USCIS and DOL Team Up to Combat H-1B Fraud: Here’s What You Need to Know to Avoid an Investigation

On July 31, the Department of Labor announced that it entered into a Memorandum of Agreement (MOA) with the Department of Homeland Security to share information about immigrant and nonimmigrant petition records. The focus of the MOA is primarily to combat abuse and fraud within the H-1B program. As part of this agreement, USCIS will now refer suspected employer violations within the H-1B program to the DOL.

Practically speaking, this means that when an H-1B employer files a petition with USCIS, if USCIS suspects any labor related violations while reviewing the supporting documentation, USCIS will share the information and refer the case to the DOL to open an investigation. Further, if USCIS discovers any suspected violation during an administrative or targeted site visit, that information will also be shared with the DOL. This is very important to be aware of because site visits are typically unannounced. This means if you are caught unprepared, there will now be additional consequences. This kind of collaboration has not previously existed between the agencies, so our clients can expect to see increased scrutiny within the H-1B program and should prepare accordingly to ensure complete compliance with all applicable labor and immigration laws.

Below, we have compiled a list of practical considerations and reminders for ILBSG’s clients, based on the types of concerns we typically see come up during DOL investigations:

• H-1B Employees must be paid the LCA wages at all times and the paystubs must reflect the wage and pay schedule identified in the LCA. For example, if an LCA is certified for $60,000 annual salary, that amount must be paid out in accordance with the employer’s pay schedule (bi-weekly, monthly, etc.). While H-1B employers occasionally reply on an employee’s W-2 form to show the LCA amount was paid during an inquiry from USCIS, the DOL does not accept W-2 forms as proof the wages were paid. Instead, the DOL performs rigorous paystub analysis and if the paystubs do not reflect the correct amount is being paid each pay period, the DOL will find a violation, regardless of if the overall amount for the year meets or exceeds the LCA amount.
• While USCIS allows beneficiaries to pay the premium processing fees, the DOL does not unless there is clear documentation the premium processing upgrade was requested by the beneficiary, that the H-1B petitioner had no need for the premium upgrade, and that the upgrade was filed solely for the beneficiary’s benefit. If the premium processing fee is deducted from the employee’s pay, the paycheck amount cannot drop below the required LCA amount. If the DOL performs an investigation and finds the beneficiary paid the premium fees and this kind of documentation is not on file, the DOL will impose back wages owed to the beneficiary.
• Payroll deductions can never be taken for an employer’s business expense, attorney’s fees, or the costs of preparation for the LCA and H-1B petition. Even with lawful, voluntary payroll deductions (for example, as outlined by DOL Fact Sheet #62H, reimbursement for travel to the United States or payment for food and lodging that was not incurred while traveling on the employer’s business) caution must be exercised. The amount of deduction from each pay period is limited to 25 percent of the employee’s disposable earnings for the period. If the deduction is more, a DOL investigator may direct payment of back wages to the H1-B employee.
• Employers should make sure they have up-to-date Public Access Files (PAFs) for all H-1B employees on site and available for review in the event of a site visit.
• When an H-1B amendment is filed for a new location, it is crucial that the employee’s address and the state withholding is updated in the paystubs. Failure to withhold the proper state taxes is a violation and can result in back payments as well as a fine.
• If an employee takes unpaid leave, it is very important that this leave is well documented at the time the leave is requested and approved. If there are no paystubs for a certain period, H-1B employers must have documentation of the unpaid leave and it should be kept in the employee’s file for review in the event of a site visit. H-1B employers should make sure they have a standard policy in place for leave requests. Leave requests should always be written requests from the employee which are then approved, signed, and dated by both the employee and the employer.
• When an H-1B employee is terminated or transfers to a new employer, it is very important that the H-1B employer immediately sends a written notice to USCIS confirming the termination and asking to withdraw/cancel the H-1B petition. This should always be a written request and a complete copy of the request with the waybill/tracking information should be kept on file. We advise monitoring the tracking number and including the delivery confirmation screenshot in the employee’s file with the copy of the request. USCIS does not always send the withdrawal confirmation notices. If they do, that notice should be kept in the employee’s file, but it they do not, proof the request was mailed and received by USCIS is critical.
• In addition to sending formal notice to USCIS when the H-1B employment has ended, H-1B employers are also responsible to provide official notice to the H-1B employee indicating the effective date of the termination and offering to pay the return transportation for the H-1B employee. This should be a written notice, kept on file and available for inspection. Without these records of complete compliance (notice to the H-1B employee, notice to USCIS, written offer to pay the return trip), the H-1B employer remains liable for the LCA wages after the date the employment ended. If discovered in the course of a DOL investigation, payment of back wages will be imposed for the entire period.

These are just some of the most common issues we see arise during the course of DOL investigations, but this is not a complete and exhaustive list. H-1B employers are responsible to make sure they are fully complying with all relevant immigration and labor laws. We strongly encourage all ILBSG clients to be diligent and proactive about these matters.

In order to assist our clients and ensure complete compliance, ILBSG offers the following two services:

First, ILBSG offers compliance consultations in which we will review and inspect your company’s current processes and recordkeeping. As part of this consultation, we will provide ILBSG approved templates to assist in your recordkeeping (notice of termination, leave requests, USCIS cancellation requests, etc.). We will also answer any questions you have about the labor and immigration requirements of the H-1B program. Finally, we will perform an audit of a small sample of your company’s H-1B employee records (5-10 employees) to check for any violations. If we identify a concerning number of violations during the small sample, we will recommend your company retain our services for a complete company internal audit.

For the complete company internal audit, the second service we offer, we will collect the employee records of all H-1B employees for a period of the last three years. We will perform the same rigorous paystub analysis that the DOL performs, ensure all required records are up to date, identify any potential violations, and work with your company to correct anything we find. The complete internal audit mimics an actual DOL investigation, to ensure you are fully prepared and ready in the event of an any inquiry from USCIS or the DOL.

If you are interested in either of these service offerings, please contact an ILBSG attorney today to find out more. We look forward to assisting your company and ensuring complete compliance and protection for you and your employees.