatory social distancing guidelines, are not in the control of the H-1B employer.

The notion that any period of unproductive status not at the direction of the employer and unrelated to the employment of the H-1B worker does not require the employer to compensate the employee was also reiterated by the DOL in its Fact Sheet #62G[13].

Fact Sheet #62G provides employers with "information concerning the payment of wages for an H-1B worker under the H-1B program." In this fact sheet, the DOL's Wage and Hour Division confirmed that an employer must continue to pay an H-1B worker the required wage, unless that worker is unavailable for work.

Indeed, in response to the question "Must the [H-1B] employer pay the guaranteed minimum hours if no work is provided?" the division confirmed:

Yes. The employer must pay the guaranteed minimum hours unless the H-1B worker is unavailable for work because of non-work related factors, such as the worker's own voluntary request for time off, or in other circumstances where the worker is unable to work.[14]

In the current environment caused by COVID-19, H-1B employers in some circumstances are being forced by their local governments to cease operations, preventing the company from providing tasks for the H-1B employee's performance. As this is not at the direction of the employer, this nonproductive time should not fall within the purview of Section 655.731(c)(7)(i), but within Section 655.731(c)(7)(ii).

Likewise, some H-1B employees are unable to travel to their work sites and perform productive work as they are potentially risking a misdemeanor charge if they travel to a nonessential work site.

For instance, under the stay-at-home directive currently in effect in the state of Maryland, residents who disobey the order to remain home except for essential travel risk a misdemeanor charge subject to imprisonment and a $5,000 fine. As such, an H-1B worker's decision to obey this order could certainly be considered a decision made independently by the H-1B worker.

Conclusion

We strongly believe that the currently regulatory framework surrounding wage payment during an unproductive period of employment caused by the COVID-19 pandemic does not support considering this to be nonproductive status at the request of the employer.

As outlined above, we believe that the DOL should consider forced business closures resulting from COVID-19 as nonproductive status under the purview of Section 655.731(c)(7)(ii) of Title 20 of the Code of Federal Regulations, which would be consistent with long-standing guidance.

While COVID-19 has brought U.S. employers a significant amount of uncertainty, guidance reiterating the DOL's long-standing precedent that only nonproductive periods at the direction of an employer would require ongoing wage payments is necessary at this time. Especially given the importance of the H-1B program to the longevity of the U.S. economy.

---

JoAnna Gavigan is an attorney at Murthy Law Firm.

Aron A. Finkelstein is a member and the managing attorney at the firm.

The opinions expressed herein are those of the author and do not necessarily reflect the views of the firm, its clients, or Portfolio Media Inc., or any of 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] Olivia Carville and Shelly Banjo, Over 200,000 H-1B Workers Could Lose Legal Status by June, Bloomberg.com (April 28, 2020), available at https://www.bloomberg.com/news/articles/2020-04-28/200-000-h-1b-workers-could-lose-right-to-work-live-in-the-u-s.

[2] U.S. Department of Labor, Office of Foreign Labor Certification, COVID-19 Frequently Asked Questions: ROUND 2, April 1, 2020, available at https://www.foreignlaborcert.doleta.gov/pdf/DOL-OFLC_COVID-19_FAQs_Round%202_04.01.2020.pdf (last accessed April 29, 2020).

[3] U.S. Department of Labor, Office of Foreign Labor Certification, COVID-19 Frequently Asked Questions: ROUND 1, March 20, 2020, available at https://www.foreignlaborcert.doleta.gov/pdf/DOL-OFLC_COVID-19_FAQs_Round%201_03.20.2020.pdf (last accessed April 29, 2020).

[4] Id.

[5] 20 CFR § 655.731(c)(7)(ii).

[6] See Nat'l Ass'n of Mfrs. v. U.S. Dep't of Labor , No. CIV. A. 95-0715, 1996 WL 420868, at *13 (D.D.C. July 22, 1996)

[7] AC21 Senate Report Summarizing ACWIA additions.

[8] 112 STAT. 2681–647 PUBLIC LAW 105–277 — OCT. 21, 1998.

[9] Id.

[10] 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, 64 FR 628-01.

[11] Id.

[12] 80170 Federal Register / Vol. 65, No. 245 / Wednesday, Dec. 20, 2000 / Rules and Regulations.

[13] U.S. Department of Labor, Wage and Hour Division, Fact Sheet #62G: Must an H-1B Worker be paid a guaranteed wage?, last revised July 2008, available at https://www.dol.gov/agencies/whd/fact-sheets/62g-h1b-required-wage (last accessed May 1, 2020).

[14] Id.

For a reprint of this article, please contact reprints@law360.com.