Government Enforcement Actions

Government Enforcement Actions

H-1B employers, particularly IT consulting companies, are experiencing extreme difficulties in obtaining H-1B approvals for their prospective employees. Their plight seems to exacerbate as the U.S. Citizenship and Immigration Services (“USCIS”) and the Department of Labor (“DOL”) have increasingly flexed their investigation and enforcement muscles to scrutinize and assess whether companies filing H-1B petitions are violating the Labor Condition Application (LCA) requirements.

Findings of Back Pay Liability

Increasingly, the U.S. Department of Labor (DOL) is also punishing employers who fail to pay H-1B employees the required wages.

Recently, Cognizant Technology Solutions Corp., one of the largest US-based outsourcing companies, agreed to pay $509,607 to 67 workers for misusing the H1-b visa program, which requires employers to pay visa holders at the same rates as US workers in the same position. According to DOL, Cognizant failed to pay the 67 IT workers "the proper wages, failed to offer all H1-b workers equal benefits or eligibility for equal benefits, and failed to maintain required records."

In Administrator, Wage and Hour Division, United States Department of Labor v. Help Foundation of Omaha, Inc. and Anil K. Agarwal, a former H-1B employee alleged to the Wage and Hour Division (WHD) that his employer failed to pay his wages. WHD determined that the employer violated H-1B provisions when it failed to pay the employee the required wages. The Administrative Law Judge (“ALJ”) found that the Help Foundation failed to pay the non-immigrant worker, the required wage under the H-1B provisions of the Act and owed him $39,666.47 in back wages, plus interest.

To effect a bona-fide termination under the H-1B program, and avoid unintended back-pay liabilities, employers must notify USCIS once employment relationship with an H-1B beneficiary has terminated, and where appropriate, provide the nonimmigrant employee with payment for transportation home. The employer’s liability to pay the employee the required wage continues unti revocation of the H-1B petition has been filed with USCIS.

These cases remind H-1B employers of how important it is to comply with the applicable law and regulations under the H1B and LCA. Any underpayment of the required wages or nonpayment due to “benching” may lead to awards of back wages and interest penalties.

Arrests For H-1B Visa Fraud

Enforcement culminated in recent arrests of company officials and one indictment against Vision Systems Group, Inc., an IT company based in New Jersey, with a branch office in Iowa. Federal agents arrested 11 people in 7 states as part of an investigation into suspected H-1B visa fraud, mail fraud, and conspiracy. These arrests occurred in Iowa, California, Massachusetts, Texas, Pennsylvania, Kentucky, and New Jersey. The companies and foreign workers have allegedly submitted false statements and documents in support of their visa applications. The companies are suspected of visa fraud, mail fraud, wire fraud, money laundering and conspiracy. They also are alleged to have placed workers in jobs and locations not certified by DOL and thus violating prevailing wage laws.

The Fraud Detection and National Security Division (FDNS) and the Document and Benefit Fraud Task Forces (DBFTF) have recently increased their scrutiny and enforcement actions, which seem to coincide with the release of USCIS report “H-1B Benefit Fraud & Compliance Assessment,” released by U.S. Senator Chuck Grassley (R-Iowa), indicating that serious violations of the H-1B program by employers were so common that one in five visas are affected by either fraud or “technical violations,” meaning that potentially thousands of employers may be violating the rules, some willfully.

Companies using the H1B program must now understand and recognize that a new era of enforcement and scrutiny has arrived. Business practices that may have been overlooked in the past are now leading to DOL investigations and arrests. Employers must review their practices and revise their systems to ensure compliance with the law. However, employers should not be afraid of hiring and sponsoring H1B employees as long as they comply with the applicable law.

As USCIS and DOL have stepped up their investigation and enforcement efforts, employers should regularly review and self-audit their immigration files to ensure that they are in compliance with the applicable law and regulations to avoid any potentially grave consequences of non-compliance.