Form I-9 and H-1B Enforcement and Employers' Best Practices to Preclude Liability




Jane W. Boldblum and Jeffrey D. Azarva







Introduction



As President Barack Obama begins his second term in office, comprehensive immigration reform has catapulted to the top of his legislative agenda. But while
Congress’ ability to agree to a meaningful overhaul remains uncertain, employers can be certain that Congress, like the administration, is focused on
comprehensive immigration enforcement. This article will discuss the two main areas of employment-based immigration enforcement, reflected in governmental
audits and, in so doing, will divide this article in two parts: in Part 1, the authors will discuss Form I-9 audits which potentially face
all U.S. employers and are conducted by the U.S. Immigration and Customs Enforcement (ICE), a division of Homeland Security Investigations (HSI); and, in Part 2, the authors will discuss H-1B audits which potentially face any employer that employs an H-1B worker and are conducted by the
office of Fraud Detection and National Security (FDNS), a division of U.S. Citizenship and Immigration Services (USCIS), as well as audits conducted by the
U.S. Department of Labor’s Wage and Hour Division.



Message: this article, in no way, seeks to panic any employer. Indeed, these authors believe that our country’s applicable immigration laws are relatively
easy to comply with. However, as evidenced, since 2009, when USCIS adopted an aggressive strategy to target employers perceived as not complying with the
letter or spirit of our immigration laws, substantial fines have ensued. Since 2009, ICE has ‘raised’ over $87 million in employer sanctions. The Wage and
Hour Division also has exacted sizable fines against non-compliant employers. Thus the critical message of this article: all employers need to be aware of
their responsibilities and to meticulously comply with same. In order to do so, employers should seek the counsel of reputable immigration counsel who will
not tell the employer what it wants to hear, but will clearly tell the employer what it needs to hear to avoid liability and to adhere to the requirements
of the law. It is our hope that this article will help.



Part 1: Form I-9 and HSI Enforcement



John Morton, Director of U.S. Immigration and Customs Enforcement, underscored his agency’s priority when he delivered in March 2012 his 2013 budget
address to Congress:



We are focused on smart and effective enforcement of our immigration laws, including making sure that employers have the tools they need
to maintain a legal workforce and face penalties if they knowingly violate the law… By focusing on employers that are willing to hire illegal workers, we can eliminate the incentive that leads illegal aliens to violate our
nation’s immigration laws… This focus will continue this coming fiscal year. [1]
(Emphasis supplied)



Director Morton then described one such “tool”:



We have also established the ICE Mutual Agreement between Government and Employers program (IMAGE) — designed to promote voluntary compliance, educate
employers about best practices and help companies train their employees to comply with the nation’s immigration-related employment laws. Last year, ICE
entered into IMAGE agreements with well-known companies, including Chick-fil-A, Smoothie King, Best Western, Toyota, Tysons Food, and Kelly Services, among
others. These companies agree to use E-Verify, conduct self-audits, and submit to an ICE audit. In FY 2013, ICE will continue to expand IMAGE outreach
nationwide… [2]



John Morton’s address makes clear that ICE, through its Homeland Security Investigations (HSI), will be aggressively auditing employers in those industries
believed to be employers of the undocumented. By way of example, in 2012, Infinite Visions, a clothing manufacturer in Secaucus, New Jersey, was audited
after ICE received an anonymous tip alleging that the company hired illegal aliens. The audit revealed unspecified violations of the Immigration Act and
“serious deficiencies with the company’s employment records.” [3] In
other words, I-9 violations. In July 2012, the company reached a final settlement with HSI in the amount of $625,000. [4]



The special agent in charge of HSI’s Newark, New Jersey office, Andrew McLees, stated:



HSI is focused on protecting lawful business owners by continuing to investigate employers who repeatedly and egregiously hire illegal workers. [5]



Employers in New Jersey and elsewhere may believe that the above statement suggests that the ‘compliant’ employer can relax, and that only the egregious
employer is being targeted. The authors of this article know otherwise.



In 2012-2013, the authors were asked to represent, what they (still) believe to be, a ‘compliant’ southern New Jersey employer in a Form I-9 audit. The
employer had received I-9 training a few years before the audit and knew they had I-9s for each worker and knew that each worker had produced documents, as
required, confirming their identity and work authorization. Although the employer somehow had misplaced about 15 original Forms I-9, they had exact copies
of same and, after searching for the missing original forms, submitted an attestation attesting to the fact that the forms were a true and correct copy of
their original. The employer, despite easily corrected technical deficiencies (such as the easily missed ‘date of hire’), in pertinent part, was a good
example of what an employer should be doing in an industry that is perceived to be non-compliant. The authors expected HSI to accept the employer’s
attestation that each Form I-9 produced was a true copy of its original, find ‘good faith compliance’, and hold the company up as an example of an employer
that evidenced a commitment to hire an authorized workforce. Instead, HSI issued a Notice of Intent to Fine containing a punitive, substantive fine for each of the 15 copies of the Forms I-9 produced. The amount of the fine, of course, will be negotiated and reduced.
However, this case underscores the importance of the most seemingly compliant employer in New Jersey to be vigilant and pro-active about their employment
verification responsibilities, as HSI does not intend to show any mercy.



Indeed, recent years have witnessed a marked escalation in worksite enforcement. As alluded to above, since January 2009, ICE has ratcheted up its
enforcement efforts, auditing more than 8,000 employers, debarring 726 companies from participation in federal contracts and other immigration programs,
and levying more than $87.9 million in financial sanctions. [6] In FY
2012 alone (October 1, 2011 to September 30, 2012), ICE served 3,020 Notices of Inspection (initiating a government inspection of an employer’s Forms I-9),
which led to 495 “Final Orders” totaling nearly in $12.5 million in administrative fines. [7] If the
skeptical or complacent employer needed any further convincing of the Department of Homeland Security’s (DHS) newfound resolve, they need only look to the
$18 billion spent on immigration enforcement initiatives in 2012—a figure which dwarfed spending by all other major federal law enforcement agencies
combined. [8] As the
above statistics suggest, DHS is serious about immigration enforcement, and there is every reason to expect more of the same in 2013 and beyond.



i.
The Mechanics of Form I-9 Completion




The passage of the Immigration Reform and Control Act (IRCA) imposed an affirmative duty on employers to verify the identity and work authorization of all
persons hired after November 6, 1986. [9] The
mechanism for documenting same is the Employment Eligibility Verification Form, better known as simply Form I-9. This all-important form must be completed
by all employees and by an authorized representative of the employer within three business days of hire. [10]
Specifically, newly-hired employees must be given a sheet on which is listed those documents that, if provided (in the original), will establish the
employee’s identity and employment eligibility. The employee is given full discretion to choose his/her documents to present. The employee may present one
original, unexpired document which establishes both employment authorization and identity, or may present two original, unexpired documents: one which
establishes employment authorization and a second document which establishes identity. [11] The
employee, after submission of his/her documents, is required to complete and execute Section 1 of Form I-9. [12]



As mentioned above, the employer must refrain from specifying which documents an employee may present in connection with Form I-9 verification, lest
liability for discrimination attach. [13] By
executing the designated portion of Form I-9, the employee attests, under penalty of perjury, that he or she is authorized to work in the United States as
either a U.S. citizen or national, lawful permanent resident (i.e. green card holder), or a nonimmigrant with valid employment authorization. [14] The
employer, in turn, must review the proffered documents and accept the documents that are on the list as ‘acceptable’ Form I-9 documents, and which appear
genuine. The law specifically precludes employers from ‘investigating’ or looking beyond the documents; it only requires that a document appear facially
genuine in order for an employer to find an individual work authorized. [15] To
look beyond the face of the documents will subject the employer to liability for discriminatory hiring practices. If, for example, an employer ‘suspects’
that a proffered Social Security Card is fraudulent, the employer is not permitted to reject same or request another document. It only may do so
in the event that the document is clearly altered. Once an employer has reviewed the employee’s documents, it must fill out the second portion of
Form I-9 by indicating the type of documentation provided, as well as the identification number and expiration date (if any) of same. [16]
Finally, employers are required by law to maintain, for inspection purposes, Forms I-9 for all members of their current workforce during the entire time of
their employment. In the case of former employees, they are obligated to keep same for a period of at least three years from the date of hire, or one year
after the date the individual ceases to be employed, whichever is later. [17] As
the authors’ client in southern New Jersey experienced, employers risk ‘substantive’ liability if Forms I-9 are not properly retained—either in paper form
(with original signatures) or in electronic form (with acceptable electronic signatures), or via a microfilm or microfiche copy of the
original signed version of the Form I-9. [18]



Although currently just one page, Form I-9 can be deceptively difficult to complete. Employers should not underestimate the importance of meticulously
completing each and every item on the form, as the failure to do so can translate into mounting liability, even when no unlawful employment exists.
Generally, in the event ICE agents or auditors conduct an inspection of an employer’s Forms I-9 for compliance, they will categorize I-9 violations into
two categories: substantive verification errors, and technical or procedural deficiencies. ICE has never promulgated a regulation defining a substantive
versus a technical violation. It, however, can be assumed that a substantive violation includes an employer’s failure to complete two key parts of Form
I-9: (i) the part that indicates the worker’s ‘immigration’ status; and (ii) the part that indicates that the employee presented a document that confirms
employment eligibility. Other omissions—including the commonly missed ‘date of hire’—usually constitute technical violations. Nevertheless, if technical or
procedural mistakes have been made, the employer will be given ten business days from the time of notification to cure any and all deficiencies. [19]
Importantly, this ‘good faith’ compliance exception does not apply to employers who fail to make such corrections within the allotted time, or who have
engaged, or are engaging, in a ‘pattern or practice’ of such violations. [20]



As noted above, where paper Forms I-9 are completed, the employer is required to retain the original, despite the fact that the
Form and its instructions do not provide notice of same. In the event that an employer fails to possess an original paper Form I-9, the authors would
advise the employer to complete a new original Form I-9 and staple it to the corresponding copy (if one exists) to help mitigate potential liability.
Indeed, should an employer commit such a substantive violation, it can face civil money penalties ranging from $110 to $1,100 for each individual with
respect to whom such violation occurred. [21] In
determining the severity of such fines, ICE is required to consider the following five factors: (i) the size of the business; (ii) the company’s good faith
effort to comply with I-9 requirements; (iii) the gravity of the violation; (iv) whether the violation involved unauthorized workers; and (v) the
employer’s track record and history of prior violations. [22] Such
amounts may seem negligible in the abstract, but for companies with a sizeable workforce, and whose human resources departments have inadvertently
maintained deficient I-9 records for some time, the potential liability can snowball rather quickly.



ii.
Mitigating the Risks: Form I-9




Employers need to be proactive, vigilant, and diligent in their compliance efforts. As set forth below, employers need to establish ‘best practices’ that
will reduce the risk of liability.



‘Best practices’ may include:



· Designating one officer and, under his supervision, one or possibly two employees (typically in the Human Resources Department), to be responsible for
the I-9 process and, as such, be the only ones trained and authorized to examine documents and complete the Forms I-9 on behalf of employer.



· Training: HSI prefers that such training be conducted by ICE personnel as a result of participation in the IMAGE program. However, training also can be
conducted by outside immigration counsel or other knowledgeable personnel. Employer’s authorized representative should be encouraged to read USCIS’Handbook for Employers: Instructions for Completing Form I-9 (Employment Eligibility Verification Form). [23] The
65-page Handbook walks employers through the various steps of proper Form I-9 completion, and provides answers to frequently asked questions: for example,
what to do if, during an in-house audit (see below), technical deficiencies are found, such as the incorrect date of hire. The authorized representative
should NEVER white-out the mistake, but should draw a line through the mistake, include the correct information above it, and initial and date same. The
date should be the date the correction was made.



· In-house Audits: these audits should be conducted on a yearly basis and can include, for large employers, a random sampling of Forms I-9; or for smaller
employers, all I-9s completed during the year in question. It is recommended that these audits be conducted by knowledgeable outside immigration counsel.
Conducting an in-house audit under the aegis of outside immigration counsel has important implications for publicly-traded companies’ compliance with the
Sarbanes-Oxley Act (SOX). Not only would an immigration counsel-led audit likely insulate employees from having to publicly disclose inculpatory
information uncovered during same, as may be required under SOX, but it would also lessen the likelihood of shareholder conflict-of-interest claims, since
the audit would not be conducted by the very human resources specialists responsible for the deficient I-9 recordkeeping in the first place.



· Keep Forms I-9 in a separate file or electronic data base (which could include software purchased from a third party vendor), rather than with other
personnel folders, so that they may be easily reviewed and readily retrieved in the event of a government audit. Although employers should take care to
ensure adherence to the strict regulations governing electronic Form I-9 storage, [24] an
electronic retention system has the added advantage of minimizing errors (e.g. the use of prompts can prevent the user from completing the form until
acceptable responses are given); effecting cost savings, particularly for employers with multiple offices and worksites; and allowing an employer to better
interface with E-Verify, if used.



· Employ a “tickler” or reminder system for Forms I-9 that contain an employment authorization expiration date and which require re-verification. Remember,
‘constructive knowledge’ of an expired work authorization document can easily be imputed to an employer in possession of a Form I-9 indicating that the
employee is no longer in valid status.



· Establish a written and uniform I-9 compliance policy. This need not be extensive, but should address the ‘who’, ‘what’, ‘where’, and ‘when’ of the
entire Form I-9 process, such as how the forms are to be completed, when they are to be completed, and when they are to be purged.




  • Enroll in E-Verify.



iv.
E-Verify



Created by the Illegal Immigration Reform and Immigrant Responsibility Act of 1996 (IIRIRA), and launched in 2004, E-Verify is an electronic verification
system administered jointly by DHS and the Social Security Administration (SSA) which confirms the work authorization status of new employees by
cross-checking information from an individual’s Form I-9 against DHS and SSA records. [25]
Should an employee’s information fail to produce a match with the government’s database, USCIS notifies the employer of the non-confirmation, and the
individual must contest the information mismatch with either the DHS or SSA. In theory, the advent of E-Verify was a welcome development for industry, as
it purported to shift the gatekeeper function that IRCA had imposed on employers back onto the government. However, in reality, program enrollment
requires, inter alia, signing a Memorandum of Understanding (MOU) with the government, subjecting the employer to a host of conditions, including
something that few employers want: permitting DHS and SSA officials to visit the employer’s workplace to review E-Verify and related records. [26]



Although employer participation is free, just a fraction of business establishments nationwide have enrolled. [27] The
low enrollment is not surprising when one considers that employers cannot use E-Verify before the Form I-9 is completed (e.g. to screen job
applicants). In fact, use of E-Verify program is only permitted after each employee is hired, and it may not be used selectively. Another reason
is the perception that E-Verify is flawed, resulting in the erroneous confirmations of unauthorized workers, and, to a lesser extent, erroneous
non-confirmation of legal immigrants and U.S. workers, adding an undesirable dose of uncertainty, expense, and hardship to the hiring process for employers
and employees alike. [28]
Although enrollment in the E-Verify program does create a presumption of compliance with IRCA, it has not—to many employers’ displeasure—prevented such
employers from being investigated. [29] It
is self-evident that the E-Verify program will become more widely used. This is due to three factors. First, HSI and ICE have made it clear that they
intend to keep auditing employers, and enrollment in E-Verify will be a mitigating factor in the event that there proves to be substantive and/or technical
violations. Second, the Federal government is moving toward a federal mandate for the use of E-Verify. Since 2008, the Federal government has conditioned
the award of federal contracts to employers that have so enrolled. [30]
Also, and significantly, there is growing support for a federal mandate that requires all employers to enroll in E-Verify. In January 2008, eight U.S.
senators, from both sides of the aisle, called for “a tough, fair, effective, and mandatory employment verification system.” [31]
Third, and finally, states are beginning to legislate that private employers must use the E-Verify program. [32]
Moreover, in 2011, the U.S. Supreme Court affirmed the right of states to so legislate, as well as to revoke the business licenses of those employers that
knowingly hire unauthorized workers. [33] As
of January 1, 2013, more than half the states in the country have enacted some form of E-Verify legislation, ordinances, or regulations, with Georgia,
North Carolina, Tennessee, and Pennsylvania becoming the latest jurisdictions to join this emerging trend. [34] For
employers with tens, if not hundreds of employees, in industries where turnover may be high and multi-state worksites commonplace, the ability to
successfully navigate this labyrinth of E-Verify requirements carries high stakes. It is easy to imagine a scenario, for example, where a company
headquartered in a state with no E-Verify legislation on its books opens a new office in a mandatory E-Verify jurisdiction, only to soon find itself the
target of a state enforcement action for its (inadvertent) failure to comply with local requirements. Depending upon the jurisdiction, the consequences of
committing such a mistake, even an unwitting one, can be costly, resulting in civil money penalties and/or loss of business licensure and state contracts.
The government’s implicit response? Enroll in E-Verify in every jurisdiction, in every state. Or, better yet, enroll in the IMAGE program.



v.
Mitigating the Risks: IMAGE Program



HSI and ICE want employers to participate in the ICE Mutual Agreement between Government and Employers (IMAGE) program. Though less well known than
E-Verify, IMAGE is a ‘voluntary’ partnership between the government and private industry in which employers receive free training and additional tools
which enable them to strengthen the integrity of their workforce and cultivate a compliant workplace culture. [35]
Employers participating in the IMAGE program must agree to do the following: register for the federal E-Verify program; establish a written hiring and
employment eligibility verification policy that includes an internal Form I-9 audit at least once a year; submit to a Form I-9 inspection
by ICE; and review and execute an official IMAGE partnership agreement with ICE. [36] In
so doing, participants are required to adhere to ICE’s ‘Best Employment Practices’ [37],
which includes self-reporting any violations to ICE. Program participants will be deemed “IMAGE-certified”, a label DHS hopes will become an industry
standard and enhance employers’ public reputation. While not every business may wish to invite ICE into its workplace and proactively self-report issues of
non-compliance, employers are being courted by representations that enrollment should ensure fine mitigation and even avoidance of liability. [38]



Part II: The H-1B Visa & Employer Exposure to Liability




As mentioned at the outset, in no way does this article seek to be alarmist or dissuade employers from hiring foreign workers, particularly in H-1B
capacity. To the contrary, the authors believe that the H-1B visa has increasingly become a valuable vehicle with which to employ foreign professionals,
especially those in the highly coveted STEM (science, technology, engineering, and mathematics) fields. Indeed, when utilized appropriately, the H-1B
represents a win-win for all parties involved.



Rather, Part II of this article simply wishes to impress upon employers that while the H-1B is a coveted visa that results in the employment of highly
skilled foreign nationals, its use comes with important responsibilities. Although employers can easily comply with all H-1B-related requirements, too many
employers fail to do so. Those that play fast and loose with the rules (or fail, at the outset, to even learn what those rules are), risk considerable
liability.



a.
A Brief Overview of the H-1B Process



To secure H-1B classification for a foreign national, the employer must demonstrate, inter alia, that: (i) the position offered to the foreign
national requires no less than the U.S. equivalent of a baccalaureate degree in a designated field; (ii) the foreign national possesses such degree; (iii)
it will pay the greater of the prevailing or ‘actual’ wage to such person; and (iv) such employer has captured one of the 85,000 available H-1B
visa numbers for the fiscal year. The employer must also maintain a public access file that confirms the above, and more.



An H-1B employer contends with two different government agencies in sponsoring a foreign worker: U.S. Citizenship and Immigration Services (USCIS) and the
U.S. Department of Labor (DOL). Before the employer submits an H-1B petition with USCIS, it must first submit a Labor Condition Application (LCA; Form 9035
ETA) to the DOL for certification. The H-1B petition, at the time of submission, includes the certified LCA, which resembles a Memorandum of Understanding
between the employer and DOL. The LCA contains numerous attestations, which if violated, can subject the employer to liability, which will be detailed in
this section.



As stated above, employers that utilize H-1B visas are required to maintain a ‘public access file’ that, upon inspection, confirms the employer’s
compliance with the rules and regulations relating to the employment of H-1B workers. [39]
Specifically, the LCA and attendant regulations provide that H-1B employers shall—for each H-1B worker—maintain their public access file at either their
principal place of employment or the H-1B worksite. [40] The
file should include the following: (i) a hard copy of the signed and certified LCA; (ii) proof of the required wage for the employee’s position. Since the
employer is required to pay the greater of the actual wage or the prevailing wage for the position, the file should include both an explanation of the
employer’s ‘actual wage’ for the position and how the employer determined same, as well as a prevailing wage survey; (iii) proof that the employer
informed, as applicable, the union or other company employees of the H-1B worker’s hire; (iv) a summary of the benefits offered to U.S. workers in
the H-1B employee’s position; and (iv) the H-1B worker’s W-2 or comparable proof of payment to the H-1B worker evidencing, inter alia, that the
worker has been paid the required wage (e.g. typically, the prevailing wage), and has not been ‘benched’. [41]



The following case highlights the need for employers to be aware of this and other requirements relating to their H-1B hires:



In 2010, the authors were retained by an IT consulting company facing a DOL Wage and Hour Division investigation. Although the employer’s H-1B Petitions
had been appropriately approved, the employer’s prior counsel had failed to alert the employer what it was required to do if some of its
H-1B consultants were moved to a different state and worksite; and, worse, what to do if the employer needed to ‘bench’ the workers during non-productive
time. The employer also was ignorant about what costs the H-1B worker could assume, and those that an H-1B worker is not permitted to assume. In this case,
the employer impermissibly used the H-1B workers’ bonus to cover H-1B costs. A disgruntled employee filed a claim and an investigation ensued, resulting in
sizable liability.



Accordingly, the following sections will identify those areas where even the compliant H-1B employer can find itself in trouble, with the goal of keeping
the employer appropriately compliant and, in the event of an audit, that no fine ensue.



b.
Prevailing Wage Considerations



When executing the LCA, the employer attests to its intent to pay the H-1B employee the required wage, which is the greater of the actual or prevailing
wage for the area of intended employment. [42] This
necessitates that the employer compare the wages that it actually pays to other employees in the same geographical area, and who perform similar duties to
that of the H-1B employee, with the ‘prevailing’ or average wage generally paid to similarly situated individuals in the area of intended employment, as
determined by a commercial or government survey. The employer is then required to pay the foreign national the higher of these two wages. [43] In
most cases, the employer is required to pay the H-1B worker the prevailing wage.



The prevailing wage for the same position can vary from location to location. For instance, the prevailing wage for a computer programmer based in Cherry
Hill, New Jersey is bound to be significantly less than that of a computer programmer working in San Francisco, California. Furthermore, the ‘prevailing’
wage for a particular position may prove higher than the employer pays its other employees. In such case, the employer may need to find a salary survey or
even conduct its own survey that validates the offered pay. What an employer cannot do is ignore its obligation to pay the H-1B the required wage at the
applicable work location. Should an employer fail to satisfy this obligation, it can be hit with back wage assessments and other penalties and fines.



c.
Payment of H-1B Costs



As suggested above, there are numerous advantages to hiring an H-1B worker, particularly in the STEM fields. These workers tend to be highly skilled,
highly motivated and, importantly, loyal. Because the H-1B visa is employer-specific, once the employer obtains same, such H-1B worker can be authorized to
work for such employer for up to six years. Thus, this visa can prove cost-effective to an employer—despite the costs of obtaining same. Still, most
employers would like the foreign national to pay for some or all of the costs associated with the H-1B visa as a condition of employment. Payment of H-1B
fees is an area fraught with potential liability: namely, back wage assessments, civil money penalties, and even disqualification from the H-1B and other
immigration programs. [44]
Thus, it is important that the H-1B employer understand which costs must be paid by the employer and which can be paid by the H-1B worker, pursuant to the
USCIS and pursuant to the Department of Labor’s Wage and Hour Division (WHD).



In addition to attorney costs, there are fees to be paid to USCIS. These include the USCIS base filing fee (there is also an optional premium processing
fee, which guarantees expedited adjudication); the USCIS ‘training’ fee; and the USCIS ‘fraud’ fee. There are no filing fees or other costs paid to the
DOL. Too many employers wrongly and solely focus on USCIS’ requirements. As evidenced below, employers are cautioned to familiarize themselves with the
DOL’s position—as enforced by its Wage and Hour Division. USCIS takes the position that employers must pay the ‘training’ fee, [45]
which is $1500 if the employer has more than 25 full-time employees, and $750 if less. The DOL agrees. Many practitioners argue that USCIS allows the H-1B
worker, who is being offered more than the prevailing wage, to pay all costs other than the ‘fraud’ fee, so long as payment of same will not result in the
H-1B worker receiving less than the prevailing wage. Here, the DOL disagrees.



The DOL’s Wage and Hour Division (WHD) maintains that the foreign national cannot pay any H-1B related costs. [46] This
includes the $500 ‘Fraud Prevention and Detection Fee’, as well as the premium processing fee [47] and
attorney fees. Indeed, the WHD has found that legal fees paid to counsel to secure H-1B classification—specifically, those fees directly attributable to
the preparation and submission of the Labor Condition Application (Form ETA 9035 and/or ETA 9035E) and Petition for Nonimmigrant Worker (Form I-129)—are
considered to be business expenses of the petitioning employer, and thus cannot be assumed by the foreign national. While the DOL regulations technically
permit such payments if they do not depress the employee’s wages below the required wage rate, the practical effect of such a rule is to almost
always require H-1B employers to bear the costs of H-1B filing and attorney fees. That is, while H-1B employees frequently earn more than theprevailing wage, rarely, if ever, do they earn more than the actual wage. [48]
Thus, in cases where the actual wage constitutes the required wage, there will likely never be a sufficient ‘cushion’ to allow for such deductions. A
cursory review of WHD court cases, emanating from audits, further underscores the importance of employers recognizing the WHD’s position. [49]



The DOL’s Wage and Hour Division, when auditing H-1B employers, asks whether an H-1B employee has paid any of the legal or filing fees relating to the
underlying petition. [50] In
addition, H-1B employees, when completing Form WH-4 with the DOL’s Wage and Hour Division to allege a possible immigration violation, are asked whether
their employer made deductions from their wages for “nonimmigrant petition processing.” [51]



Here, it is important to note that employee complaints no longer constitute the sole trigger for a WHD audit. U.S. embassies have begun referring matters
to the DOL for investigation, and the Wage and Hour division has entered into agreements with foreign consulates to help crack down on H-1B wage
infractions. [52] If
employers needed any further incentive to comply with the wage requirements, the DOL even maintains a list of ‘willful violators’, subjecting offenders to
public opprobrium. [53] In
light of this environment, it is these authors’ view, as well as that of many other immigration practitioners, that the most judicious and risk-free
strategy for the H-1B employer is to simply assume all costs.



Finally, although an employer is prohibited from imposing a ‘penalty’ on the foreign national for ceasing employment prior to the termination date stated
in the H-1B Petition, the employer is permitted to insert a bona fide liquidated damages clause into a private employment contract. [54] As
the admittedly blurred distinction between a penalty and lawful liquidated damages is a matter of state law, employers seeking to hedge against the
situation where a foreign national ceases H-1B employment shortly after assuming the position should consider the efficacy of same.



d.
Non-productive Time & the Prohibition on ‘Benching’



In an attempt to both protect foreign nationals from exploitation and safeguard the U.S. labor market against cheap foreign labor, the H-1B regulations
specifically prohibit ‘benching’, the practice whereby an H-1B employee is placed in a nonproductive (i.e. non-revenue generating) status without pay or
receipt of the full required wage. [55]



‘Benching’ sometimes occurs unintentionally. As demonstrated below, an employer must select the commencement date of H-1B employment carefully. The
obligation to pay for an H-1B employee’s non-productive time actually begins at the earliest of the applicable following events: (i) when
the H-1B worker starts ‘work’ (i.e. when the foreign national makes himself or herself available for work or otherwise comes under the employer’s control);
(ii) no later than 30 days after the foreign national is first admitted into the United States in H-1B status, whether or not he or she has
started ‘work’; (iii) if the foreign national is already present in the United States, no later than 60 days after the date he or she becomes eligible to
work for the employer, as determined by the start date on the H-1B petition, whether or not the H-1B worker has ‘entered into employment’; or (iv) where the foreign national is already working in H-1B status for another employer, on the date the petitioning employer files the H-1B
‘transfer’ petition with USCIS. [56] Such
rules can result in violations to the unsuspecting employer. For instance, what if the foreign national cannot obtain a Social Security Card on a timely
basis? No matter. The employer is still obliged to put the H-1B worker on the payroll at the earliest of the dates enumerated above. [57]



Benching also can occur in the context of a business slowdown. Although an employer may ‘bench’ or lay-off its U.S. workers during such periods, it is not
permitted to ‘bench’ a foreign national because of insufficient work. [58] If
the employer has run out of work, it can take other steps to help insulate itself from liability. For instance, the employer can reduce a full-time H-1B
employee’s hours (generally defined by the DOL to be at least 35 hours per week) to that of part-time. If it does so, it must file a new LCA with the DOL
specifying the reduction in hours and wages, and, in some cases, an amended H-1B petition with USCIS. [59] If
an employer can no longer employ the foreign national in any capacity, it must terminate such H-1B worker. In such event, the employer must offer the
foreign national return transportation to his or her last country of residence, and notify USCIS of such termination. Should an employer fail to notify
USCIS of termination or a reduction in hours, it is required to pay the ‘benched’ foreign national his or her full salary listed on the LCA, through the
end of the H-1B petition. Indeed, only when a ‘bona fide termination’ is effected does this wage obligation cease.



Importantly, an H-1B nonimmigrant may not lodge a wage complaint with the Wage and Hour Division where the inactivity is attributable to the employee’s
voluntary request (made for his or her convenience), or a condition that otherwise renders the individual unable to perform the H-1B position’s duties. [60]
Examples of the former would include taking extended vacation time or caring for an ailing relative, while the latter would apply to cases of maternity
leave, hospitalization, and the like. Employers, however, are not relieved of their wage obligations, where payment for such periods is mandated by law
(e.g. Family and Medical Leave Act, Americans with Disabilities Act) or the employee’s benefit plan. [61]



e.
Job Duties Inconsistent with the LCA and H-1B Petition



In submitting the LCA to the DOL, an H-1B employer declares that the “information and labor condition statements provided are true and accurate.” [62] Yet,
while the LCA warns that the “making [of] fraudulent representations” can lead to civil or criminal liability, H-1B abuse remains commonplace.



Although abuse of the H-1B program takes many forms, one of the most common types of misrepresentation occurs where the H-1B beneficiary performs duties
inconsistent with those described on the LCA and H-1B Petition. For instance, in one particularly egregious case, an employer identified the foreign
national’s offered position as a ‘business development analyst’—an unequivocally professional and qualifying H-1B position. However, after an investigation
conducted by USCIS’ Fraud Detection and National Security (FDNS) division, it was discovered that the beneficiary was actually working at a Laundromat,
doing laundry and maintaining washing machines. [63] This
is not unusual. FDNS site visits have revealed numerous cases where the beneficiary’s job duties deviate significantly from the description given on the
LCA and H-1B Petition.



In response to this and other fraudulent H-1B practices, FDNS has introduced more proactive enforcement measures, and, in 2009, created the Administrative
Site Visit and Verification Program (ASVVP), an ongoing initiative to conduct site inspections—both pre- and post-adjudication—of H-1B employers
deemed to be at a higher risk for abuse. [64]
ASVVP investigators are specifically charged, inter alia, with verifying the information submitted with the petition, including supporting
documentation submitted by the petitioner. [65] In
the event that the foreign national is found to be performing duties different than those listed on the LCA and H-1B petition, an employer faces adverse
action, ranging from revocation of the underlying H-1B petition to criminal investigation. [66]



Employers, particularly staffing companies, looking to game the H-1B system as a way to hire cheap foreign labor should also know that they face
significant back wage liability. In the event that an employee works in an occupation other than that listed on the LCA, the employer’s required wage
obligation is based on the occupation identified on the LCA, not the wage standards applicable to the occupation in which the foreign national may
be working. [67]



f.
Liabilities and Penalties for H-1B Employers



As has been stressed above, compliance with the USCIS and DOL regulations governing the H-1B program is serious business. H-1B employees who believe that
their employers have failed to comply with their LCA attestations may lodge a formal complaint with the DOL’s Wage and Hour Division (WHD), which, in turn,
can conduct investigations, enforcement proceedings, and impose financial sanctions on non-compliant employers. However, and significantly, the H-1B
employee is not the only party that can potentially inflict liability on employers. Any aggrieved party may, in fact, file a complaint with WHD [68], so
long as that person’s or entity’s “operations or interests are adversely affected by the employer’s alleged non-compliance with the labor condition
application….” [69] This
definition thus includes, but is not limited to, H-1B employees’ union representatives, government agencies, and even competitors of the H-1B employer!



Employers should make no mistake: Civil money penalties can pack a serious financial punch, ranging from $1000 to $35,000 per violation depending upon the
nature of the LCA infraction. [70] In
determining the amount of penalty to be assessed, the DOL may consider the following, non-exhaustive factors: (i) the employer’s history of violations;
(ii) the number of workers affected by the violation(s); (iii) the gravity of the violation(s); (iv) the employer’s ‘good faith’ compliance efforts; (v)
the employer’s explanation for the violation(s); (vi) the employer’s commitment to future compliance; and (vii) the extent to which the employer reaped a
financial gain from the violation(s), or the potential financial injury to other parties. In addition to monetary fines, the WHD may also order the
employer to pay back wages to aggrieved workers, and can even bar the employer from filing LCAs, employment-based immigrant petitions (e.g. EB-2), and H,
L, O, or P nonimmigrant petitions for up to three years. [71]



Conclusion



Today, immigration enforcement has entered a brave new world. After years of averting its gaze, the U.S. government is making good on its promise to turn
up the heat on employers who, whether willfully or inadvertently, fail to comply with their immigration obligations under the law. Although enforcement is
intended for the non-compliant, egregious employer, this article underscores the importance of all employers understanding their obligations and
responsibilities and ‘just’ doing what they are supposed to do. The employer who fully and properly completes Forms I-9, and the employer who properly
employs its H-1B workers and pays the costs relating to same, should have little reason to worry. In the event of an I-9 audit, such employer should be
able to confidently produce its file of Forms I-9 or, in the event of an H-1B audit, its public access files.



Employers, however, must stay ahead of the curve, and commit themselves to not only knowing their responsibilities under the law, but also ensuring that
their immigration compliance protocols comport with established ‘best practices’. While no amount of due diligence and preparedness can guarantee full
compliance, adherence to this basic strategy remains employers’ best insurance policy in warding off liability.



*


1 Written testimony of U.S. Immigration and Customs Enforcement (ICE) Director John Morton for a House Committee on Appropriations, Subcommittee
on Homeland Security hearing on the President’s Fiscal Year 2013 budget request for ICE, Release Date: Mar. 8, 2012, available at:

http://www.dhs.gov/news/2012/03/08/w...director-house

(accessed Feb. 27, 2013).





2
Id
.





3
New Jersey firm fined more than $600,000 for hiring illegal aliens, U.S. Immigration and Customs Enforcement, News Release, Aug. 8, 2012, available at: http://www.ice.gov/news/releases/1208/120808newark.htm
(accessed Feb. 28, 2013).





4
Id
.





5a>
Id
.






Statement for the Record, Secretary Janet Napolitano, U.S. Department of Homeland Security, Testimony before the U.S. House of Representatives,
Committee on the Judiciary, July 19, 2012, available at

http://judiciary.house.gov/hearings/...2007192012.pdf

(accessed Feb. 28, 2013) [hereinafter Napolitano Testimony].





7
Fact Sheet: Worksite Enforcement, U.S. Immigration and Customs Enforcement, May 23, 2012, available at http://www.ice.gov/news/library/factsheets/worksite.htm (accessed Feb. 9,
2013).





8
Julia Preston, Huge Amounts Spent on Immigration, Study Finds, N.Y. Times, Jan. 7, 2013. According to a report by the Migration Policy
Institute, ICE’s budget alone is now nearly $6 billion, an 87% increase since 2005. Id.





9
Public Law 99-603.





10
8 C.F.R. § 274a.2(b)(1)(ii).





11
Id
. at § 274a.2(b)(1)(v).





12
8 U.S.C. § 1324a(b)(1)(B)-(D).





13
Id.
at § 1324b(a).





14
Id.
at § 1324a(b)(2).





15
Id.
at § 1324a(b)(1)(A).





16
8 C.F.R. § 274a.2(b)(1)(v).





17
Id.
at § 274a.2(b)(2)(i).





18
Id
.





19
8 U.S.C. § 1324a(b)(6)(B).





20
Id
. at § 1324a(b)(6)(C).





21
Fact Sheet: Form I-9 Inspection Overview, U.S. Immigration and Customs Enforcement, Aug. 1, 2012, available at http://www.ice.gov/news/library/factsheets/i9-inspection.htm (accessed
Feb. 11, 2013).





22
8 U.S.C. § 274a.10(e)(2).





23
Handbook for Employers: Instructions for Completing Form I-9 (Employment Eligibility Verification Form)
, U.S. Citizenship and Immigration Services, available at http://www.uscis.gov/files/form/m-274.pdf (accessed Feb. 11, 2013).





24
8 C.F.R § 274a.2(e).





25
E-Verify, U.S. Citizenship and Immigration Services, available at www.uscis.gov/everify
(accessed Feb. 9, 2013).





26
Employer Responsibilities When Using E-Verify, U.S. Citizenship and Immigration Services, available at
href="http://www.uscis.gov/portal/site/uscis/menuitem.5af9bb95919f35e66f614176543f6d1a/?vgnextoid=5883d0438c947210VgnVCM100000082ca60aRCRD&vgnextchannel=51ee4df6afc67210VgnVCM100000082ca60aRCRD"
>
http://www.uscis.gov/portal/site/usc...00082ca60aRCRD

(accessed Feb. 9, 2013).





27
Napolitano Testimony, supra note 5 (indicating that 385,000 employers are enrolled in E-Verify as of July 2012). According to the 2012
U.S. Census, however, there are over 7.7 million business establishments in the United States. See http://www.census.gov/econ/smallbus.html (accessed Feb. 9, 2013).





28
Marc Rosenblum & Lang Hoyt, The Basics of E-Verify, the US Employer Verification System, Migration Fundamentals, Migration Policy
Institute, July 2011, available at http://www.migrationinformation.org/feature/display.cfm?ID=846
(accessed Feb. 18, 2013).





29
Remarks by Secretary of Homeland Security Michael Chertoff, ICE Assistant Secretary Julie Myers and Federal Trade Commission Chairman Deborah Platt
Majoras at a Press Conference on Operation Wagon Train, Dec. 13, 2006.





30
Federal Contractors Required to Use E-Verify System, U.S. Citizenship and Immigration Services, Press Release, Nov. 13, 2008, available at http://www.uscis.gov/files/article/FAR_13Nov08.pdf (accessed
Feb. 9, 2013).





31
Bipartisan Framework for Comprehensive Immigration Reform, Senators Schumer, McCain, Durbin, Graham, Menendez, Rubio, Bennet, and Flake, N.Y.
Times, Jan. 28, 2013, available at

http://www.nytimes.com/interactive/2...-document.html

(accessed Feb. 28, 2013).





32
See, e.g.
, E-Verify State Map, available at http://www.lawlogix.com/i-9-and-e-verify-compliance/state-map
(accessed on Feb. 9, 2013).





33
Chamber of Commerce v
. Whiting, 131 S. Ct. 1968 (2011).





34
William J. Flynn, III, E-Verify to Become Mandatory in Four Additional States, National Law Review, Nov. 15, 2012, available at

http://www.natlawreview.com/article/...itional-states

(accessed Feb. 18, 2013). In Pennsylvania, the E-Verify requirement applies only to public works state contractors and subcontractors with
public works contracts worth $25,000 or more.

http://www.lawlogix.com/electronic-i...ffective-2013/

(accessed Feb. 18, 2013).





35
Fact Sheet: Worksite Enforcement, U.S. Immigration and Customs Enforcement, May 23, 2012, available at http://www.ice.gov/news/library/factsheets/worksite.htm (accessed Feb. 9,
2013).





36
IMAGE, U.S. Immigration and Customs Enforcement, available at http://www.ice.gov/image/ (accessed Feb. 10, 2013).





37
IMAGE Best Employment Practices, U.S. Immigration and Customs Enforcement, available at http://www.ice.gov/image/best-practice.htm (accessed Feb. 10, 2013).





38
This was the authors’ experience with a client in Pennsylvania—where, despite thousands of technical violations, and numerous ‘unfound’ I-9s, HSI
recognized that the employer was a compliant employer—and issued a compliance letter and no fine. New Jersey’s HSI, in contrast, swiftly made it
clear that it runs a much more punitive office.





39
20 C.F.R. § 655.760.





40
Id
. at § 655.760(a).





41
Fact Sheet #62D: What records must be maintained by all H-1B employers?, U.S. Department of Labor, Wage & Hour Division, July 2008 (revised),available at http://www.dol.gov/whd/regs/compliance/FactSheet62/whdfs62D.htm
(accessed Feb. 28, 2013).





42
See
20 C.F.R. § 655.700 et seq.





43
Id
. at § 655.731(a).





44
Id
. at § 655.731(c)(11).





45
INA § 214(c)(9)(A); Fact Sheet #62H: What are the rules concerning deductions from an H-1B worker’s pay?, U.S. Department of Labor, Wage and Hour
Division, Aug. 2009, available at http://www.dol.gov/whd/regs/compliance/FactSheet62/whdfs62H.pdf
(accessed Feb. 28, 2013).





46
Fact Sheet #62H: What are the rules concerning deductions from an H-1B worker’s pay?, U.S. Department of Labor, Wage and Hour Division, Aug. 2009.





47
Id
.





48
Wendy Castor Hess et al., Advanced Issues Facing H-1B Nonprofit Employers, AILA Immigration Practice Pointers, 2012-13 ed.





49
Id.
(citing Limanseto v. Ganze & Co., No. 11-LCA -00005, at 10 (ALJ June 30, 2011); Administrator v. Ave. Dental Care, No.
06-LCA-00029, at 23 (ALJ June 28, 2007); Kutty v. U.S. Dep’t of Labor, No. 3:05-CV-510, slip op. at 30-31 (E.D. Tenn., Aug. 25, 2011).





50
Id.





51
Id.
(citing Form WH-4, Nonimmigrant Worker Information Form, available at www.dol.gov/whd/forms/wh-4.pdf).





52
See, e.g.
, U.S. Department of Labor’s Wage and Hour Division to sign agreement of understanding with Mexican consulate in Portland, Ore., Aug. 22, U.S.
Department of Labor, Press Release, Aug. 21, 2012, available at

http://www.dol.gov/whd/media/press/w...20120821_2.xml

(accessed Feb. 26, 2013).





53
H-1B Willful Violator List of Employers, U.S. Department of Labor, Wage and Hour Division, available at http://www.dol.gov/whd/immigration/H1Bwillfulviolator.htm
(accessed Feb. 26, 2013).





54
20 C.F.R. § 655.731(c)(10)(i)(A)-(B).





55
Id
. at § 655.731(c)(7)(i).





56
Id
. at § 655.731(c)(6); see also Fact Sheet #62I: Must an H-1B employer pay for nonproductive time?, U.S. Department of Labor, Wage and Hour
Division (WHD), July 2008 (revised), available at https://www.dol.gov/whd/regs/compliance/FactSheet62/whdfs62i.htm
(accessed Feb. 27, 2013).





57
See, e.g.
, Matter of Univ. of Miami v. Wirth, ARB Case No. 10-090, Dec. 20, 2011.





58
20 C.F.R. § 655.731(c)(7)(i).





59
8 C.F.R. § 214.2(h)(11)(i)(A).





6
20 C.F.R. § 655.731(c)(7)(ii).





61
Id
. at § 655.731(c)(7)(ii).





62
Labor Condition Application for Nonimmigrant Workers, ETA Form 9035, U.S. Department of Labor, available at http://www.foreignlaborcert.doleta.gov/pdf/ETA_Form_9035.pdf
(accessed Feb. 28, 2013).





<63
U.S. Citizenship and Immigration Services, H-1B Benefit Fraud & Compliance Assessment, Sept. 2008, available at http://www.grassley.senate.gov/news/upload/100820082.pdf (accessed Feb. 28,
2013).





64
Administrative Site Visit and Verification Program, U.S. Citizenship and Immigration Services, available at
href="http://www.uscis.gov/portal/site/uscis/menuitem.5af9bb95919f35e66f614176543f6d1a/?vgnextoid=836d7b8a96aa7210VgnVCM100000082ca60aRCRD&vgnextchannel=66965ddca7977210VgnVCM100000082ca60aRCRD"
>
http://www.uscis.gov/portal/site/usc...00082ca60aRCRD

(accessed Feb. 28, 2013).





65
Id.





66
H-1B Visa Program: Reforms are Needed to Minimize the Risks and Costs of Current Program
, U.S. Government Accountability Office, Report to Congressional Committees, Jan. 2011, available at http://www.gao.gov/assets/320/314501.pdf (accessed Feb. 27, 2013).





67
20 C.F.R. § 655.731(c)(8).





68
Id
. at § 655.806.





69
Id
. at § 655.715.





70
Id
. at § 655.810(b).





71
Id
. at § 655.810(d).










About The Author




Jane W. Goldblum is a founder and partner of Goldblum & Hess, LLC. With over 30 years of employment-based immigration
experience, Jane represents some of the country’s finest universities, medical centers, research institutions, and private employers. Jane was
selected as Best Lawyers® 2013 Lawyer of the Year (Immigration Law) and is consistently listed as one of the best employment-based
immigration attorneys in Pennsylvania (www.superlawyers.com), and internationally (www.whoswholegal.com).


                                                                                                                                                      

                                                                                                                                                      


                                                                                                                                                      



Jeffrey D. Azarva is an Associate Attorney at Goldblum & Hess, PC. His practice focuses on a wide array of nonimmigrant and immigrant matters for U.S. and multinational companies and their employees, including H-1B specialty occupation visas.



                                                                                                                                                      

                                                                                                                                                      


                                                                                                                                                      




The opinions expressed in this article are those of the author(s) alone and should not be imputed to ILW.COM.