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H-1B: The Buck Stops Where?

Who can pay the cost of the H-1B is a recurring question. And the US Department of Labor provides the answer.

The short answer is: the employer. However, like most legal questions, the more detailed answer is more complicated.

It is that time of year again—H-1B filing season. Employers, recent graduates, and professionals overseas are starting to prepare for the annual filing of new H-1B visa petitions to authorize professionals from other countries to be employed in the US.

The process is expensive. There are government filing fees and attorney’s fees, charges for expert evaluations of foreign education and/or experience and charges for translations. For some, there may also be costs associated with relocation, transportation, accompanying family members, etc. Even generous employers often question whether some of the expenses can be lawfully paid the employee himself or herself, or which of the expenses the employer may recoup if the employee leaves employment.

The DOL’s Wage and Hour Division issued Fact Sheet #62H, “What are the rules concerning deductions from an H-1B worker’s pay?,” in 2009. The DOL’s position is that there are certain expenses that can never be deducted from an employee’s pay. In pertinent part, these include:

  • The US Citizenship and Immigration Services training and processing fee;
  • The USCIS fraud protection and detection fee;
  • The USCIS optional premium processing fee;
  • A penalty for the workers failure to complete the full employment period authorized by the approved H-1B;
  • Any expenses, including attorney fees, directly related to the filing of the Form ETA 7035E labor condition attestation; and
  • Any deduction that would reduce the worker’s pay below the required wage rate, which is stated on the Form ETA 7035E.

The DOL does identify some expenses that can be paid by either the employer or the employee. Of course deductions required by law (e.g., income tax) can be made. Deductions authorized by the employee also are permissible, but only if:

  • There is a voluntary, written authorization by the employee;
  • For a matter principally for the benefit of the employee, such as reimbursement for travel to the United States or payment for food and lodging that was not incurred while traveling on the employer’s business;
  • For an amount that does not exceed the fair market value or the actual cost (whichever is lower) of the matter covered; and
  • The amount does not exceed the limits for garnishments set by the Consumer Credit Protection Act.

It is important to note that the US Citizenship and Immigration Services guidance in this area is much less comprehensive than the DOL. USCIS provides clear guidance on their position with respect to the various USCIS filing fees. While some may consider the differences as creating a grey area to justify allocating certain expenses to employees, conservative employers will want to minimize exposure to potential liability and the specter of a government enforcement action or civil suit by a disgruntled employee. Following the DOL’s guidance is the best practice.

Employers should review their employee handbooks, employment agreements, offer letters and collateral materials to ensure that they are in compliance with the DOL framework.

The full text of Fact Sheet #62H is available on the DOL website.

For more information about H-1B visa requirements or other questions regarding hiring the best and brightest from around the world, please contact the authors or your regular Dentons lawyer.

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H-1B: The Buck Stops Where?

New important dates for H-1B employers: March 1, 20 and 31

The US Citizenship and Immigration Services agency announced on January 9, that the initial H-1B petition registration period will be from March 1 to March 20, 2020, and that USCIS expects to notify employers whose registrations have been selected no later than March 31, 2020. The agency also provided new information about the H-1B cap-subject petition registration process.  

Petitioners must register using an online account. As of this writing, USCIS has not provided any details regarding the registration portal or ways to register an account, but has indicated that it will post the date employers may start setting up accounts on its website. 

Petitioners must electronically submit a separate registration request for each individual it seeks to petition for a cap-subject H-1B. No more than one registration may be submitted for the same individual by the same petitioner, or all registrations for that individual will be disregarded. 

USCIS will deliver lottery results by sending notices electronically and inform petitioners to file an H-1B cap-subject petition on behalf of the named individual within the filing period indicated on the notice. The notifications will be added to the registration accounts, and the account holders will receive notification via email or text message stating that an action has been added to their account. 

Petitioners should start the preparation process now by evaluating potential H-1B candidates to make sure that they are qualified to receive the visa if selected. Please contact your Dentons lawyer if you have any questions. 

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New important dates for H-1B employers: March 1, 20 and 31

New H-1B Registration Starts March 1, 2020

Hire American/Buy American policy used to benefit the government

In a move under the Hire American/Buy American Executive Order touted as aiding US employers, the US Citizenship and Immigration Services in November actually placed an extra burden on US employers sponsoring H-1B professional workers. The only real winner from this change is the US government—not American employers or workers.

The old rule

In the past, employers filed H-1B petitions with filing fees and the USCIS would then randomly select petitions up to the limited quota available. The agency had to deal with more than twice as many petitions as the quota allowed. It took the USCIS three months on average to return unselected petitions and the filing fees paid by employers, at considerable expense to the government.

The new rule

Under the new rule, the USCIS has increased both the fees employers pay and the steps employers must take. Now employers seeking to file H-1B, cap-subject petitions for the 2021 fiscal year will be required to first register and pay a non-refundable $10-per-petition registration fee.

A separate registration must be submitted for each H-1B requested. The registration must be completed between March 1 and March 20, 2020. Petitioners will receive electronic notification that USCIS has accepted the registration for processing. As before, employers are not permitted to submit more than one registration for a single employee in a fiscal year.

The USCIS will then run a random selection process on the registrations received and will notify petitioners whose registrations were selected. The petitioner will then have up to 90 days to file a full petition with supporting documents and all of the usual filing fees.   

Dentons insights

Imposing additional fees and procedures on US employers benefits no one but the government.

While employers will find out sooner than under the old rule if an employee’s petition is selected, that is no guarantee the petition will be ultimately granted. To the contrary, the increasingly conservative positions being taken by USCIS adjudicators in evaluating petitions—a process without legislative or regulatory approval—make denial more likely than ever.

And early notice of selection for the lucky few means earlier notice of non-selection for the majority of registrations. That is particularly bad news for most F-1 visa foreign students.

The old rule allowed continued employment of certain F-1 students whose authorization otherwise ended. Known as a “cap-gap extension,” this rule provided that a pending H-1B petition for a foreign student with OPT or STEM OPT ending before September 30 acted to extend employment authorization until September 30 or the date that the employer receives notice that the H-1B petition is not selected, whichever is earlier. Such rejection notices were usually not received until mid-June or later, which benefited many employers and students. Under the new rule, unselected registrations will not enjoy cap-gap benefits and employers will lose more workers sooner.

We also expect that US employers will see even longer USCIS-processing times for selected H-1B petitions.

In the past, the USCIS began processing petitions after the selection process was completed—usually mid-April—yet the agency would still be sending out petition approvals and denials into October. Under the new process, the USCIS says registrations will be selected by the beginning of April and employers will have 90 days to file. With some petitions filed as much as three months later under the new rule, it seems likely employers will sometimes see USCIS processing completed in December, or 90 days later than now.

The government claims this new registration process will dramatically streamline processing by reducing paperwork and data exchange, and will result in an overall cost savings to US employers. In fact, the real beneficiary of the new process is the agency itself.

By limiting the number of petitions eligible to file, the USCIS reduces its own workload. It will not have to deal with sending out rejection notices and returning unselected petition packages. Government efficiency is a good thing, but better without the pretense that the change helps Americans.

US employers will continue to bear the cost of recruiting and making offers to more prospective hires than they will ultimately be allowed to employ. They will still have to pay lawyers to evaluate jobs offered and candidate qualifications to make sure registrations are only done for qualified cases. The fact that some forms will not need to be typed or documents copied will save employers some money, but only on the clerical aspects of the process.

As with any new rule, there are clouds of uncertainty. Employers, candidates and lawyers must be prepared for last-minute process changes. The USCIS already announced that it will soon release more information regarding the new registration. And there is always the possibility that a court decision will ban the implementation of this new process and we will have to revert back to previous practices.

Dentons will continue to monitor this issue. Please contact your Dentons lawyer if you have any questions.

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New H-1B Registration Starts March 1, 2020