Stephen M. Perlitsh P.C.
49 West 45th Street, Floor 6
New York, NY 10036
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Email: stephen@perlitsh.com
11. The Labor Condition Application
I. Introduction
WARNING: Employers must take all efforts possible to comply with all the rules and regulations pertaining to the Labor Condition Application. Failure to do so could lead to steep monetary penalties ranging from $1,000.00 to $35,000.00 per violation, as well as civil and criminal liabilities.
This memorandum discusses the representations which an employer makes when executing a Labor Condition Application, (hereinafter referred to as “LCA”) in conjunction with the H-1B petitioning process. Due to the numerous regulations pertaining to the LCA, it is impossible to address every detail of the laws. However, this memo will discuss some of the key points pertaining to the LCA segment of the H-1B process. It is impossible for this memo to cover all points contained in the Regulation. Full information regarding the LCA, as implemented by the American Competitive and Workforce Improvement Act of 1998 was published on December 20, 2000 in the Federal Register on pages 80110 through 80239, 138 pages of small type three column paper. These regulations can also be found in 20CFR Parts 655 and 656.
An employer seeking the services of an H-1B non-immigrant has several responsibilities and obligations. The preliminary step to an H-1B petition is the submission of an LCA to the Department of Labor. By completing the LCA, the employer is agreeing to several attestations regarding an employer’s responsibilities, including the wages, working conditions, and the benefits to be provided to the H-1B employee.
The LCA contains additional attestations for certain employers deemed to be “H-1B dependent” and employers who are found to have “willfully violated the H-1B program requirements.” These attestations impose obligations on the employer to recruit workers from the United States, either for the employer’s staff or for the staff of a second employer with whom the H-1B worker is placed, with indicia of employment from the first employer.
The employer must make the LCA and necessary support documentation available for public examination at the employer’s principal place of business in the United States, or at the place of employment, within one working day after the date on which the LCA is filed with the Department of Labor.
The employer must develop sufficient documentation to meet its burden of proof with respect to the validity of the statements made in the LCA and accuracy of the information provided in support of the attestations, in the event the LCA is challenged. This documentation must be maintained and made available to the Department of Labor for inspection and copying at the employer’s principal place of business in the United States.
The LCA must list ALL intended places of employment. If needed, additional LCAs should be submitted for additional places of employment.
II. The Attestations Contained in the LCA
A prospective employer, prior to filing an H-1B petition with USCIS, must file an LCA, Form ETA 9035, with the Department of Labor. By filing the LCA, the employer attests to the following:
1. Wages: For the entire period of authorized employment, the employer will pay all H-1B non-immigrants who have similar experience and qualifications for the specific position set forth in the LCA at least the higher of:
a. The actual wage level paid by the employer to all other individuals with similar experience and qualifications for the specific position in question; or
b. The prevailing wage level for that specific occupational classification, in the area of intended employment
1.1 Nonproductive Time: The employer will pay the H-1B non-immigrants the required wage for time in nonproductive status, due to a decision of the employer, or due to the H-1B non-immigrant’s lack of a permit or license
1.2 Benefits: That the H-1B non-immigrant will be offered benefits and eligibility for benefits on the same basis and in accordance with then same criteria, as offered to U.S. workers. See 20 CFR 655.731
2. Working Conditions: The employment of H-1B non-immigrants in the named occupation will not adversely affect the working conditions of workers similarly employed. Working conditions include hours, shifts, vacation periods and fringe benefits.
The H-1B non-immigrants will be afforded working conditions on the same basis and in accordance with the same criteria, as offered to similarly employed U.S. workers. See 20 CFR 655.732
3. Strike, Lockout or Work Stoppage: On the date the LCA is signed and submitted, there is not a strike, lockout or work stoppage in the course of a labor dispute in the occupation in which H-1B non-immigrants will be employed at the place of employment. If such a strike or lockout occurs after the filing of the LCA, the employer will notify ETA within three days of the occurrence, and the LCA will not be used in support of petition filings with USCIS for H-1B non-immigrants to work in the same occupation at the place of employment until the Employment and Training Administration component of the Department of Labor (ETA) determines the strike or lockout has ceased. See 20 CFR 655.733
4. Notice: As of the date of filing of the LCA, notice of the LCA has been or will be provided to workers employed in the occupation in which H-1B non-immigrants will be employed, through one of the following two methods:
a. Notice of filing the LCA has been provided to the bargaining representative of workers in the occupation in which H-1B non-immigrants will be employed.
b. If there is no bargaining representative, a notice of the LCA filing will be provided either through physical posting in conspicuous locations where H-1B non-immigrants will be employed or through electronic notification to employees in the occupational classification for which H-1B non-immigrants are being sought. All three pages must be posted.
4.1 A copy of the certified LCA, as well as a copy of ETA 9035CP (Cover Pages), if requested, will be provided to each H-1B non-immigrant employed pursuant to the LCA, no later than the date that the H-1B non-immigrant reports to work at the place of employment. See 20 CFR 655.734
III. The Public Inspection File
By executing the LCA, the employer is obligated by the Regulations to develop and maintain in a Public Inspection File, documentation supporting the LCA statements 1 and 4 as specified in 20 CFR 655.731 and 655.734 and to make this documentation available to Department of Labor officials upon their request. The Regulations do not require a separate public access file for each LCA or for each H-1B worker. An employer may keep a single public access file with one copy of each of the required documents which are required for all LCA’s and clip together those documents which are specific to each LCA.
The documentation is not submitted to the Department of Labor. However, upon the request of the Department of Labor or any individual, the Public Inspection File must be made available for inspection. Other documentation must be maintained for review, in the event of a Department of Labor investigation. LCA materials should be kept separate from other employment records. Documentation which must be made available for public inspection should be kept in its own file and apart from the other documentation required for LCA purposes, as well as from the personnel information regarding specific H-1B workers.
Within one working day of filing the LCA, the employer must make available for public examination, at its principal place of business or place of actual employment, the following documentation:
1. A copy of the LCA, signed by the employer's representative, including ETA 9035 (the actual form) and ETA9035CP, the LCA cover pages.
2. Documentation providing the wage rate to be paid to the H-1B worker admitted under the LCA.
3. A copy of the prevailing wage determination.
4. A memorandum explaining how the employer calculated the actual wage for the job, without identifying the H-1B worker or the other workers similarly employed as the H-1B worker for purposes of determining the actual wage. The documentation could be a memorandum summarizing the system or a copy of the employer's standardized pay system.
5. A summary of the benefits offered to United States’ workers in the same occupational classifications as the H-1B worker. If the employer is providing “home country” benefits, a notation should be made in the Public Inspection File. The summary need not include proprietary information, including the costs of benefits to the employer, or the details of stock options or incentive distributions.
6. If all employees are not offered the same benefits, a statement of how any differentiation of benefits is made.
7. Where the employer is utilizing the “single employer” definition as contained in the IRC, in order to determine its H-1B dependency status, a list of the entities included as part of the single employer in making this determination.
8. Evidence of (1) notification to the bargaining representative or (2) posting of notice of the LCA filing, including the dates and locations of the posting.
9. Evidence that a copy of the LCA was given to the H-1B worker on or before the first day of employment.
10 Documentation of H-1B dependency if the non-dependent status is not readily apparent, or if the employer has changed from being H-1B dependent, to H-1B non-dependent. See below.
11. If the employer undergoes a change in corporate structure, a sworn statement by a responsible official of the new employing entity, that it accepts all the obligations, liabilities and undertakings under the LCAs filed by the predecessor, together with a list of each affected LCA and its date of certification and a description of the actual wage system and EIN of the new employing entity. (See Section 655.730(e)(1)).
12. Where the employer is H-1B dependent and/or a willful violator and indicates on the LCA that only ”exempt” employees will be employed, a list of the “exempt” H-1B non-immigrants (See Section 655.737(e)(1)).
13. Where the employer is H-1B dependent and/or a willful violator, a summary of the recruitment methods used and the time frames of recruitment of US workers(or copies of pertinent documents showing this information. (See Section 655.739(i)(4)).
If one Public Inspection File is maintained for all LCA’s, where there is documentation common to all LCA’s, only one document needs to be retained in the file.
The records mentioned herein must be maintained for a period of one year beyond the date of expiration of the LCA, or one year from the withdrawal of the LCA, or one year from the last day of employment of the H-1B worker under the LCA.
IV. Maintaining the LCA Documentation:
The Non-Public Records
Note: It is beyond the scope of this memo to contain all the requirements of ACWIA.
Not all documentation in support of the LCA must be maintained in the Public Inspection File. Among the documentation which is not required to be made available for public inspection are the following:
1. Payroll records showing the wage rate for all of the employer's employees in the same job at the place of employment. This documentation is not limited to employees with experience and qualifications similar to the H-1B worker, although the H-1B worker only needs to be compared to this latter group of employees for purposes of determining the actual wage rate. The payroll records must be maintained throughout the period of employment of the H-1B non-immigrant. The payroll records must include the following information for each employee receiving the actual wage rate paid to the H-1B employee:
a. Full Name and address.
b. Occupation and rate of pay.
c. Hours worked each day and each week if paid on other than salary basis and for part time H-1B workers.
d. Total additions or deductions from pay for each pay period.
e. Total wage paid for each pay period.
This information is similar to the information that must be kept by the employer pursuant to the Fair Labor Standards Act.
1. Data used to establish the actual wage rate for the H-1B worker. This data should document arithmetically how the employer's wage system, described in the memorandum in the public inspection file, was applied to calculate the H-1B worker's rate of pay.
2. Data underlying the prevailing wage determination, if applicable. The employer is only required to include a general description of the prevailing wage source and methodology in the public inspection file. The raw data underlying a wage survey should be maintained by the employer apart from the public inspection file, in cases in which a wage survey is used by the employer as a prevailing wage source.
3. Documentation on working conditions. The employer may be required to produce evidence that the H-1B worker is receiving working conditions equivalent to U.S. workers if the DOL undertakes an investigation.
4 Detailed records of fringe benefits.
5 A copy of each H-1B petition and extension request.
6 A list of all entities which are considered to be a part of a “single employer,” for the purpose of determining H-1B dependency.
V. Attestation as to Wages
The Actual Wage Rate described in the first attestation is the wage rate paid by the employer to all other individuals with similar experience and qualifications for the position. The following factors can be considered in determining the wage level: experience, qualifications, education, job responsibility and function, specialized knowledge, and other legitimate business factors, namely, those that it is reasonable to conclude are necessary because they conform to recognized principles or can be demonstrated by accepted rules and standards.
Where there are other employees with substantially similar experience and qualifications in the position in question, i.e., they have substantially similar duties and responsibilities as the H-1B non-immigrant, the actual wage shall be the wage paid to these other employees. Where no such other employees exist, then the actual wage shall be the wage paid to the H-1B employee by the employer. If the employers pay scale or system provides for adjustments during the period of the LCA, for example, cost of living increases or other periodic adjustments, or the employee moves to an advanced level in the same occupation, such adjustments must also be provided to the similarly employed H-1B worker.
The Prevailing Wage for the position must be determined as of the time of filing the LCA. In most cases, the employer is not required to use any specific methodology to determine the prevailing wage and may use a SESA (the Department of Labor survey), an independent authoritative source or other legitimate sources of data.
The best source for determining the prevailing wage is the Department of Labor. The prevailing wage is determined from SESA (State Employment Service Administration). An application can be submitted to the Department of Labor. However, it can take anywhere from one week to two months to process a prevailing wage application, depending on the state where the prospective employment is to be performed. Alternatively, surveys published by the Department of Labor can be obtained from OES (Office of Employment Statistics). SESA and OES surveys are probably the best and safest surveys to use to substantiate the prevailing wage.
If the position is covered by a Collective Bargaining Agreement, the prevailing wage would be the wage stated in the Agreement.
Alternatively, an employer can use any other published survey as its source for a prevailing wage. However, if the Department of Labor determines that the survey is deficient, the employer can be liable for various penalties. The determination of the acceptability of the survey will not be made at the time of filing.
It is a violation of the wage provisions of the employer, if the H-1B worker is required to reimburse, or pay for attorney’s fees, or other costs related to the preparation and filing of the H-1B petition, if after deducting these fees or costs from the employees wage, the employee’s wage would be below the wage required by the LCA.
VI. Attestation as to Working Conditions
The employment of an H-1B non-immigrant cannot adversely affect the working conditions of workers similarly employed in the area of intended employment. "Working Conditions" are defined as hours, shifts, vacation periods and fringe benefits. In the event of a complaint, the employer must present documentation to the Department of Labor establishing that the working conditions of its H-1B aliens and similarly employed workers are similar to those within like business establishments.
VII. Attestation as to the Posting Notice
If there is no bargaining representative, the employer, on, or within 30 days of the date the LCA is filed with the Department of Labor, must provide notice of the filing of the LCA. Usually, the entire LCA, as well as the instructions, are posted. By doing so, the employer should meet the statutory requirement that the notice include the following information:
1. That H-1B non-immigrants are sought
2. The number being sought
3. The occupational classification
4. The wages offered
5. The period of employment
6. The locations at which the non-immigrant workers are employed
7. That the LCA is available for public inspection
The notice must be posted in at least two conspicuous locations at the work site for at least 10 consecutive days and contain the following statement:
“Complaints alleging misrepresentation of material facts in the labor condition application and/or failure to comply with the terms of the labor condition application may be filed with any office of the Wage and Hour Division of the United States Department of Labor.”
This statement is contained on the LCA.
For public and Department of Labor inspection, the employer must retain copies of the posted notice with a notation as to the dates and locations of posting.
If there is a bargaining representative, the notice should be sent by certified mail, return receipt requested, and also contain the above recitation.
The LCA must be posted at each location where the H-1B employee will be performing services pursuant to his employment. These locations are to be listed on the LCA and on the H-1B petition.
The notification can also be made by electronic means. Posting on the employer’s home page or electronic bulletin board is allowed, where employees have direct access to these resources. Posting must be by the means ordinarily used by the employer to communicate with its employees about job vacancies or promotion opportunities.
Appropriate locations for posting include locations in the immediate proximity of wage and hour notices required by 29 CFR 516.4. or occupational safety and health notices required by 29 CFR 1903.2(a).
If the employer places an H-1B non-immigrant at one or more worksites not contemplated at the time the LCA is filed, but are within the area of intended employment listed on the LCA, then the notice must be posted in the manner stated above, on or before the date any H-1B non-immigrant begins work.
The employer must provide the H-1B employee with a copy of the LCA certified the DOL, no later than the day the H-1B employee reports to work at the place of employment. The cover pages to the LCA only have to be provided if requested.
VIII. Employer’s Continuing Obligations
The employer has several continuing obligations once the initial approval has been received. If the H-1B worker is assigned to work sites not listed on the original LCA, additional steps must be taken. These steps include a new posting at the additional work site or the filing of a new LCA (with a new prevailing wage determination, actual wage calculation and posting), depending on whether the new work sites are within an area of employment listed on the original LCA. Any material changes in the employment described in the H-1B petition must be approved by the USCIS through the filing of an amended petition. The USCIS interprets assignment to additional work sites requiring a new LCA to be a material change requiring the filing of an amended petition.
IX. Determination of H-1B Dependency
An H-1B employer must make additional attestations if they are deemed H-1B dependent. The determination of H-1B dependency is based upon the following proportions:
1. 25 or fewer full time equivalent employees (FTEs) and more than 7 H-1B employees
2. 26-50 FTE’s and more than 12 H-1B employees
3. 51 or more employees and at least 15% of the employer’s FTE employees are H-1B employees
The Supplemental Information to the regulations provides that documentation of the determination is required to be maintained in the Public Inspection File, if the non-dependent status is not readily apparent. Employers have an option of considering all part time employees as being ½ FTE.
X. Sections Not Being Discussed in this Memo
As stated above, the regulations pertaining to the LCA are quite extensive and detailed. If you have not fallen asleep reading this memo, it is probably due to the shock from the realization of the onerous provisions and responsibilities resulting from filing an LCA. Among the areas not discussed in this memo, but may be of applicability to your circumstances, are the following:
1. Section 655.735: Special Provisions for Short Term Placement of H-1B non-immigrants at places of employment outside of areas of intended employment listed on the LCA
2. Section 655.736: What are H-1B dependent employers and willful violators?
3. Section 655.37: The effect of “exempt” H-1B non-immigrants on the additional attestation obligations of H-1B dependent employers and willful violator employers.
4. Section 655.738: What are the non-displacement of US Workers obligations that apply to H-1B dependent employers and willful violators and how do they operate?
5. Section 655.739: The “Recruitment of US Worker” obligations that apply to H-1B dependent employers and willful violators and how they operate.
6. Subpart I Enforcement of the LCA: Sections 655.800 through 655.855
Should you require information on these topics, or if these topics apply to you, please consult competent legal counsel.
The United States Department of Labor Employment Standards Administration Wage and Hours division is charged with investigating compliance with the LCA regulations. The general practice of the Department of Labor is to call and subsequently write a letter informing the Department and advising as to the date of investigation, the documents required and the period of time under investigation. Among the documents reviewed at an investigation and required to be made available pursuant to 29 CFR part 655.760 (a) are the following:
1. All Labor Condition Applications submitted to the U.S. Department of Labor during the designated investigative period.
2. A copy of all public access documentation required by 29 CFR part 655.760 (a) including:
a. The LCA that was included as part of their H-1B visa application.
b. Their actual hours of work and gross earnings received.
c. An explanation of the deductions made from their weekly wages.
d. The actual site where their work was performed each week (Site, City, State).
e. The actual rate of pay.
f. The date of entry into the United States.
Other documentation may be required to be submitted at the time of the inspection. It is recommended that you retain council in the event that an inspection is scheduled.
XI. Conclusion
The LCA is a long application, which, if the employer wants to be in full compliance with Federal Regulations, requires numerous additional steps. Failure to comply with these regulations can lead to various penalties, including fines and back wages. Hopefully, by complying with the federal guidelines, the employer will be in full compliance with the LCA regulations. This memorandum is designed to provide basic information regarding the LCA and is not to be construed as a substitution to reading and analyzing the regulations.
Last update: November 27, 2005