Second Circuit: H-1B Employer Wage Obligations Clarified

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September 22, 2020

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In Aleutian Capital Partners, LLC v. Scalia, the Second Circuit Court of Appeal stated that even though an employer of an H-1B visa employee paid more income than promised in the Labor Condition Application (LCA), the employer violated U.S. Department of Labor (DOL) regulations requiring wage payments that were predictive in amount and timing. The court also said that the DOL was authorized to investigate the terms of employment even though the employee did not file a complaint with the DOL.

There, the employer paid a monthly salary amount below H-1B Program standards in some months and overpaid the employee in other months, resulting in overall wages that were higher than promised. Nonetheless, the employer was obligated to pay back wages for those months that were underpaid, regardless of any bonuses or overpayments that it made in other months. DOL regulations require H-1B employers to make wage payments “when due” in “prorated installments,” “no less often than monthly.”

In the course of a DOL investigation into one employee’s claim, the DOL investigated treatment of another H-1B employee finding wage and hour errors. The court said that “where an investigation into a timely filed complaint reveals that an employer’s failure to conform to an LCA has resulted in a pattern of underpayment that extends earlier than the statute of limitations cut-off, DOL may assess back wages that remedy the full scope of that failure.” More specifically, “it is reasonable … for DOL to seek information from the employer to ensure that it is not applying the same unlawful practices to other H-1B Program employees.” Ultimately, employers risk greater exposure than the claim at issue for failing to follow statutory requirements.

Action Items

  1. Review wage payments of H-1B employees for compliance.
  2. Subscribers can call our HR On-Call Hotline at (888) 378-2456 for further assistance.
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