A Glimpse on DOL H1b Audits

Employers who hire H1b employees have certain responsibilities in terms of submitting a completed Labor Condition Application (LCA) on Form ETA 9035E in the manner prescribed by the regulations. By completing and signing the LCA, the employer agrees to several attestations regarding an employer’s responsibilities, including the wages, working conditions, and benefits to be provided to the non-immigrant.

An important aspect of the LCA process is that the application is valid to specific place or places designated on the prevailing wage conditions, and the employee for whom this LCA process is filed and approved should be employed within the designated areas.

In order to enforce compliance of the LCA, DOL audits employers. Audits are usually triggered either when a current or former employee files a complaint with the DOL or when the DOL targets a specific industry for investigation.

Each investigation begins with an initial audit letter from the DOL officer. The officer may also meet with the company and obtain an initial statement. Following the letter, the investigation commences and may take several years to complete. Finally, the Division (Wage and Hour Division) concludes its investigation and makes a final determination in regard to compliance.

Penalties for non-compliance vary widely, and include civil fines for willful violators of the displacement provisions, criminal fines and incarceration, payment of back wages, and termination of participation in the H-1B program. DOL penalizes for instances where their are willful failures to pay the required wages, failure to maintain public access files, and fines for the employer’s retaliatory action again the employees who had filed a complaint.

Thus, the most prudent course of action is to avoid DOL investigations altogether, by full compliance with LCA regulations and meticulous record keeping in regard to foreign employees. Although the relevant regulations are at times convoluted and confusing, understanding the rules and implementing the appropriate procedures is essentially a matter of patience and careful record keeping. The company should develop and maintain policies in regard to foreign employees, to ensure consistency and reduce the probability of employee complaints. If compliance is an issue, the company may wish to conduct an audit of all applicable records, with or without the assistance of professional immigration consultants.

In the unfortunate event that a company does become the subject of a DOL investigation, the company should immediately take action to address the alleged shortcomings and defend the company’s practices. If the reason for the complaint is apparent, rebuttal information should be gathered and prepared. Affected employees should be notified about the investigation and the proper response, to minimize the negative affect within the office. If the reason for the complaint is unknown, the company should conduct an audit to identify weaknesses and prepare a rebuttal. In some circumstances, as suggested above, the company may find it appropriate to hire Attorneys to assist with the audit, including but not limited to an immigration attorney, employment attorney, and a criminal attorney (if the violation appears to be sufficiently egregious). The “audit team” might also include personnel from the company’s HR department, payroll department, benefits department, and in-house counsel, if any.

Typically, investigations focus on the following issues:

  1. Wages – are the H-1B employees paid the same as other employees?
  2. Treatment – are the H-1B employees otherwise treated similarly to other employees?
  3. LCA specifics – has the company accurately completed the LCA? Is the H-1B employee working in the same location listed on the LCA and under the same job title?
  4. Displacement issues – has a U.S. worker been replaced by an H-1B employee?
  5. Does the Public Access File properly maintained and accessible?

In light of these issues, investigators often request the following documentation:

  • Public Access files
  • Payroll records;
  • List of similarly situated workers and their wages;
  • Copies of H-1B petitions;
  • Listing of differences in job duties between H-1B employees and non-H-1B employees;
  • Listing of benefits and deductions for H-1B employees and non-H-1B employees.

During an investigation, the company must often make strategic decisions about how cooperative the company will be, and, if an actual violation is discovered, whether the violation should be corrected while the investigation is taking place.