BALCA on Employee Referrals and Minor Wage Deviation

The Board of Alien Labor Certification Appeals (BALCA) issued a decision on June 14, 2012 overturning the denial of a PERM labor certification (PERM labor) despite a 0.0003 percent variation between the employer’s offered wage and the U.S. Department of Labor’s prevailing wage determination (PWD). BALCA also held that the employee referral program used by the employer was proper, and set forth a three-step test for such programs. The Murthy Law Firm was not involved in any aspect of the case at issue. We provide this summary of the BALCA decision, Matter of Kohler Co., and our explanation of the implications of this decision, for the benefit of readers.

Employer’s Offered Wage Must Equal or Exceed PWD

The PERM labor regulations state that the sponsoring employer must offer the position to the foreign national at a wage that is equal to or greater than the rate set forth in the required Department of Labor (DOL) PWD. In the Kohler Co. case, the employer offered a wage that was just 20 cents per year below the PWD. This variation was calculated to be a discrepancy of 0.0003 percent.

DOL Requirements for Employee Referral Programs

The PERM labor regulations pertaining to the use of employee referral programs as one of the allowable forms of recruitment of U.S. workers, state that an employee referral program can be documented by providing dated copies of employer notices or memoranda advertising the program and specifying the incentives offered to employees for any referrals.

In the Kohler Co. case, the employer failed to provide dated copies of the employer’s memoranda advertising the referral program with incentives. BALCA decision discussed and applied a three-part test for determining whether the employer properly documented the use of an appropriate referral program.

BALCA Holds Wage Variation Too Small to Matter

The wage offered in two forms of the employer’s recruitment was clearly below the PWD. The PWD set forth an hourly wage rate; the employer calculated it as an annual salary. Thus, the required job order and internal notice of filing contained a wage offer of $59,467 rather than the PWD amount of $59,467.20. The employer argued that, in limited situations, case law allows for the approval of the PERM labor certification even if the offered wage is below the PWD. The employer argued that the discrepancy was de minimus, essentially, meaning that it was too small to matter.

BALCA agreed with the employer, and applied the rationale from an earlier case in which an employer advertised a wage that was 99.95 percent of the PWD. BALCA noted that the issue to be determined in a PERM labor case is whether the wages offered will adversely impact the wages and working conditions of similarly employed U.S. workers. Since the government had not argued that a 20-cent-per-year variation in the wage offered in the recruitment would have such a negative effect, BALCA determined that it was appropriate to approve the case.

This holding is specific to these facts only. The law uses language regarding the wages and working conditions of U.S. workers, rather than referencing the PWD. The more detailed regulations, however, state that the position must be offered at or above the PWD level. Thus, employers should never assume that a PERM labor certification will be approved if the job is not offered at a wage level that is at or above the PWD. The approach used in this case would best be reserved for situations in which, there is an inadvertent, extremely minor deviation from the PWD.

BALCA on Three-Part Test for Referral Programs

As stated, the second issue in the Kohler Co. case concerns proof of recruitment for the position through an employer recruitment program, with incentives. The DOL did not issue guidance on acceptable forms of evidence of such programs until August 3, 2010. An earlier BALCA panel in a case known Sanmina-Sci. Corp. adopted a three-part test for determination of whether the employer adequately documented the existence and employee notification of the referral program.

The three-part test requires the following.

1)    The employee referral program provides incentives to company employees.

2)    The employee referral program must be in effect during the recruitment effort on which the employer is relying to support the PERM labor application.

3)    The employees must be put on notice of the job opening at issue.

Employer Satisfied Test on Employee Referral Program

The employer in the Kohler case argued that the company had a referral program that ran continuously. The employer provided an internal flyer regarding the program, as well as an affidavit from the company representative responsible for the program. The company also documented that the job had been advertised on the employer’s website and that their employees had further been alerted to the job opportunity via the required internal notice of filing.

BALCA found that Kohler Co.’s employee referral program met the three-prong test. The program (1) provided incentives to employees for referral of job candidates, (2) was in effect during the recruitment effort for the position in the labor certification application, and (3) the employer’s employees were on notice of the job opening at issue.

Conclusion

This case demonstrates the highly technical nature of the PERM process. PERM preparation involves extremely careful planning, review, and consideration of numerous details. The outcome in this case turned, in part, on a 20-cent-per-year wage discrepancy. The approval also required that the employer anticipate the forms of employee referral program documentation, which would satisfy the DOL without any prior DOL guidance on the topic. The ultimate success in this case required a BALCA appeal, and a span of almost four years between filing and approval.

Attorneys at the Murthy Law Firm have extensive experience with representation throughout the PERM process. We are available to answer your questions regarding the PERM process and to represent those filing PERM applications.

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