Company and Owner Both Liable for H1B Back Wages
Posted Jan 30, 2009
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The Administrative Review Board (ARB) of the U.S. Department of Labor (DOL) reaffirmed and approved on December 31, 2008 a decision by an Administrative Law Judge (ALJ) that awarded $39,666.47 in back wages, plus interest, to a physician employed in H1B status. Two significant matters in this case are: (1) the ARB found that it was appropriate to award wages beyond the termination of actual employment until the time when employer filed a notification and request with the USCIS to revoke the H1B petition; and (2) the back-wage award was granted against the H1B company, as well as against the company owner, individually. This problem is avoidable simply by paying workers, as required in the Labor Condition Application (LCA); or, if there is not sufficient work, filing an H1B amendment or terminating the H1B, as needed, in compliance with the DOL regulations.
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Role of the DOL Wage & Hour Division
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The DOL's Wage & Hour Division (WHD) is responsible for investigating claims of underpayment or nonpayment of wages, and claims of LCA violations by H1B workers. In the case of Administrator, WHD, DOL v. Help Foundation of Omaha, Inc. and Anil K. Agarwal, a physician working in H1B status complained to the WHD regarding the employer's failure to pay the required salary. The WHD investigated and found that the employer had violated the Immigration and Nationality Act (INA) by failing to pay the required LCA wages.

Background of Claim
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The employer in this case filed for and obtained an H1B petition approval for a physician, after having supported his request for a waiver of his J-1 two-year home return requirement. The underlying LCA, approved by the DOL, indicated that the prevailing wage for this occupation in Council Bluffs, Iowa was $118,222 per year, and that the position would be compensated at the rate of $125,000 per year.
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Employer Fails to Pay Prevailing Wages
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This doctor worked for the employer for nine months, at which time he was terminated. The employer did not immediately notify the USCIS and request revocation of the H1B petition, nor did it offer payment for the doctor's return travel to his home country. Both of these measures are required when employment is terminated before the expiration of the H1B petition.
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During the physician's nine months of employment, the employer paid wages totaling $49,000. This is the equivalent of an annual salary of $65,333.33. This wage level falls well below both the prevailing wage of $118,222 and the promised salary of $125,000.
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Employer Notifies DHS of Employee's Termination
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Eight months following the employment termination, the employer notified the USCIS of that fact. At no time did the employer offer to pay the cost of return travel. These failures, as explained below, would have resulted in an award of an additional eight months of back pay, had the parties not agreed upon the amount of back wages in dispute.
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Employer Requests Hearing before an ALJ
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The WHD's investigation resulted in a finding of violations and assessed back wages. The employer disputed these findings and requested a hearing before an ALJ. The ALJ ruled in favor of the doctor and ordered back wages in the amount of $39,666.47, with interest. The order was against the company as well as the individual owner. The employer appealed to the ARB. The ARB affirmed the decision of the ALJ. The ARB found that the appropriate back-wage period was extended by eight months, as the employer did not properly effectuate the termination of employment under the USCIS regulations for termination of H1B employees.
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Employer Tries to Argue Part-Time Employment
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The company owner claimed that the doctor did not see enough patients to equal 40 hours and, thus, was not entitled to full-time wages. The employer claimed that the doctor had requested a part-time schedule, and was paid accordingly. The ARB did not accept these arguments.  
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Employer Liable for Full Wages, per LCA
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The ARB stated that it was the responsibility of the employer to provide enough patients for full-time employment, and that the LCA filed in this case indicated that the employment was on a full-time basis. This LCA included an attestation that the H1B worker would be paid the offered wage for the entire period of authorized employment. If this doctor was unproductive during certain periods of time, it was not due to his unavailability or unwillingness to work. Additionally, the doctor's testimony, the testimony of other clinic employees, and documentary evidence showed that he did, in fact, work a full-time schedule.
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ARB Expands Employer's Liability
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In addition to the back-wage order entered by the ALJ, the ARB found that the employer owed interest on the back-wages award from the date of the employee's termination until the date of the WHD's finding. It also stated that the employer owed post-judgment interest from the date of the WHD finding until it made full payment of the back wages. The ARB further found that the employer was responsible for back wages until the date when the employer notified the USCIS/DHS of the termination of the doctor's employment. This was an additional eight months of back wages, because the employer did not fulfill its obligation to notify the DHS promptly after terminating the H1B worker's employment. However, this was not actually awarded, as the parties had agreed to the limit of the dispute as being the earlier award of $39,667, plus interest. Had this not previously been agreed upon, ARB opined that the employer could have been required to pay an additional eight months of wages.
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Conclusion
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The ARB's decision in this case emphasizes how important it is for employers of H1B workers to meet all obligations under the H1B and LCA documents. In this environment of heightened DOL investigation, any underpayment of the prevailing wages or nonpayment during bench time may lead to a significant award of back wages and interest penalties. As noted in this case, the judgments may be valid not only against the company, but also potentially against the company's owner/s, personally. Employers need to understand their obligations and set up appropriate systems to ensure compliance. The Murthy Law Firm can assist employers with matters related to H1Bs, including appropriate procedures for notifying the USCIS of H1B terminations and other changes in the terms of employment. We will continue to monitor DOL decisions to update MurthyDotCom and MurthyBulletin readers.