H-1B Wage Obligations During the COVID-19 Pandemic
Written by: Ashik R. Jahan, Esq.
With the growing uncertainty of what impact COVID-19 will have on local businesses from an economic standpoint, many businesses are unsure of how they will maintain day-to-day operations. There may be an added uncertainty to employers that sponsor H-1B workers. Lay-offs, furloughs, reduced wages, and even termination of employees are all options that are being considered by many businesses. However, it is important to note that the moment an H-1B worker enters into employment for his sponsoring employer, the employee must be paid the appropriate wage rate as listed on the Labor Condition Application (“LCA”) at all times during employment, with limited exceptions. In anticipation of the dilemma that such business will face as it relates to their sponsored employees, we provide the following considerations and scenarios:
Payment of Wages Required When H-1B Employee is Furloughed or Benched
For H-1B employees, employers are required to pay the wage listed on their LCA at all times, even if the employee is benched or furloughed. If the actual wages are not paid to the employee, back wages could become owed. In those situations, it is up to the employer to monitor payments to ensure the balance is paid at year-end to correct any deficiencies. Keep in mind that the failure to timely pay wages to H-1B workers may create a DOL “proper payment” issue and could trigger an investigation, audit and fines.
H-1B Amendment for Conversion to Hourly Rate
Alternatively, if a change is desired to make an H-1B employee hourly (part-time) instead of full-time or salaried, an LCA amendment is recommended to document the change. There is nothing that mandates employers have to get USCIS approval before that change goes into effect, so it would be reasonable and prudent to file any amendments as soon as possible once the change to hourly is confirmed and/or imminent. Doing so would give employers (and their employees) reassurance, while also avoiding the risk of non-compliance.
Reduction of H-1B Wage Rate to Level Above Prevailing Wage
In 2003, AILA asked USCIS to confirm if an amended petition would be required where, due to across-the-board salary cuts, an H-1B beneficiary earned less than the offered salary stated on the H-1B petition filed with USCIS but still above the prevailing wage certified on the LCA. USCIS consulted with the DOL, providing the following answer: “The DOL is sensitive to the fact that wages can and sometimes do go up and down based on economic conditions. In the circumstance described in your question, there would be no need for a new LCA or a new I-129 petition provided that the employer was still paying the “required wage” [meaning the higher of the applicable prevailing wage or actual wage]. Any change in the beneficiary’s wage rate must be disclosed in the next H-1B petition filing with [USCIS]. It is important that any wage change be documented in the employer’s LCA public disclosure file and disclosed to the [USCIS] in the next H-1B filing.”
Situations Where Non-Payment of H-1B Wages is Permissible
There are situations where wages would not have to be paid to an H-1B employee, and where employees would be able to maintain employment. 20 CFR 655.731(c)(7)(ii) documents circumstances where wages need not be paid. If an H-1B nonimmigrant experiences a period of nonproductive status due to conditions unrelated to employment which take the nonimmigrant away from his/her duties at his/her voluntary request and convenience (e.g., touring the U.S., caring for ill relative) or render the nonimmigrant unable to work (e.g., maternity leave, automobile accident which temporarily incapacitates the nonimmigrant), then the employer shall not be obligated to pay the required wage rate during that period, provided that such period is not subject to payment under the employer’s benefit plan or other statutes such as the Family and Medical Leave Act (29 U.S.C. 2601 et seq.) or the Americans with Disabilities Act (42 U.S.C. 12101 et seq.).
At first glance this section appears to provide options due to COVID-19 rendering the nonimmigrant unable to work. However, the regulation cited above tracks language of the FMLA regarding a worker’s right to unpaid time off. Therefore, it does not appear to license non-payment of wages in any situation where the H-1B employee did not ask for time off (for an accident or other emergency the worker has to ask for time off within a reasonable time after the fact, to trigger the FMLA).
Voluntary Request for Time Off Is Necessary to Stop Paying H-1B Wages for 20 CFR 655.731(c)(7)(ii)
If the employee asks for time off, because they are unable to work due to circumstances such as the COVID-19 pandemic, it may afford employers the option of utilizing the regulation cited above for non-payment of H-1B wages. Therefore, presenting an option of voluntary time off to H-1B employees if they cannot work due to the pandemic may be a strategy worth considering. For example, an employer is not required to pay an H-1B worker who requests a period of absence to care for sick relatives. Thus, if the employee requests a voluntary leave, to take care of sick relatives or their children who are out of school, it would be unpaid pursuant to the regulations. However, the leave approval and its length should be in line with the employer’s standard leave policy, so that there is less of a concern of special treatment or “benching” in disguise. After all, H-1B employees are entitled to the same leave as all other employees. Also, please note that an H-1B employee taking such leave should not violate his or her status. However, an employee cannot take more leave than is usually allowed other employees and still be considered in status. Keep in mind that if this option is chosen, the public access file may need to be modified/supplemented to reflect the same.
Lastly, payment need not be made to H-1B workers if there has been a bona fide termination of the employment relationship. DHS regulations require the employer to notify the DHS that the employment relationship has been terminated so that the petition is canceled (8 CFR 214.2(h)(11)), and require the employer to provide the employee with payment for transportation home under certain circumstances (8 CFR 214.2(h)(4)(iii)(E)). Once terminated, the employees would fall under a grace period that would not last longer than 60 days, depending on the underlying period of validity of their H-1B status. This grace period is provided to allow an H-1B worker the ability to pursue new employment and an extension of their non-immigrant status.
Given the differing interpretations regarding 20 CFR 655.731(c)(7)(ii), and the overall difficulty the COVID-19 pandemic has created, it is highly recommended that employers speak with a qualified immigration attorney to discuss these implications and the non-payment of wages to an H-1B employee before making any such employment decisions.
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