When Must an Employer Start Paying an H1B Worker?
Posted Apr 17, 2009
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We at the Murthy Law Firm recently have been producing articles intended to assist H1B petitioning employers in understanding and complying with complex U.S. Department of Labor (DOL) regulations. The timing of an employer’s obligation to pay H1B workers is another important topic in this area; in particular, a DOL regulation commonly referred to as the 30/60-day rule. Many of the regulations that apply to employers of H1B workers pertain to the labor condition application (LCA) that must be obtained from the DOL to process an H1B petition.
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DOL Regulations Define Start Date for Wage Obligation
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The DOL has a regulation that states that an employer who files an H1B petition must begin to pay the sponsored worker the required LCA wage when the worker enters into employment. The DOL defines this as when the worker makes himself or herself available for employment or when the worker comes under the control of the employer. Thus, an H1B employee meets this requirement and the wage obligation begins, in many situations, when the worker is not engaging in productive employment. This can include common situations, such as when the employee is available to start, but is waiting for an end-client assignment, is engaged in any type of training (whether in-house or from the employee's residence), is attending orientation sessions, and/or is interviewing with end-clients or customers for placement. Thus, employers that do not pay their H1B workers who have made themselves available or are in the employer's control, as explained above, can be subject to substantial back-wage assessments.
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DOL 30/60-Day Rule
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If the H1B worker does not enter into employment, as defined above, and is present in the United States, then the DOL's 30/60-day rule will apply. The relevant DOL regulation states that if the H1B worker does not enter into employment, the H1B employee must be put on the employer's payroll and be paid the full required LCA wage on the 30th day after the employee entered the U.S. in H1B status. If the H1B worker was already in the U.S. when the H1B petition was approved, s/he must be paid the full required LCA wage, at the latest, by the 60th day after the date when the worker became eligible to work for the employer. The worker is considered eligible for work on the start date listed on the approved H1B petition or the date that the H1B petition is approved, whichever is later. Thus, the wage obligation must begin, at the latest, 60 days after the start date of the approved H1B petition.
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Example 1  Company A files an H1B petition on April 1, 2009. The requested start date for employment is October 1, 2009. If the H1B petition is approved on July 1, 2009, the eligible to work date is October 1, 2009. This is because the H1B petition requested a start date of October 1, and no wage obligations are triggered before that date, even if the H1B petition is approved.
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Example 2  Company A files an H1B petition on April 1, 2009. The requested start date for employment is October 1, 2009. If the H1B petition is not approved until November 1, 2009, the eligible to work date is November 1, 2009. This is because, as of the requested start date, the petition was not yet approved.
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H1B Withdrawals May Be Needed
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If an H1B worker is in the United States, the H1B-sponsoring employer’s LCA wage obligations will begin no later than the 60th day after the start date on the approved H1B petition. Most employers cannot afford to pay workers who are not working for them and producing some type of revenue or benefit. Thus, in order to prevent or stop the back wage obligation for such workers, it is necessary to terminate the employee and send a withdrawal notification to the U.S. Citizenship and Immigration Services (USCIS). The DOL considers the H1B worker’s wages to be a responsibility of the employer until the date that the USCIS receives a written request to withdraw the relevant H1B petition. The revocation of H1B petitions was covered in our March 20, 2009 NewsBrief, entitled Solutions to Help Employers with H1B Compliance, available on MurthyDotCom.
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Enforcement of the 30/60-Day Rule
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The DOL is currently enforcing this 30/60-day rule against employers of H1B workers in two ways. First, the DOL is seeking back wages for the time between when an employee enters the U.S. or becomes eligible to work and the time when the H1B employee is first added to the employer's payroll and paid the full LCA wage. Any reduced salary or wage during this time is considered a violation of DOL regulations and can lead to an assessment of back wages and possible fines. The DOL is also seeking back wages covering the period from when an H1B worker last was paid to when USCIS receives a written withdrawal request for the H1B petition. If the employer waits several months to send the withdrawal request, and does not have other clear proof of the termination of employment, there can be an assessment of back wages.
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Conclusion
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As MurthyDotCom and MurthyBulletin readers have been advised of late, employers must take H1B compliance seriously. Employers may not have their H1B workers train, interview for placements, or perform other tasks without paying them the full LCA required wages or salaries. Once 30 or 60 days have passed, H1B employers must pay the required wages or terminate the employment and send prompt notice of withdrawal of the relevant H1B petition to the USCIS. Any other practice could lead to DOL investigation and the possibility of findings of back-wage obligations, as well as fines and other penalties.