H-B EMPLOYEES IN THE ECONOMIC DOWNTURN
Many companies are reacting to the economic downturn by downsizing – reducing the hours the employees work or eliminating positions that are no longer economically viable - within the company.
In instances where a company employs temporary foreign workers (pursuant to H-1B petitions) this matter must be carefully evaluated. When an employer files an H-1B petition with U.S. Citizenship & Immigration Services, the employer completes a Labor Condition Application which is filed with the U.S. Department of Labor. In that document, the employer agrees to pay the prevailing wage or a higher wage, as established by the local Department of Labor. If an employer decides that all professional employees will be given a 10% reduction in pay and work the same hours, the employer must be careful to ascertain that the 10% pay reduction to the H-1B employee does not fall below the prevailing wage which the employer guaranteed by signing the Labor Condition Application. If the employer does decrease the H-1B employee’s wages, below the prevailing wage, the employer has violated the Labor Condition Application and can be subject to discipline from the U.S. Department of Labor. Also, the employee can file a claim against the employer for not paying wages guaranteed under the Labor Condition Application. The employer must review all H-1B petitions filed and review the Labor Condition Applications to ensure that the prevailing wage guarantee will not be violated. If the employer ascertains that the prevailing wage is still being met, even with the reduction of pay, no action is required.
In many cases, H-1B employees are usually paid at the prevailing wage or slightly higher as this is the least amount of money that the employer must pay to hire temporary foreign workers.
Some employers have been known to not reduce the H-1B employee wages in order to comply with the Labor Condition Application. However, this opens up a myriad of problems which the company’s employment lawyers will have to address. If the temporary foreign worker is treated better than the lawful U.S. worker at the same company, unlawful employment discrimination will result.
A possible solution could be to reduce the H-1B employee’s wages and hours after filing a new petition with U.S. Citizenship and Immigration Services. A new petition is required as the circumstances of employment have significantly changed. H-1B employees can be employed on a less than full time basis provided that the Company is paying the prevailing hourly wage rate. However, the Company must file a new petition and substantial filing fees must be taken into account. In addition to the base filing fee of $320, on the first renewal of an H-1B or a refilling of an H-1B petition, there is an ACWIA (American Competitiveness and Workforce Improvement Act of 1998) fee of $1500 for employers of 26 or more U.S. full time employees or $750 for employers with 25 or less U.S. full time employees. There may be additional legal fees for the preparation of the documents which may add expense to the procedure.
If the employer determines that it is necessary to lay off an H-1B employee for lack of work, the employer is still required to pay the wage guaranteed by the Labor Condition Application for the period of the lay off, required by Federal regulation 20 C.F.R. §655.731(c)(7)(i). Termination of the employee(s) may be a better remedy.
However, termination of the H-1B employee(s), is not without its costs. By provisions of Federal regulations which govern H-1B employment (specifically 8 C.F.R. §214.2(h)(6)(vi)), the employer will be liable for the costs of return transportation for the alien/temporary foreign employee abroad if the alien is dismissed from employment for any reason by the employer before the period of authorized admission. The regulation further states, that the term “abroad” means the alien’s last place of foreign residence. Therefore, the employer must carefully weigh which is the most cost effective and humane way to meet this challenge. No matter how the employer decides to proceed, it must ensure that the H-1B employee(s) are not treated better than any other employee of the company.
Seeking competent legal counsel in strongly suggested in complex matters such as those outlined above.
For more information, please contact Attorney Jason Y. Gans.