Back wages and penalties ordered after public school district forces employees to pay for their own H-1B visas in violation of DOL wage regulations.

In April, the U.S. Department of Labor announced that Maryland’s Prince George’s County Public Schools system was ordered to pay $4.2 million in back wages to 1,044 teachers, and fined $1.7 million in civil money penalties by the U.S. Department of Labor after an investigation which found that the school system had willfully violated the laws that govern the H-1B temporary foreign worker visa program. Investigators discovered that the school system had required employees with H-1B visas to pay their own attorney fees and filing fees in connection with obtaining H-1B visas.

The Department of Labor takes the position that attorney’s fees and filing fees associated with H-1B visas are “an employer’s business expense.” If an employee pays these fees, it is considered to be a “deduction” from the employee’s pay. If this “deduction” serves to drive the employee’s pay below the wage required to be paid under H-1B rules, it is considered an “unauthorized deduction” which can subject the employer to an order to pay back wages.

According to the Department of Labor, investigators found that the Prince George’s County Public Schools “illegally reduced the wages of 1,044 foreign teachers hired under the H-1B program by requiring the payment of $4,224,146 in fees.” Because of the “willful nature” of some of the violations, the DOL assessed a penalty of $1,740,000 in civil penalties.

Who may be affected?

Any employer that currently has H-1B employees falls under the jurisdiction of the DOL. If an employer has traditionally required employees to pay their own visa expenses, they are potentially subject to penalties and back wage awards.

What wage needs to be paid?

Department of Labor regulations state that H-1B employees be paid the greater of the prevailing wage for teachers in the area or the actual wage paid to similarly situated employees. The wage can be determined by a collective bargaining agreement. However, fees incurred by the employee in connection with obtaining an H-1B visa are considered to be “deductions” from wages, and thus, may serve to bring the employee’s pay below the collectively bargained wage. If H-1B employees are being paid the same collectively bargained salary as other employees and paying expenses associated with H-1B fees, there is likely to be a violation of Department of Labor regulations.

What if the teacher offers to pay for the H-1B visa?

The Department of Labor position is that fees associated with the H-1B visa petition are legal obligations required to be paid for by the employer alone. “Where a worker is required to pay an expense, it is in effect a deduction in wages which is prohibited if it has the effect of reducing an employee’s pay.” Therefore, any costs incurred in the filing of the LCA and the H-1B petition (e.g., prevailing wage survey preparation, attorney fees, DHS fees) cannot be shifted to the employee. Such costs are considered the sole responsibility of the employer, even if the employee proposes to pay the fees.

Are there any circumstances where the employee can pay H-1B legal fees?

In limited circumstances, the payment of fees may be a deduction that does not serve to drive the employee’s wages below the required wage. This requires an examination and determination of all similarly situated employees to determine if the wage will be reduced below the required wage (the higher of the prevailing wage or wage offered to similarly situated employees). If the salary, after deducting the amount of legal or filing fees is still at or above the required wage, an employer may be in compliance.

What can an employer do to protect itself?

Employers should initially work with counsel to determine exposure and what statutes of limitations apply to back wage awards. Employers should also determine who is using H-1B visas, the wages paid to these employees, and establish policies for the future use of the H-1B program.

Caplan and Earnest’s immigration and employment department can assist employers in establishing protocols for the use of H-1B visas, and can set fixed rates for H-1B visa usage to provide employers with cost certainty.

If your district has concerns or questions regarding the H-1B temporary foreign worker visa program, please contact your attorney or contact Brad Hendrick at 303.443.8010 for more guidance.