Labor & Employment Law I JANUARY 2, 2018

Wage Obligations of H-1B Visa Sponsors

The Immigration and Nationality Act permits certain nonimmigrants to work in specialty occupations temporarily on H-1B visas. To support an H-1B visa application, a U.S. employer must file a Labor Condition Application. The regulations at 20 C.F.R. § 655.731 contain detailed requirements concerning the wages to be paid to H-1B nonimmigrants, and 20 C.F.R. § 655.731(c) particularly focuses on circumstances where an employer is required to pay H-1B employees even where they are in a nonproductive status. If an H-1B employee is in nonproductive status due to a decision by the employer, the employer is required to pay the employee’s salary. 20 C.F.R. § 655.73l(c)(7)(i).

However, once there has been a bona fide termination of the employment relationship, the H-1B employee is no longer entitled to any further salary. 20 C.F.R. § 655.73l(c)(7)(ii).

Aditya Chettypally entered into an employment agreement with Premier IT Solutions to work under the H-1B visa program from October 1, 2015 through September 3, 2018. Beginning sometime in November 2015, Mr. Chettypally was in a non-productive status, due to the failure of Premier to provide him work assignments.

On March 21, 2016, Mr. Chettypally filed a complaint with the U.S. Department of Labor Wage and Hour Division, alleging that Premier had committed a number of violations of the Labor Condition Application regulations, including a failure to pay him the agreed upon salary, Approximately one month later, when checking his status on the USCIS website, Mr. Chettypally discovered that Premier had submitted a notice to terminate the H-1B visa and that the termination had been approved. Mr. Chettypally was never directly notified by Premier that his visa had been terminated, nor was he given any payment for transportation home to India. He eventually borrowed funds and returned home.

On February 7, 2017, WHD issued a decision finding that Premier had committed three violations of the H-1B regulations, including failure to pay wages in violation of 20 C.F.R. § 655.731. The Administrator found that there was a failure to pay Mr. Chettypally for both productive and non-productive work, and for travel expenses “associated with the petition.”

On February 21, 2017, Mr. Chettypally requested a hearing on the WHD determination. In particular, Mr. Chettypally contended that Premier did not comply with the bona fide termination process in that it did not notify him of his employment termination, nor did it provide him with a flight ticket home.

Mr. Chettypally admitted that he eventually received, as part of the back wages ordered by the Administrator, after-the-fact payment for his return trip to India.

It was undisputed that Premier never directly or expressly informed Mr. Chettypally that he was being terminated. Rather, Mr. Chettypally found out about the termination when he checked his status on the USCIS website sometime in April, 2016.

Actual notice from USCIS that his employment with Premier was terminated satisfies the notification requirement with respect to Mr. Chettypally. Since the intent of this requirement is obviously to give notice to the H-1B employee and since Mr. Chettypally received actual notice—albeit not directly from Premier, the hearing officer found that the purpose of this requirement had been accomplished.

With respect to the second requirement of whether a bona fide termination had been effected, it was clear that Premier did notify USCIS that the employment relationship with Mr. Chettypally was terminated. With respect to the third requirement, the record established that Mr. Chettypally was not given payment for his return trip home at the time he was forced to leave the United States, though he was later reimbursed for the cost of his trip as a result of the decision by the Administrator.

The failure of Premier to comply with all the requirements for bona fide termination did not, in itself, constitute a basis for directing the payment of additional wages beyond that ordered by the Administrator. Although the payment for the return trip to India was after-the-fact, Mr. Chettypally was nevertheless fully compensated for his return trip. According to the hearing officer, if an H-1B employee is informed that his employment is terminated, and the employer has filed the requisite documentation with USCIS, and the individual returns home on his own, it is difficult to see how the regulations justify payment of additional salary for the period the individual is no longer in this country. Since Mr. Chettypally had already left the country as of May 13, 2016, he was in no position to continue working for Premier. In view of the WHD Administrator’s decision to require Premier to provide full back pay from November 1, 2015 through May 13, 2016, and to provide, although after-the fact, the cost of a return trip home, Premier had no further financial obligation to Mr. Chettypally. Chettypally v. Premier IT Solutions, Inc., 2017-LCA-00006.

Rites LLC is an IT consulting company located in Virginia. On March 30, 2012, the Department of Labor’s Wage and Hour Division issued a letter notifying Rites that it was the subject of an investigation to determine compliance with the H-1B Labor Condition Application provisions of the Immigration and Nationality Act. The investigation involved 27 employees, including Usha Kiran Danda.

On September 18, 2015, Rites and the Administrator of the Wage and Hour Division of the U. S. Department of Labor entered into a Back Wage Compliance and Payment Agreement. The Agreement stated that “[a]s a result of th[e] investigation monetary violations were found resulting in 26 employee(s) due back wages in the amount of $61,595.92.” Mr. Danda was not listed among the 26 employees covered by the Agreement.

On March 23, 2017, the Administrator issued a second determination letter to Rites. The March 23, 2017 determination letter stated that “it has been determined that your firm committed the following violations”:

  • failed to pay wages as required in violation of 20 C.F.R. § 655.731.... failed to provide notice of the filing of LCA(s) in violation of 20 C.F.R. § 655.734.... failed to maintain documentation, as required by 20 C.F.R. § 655.731(b), 20 C.F.R. § 655.738(e), 20 C.F.R. § 655.739(i) and/or 20 C.F.R. § 655.760(c).... and failed to comply with the provisions of subpart H or I in violation of 20 C.F.R. § 655.735(c).

As to the remedy for the violations, the letter stated: “Your firm owes back wages in the amount of $134,029.86 to one (1) H-1B nonimmigrant, Usha Kiran Reddy Dandy.”

The parties disputed the start date of the back wage assessment for Mr. Danda. The Administrator contended the start date should be October 1, 2008, and Rites argued the start date should be January 8, 2009, the first day of the validity period on Rites’ H-1B petition.

The sole issue was the start date for Rites’ obligation to pay back wages to Mr. Danda. There was no dispute that Mr. Danda became employed by Rites, never obtained an assignment but was not validly terminated, and was therefore is entitled to back wages for his employment. The parties agreed on the rate of pay for the back wages and that wages were due through September 22, 2011. They disagreed only as to the start date for the payment of back wages.

An employer is required to pay full wages to an H-1B nonimmigrant, even if the worker is in nonproductive status for lack of assigned work, “after the nonimmigrant has entered into employment with the employer.” 8 U.S.C. § 11 82(n)(2)(C)(vii)(l); 20 C.F.R. § 655.73l(c)(7)(i). An H-1B worker “enters into employment” with an employer “when he/she first makes himself available for work or otherwise comes under the control of the employer, such as by waiting for an assignment, reporting for orientation or training, going to an interview or meeting with a customer, or studying for a licensing examination, and includes all activities thereafter.” 20 C.F.R. § 655.73l(c)(6)(i).

The Administrator argued that Mr. Danda entered into employment with Rites by October 1, 2008, because he moved to Richmond, Virginia, in September 2008 to work for Rites; began an eight-week training class for Rites sometime in September 2008; and began receiving job postings.

Rites countered that the training class was open to the public; that the purported job posting emails did not clearly relate to available positions and did not establish that any job opportunities had a start date prior to January 8, 2009; that the Administrator failed to produce any direct documentation of employment, such as W-2s, I-9s, timesheets, or similar documents; and that its co-owner, Mr. Vakkalanka, unambiguously stated that Mr. Danda was not an employee of the company prior to approval of the petition in January 2009. Rites also argued that in any event, the obligation to pay wages is not triggered “merely because the employee chooses to make himself available to work,” but rather depends on when the employee becomes eligible to work through approval of the H-1B petition.

The hearing officer found that Mr. Danda made himself available to work for Rites when he moved to Richmond, Virginia, and began participating in Rites’ training class.

The H-1B “portability” provision allows an H-1B worker to change employers, and states that a “nonimmigrant alien described in paragraph (2) who was previously issued a visa or otherwise provided nonimmigrant status ... is authorized to accept new employment upon the filing by the prospective employer of a new petition on behalf of such nonimmigrant .... Employment authorization shall continue for such alien until the new petition is adjudicated. If the new petition is denied, such authorization shall cease.” 8 U.S.C. § 1184(n).

The hearing officer concluded that the portability provision applied. USCIS had investigated Mr. Danda and granted him H-1B status with a prior employer, Vayu Inc., and investigated and approved Rites’ petition, based on a “[c]hange of employer,” to “[a]mend the stay of the person(s) since they now hold this status.” The approval by USCIS was evidence that Mr. Danda had been lawfully admitted into the U.S.; that the petition was not frivolous; and that Mr. Danda had not been employed without authorization prior to the filing of Rites’ petition. Therefore, the portability provision applied to him.

Thus Mr. Danda was entitled to back wages from the first date that he “entered into employment” with Rites following the date of filing of Rites’ I-129 petition. Rites filed its I-129 petition on September 18, 2008, and Mr. Danda entered into employment with Rites as of October 1, 2008. Therefore, Mr. Danda was entitled to back wages as of October 1, 2008. Administrator, Wage and Hour Division v. Rites LLC, 2017-LCA-00011