ARB: VA Hospitals Not Governmental Research Organization for Prevailing Wage Purpose

The Administrative Review Board (ARB) of the U.S. Department of Labor (DOL) has ruled in a case, entitled Matter of U.S. DOL v. Dallas VA Medical Center, that the Dallas Veteran’s Administration Medical Center (DVMC) is not a government research organization. Thus, the DVMC is not entitled to special prevailing wage provisions available to government research organizations, and institutions of higher education and their nonprofit affiliates. Rather, the DVMC is required to pay prevailing wages to H1B employees as listed in the Occupational Employment Statistic survey or other qualifying prevailing wage survey, in the same fashion as most other employers.

VA Hospital Not Governmental Research Organization

The DVMC, a medical care center dedicated to providing medical treatment and care to veterans in Dallas, TX, filed a Labor Condition Application (LCA) as required prior to filing an H1B petition for a potential employee. The DOL rejected the LCA on the legal ground that it used an unacceptable source for its prevailing wage data. The DVMC subsequently re-filed and obtained approval of the LCA by re-characterizing the wage source. The H1B petition was approved based upon the re-filed LCA.

Thereafter, the DOL conducted an investigation and determined that the DVMC had violated the regulations by improperly determining the prevailing wage for the position and, therefore, failing to pay the required wage for the position. The DOL ordered the DVMC to remedy the matter by paying the employee $17,842.18 in back wages. The DVMC objected to the order and sought a hearing before an Administrative Law Judge (ALJ).

The ALJ granted summary judgment in favor of the DVMC, finding that it is a “government research organization, and therefore entitled to special prevailing wage provisions set out in the Immigration and Nationality Act (INA) amendments.” The appeal followed from the ALJ’s decision. On appeal, the ARB found that the DVMC is not a governmental research organization and cannot utilize the American Competitiveness and Workforce Improvement Act (ACWIA) provisions, allowing for prevailing wage determination based upon comparison with the same type of organization. (This is generally a lower wage level.)

Only Limited Use of the Modified Survey Rules

At issue in this case was whether the DVMC is a governmental research organization and can, therefore, utilize the ACWIA survey to determine its wage obligations.

As regular readers of MurthyDotCom and the MurthyBulletin are aware, an employer seeking to hire a foreign national in the H1B classification must first obtain certification of a Labor Condition Application (LCA) from the DOL. This is filed using ETA Form 9035. In seeking this certification, an employer attests that it will pay the required wage rate for the employment position in the area of intended employment. The required wage is the wage rate which is the higher of the employer’s actual wage rate (the wage rate the employer pays to all employees with similar experience and qualifications) and the prevailing wage rate. The prevailing wage rate is measured as of the time the LCA is filed and is based upon surveys, including Occupational Employment Statistics or other surveys meeting the regulatory requirements.

Employers meeting the definitions of institutions of higher education (or a related / affiliated nonprofit entity), as well as nonprofit or governmental research organizations, may use a special method for calculating the prevailing wage level for H1B employees. This method only takes into account employees at such institutions and organizations in the area of intended employment. They are, historically, lower than prevailing wages contained in other surveys, since other surveys would include private, for-profit organizations that typically offer higher levels of compensation than nonprofit and academic institutions.

The ARB recognized that the DVMC conducts research and receives governmental funds earmarked for research. Notwithstanding this, the ARB found that the DVMC’s primary mission is the provision of medical care and treatment and not research. As medical care, and not research, is the primary mission, the ARB concluded that the DVMC is not within the definition of governmental research organization and, thus, cannot utilize the ACWIA survey to determine its wage obligations for its H1B employees.


This decision establishes that the VA Hospital system is not a governmental research organization and requires the VA Hospital system to utilize the surveys required of most employers when calculating the prevailing wages for its H1B employees.


Disclaimer: The information provided here is of a general nature and may not apply to any specific or particular circumstance. It is not to be construed as legal advice nor presumed indefinitely up to date.