Department of Labor: 65 FED REG 80109 1

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Wednesday,December 20, 2000

Part III

Department of Labor Employment and Training Administration

20 CFR Parts 655 and 656 Temporary Employment in the United States of Nonimmigrants under H1B

Visas; Final Rule

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80110 Federal Register / Vol. 65, No. 245 / Wednesday, December 20, 2000 / Rules and Regulations

DEPARTMENT OF LABOR

Employment and TrainingAdministration

20 CFR Parts 655 and 656

RIN 1215AB09

Labor Condition Applications andRequirements for Employers UsingNonimmigrants on H1B Visas inSpecialty Occupations and as FashionModels; Labor Certification Processfor Permanent Employment of Aliensin the United States

AGENCY : Employment and TrainingAdministration, Labor, in concurrencewith the Wage and Hour Division,Employment Standards Administration,Labor.ACTION : Interim final rule; request forcomments.SUMMARY : This document containsinterim final regulations implementingrecent legislation and clarifying existingDepartmental rules relating to thetemporary employment in the UnitedStates of nonimmigrants under H1Bvisas. On January 5, 1999, theDepartment published a notice of proposed rulemaking (64 FR 628)seeking public comment on issues to beaddressed in regulations to implementchanges made to the Immigration andNationality Act (INA) by the AmericanCompetitiveness and WorkforceImprovement Act of 1998 (ACWIA). Inparticular, the ACWIA requires H1B-

dependent employers and willfulviolators to comply with certainadditional attestations regarding anti-displacement and recruitmentobligations. The Department also soughtfurther comment on certain proposalswhich were previously published forcomment as a Proposed Rule on October31, 1995 (60 FR 55339), and on certaininterpretations of the statutes and itsexisting regulations which theDepartment proposed to incorporate inthe regulations.DATES : Effective Dates: Theseregulations are effective January 19,

2001, with the exception of 655.731(a)(2) and 656.40, (c) and (d)which are effective December 20, 2000.

Applicabililty Date: Sections655.731(a)(2) and 656.40 applyretroactively to any prevailing wagedeterminations thereunder which werenot final as of October 21, 1998.Sections 655.720 and 655.721 areapplicable to Labor ConditionApplications filed on or after February5, 2001.

Comment Date: Written comments onthese regulations and issues raised in

the preamble may be submitted byFebruary 20, 2001, with the exception of any comments on Form WH4, whichmust be submitted by January 19, 2001.ADDRESSES : Submit written commentsconcerning Part 655 to DeputyAdministrator, Wage and Hour Division,ATTN: Immigration Team, U.S.Department of Labor, Room S3502, 200Constitution Avenue, N.W.,Washington, D.C. 20210. Commenterswho wish to receive notification of receipt of comments are requested toinclude a self-addressed, stamped postcard. Comments may also be transmitted

by facsimile (FAX) machine to (202)6931432. This is not a toll-free number.

Submit written comments concerningPart 656 to the Assistant Secretary forEmployment and Training, ATTN:Division of Foreign Labor Certifications,U.S. Employment Service, Employmentand Training Administration,Department of Labor, Room C4318, 200Constitution Avenue, NW., Washington,DC 20210. Commenters who wish toreceive notification of receipt of comments are requested to include aself-addressed, stamped post card.Comments may also be transmitted byfacsimile (FAX) machine to (202)6932769. This is not a toll-free number.FOR FURTHER INFORMATION CONTACT :Michael Ginley, Director, Office of Enforcement Policy, Wage and HourDivision, Employment StandardsAdministration, Department of Labor,Room S3510, 200 Constitution Avenue,NW., Washington, DC 20210.Telephone: (202) 6930745 (this is nota toll-free number).

James Norris, Chief, Division of Foreign Labor Certifications, U.S.Employment Service, Employment andTraining Administration, Department of Labor, Room C4318, 200 ConstitutionAvenue, NW., Washington, DC 20210.Telephone: (202) 6933010 (this is nota toll-free number).SUPPLEMENTARY INFORMATION :

I. Paperwork Reduction Act

The H1B nonimmigrant program is a

voluntary program that allowsemployers to temporarily import andemploy nonimmigrants admitted underH-1B visas to fill specialized jobs notfilled by U.S. workers. (Immigration andNationality Act (INA), 8 U.S.C.1101(a)(15)(H)(I)(b), 1182(n), 1184(c)).The statute, among other things,requires that an employer pay an H1Bworker the higher of the actual wage orthe prevailing wage, to protect U.S.workers wages and eliminate anyeconomic incentive or advantage inhiring temporary foreign workers.

Under the Immigration andNationality Act (INA), as amended bythe Immigration Act of 1990 (Act), andas amended by the Miscellaneous andTechnical Immigration andNaturalization Amendments of 1991, anemployer seeking to employ an alien ina specialty occupation or as a fashionmodel of distinguished merit and abilityon an H1B visa is required to file alabor condition application with andreceive certification from DOL beforethe Immigration and NaturalizationService (INS) may approve an H1Bpetition. The labor conditionapplication process is administered byETA; complaints and investigationsregarding labor condition applicationsare the responsibility of ESA.

On January 5, 1999, the Department of Labor (DOL) published a proposed rulewhich would implement statutorychanges in the H1B program made tothe INA by the American

Competitiveness and WorkforceImprovement Act of 1998 (ACWIA)(Title IV, Pub. L. 105277). The ACWIA,as amended by the AmericanCompetitiveness in the Twenty-FirstCentury Act of 2000 (Pub. L. 106313),among other things, temporarily (untilOctober 2003) increases the maximumnumber of H1B visas permitted eachyear; temporarily requires new non-displacement (layoff) and recruitmentattestations by H1B dependentemployers (as defined by the ACWIA)and willfully violating employers; andrequires employers to offer the samefringe benefits to H1B workers on thesame basis as it offers fringe benefits toU.S. workers. The public was invited tocomment on the proposed rule,including the information collectionrequirements noted below. In addition,pursuant to the Paperwork ReductionAct of 1990, DOL submitted apaperwork package to the Office of Management and Budget (OMB),requesting review and approval of theinformation collection requirementsincluded in the proposed rule.

Since publication of the NPRM,additional amendments to the H1Bprovisions were enacted by the

American Competitiveness in theTwenty-first Century Act of 2000 (Pub.L. 106313, 114 Stat. 1251, October 17,2000), the Immigration and NationalityActAmendments (Pub. L. 106311,114 Stat. 1247, October 17, 2000), andsection 401 of the Visa WaiverPermanent Program Act (Pub. L. 106396, 114 Stat. 1637, October 30, 2000)(collectively, the October 2000Amendments). Most pertinent to theseregulations were provisions that raisedthe ceiling on the number of H1B visasthat may be issued and extended the



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80111Federal Register / Vol. 65, No. 245 / Wednesday, December 20, 2000 / Rules and Regulations

period of effectiveness of the additionalattestations applicable only to H1B-dependent employers and willfulviolators.

Comments were received frommembers of Congress, OMB, law firms,information technology industryassociations, other industryassociations, information technologyfirms, research firms, other employers of H1B workers, Federal agencies andindividuals. Commenters questionedDOL authority under the ACWIA and/orthe Immigration and Nationality Act toimpose the paperwork requirementscontained in the proposed rule. Further,commenters questioned the DOL burdenestimates for these informationcollections, indicating that the estimateswere much too low. Many commenterscontended DOL should only require theproduction of records in aninvestigation context. One commentersuggested for clarity that DOL provide a

check list for H1B employersindicating which records must be kept,which records are required by otherstatutes or regulations and where theserecords must be kept.

Many commenters have fundamentalmisunderstandings of the nature of thereporting and disclosure requirementsproposed in the NPRM. The Departmenthas made every effort in the NPRM andin the Interim Final Rule to limitrecordkeeping requirements todocuments which are necessary for theDepartment to ensure compliance, andto documents which are alreadyrequired by other statutes andregulations or would ordinarily be kept

by a prudent businessperson. As ageneral matter, when reviewing therecordkeeping and disclosureobligations set forth in the regulations,employers should be aware that theregulations distinguish between arequirement to preserve or retainrecords if they otherwise exist, and arequirement to maintain recordswhether or not they already exist. Arequirement that employers retain, forexample, any documentation on aparticular subject requires only that anysuch documents be retained if they

otherwise exist, but does not requirecreation of any documents. In addition,the Department points out that wherethe regulations do not explicitly requirepublic access, the records may be keptin the employers files in any mannerdesired; they do not need to besegregated by labor conditionapplication (LCA) or establishment anddo not need to be segregated from therecords of non-H1B workers, providedthey are promptly made available to theDepartment upon request in the conductof an investigation. The Department

considers it important to require thatsuch records be maintained, as in otherenforcement programs, so that in theevent of an investigation, theDepartment is able to determinecompliance or, in the event of violations, to determine the nature andextent of the violations. This can only

be accomplished with adequate,accurate records since it is only theemployer who is in a position to knowand produce the most probativeunderlying facts. See Anderson v. Mt.Clemens Pottery Co., 328 U.S. 680, 687(1946).

In addition, in the regulations, theDepartment has limited the documentsthat must be disclosed to the public tothose which the Department hasconcluded are necessary for a memberof the public to be able to determine theemployers obligations and the generalcontours of how it will comply with itsattestation obligations. The regulations

on public access files do not require thatthere be a separate public access file foreach LCA or for each worker. Thus, forexample, an employer might choose tokeep a single public access file with onecopy of each of the required documentswhich are applicable to all LCAs (suchas the description of the employers paysystem), and separately clip togetherthose documents which are specific toeach LCA.

Nothing in the ACWIA suggests thatit intends to deny the Department theusual authority to require recordkeepingas a means of ensuring compliance withan employers statutory obligations. Tothe contrary, Section 212(n)(1)specifically requires employers to makethe LCA and such accompanyingdocuments as are necessary availablefor public examination. The Department

believes that this provision clearlypermits the Department to determinewhat documents must be created orretained by employers to support theLCA. In the absence of such records, theDepartment is unable to ascertainwhether an employer in fact is incompliance or the extent of violations.

In an effort to fully educate the publicregarding the H1B program and its

requirements (including paperwork),DOL intends to prepare and makeavailable pamphlets, fact sheets and asmall business compliance guide.Further compliance assistance materialwill be made available on the DOLwebsite. See Section IV.B, below, for anextensive discussion of this publicoutreach effort. The following is a brief discussion of the paperworkrequirements contained in the proposedrule, the public comments on thoserequirements, the DOL response and thepaperwork requirements imposed by

this interim final rule. A much moreextensive discussion of the issues,including the paperwork requirements,is contained in Section IV of thepreamble.A. Labor Condition Application( 655.700)

The process of protecting U.S.

workers begins with a requirement thatemployers file a labor conditionapplication (LCA) (Form ETA 9035)with the Department. In this applicationthe employer is required to attest: (1)That it will pay H1B aliens prevailingwages or actual wages, whichever aregreaterincluding, pursuant to theACWIA, the requirement to pay forcertain nonproductive time and toprovide benefits on the same basis asthey are provided to U.S. workers; (2)that it will provide working conditionsthat will not adversely affect theworking conditions of U.S. workerssimilarly employed; (3) that there is nostrike or lockout at the place of employment; and (4) that it has publiclynotified the bargaining representativeor, if there is no bargainingrepresentative, the employees, byposting at the place of employment or

by electronic notificationand willprovide copies of the LCA to each H1B nonimmigrant employed under theLCA. In addition, the employer mustprovide the information required in theapplication about the number of alienssought, occupational classification,wage rate, the prevailing wage rate andthe source of the wage rate, and periodof employment. Pursuant to the ACWIA,additional attestation requirements

become applicable to H1B-dependentemployers and willful violators afterpromulgation of these regulations. Thisform, currently approved by OMB underOMB No. 12050310, was revised in theNPRM to identify H1B dependentemployers and provide for theirattestation to the new requirements. TheACWIA increased the number of H1Bnonimmigrants from 65,000 to 115,000in fiscal years 1999 and 2000 and to107,500 in fiscal year 2002. Besides theincrease in LCAs filed for these

additional workers, by regulation H1B-dependent employers are required tofile new LCAs if they wish to filepetitions for new H1B nonimmigrantsor to seek extensions of status forexisting workers. The Departmentestimated in the proposal that 249,500LCAs are filed annually by 50,000 H1Bemployers (dependent andnondependent). The only added LCA

burden proposed in the NPRM was forH1B-dependent employers and willfulviolators to indicate on the LCA theirstatus and their agreement to the



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additional attestation requirements.(The time required for an estimated 50H1B employers to make themathematical calculation to determine if they must make the additionalattestations required of an H1Bemployer is separately set out in C. of this section, below.) Since it wasestimated that only 50 H1B employerswill find it necessary to make thiscalculation, out of a total of 50,000 H1B employers, the estimate of timenecessary to complete the formremained at 1 hour. Total annual burdenwas estimated at 249,500 hours.

Since promulgation of the NPRM, the2000 Amendments to the INA furtherincrease the ceiling on the number of H1B visas that may be issued annually for2001, 2002 and 2003, to 195,000annually, with an additionalunspecified number who may beadmitted if they will be employed by aschool, a related non-profit entity, a

State or local government researchorganization, or a nonprofit researchorganization.

Commenters generally objected to theone hour estimate for completing theLCA, pointing out that the revised LCAis four pages long, whereas the currentLCA is only one page for an estimated

burden of one and one-quarter hour perLCA.

OMB suggested asked whether theconditions in a, b and c in section 8capture the requirements for H1Bdependent employers. They alsosuggested amending the end of thesentence following the second box toread * * * unless the exemptionrequirement in the NOTE below is met.

A commenter stated that DOL hadfailed to consider that many employerswill now be forced to file two LCAswhere previously they only filed one.Several of its member employers whopreviously filed an LCA for multipleopenings indicated that they may fileseparate LCAs for each opening ratherthan take the risk that of INS making adetermination that one H1Bnonimmigrant is not exempt, thusinvalidating the entire LCA.

As discussed in Section IV.B.4 below,

the ETA Form 9035 has been amendedto provide that every employer isrequired to indicate whether it is or isnot H1B-dependent or a willfulviolator. Since all employers arerequired to determine whether or notthey are H1B dependentalthough formost employers, as discussed below,their status will be readily apparent andno actual computation will benecessarythe additional box for non-dependent employers should require noadditional time. There is no otherinformation required which is not

contained on the current form otherthan to check a box indicating theagreement of H1B-dependentemployers and willful violators to theadditional attestation requirements. Thelonger form is not due to therequirement to furnish additionalinformation, but to the new formatrequired for the FAXback, which isdesigned to decrease significantly theprocessing time. See Section IV.5,

below. The Department also notes thatthe 1 1 4 hour estimate on the currentETA Form 9035 includes the 15 minutesestimated to file a complaint with theWage and Hour Division

Upon review, the Department sees noreason to change its estimate of anaverage of one hour per form, including

both reading the instructions and fillingout the form (estimated to take no morethan one-half hour per form), as well astaking the actions that are subsumed infilling out the form (obtain the

prevailing wage and providing notice).Based upon current data, andconsidering the regulatory changedeleting the necessity for filing a newLCA when an employers corporateidentity changes ( see B. of this section,

below) as well as the requirement thatH1B-dependent employers withcurrent LCAs file new LCAs if they wishto file new H1B petitions or requestsfor extension of status, DOL estimatesthat 637,000 LCAs will be submittedannually by 63,500 H1B employers(dependent and nondependent). Totalannual burden for the LCA is estimatedto be 637,000 hours (637,000 LCAs 1hour).B. Documentation of Corporate Identity( 655.760)

Currently, the regulatory requirementis that a new LCA must be filed whenan employers corporate identitychanges and a new EmployerIdentification Number (EIN) is obtained.Under the proposed rule, an employerwho merely changes corporate identitythrough acquisition or spin-off couldmerely document the change in thepublic file (including an expressacknowledgment of all LCA obligations

on the part of the successor entity),provided it satisfied the InternalRevenue Code definition of a singleemployer. The proposed regulation wasdesigned to eliminate a burden on

businesses to file a new LCA, while atthe same time ensuring that the publicis aware of the changes and that theemployer will continue to follow itsLCA obligations. It was estimated in theproposal that 500 H1B employerswould be required to file the subjectdocumentation annually. It wasestimated that the recording and filing

of each such document would take 15minutes for a total annual burden of 125hours.

One commenter asked how DOLsrulemaking affected the INSinterpretation that any material changein employment necessitates the filingof an amended petition. Anothercommenter asked what opinion anemployer is to follow when current DOLopinion is that any change to anapproved LCA requires an amendmentto the H1B petition and the view of INS is that a change in company nameor EIN does not require a new LCA, justthat the change be documented at thetime of amendment or extension.Another commenter stated that the

burden for this requirement issignificantly higher than DOL estimated.

Upon reconsideration, DOLs InterimFinal Rule provides that a new LCA willnot be required merely because acorporate reorganization results in achange of corporate identity, regardlessof whether there is a change in the EINand regardless of whether the IRSdefinition of single employer issatisfied, provided that the successorentity, prior to the continuedemployment of the H1B nonimmigrant,agrees to assume the predecessorentitys obligations and liabilities underthe LCA. The agreement to comply withthe LCA for the future and to anyliability of the predecessor under theLCA must be documented with amemorandum in the public access file.

With these changes, and based on theDepartments experience, it is nowestimated that 1000 H1B employers (anincrease from the 500 employersestimated in the NPRM) will be requiredto file the documentation annually andthat the recording and filing of eachsuch document will take approximately30 minutes for a total annual burden of 500 hours. The Department alsoestimates that employers who file thismemorandum will file 10,000 fewerLCAs, for a net saving of 9,500 hours.

INS requirements for the filing of anamended petition are separate from DOLrequirements for the filing of LCAs.C. Determination of H1B Dependency ( 655.736)

An H1B employer must calculate theratio between its H1B workers and thenumber of full-time equivalentemployees (FTEs) to determine whetherit meets the statutory definition of an H1B-dependent employer (8 U.S.C. 1182(n)(3)(A)). The NPRM provided thatwhen it is a close question, thedetermination would ordinarily bemade by examination of an employersquarterly tax statement and last payroll(or last quarter of payrolls if more



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representative) or other evidence as toaverage hours worked by part-timeemployees to aggregate their hours intoFTEs, together with a count of thenumber of workers under H1Bpetitions. Documentation of thisdetermination would be required wherenon-dependent status is not readilyapparent and a mathematicaldetermination must be made. A copy of this determination would be placed inthe public disclosure file. In addition, if an employer changed from dependent tonon-dependent status, or vice-versa, asimple statement of the change in statuswould be placed in the publicdisclosure file. The NPRM explainedthat documentation of a determinationof H1B dependency where it is a closequestion is necessary to determineemployer compliance with H1Brequirements, and to advise the publicof an employers status. It was estimatedin the proposal that approximately 50

H1B employers would need to makethe determination with 25 employerswho are found not to be dependentemployers would be required todocument this determination annually.The making and documentation of eachsuch determination was estimated totake approximately 15 minutes, andoccur at least twice annually for a totalannual burden of 12.5 hours.

Several commenters expressed theview that the DOL burden estimate forthis requirement was severelyunderestimated. They remarked thatlarge employers who hire H1Bemployees will have to create systems of verification of H1B dependency andthat the determination will be difficultwhere employees are located inmultiple locations and departments andthe data needed to make thedetermination are maintained indifferent databases. Some commentersquestioned the connection DOL made

between the use of blanket LCAs andthe likelihood of H1B dependency andhow frequently the determinationwould need to be made. Some alsocommented that it appeared thatwhenever the determination is made, acopy of the calculation must be placed

in the public access file, making it arequirement for all H1B employers, notjust those who are borderline H1Bdependent. OMB commented that the15-minute burden for the dependencydetermination seemed low and asked if the estimate just includes the assurance(how it is written) or does it alsoinclude documentation of the assurance.

Having taken into consideration all of the comments pertaining to thedetermination of dependency status,DOL has decided modification theserequirements is appropriate to achieve

the purposes of the ACWIA and avoidunnecessary burden on employers. First,the Interim Final Rule provides that allemployers must retain copies of the I129 petitions or requests for extensionsof status filed with INS. Thesedocuments are critical to severalprovisions in the regulations, includingin particular the determination of dependency and the number of hoursthat must be compensated if employeesare benched. The Department believesthat prudent businessmen would retaincopies of these documents in any event.(See also the discussion in D. of thissection, below.)

The Interim Final Rule alsosignificantly reduces the burden toemployers in making the computationsof dependency. The Rule will permitemployers to use a snap shot test todetermine if dependency status isreadily apparent and requires a fullcomputation only if the number of H

1B workers exceeds 15 percent of thetotal number of full-time workers of theemployer. Furthermore, the Ruleprovides employers an option of considering all part-time workers to beone-half FTE, rather than make the fullcomputation. If the full computation(where required because thedependency status is not readilyapparent) indicates that the employer isnot H1B dependent, the employer mustretain a copy of this computation.Further, the employer must retain acopy of the full computation inspecified circumstances which theDepartment believes will very rarelyoccur. The full computation must bemaintained if the employer changesstatus from dependent to non-dependent. If the employer uses theInternal Revenue Code single employertest to determine dependency, it mustmaintain records documenting whatentities are included in the singleemployer, as well as the computationperformed, showing the number of workers employed by each entity who isincluded in the calculation. Finally, if the employer includes workers who donot appear on the payroll, a record of the computation must be kept. The

Department has concluded that thecomputations or summary of thecomputations need not be kept in thepublic access file.

Although DOL has made severalchanges to simplify the determination of dependency status and itsdocumentation, upon reconsiderationDOL has increased its estimate of

burden from 15 to 30 minutes, thusincreasing the annual burden for anestimated 25 employers who must makeand document such calculations twiceannually from 12.5 to 25 hours. The

Department also estimates that no morethan 5 percent of employers will berequired to retain copies of H1Bpetitions and extensions who do notcurrently retain these documents, for anaverage of 3 minutes per petition, anda total of 159 hours (3,175 employers 3 minutes 60). Total annual burden forthis item is estimated to be 184 hours.D. List of Exempt H1B Employees inPublic Access File ( 655.737(a)(1))

The ACWIA provisions regardingnon-displacement and recruitment of U.S. workers do not apply where theLCA is used only for petitions forexempt H1B workers. The NPRMprovided that where the INS determinesa worker is exempt, employers would berequired to maintain a copy of suchdocumentation in the public access file.Determinations as to whether or not H1B workers meet the educationrequirements to be classified as exemptH1B nonimmigrants would be madeinitially by the INS in the course of adjudicating the petitions filed on

behalf of H1B nonimmigrants bydependent employers. In the event of aninvestigation, it was anticipated thatconsiderable weight would be given tothe INS determination that H1Bnonimmigrants were exempt, based onthe educational attainments of theworkers, since INS has considerableexperience in evaluating the educationalqualifications of aliens. Retention of copies of such determinations wouldaid DOL in determining compliancewith the H1B requirements andprovide the public with notice as well.It was estimated in the proposal that28,125 such documents would need to

be filed annually. Each such filingwould take approximately one minutefor an annual burden of approximately468.8 hours.

One commenter indicated that the oneminute to physically complete the formmay be correct but that the estimateignores the analysis and review requiredto determine if they are exempt.Another commenter asked whatdocumentation must be copied andmaintained in the file, i.e., would INS

issue a separate determination or wouldForm I797, Notice of Approval of H1B Petition suffice? They also believedit was unclear how DOL estimated only28,125 documents would be filedannually when the number of H1Bpetition approvals for the current fiscalyear is 115,000.

On further consideration, because of privacy considerations, DOL hasconcluded that the H1B petitions withthe INS determinations of workersexempt status need not be included inthe public access file. However, DOL



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believes the public should know whichworkers are not covered by the newattestation elements so they canchallenge a determination of exemptstatus where they believe the basis forthe exemption is invalid. Therefore,under the interim final rule employerswill be required to include in theirpublic access file a list of the H1Bnonimmigrants supported by any LCAattesting that it will be used only forexempt workers, or in the alternative, astatement that the employer employsonly exempt H1B workers. DOLestimates that each list or statement willtake approximately 15 minutes and that200 H1B employers will prepare onesuch list or statement annually for atotal burden of 50 hours.E. Record of Assurance of Non-displacement of U.S. Workers at Second Employers Worksite (655.738(e))

Section 212(n)(F)(ii) of the INA, 8U.S.C. 1182(n)(F)(ii), prohibits an H1B-dependent employer from placing H1Bnonimmigrant with another employerunless the dependent employer makes a

bona fide inquiry as to the secondaryemployers intent regardingdisplacement of U.S. workers by H1Bworkers. The proposed regulationwould require an employer seeking toplace an H1B nonimmigrant withanother employer to secure and retaineither a written assurance from thesecond employer, a contemporaneouswritten record of the second employersoral statements regarding non-displacement, or a prohibition in thecontract between the H1B employerand the second employer. Pursuant tothe ACWIA, an H1B employer may bedebarred for a secondary displacementonly if the Secretary of Labor foundthat such placing employer * * * knewor had reason to know of suchdisplacement at the time of theplacement of the nonimmigrant with theother employer. Congress clearlyintended that the employer make areasonable inquiry and give due regardto available information. In order toassure that the purposes of the statuteare achieved, the Department developed

a regulatory provision to require that theH1B employer make a reasonable effortto inquire about potential secondarydisplacement and to document thoseinquiries. It was estimated thatapproximately 150 employers wouldplace H1B nonimmigrants withsecondary employers where assurancesare required. It was estimated that eachsuch assurance will take approximately5 minutes and each such employerwould obtain such assurances 5 timesannually for an annual burden of 62.5hours.

Commenters stated that DOL grosslyunderestimated the amount of timenecessary to persuade and obtain fromthe secondary employer the necessaryassurances, create a verification form orrevise a contract and the annualfrequency of the assurances. Further,some commenters felt that DOL hadfailed to consider the additional burdenon the secondary employer to documenttheir compliance with the assurance.

The paperwork burden estimate,properly, does not include the timenecessary to persuade a secondaryemployer to provide such an assurance

but does include the development of theverification form or contract clause andits execution. DOL believes that oncethe form or contract clause is created,this form or contract clause will be useduniformly for subsequent assurancesmaking the average burden peroccurrence minimal. There is no burdenon the secondary employer to document

its compliance with the assurance, sinceit is solely the responsibility of theprimary H1B employer to comply withthe attestation that no U.S. worker will

be displaced by an H1B worker. DOLestimates an average burden of 10minutes per attestation or statement,and that 150 H1B employers willdocument such assurance 5 timesannually, for a total annual burden of 125 hours.F. Offers of Employment to Displaced U.S. Workers ( 655.738(e))

The ACWIA prohibits H1Bdependent employers and willfulviolators from hiring H1Bnonimmigrants if their doing so woulddisplace similar U.S. workers from anessentially equivalent job in the samearea of employment. The proposedregulations would require H1B-dependent employers to keep certaindocumentation with respect to eachformer worker in the same locality andsame occupation as any H1B workerwho left its employ in the period from90 days before to 90 days after anemployers petition for an H1B worker.For all such employees, the Departmentproposed that covered H1B employers

maintain the last-known mailingaddress, occupational title and jobdescription, any documentationconcerning the employees experienceand qualifications, and principalassignments. Further, the employerwould be required to keep alldocuments concerning the departure of such employees and the terms of anyoffers of similar employment to suchU.S. workers and responses to thoseoffers. These records are necessary forthe Department to determine whetherthe H1B employer has displaced

similar U.S. workers with H1Bnonimmigrants. The Department statedthat no records need be created tocomply with these requirements, sincethe Equal Employment OpportunityCommission (EEOC) already requiresunder its regulations that the recordsdescribed above be maintained.

Commenters stated that they wereunaware of the EEOC regulation thatrequired this documentation andrequested that DOL recite rather thanjust refer to the EEOC regulations.

As discussed in Section IV.F.8 below,commenters are generally correct thatthe EEOC regulation cited in the NPRM,29 CFR 1620.14, does not establish ageneral requirement that employerscreate the records encompassed by theDepartments displacement proposal.Rather, it requires an employer topreserve all personnel or employmentrecords which the employer made orkept. Furthermore, EEOC requires thepreservation of the same or similarrecords under other statutes itadministers, such as the AgeDiscrimination in Employment Act(ADEA). Under this Interim FinalRegulation, DOL is not requiringemployers to create any documentsother than basic payroll information,with one noted exception. If theemployer offers the U.S. worker anotheremployment opportunity, and does nototherwise do so in writing, by theprovisions of section 655.738(e)(1) of these regulations, the employer mustdocument and retain the offer and theresponse to such offer.

It is estimated that 10 H1Bemployers will make such offers of employment 5 times annually (50) andthat 5 of those offers and responseswould not otherwise be committed towriting without this paperworkrequirement. Each such documentationis estimated to take 30 minutes for atotal annual burden of 2.5 hours.G. Documentation of U.S. Worker Recruitment ( 655.739(i)

Pursuant to the ACWIA, H1B-dependent employers are required tomake good faith efforts to recruit U.S.

workers before hiring H1B workers.Under the proposed regulations, H1B-dependent employers would be requiredto retain documentation of therecruiting methods used, including theplaces and dates of the advertisementsand postings or other recruitmentmethod used, the content of theadvertisements or postings, and thecompensation terms. Further, theemployer would be required to retainany documentation concerningconsideration of applications of U.S.workers, such as copies of applications



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and related documents, rating forms, joboffers, etc. The proposed rule alsowould require the employer to placeeither documentation or a simple list of the places and dates of theadvertisements and postings of otherrecruitment methods used. Commentswere requested regarding howemployers should determine industry-wide standards and make thisdetermination available for publicdisclosure. The documentation notedabove is necessary for the Department of Labor to determine whether theemployer has made a good faith effort torecruit U.S. workers and for the publicto be aware of the recruiting methodsused. It was estimated that annually 200H1B dependent employers would needto document their good faith efforts torecruit U.S. workers. The filing of suchrecords was estimated to takeapproximately twenty minutes peremployer for an annual burden of

approximately 66.7 hours.Commenters felt the burden for thisitem was underestimated, i.e., that DOLshould recognize that employers filemore than one LCA each year and thatDOL should recite rather than just referto the EEOC regulation requiring thisdocumentation.

As noted in F. above and as discussedat some length in Section IV.G.5 of thepreamble, DOL believes that employersare required to preserve the recordsrequired under current EEOCrequirements. With the exception of thelist to be included in the public accessfile (and here too employers have theoption of putting the actual records inthe file), DOL is not requiring employersto create any documents, but rather topreserve those documents which arecreated or received. Further, DOL, uponfurther review, has determined thatemployers will not be required tomaintain evidence of industry practicefor recruitment. The only additionalrecordkeeping burden required by theseregulation is that the public disclosurefile contain a summary of the principalrecruitment methods used and the timeframes in which they were used. Thisrecordkeeping requirement may be

satisfied by creating a memorandum tothe file or the filing of pertinentdocuments. It is estimated that 200 H1B employers will file such documentsor memorandum 5 times annually andthat each recordkeeping will take 20minutes, for an annual burden of approximately 333 hours.H. Documentation of Fringe Benefits( 655.731(b))

Pursuant to the ACWIA, all employersof H1B workers are required to offer

benefits to H1B workers on the same

basis and under the same criteria asoffered to similarly employed U.S.workers. The proposed regulationswould require employers to retaincopies of all fringe benefit plans andsummary plan descriptions, includingall rules regarding eligibility and

benefits, evidence of what benefits areactually provided to individual workersand how costs are shared betweenemployers and employees. Theserecords are necessary for theDepartment to determine whether theH1B nonimmigrants are offered thesame fringe benefits as similarlyemployed U.S. workers. Copies of mostfringe benefit programs are required to

be maintained by Internal RevenueService and Pension and WelfareBenefits Administration regulations;thus there would not ordinarily be anadditional recordkeeping burden fromthese requirements. The Departmentestimated that 2,500 employers would

spend approximately 15 minutes eachdocumenting unwritten plans, for anannual burden of 625 hours.

The Department in the proposed rulealso inquired as to whether it would bepossible to require multinationalemployers to keep H1B workers onhome country benefit plans in lieu of those provided to U.S. workers andwhat records would need to be kept todemonstrate the value of the home-country benefits and those provided toU. S. workers.

A commenter said that DOL shouldrecite, rather than just refer to the

PWBA and IRS regulations. Anothercommenter stated it was unclearwhether in fact these regulationsgoverning retention of benefitsinformation meet the DOL requirementsfor the H1B program, since the DOLregulations require specificdocumentation of the comparative

benefits offered and received by H1Bemployees and their U.S. counterparts,including the need to determine theappropriate comparison group and thenrequire the maintenance of all theinformation in the public inspection filefor each H1B worker. Another

comment stated that DOL has failed toconsider the additional burden of comparing fringe benefits offered bysimilar employers in the area whichDOL is proposing to require.Commenters questioned the need for thedocumentation of fringe benefits to beplaced in each public access file, withothers suggesting more flexibility inhow the documentation should beprovided. One commenter suggestedthat employers be allowed to selectequivalent but different valued benefitsas long as employers can show that all

similarly situated workers were offeredthe same array of benefits.

It is believed that almost allemployers of H1B workers would,absent the regulation, have alreadycreated an employee handbook or havea summary description plan required byERISA regulations which would satisfythe H1B regulatory requirement. Theprovision being considered to require acomparison of fringe benefits offered bysimilar employers in the area is notincluded in this interim final rule. DOLis not requiring that detailed records of fringe benefits be maintained in eachpublic access file. These records may bekept in a master file or in any othermanner the employer desires. Thepublic access file need only contain asummary of the benefits offered to U.S.workers in the same occupation as H1B workers, including a statement of how employees are differentiated, if atall. Ordinarily this would be satisfied

with the employee handbook orsummary description discussed above.Where an employer is providing homecountry benefits, the employer needonly place a notation to that effect in thepublic access file.

There are an estimated 10 percent of H1B employers, or 6,350 who providefringe benefits, such as bonuses,vacations and holidays, not required byERISA regulations to be documented. Itis estimated to document these planswould take 15 minutes per employer,for an annual burden of 1,588 hours(6,350 15 minutes). It is furtherestimated that 25 percent of H1Bemployers (15,875) are multinationalemployers and that a note to the file thatthese workers receive home country

benefits would take 5 minutes peremployer for an annual burden of 1,323hours. The total estimated burden forthis item is 2,911 hours.I. Wage Recordkeeping RequirementsApplicable to Employers of H1BNonimmigrants

The Department republished andasked for comment on severalprovisions of the December 20, 1994Final Rule (59 FR 65646) which were

published for notice and comment onOctober 31, 1995 (60 FR 55339).Existing regulations require all H1Bemployers to document their actualwage system to be applied to the H1Bnonimmigrants and U.S. workers. Theyare also required to keep payroll recordsfor non-FLSA exempt H1B workersand other employees for the specificemployment in question. The proposedrule would decrease the burden onemployers of keeping hourly payrecords for U.S. workers, requiring suchrecords only if either the worker is not



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paid on a salary basis, or the actualwage is stated as an hourly wage. For H1B workers, such records must also bekept if the prevailing wage is expressedas an hourly rate. The statute requiresthat the employer pay H1Bnonimmigrants the higher of the actualor prevailing wage. The Departmentexplained that in order to determine if the employer is paying the requiredwage, it must be able to ascertain thesystem an employer uses to determinethe wages of non-H1B workers. TheDepartment also stated that it isessential to require the employer tomaintain payroll records for theemployers employees in the specificemployment in question at the place of employment to ensure that H1Bnonimmigrants are being paid at leastthe actual wage being paid to non-H1Bworkers or the prevailing wage,whichever is higher. The Departmentestimated that approximately 50,000

employers employ H1Bnonimmigrants. The documentationwould have to be done only one time foreach employer. Hourly pay recordswould have to be prepared with respectto all affected employees each payperiod. The Department estimated thatthe public burden wold beapproximately 1 hour per employer peryear to document the actual wagesystem for a total burden to theregulated community of 50,000 hours ina year.

The payroll recordkeepingrequirements are virtually the same asthose required by the Fair LaborStandards Act (FLSA) and any burdenrequired is subsumed in the OMBApproval No. 12150017 for thoseregulations at 29 CFR Parts 516, exceptwith respect to records of hours workedfor exempt employees. There would beno burden for U.S. workers since as apractical matter, hours worked recordswould be required for U.S. workers onlyif they are not exempt from FLSA, or if they are exempt but paid on an hourly

basis (certain computer professionals),and therefore would keep hourlyrecords in any event. The Departmentestimates that 55,000 H1B workers will

be paid on a salary basis. Hours workedrecords would be required for theseworkers only if the prevailing wage isexpressed as an hourly rateestimatedto 17 percent of all cases. TheDepartment estimated a burden of 2.5hours per worker per year, for 9,350workers and a total of 23,375 hours.

Several commenters stated that DOLhad grossly underestimated the burdenof documenting the objective wagesystem. Some indicated that it wasludicrous to estimate that thedocumentation is done only once, since

wage systems continually change,documentation will need be done, at aminimum, each time a new LCA isprepared and employers do not hire H1B nonimmigrants only for one positionin the organization. Thus, DOL mustcalculate how many different jobcategories are filled by H1Bnonimmigrants on average for eachemployer to estimate how many timesthe burden of documenting the objectivewage system occurs annually. Further,the documentation must be sufficientlydetailed to allow a third party todetermine the actual wage, making the

burden higher than estimated. Somecommented that the proposed regulationrequires the actual wage be determinedand documented anew for each HBhire, along with periodic adjustments tothe actual wage system.

The Department has deleted theprovisions suggesting that theemployers wage system must be

objective, as well as the statement thatit must be described in the publicdisclosure file with detail sufficient fora third party to determine the actualwage rate for an H1B nonimmigrant.As stated above, the requirement that adescription of the actual wage system beincluded in the public access file isalready contained in the regulations atsection 655.760(a)(3). Therefore theseregulations create no additional burdenfor this requirement.

Some commenters stated that whileDOL estimated that only 17 percent of the prevailing wages provided toemployers by State EmploymentSecurity Agencies (SESAs) areexpressed as hourly rates, theirexperience was that SESAs regularlyprovides employers and attorneys withthe prevailing wage stated as an hourlyrate.

With respect to the concern expressedthat SESA more frequently issues hourlyrates, the modification to section655.731(a)(2) in the interim final rulewill provide that employer shall convertthe prevailing wage determination intothe form which accurately reflects thewages which it will pay.

The Department has also concluded

that a revision of the regulation isappropriate to remove the requirementthat the employer keep hourly wagerecords for its full-time H1B employeespaid on a salary basis. The regulationcontinues to require employers to keephours worked records for employeeswho are not paid on a salary basis andfor part-time H1B workers, regardlessof how paid. The additional burden of keeping records for salaried H1Bworkers who are exempt from the FLSAis estimated at 2.5 hours per worker for10,500 workers (1.5 percent of total H

1B workers), for a total annual burdenof 26,250 hours.

J. Information Form Alleging H1BViolations

The ACWIA requires DOL to developa procedure so that a person, other thanan aggrieved party, can provide, inwriting on a form developed by DOL,

information alleging H1B programviolations. The Department proposesthat a single form be used by any partyalleging violations, to the Wage andHour Division of the U.S. Department of Labor, whether a complainant oranother source. The H1BNonimmigrant Information Form, WH4, is included in this Interim Final Rulefor public review and comment. It isestimated that 200 such responses will

be received annually and that eachresponse will take approximately 20minutes, for a total burden of 67 hours.Total Annual Hours Burden for allInformation Collections667,423Hours

Retention of Records: The currentregulations provide at section 655.760that copies of the LCAs and itsdocumentation are to be kept for aperiod of one year beyond the end of theperiod of employment specified on theLCA or one year from the date the LCAwas withdrawn, except that if anenforcement action is commenced, theserecords must be kept until theenforcement procedure is completed asset forth in part 655, subpart I. Thepayroll records for the H1B employeesand others employees in the sameoccupational classification must beretained for a period of three years fromthe date(s) of the creation of therecord(s), except that if an enforcementproceeding is commenced, all payrollrecords shall be retained until theenforcement proceeding is completed.These record retention requirementshave been approved by OMB underOMB No. 12050310.

After consideration of commentsraised in response to the NPRM, theDepartment has clarified the recordretention requirements to provide that

where there is no enforcement action,the employer shall retain requiredrecords for a period of one year beyondthe last date on which any H1Bnonimmigrant is employed under thelabor condition application or, if nononimmigrants were employed underthe labor condition application, oneyear from the date the labor conditionapplication expired or was withdrawn.

H1B employers may be from a widevariety of industries. Salaries foremployers and/or their employees whoperform the reporting and



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recordkeeping functions required bythis regulation may range from severalhundred dollars to several hundredthousand dollars where the corporateexecutive office of a large companyperforms some or all of these functionsthemselves. Absent specific wage dataregarding such employers andemployees, respondent costs wereestimated in the proposed rule at $25 anhour. Total annual respondent hourcosts for all information collectionswere estimated to be $8,105,887.50($25.00 324,235.5 hours).

Some commenters questioned the $25per hour estimate for respondent costs,indicating that in order to comply withthe information requirements, H1Bemployers must employ high-levelcompensation professionals and humanresource professionals. The Departmentrecognizes that some employers mayemploy highly-paid professionals toadvise them on how to comply with the

H1B program requirements. However,it is believed that such a need will beshort-lived and that once a system is inplace, compliance can be maintainedwithout this highly paid professionalassistance. The $25 an hour respondentcost is an average cost, which recognizeshigher initial cost to effect compliance,as well as the low cost of performing theclerical filing functions. Further, asnoted above, in addition to the guidanceprovided in this regulation and itspreamble, the Department intends toprovide non-technical guidance printedmaterial and information in electronicformat which should greatly assistemployers and employees inunderstanding the H1B programrequirements. Total annual respondenthour costs for all informationcollections are estimated at $16,685,575($25.00 667,423).

The paperwork requirementsdiscussed above will not becomeeffective until OMB has reviewed andapproved these requirements andassigned an OMB approval number.II. Background

On November 29, 1990, theImmigration and Nationality Act was

amended by the Immigration Act of 1990 (IMMACT 90) (Pub. L. 101649,104 Stat. 4978) to create the H1B visaprogram for the temporaryemployment in the United States (U.S.)of nonimmigrants in specialtyoccupations and as fashion models of distinguished merit and ability. TheH1B provisions of the INA wereamended on December 12, 1991, by theMiscellaneous and TechnicalImmigration and NaturalizationAmendments of 1991 (MTINA) (Pub. L.102232, 105 Stat. 1733). Further

amendments were made to the H1Bprovisions of the INA on October 21,1998, by enactment of the AmericanCompetitiveness and WorkforceImprovement Act (ACWIA) (Title IV of Pub. L. 105277, 112 Stat. 2681). Inaddition, the H1B provisions of theINA were amended in October, 2000 byenactment of the AmericanCompetitiveness in the Twenty-firstCentury Act of 2000 (Pub. L. 106313,114 Stat. 1251, October 17, 2000), theImmigration and Nationality ActAmendments (Pub. L. 106311, 114Stat. 1247, October 17, 2000), andsection 401 of the Visa WaiverPermanent Program Act (Pub. L. 106396, 114 Stat. 1637, October 30, 2000)(collectively, the October 2000Amendments).

These cumulative amendments of theINA assigned certain responsibility tothe Department of Labor (Department orDOL) for implementing several

provisions of the Act relating to thetemporary employment of certainnonimmigrants. The H1B provisions of the INA govern the temporary entry of foreign professionals to work inspecialty occupations in the UnitedStates under H1B visas. 8 U.S.C.1101(a)(15)(H)(i)(b), 1182(n), and1184(c). The H1B category of specialtyoccupations consists of occupationsrequiring the theoretical and practicalapplication of a body of highlyspecialized knowledge and theattainment of a Bachelors or higherdegree in the specific specialty as aminimum for entry into the occupationin the United States. 8 U.S.C. 1184(i)(1).In addition, an H1B nonimmigrant ina specialty occupation must possess fullState licensure to practice in theoccupation (if required), completion of the required degree, or experienceequivalent to the degree and recognitionof expertise in the specialty. 8 U.S.C.1184(i)(2). The category of fashionmodel requires that the nonimmigrant

be of distinguished merit and ability. 8U.S.C. 1101(a)(15)(H)(i)(b).A. Changes Made by the ACWIA and theOctober 2000 Amendments

The ACWIA made numeroussignificant changes in the H1Bprovisions. One was the temporaryincrease in the maximum number of H1B visas over the three fiscal yearsfollowing ACWIAs enactment: Forfiscal years 1999 and 2000, the capwould be 115,000; for fiscal year 2001,the cap would be 107,500; and for fiscalyear 2002 (and thereafter), the capwould return to the original 65,000.Another significant change was theimposition of additional attestationrequirements for certain employers to

provide better protections to U.S.workers. The additional attestationrequirements apply to H1B-dependent employers and toemployers who have been found to havecommitted a willful failure ormisrepresentation with respect to theH1B requirements (hereafter referred toas willful violators). H1B-dependentemployers and willful violators mustattest that they: (1) Have not displacedand will not displace a U.S. workerwithin the period beginning 90 days

before and ending 90 days after thefiling of an H1B petition; (2) will notplace an H1B worker with anotheremployer with indicia of anemployment relationship withoutmaking an inquiry to assuredisplacement has not and will not takeplace within the period beginning 90days before and ending 90 days after theplacement; and (3) have taken good faithsteps to recruit U.S. workers for the job

for which the H1B workers are sought,and will offer the job to any equally or better qualified U.S. worker. Therecruitment provision does not apply toan LCA for an H1B worker who isexceptional, an outstandingprofessor or researcher, or amultinational manager or executivewithin the meaning of section 203(b)(1)of the INA. The ACWIA specified that

both the displacement and recruitment/hiring protections become effectiveupon the date of the Departments finalregulation and apply only to LCAs filed

before October 1, 2001. An H1B-dependent employer or willful violatorfiling an LCA which will be used onlyfor exempt H1B workers is notrequired to comply with the newattestation requirements for that LCA.

The ACWIA also instituted a filing feeof $500, to be collected by INS, forinitial petitions and first extensionsfiled on or after December 1, 1998, and

before October 1, 2001. Institutions of higher education and related oraffiliated nonprofit entities, nonprofitresearch organizations, andGovernmental research organizationsare exempt from the new fee. The feesare to be used for job training, low-

income scholarships, and programadministration/enforcement.The ACWIA included other generally

applicable worker protections,specifically: whistleblower protection,prohibitions against reimbursement of the $500 filing fee and againstpenalizing an H1B worker whoterminates employment prior to a dateagreed with the employer, and arequirement that the employer paywages during nonproductive time if such time is not due to reasonsoccasioned by the worker. The ACWIA



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also required employers to offer H1Bworkers fringe benefits on the same

basis and in accordance with the samecriteria as U.S. workers.

The ACWIA specified new civilmoney penalties ranging from $1,000 to$35,000 per violation, along withdebarment. New investigativeprocedures were created, authorizingthe Department to conduct randominvestigations of willful violators duringthe five-year period after the finding of such violation, and establishing analternative investigation protocol basedon information indicating potentialviolations obtained from sources otherthan aggrieved parties. Enforcement of the requirement that employers hireU.S. workers if they are equally or betterqualified than the H1B workers iscarried out by the Attorney Generalthrough arbitration.

The ACWIA mandated a particularmethod of computation of the localprevailing wage for purposes of therequirements of the H1B program andthe permanent immigrant workerprogram with respect to employees of institutions of higher education andrelated or affiliated nonprofit entities,nonprofit research organizations, andGovernmental research organizations.Under the ACWIA provision, theprevailing wage level is to take intoaccount only employees at suchinstitutions and organizations.

The ACWIA became law on October21, 1998. With one exception, itsprovisions took effect at that time, andapply both to existing LCAs and toLCAs filed in the future. Pursuant tosection 412(d) of the ACWIA andsection 212(n)(1)(E)(ii) of the INA asamended by the ACWIA, 8 U.S.C.1182(n)(1)(E)(ii), the special attestationprovisions regarding displacement andrecruitment are applicable only to LCAsfiled by H1B-dependent employers andwillful violators on or after the date thisInterim Final Rule becomes effectiveand until October 21, 2001.

In addition, section 415(b) of theACWIA provided that the amendmentsto section 212(p) of the INA, 8 U.S.C.1182(p)relating to computing the

prevailing wage level for employees of an institution of higher education or arelated or affiliated nonprofit entity, foremployees of a nonprofit researchorganization or Governmental researchorganization, or for professionalathletesapply to prevailing wagecomputations for LCAs filed beforeOctober 21, 1998, but only to theextent that the computation is subject toan administrative or judicialdetermination that is not final as of suchdate. Therefore, the regulations in parts655 and 656 to implement section

212(p) apply retroactively to anyprevailing wage determinationsthereunder which were not final as of October 21, 1998.

Two other ACWIAs provisionscontained temporal qualifications,relating to the Departments authority toconduct random investigations andother source investigations (INA,sections 212(n)(2)(F), 212(n)(2)(G),respectively). The Act specified that theDepartments authority, pursuant tosection 212(n)(2)(F) of the INA asamended by the ACWIA, 8 U.S.C.1182(n)(2)(F), to conduct randominvestigations of employers who havecommitted a willful failure to meet acondition of their LCAs or who havemade a willful misrepresentation of material fact applies only where such afinding has been made by the Secretaryon or after October 21, 1998. The Actalso specified that the Departmentsauthority, pursuant to section

212(n)(2)(G), 8 U.S.C. 1182(n)(2)(G), toconduct investigations based oncredible information from a source otherthan an aggrieved person wouldsunset, i.e. , expire, on September 30,2001.

The October 2000 Amendments madesubstantial increases in the numbers of H1B visas available for theemployment of nonimmigrants: 195,000each year for fiscal years 2001, 2002,and 2003 (with the number thereafter torevert to the original 65,000 per fiscalyear); an unspecified additional numberfor fiscal year 1999 to covernonimmigrants issued visas above theauthorized number for that year; anunspecified additional number for fiscalyear 2000 to cover petitions filed beforeSeptember 1, 2000; and an unlimitednumber for nonimmigrants employed byinstitutions of higher education, by theirrelated or affiliated nonprofit entities,

by nonprofit research organizations, or by governmental research organizations(i.e. , visas for employees of such entitiesare not counted against the annuallimits). The Amendments extended theeffective periods for two ACWIAprovisions: The additional attestationelements for H1B-dependent

employers and willful violatoremployers were extended until October1, 2003; the Departments authority toconduct investigations based on sourcesother than aggrieved parties wasextended through September 30, 2003.In addition, the Amendments created aportability option for H1Bnonimmigrants, by authorizing theirchange of employers (from one H1Bemployer to another) upon the filing bythe prospective employer of a newpetition on behalf of suchnonimmigrant ( i.e. , eliminating the

need to await the INS adjudication of the petition). Further, the Amendmentsauthorized the extension of H1B statusfor nonimmigrants in cases of delayedINS adjudications of petitions foremployment-based immigration orapplications for adjustment of status forpermanent residence; the extensions of H1B status are to be made by the INSin one-year increments. TheAmendments doubled the ACWIA-created petition fee (from $500 to$1,000) and extended the effectiveperiod of the fee provision to October 1,2003. The Amendments broadened theACWIAs exemption of certainemployers from payment of the filingfee (to include nonprofit entitiesengaging in established curriculum-related clinical training of studentsregistered at such institutions). Inaddition, the Amendments made somechanges in the ACWIA allocations of feemonies for various training programs,

increased the ACWIA allocation of feemonies to the INS for processing of LCAs, and reduced the ACWIAallocation of fee monies to theDepartment for processing andenforcement of LCAs ( i.e. , reduced from6 percent to 5 percent, to be dividedequally between processing andenforcement). Finally, the Amendmentsdirected that an amended H1B petitionwas not required to be filed by anemployer that was involved in acorporate restructuring, where thenonimmigrants terms and conditions of employment remained the same.

The Department notes that theACWIA was the product of extensivenegotiations between theAdministration and the House and theSenate. See 144 Cong. Rec. H8584 (Sept.24, 1998); 144. Cong. Rec. S10877 (Sept.24, 1998). Earlier in the year both theHouse and the Senate had issued verydifferent bills to address the H1Bprogram ( see S. Rep. No. 105186, 105thCong., 2d Sess. (1998); H.R. Rep. No.105657, 105th Cong., 2d Sess. (1998)).The resulting legislation was acompromise, and there was noconference committee report or jointstatement by the negotiators that wouldprovide clear legislative history as to itsintent. Although Senator Abraham andCongressman Lamar Smith, as well asother individual Congressman, maderemarks in the Congressional Record ,their views as to the meaning and effectof the legislation are dramaticallydifferent.

The Department further notes that theOctober 2000 Amendments were alsothe product of extensive negotiations,

but that there is very little legislativehistory concerning the limited



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provisions that were actually enacted byCongress.

Keeping in mind the difficulty withconstruing legislation under thesecircumstances, the Department hasinthe Preamble of this Interim FinalRulecited to the legislative history of ACWIA in both the House and theSenate, and to the extensive remarks of

both Senator Abraham andCongressman Smith.B. Summary of Comments on the

January 5, 1999 NPRM To obtain public input to assist in the

development of interim finalregulations, the Department published aNotice of Proposed Rulemaking (NPRM)and invited public comment in theFederal Register on January 5, 1999.The NPRM also stated that theDepartment was re-publishing for noticeand further comment certain provisionsof the Final Rule promulgated inDecember 1994. These provisions had

been proposed for comment on October31, 1995, during the pendency of thelitigation in National Association of Manufacturers v. Reich, 1996 WL420868 (D.D.C. 1996) (NAM), whichresulted in an injunction against theDepartments enforcement of some of the provisions on AdministrativeProcedure Act (APA) proceduralgrounds. In addition, the Departmentsought comment on a number of interpretive issues arising under theexisting regulations, set forth inproposed Appendix B. The thirty-daycomment period set forth in the January5, 1999 NPRM was extended untilFebruary 19, 1999.

The Department has, in this InterimFinal Rule, carefully consideredcomments received in response to theOctober 31, 1995 Proposed Rule inconjunction with the commentsreceived in response to the January 5,1999 NPRM. The 1995 Proposed Ruleelicited comments from 13 commenters,including one from a trade association,one from an association representingimmigration attorneys, one from anassociation representing firms whichprovide international personnel to

American businesses, five frominformation technology companies, onefrom an accounting and auditing firm,two from universities and two from lawfirms. The proposals which then elicitedthe greatest number of commentsconcerned the actual wage system(Appendix A), workplace notice, the 90-day short-term placement option for H1B workers who move to worksite(s) notcovered by LCA(s), and the use of theGovernment per diem schedule fortravel expenses for those workers. All

but two of these commenters objected to

the Departments proposal that theactual wage be based on a systemutilizing objective criteria. Seven of thecommenters objected to theDepartments proposals on the postingof notices at worksites not controlled bythe employer, while eight of thecommenters objected to theDepartments proposals with regard tothe 90-day option. Five of thecommenters objected to the use of theGovernment per diem schedule forreimbursement of travel expenses underthis option.

The Department received 92comments in response to the January 5,1999 NPRM, including comments whichwere received late but which wereincluded in the rulemaking record andfully considered. The commentersincluded individuals, a union,employee associations, lawyers or lawfirms, businesses, trade and businessassociations, educational and research

facilities and associations, U.S.Government agencies, and Members of Congress (one comment from twoSenators and one comment signed by 23Members of Congress (hereafter referredto as Congressional commenters)).

The proposals eliciting the greatestnumbers of comments were thoseregarding non-productive time (orbenching), the information requiredon the LCA regarding the employersstatus as H1B-dependent, recruitment,displacement, and the posting of notices. Individual commenters werecritical of the H1B program generally,describing it as particularly detrimentalto the job security of older Americans,and sought more guidance from theDepartment with regard to procedureswhich American workers may follow toprove displacement. These commentersalso urged the Department to strictlyenforce the ACWIA no benchingprovisions; include a requirement thatall employers check the H1Bdependency box on Form ETA 9035,with the imposition of heavy fines fornoncompliance; and require thephysical posting of all notices at theplace of employment or worksite.

The union and employee association

commenters generally endorsed theDepartments proposed regulations.Educational and research facilitiesprimarily addressed and supported theDepartments proposals regardingdetermination of prevailing wages foremployees of those institutions. Thesecommenters also urged the Departmentand the INS to be consistent in theirapplication of the definitions containedin the regulatory provisions.

Two associations, one representingthe interests of immigration lawyers andthe other representing the interests of

firms which provide internationalpersonnel to American businesses,commented on virtually every proposalmade by the Department in the NPRM.Lawyers and law firms particularlyaddressed the proposal that all fees andcosts connected with the filing of theLCA and H1B petition, includingattorney and INS fees, are to be borne

by the employer. The Departmentsproposal addressing the timing of theH1B dependency determination alsodrew a strong response fromcommenters representing businessinterests. Senator Abraham, one of theACWIAs Congressional sponsors,submitted his October 21, 1998Congressional Record remarks to beincluded in the rulemaking record.Senator Abraham, along with SenatorBob Graham, further commented on anumber of NPRM provisions they

believed to be inconsistent withCongressional intent. The Department

also received a letter signed by 23Congressmen and Senators, includingSenators Abraham and Graham. Thesecommenters expressed concerns on anumber of provisions, includingproposed paperwork requirements, therequirement that the actual wage be

based on an objective system, and the90-day short-term placement option.III. General Issues Applicable to theRule

In the review of the comments and thedevelopment of this rule, theDepartment realized that there are anumber of general issues which affectthe entire rule. The following discussionaddresses these issues.A. The Administrative Procedure Act

On January 5, 1999, the Department of Labor published a Notice of ProposedRulemaking (NPRM) in the FederalRegister (64 FR 628). The Departmentpublished the NPRM to obtain publiccomment and assistance in thedevelopment of regulations toimplement changes made to the INA bythe ACWIA, and to provide anadditional opportunity for comment oncertain provisions which were

previously published for comment as aProposed Rule in 1995 (60 FR 55339). Inaddition, the Department soughtcomments on various interpretations of the existing regulations, published asproposed Appendix B.

The Departments NPRM set forthspecific regulatory language forcomment on some, but not all, of theissues arising from the provisions of theACWIA. For those issues with nospecific regulatory language, theDepartment identified concerns, and setout its proposed approach to addressing



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them or described alternativeapproaches. The Department soughtcomment on all of these issues andproposals.

The Department was mindful of Congress intent that the ACWIAimplementing regulations bepromulgated in a timely manner; thelegislation allowed a public commentperiod of not less than 30 days.Accordingly, the Department set a 30-day comment period, to close onFebruary 4, 1999. Upon petition by theAmerican Council on InternationalPersonnel (ACIP), the Departmentextended the comment period another15 days, until February 19, 1999. Afterconsideration of the comments received,the Department now issues this InterimFinal Rule and invites further commenton the regulatory provisions set forth inPart IV.A through N of this preambleand the accompanying regulatory text.After reviewing any comments received,

the Department will issue a Final Rule.The Department received 13comments on its regulatory process.

The comments focused primarily onthe length of the comment period andthe NPRMs lack of regulatory text onvarious issues. Nine commentersgenerally objected to the length of thecomment period in combination withthe lack of regulatory text, variouslycontending that the requirements of theAdministrative Procedure Act (APA)were violated in that the bulk of theproposals together with the lack of regulatory text, definitions, and clearexplanations prohibited meaningfulcomment even within the extendedperiod allowed. The AmericanImmigration Lawyers Association(AILA) recommended that theDepartment withdraw the NPRM andissue an Advance Notice of ProposedRulemaking (ANPR). ACIP and SenatorsAbraham and Graham suggested that theDepartment publish a proposed rulewith request for comment prior toimplementing an interim final or finalrule. ACIP also expressed concern aboutthe inclusion of the outstanding issuesin the 1995 NPRM in the proposed rule.In the alternative, ACIP and the

American Council on Education (ACE)requested the Department to deferenforcement of the interim final ruleduring an employer education period of at least 60 days following itspromulgation.

The Department has concluded thatthe delay inherent in the publication of an ANPRM or a new NPRM with fullregulatory text would not be warranted.The new attestation requirements for H1B-dependent employers and willfulviolators created by the ACWIA do nottake effect until these regulations are

promulgated and will terminate onOctober 1, 2003 (with the extendedsunset date specified by the October2000 Amendments). Congressspecifically allowed a comment periodof 30 days. The Department obligedcommenters by extending this period anadditional 15 days. The analysis of thecomments and the preparation of thisInterim Final Rule have been a complexand time-consuming process. TheDepartment is of the view that thereshould be no further delay of keyACWIA provisions. The Department isnow providing an additionalopportunity for comment on theprovisions of the Interim Final Rule.Also, the Department seeks commentson additional proposals presented forthe first time; these proposals are notincluded in the Interim Final Rule butare presented for comment for possibleinclusion in the Final Rule.

The Department is of the view that the

procedure followed on this Rule is infull compliance with the notice andcomment provisions of the APA. TheAPA requires that an agency include inits notice of proposed rulemakingeither the terms or substance of theproposed rule or a description of thesubjects and issues involved. 5 U.S.C.553(b)(3); see Kooritzky v. Reich, 17F.3d 1509, 1513 (D.C. Cir. 1994).Furthermore, the agency must giveinterested persons an opportunity toparticipate in the rulemaking throughsubmission of written data, views, orarguments. 5 U.S.C. 553(c). Thus,under the plain language of the APA,the absence of complete regulatory textin the NPRM does not compromise theDepartments compliance with thenotice and comment requirements of theAPA.

The lengthy and detailed preamble tothe NPRM, setting forth theDepartments proposals and concerns oneach of the issues, struck a balance

between the need to promulgateregulations expeditiously (created bythe ACWIA provision that its newattestation requirements would not takeeffect until regulations are issued andwill terminate on October 1, 2001 (now

extended until October 1, 2003), as wellas the need to give regulatory guidancewith regard to those ACWIA provisionswhich took effect immediately), and theopportunity to provide meaningfulpublic comments. Certainly the publichas a right to have a sufficientdescription of the subjects and issuesinvolved to offer meaningful comment.The Department believes that it hasfully accommodated this need with itsdetailed discussion in the NPRMpreamble. Furthermore, in addition todescribing the provisions it proposed to

promulgate where regulatory text wasnot included in the NPRM, theDepartment discussed and soughtcomments on numerous additionalalternatives it was considering, in anattempt to ensure that there would be nosurprises to the public if, after a reviewof the comments, it determined that analternative was appropriate for theInterim Final Rule. The NPRM preambleis sufficiently detailed to inform thereader, who is not an expert in thesubject area, of the basis and purpose forthe * * * proposal[s]. Federal RegisterAct, 44 U.S.C. 15011511 andregulations thereunder, 1 CFR 1812(a).

The Department has carefullyconsidered the request for a delay inenforcement for 60 days after theeffective date of the regulations. TheDepartment notes that the new law wasextensively negotiated withstakeholders for nearly a year before itwas enacted, that stakeholders have

been aware of the Departmentsproposed approach to the issues formore than a year, that a number of theprovisions will be in effect for only alimited period of time, and that severalprovisions that are the subject of thisrulemaking relate to applications of thelaw that have been in effect for nearlya decade and have been addressed inprior rulemaking. Furthermore, theDepartment plans to undertakeextensive education efforts, as discussed

below. The Department has thereforeconcluded that it is inappropriate toadministratively declare a period inwhich civil money penalties anddebarment would not be imposed.However, we would point out that in allcases the Departments enforcement andthe penalties imposed take intoconsideration the full circumstances of any violations found, within theconstraints of the statutoryrequirements. See INA, section212(n)(2)(C), 8 U.S.C. 1182(n)(2)(C), and 655.810 of this Rule. Furthermore,with regard to the recordkeepingrequirements in particular, as discussedin IV.M.5 below, the Department willissue CMP assessments for violationsonly where it finds that the violation

impedes the ability of the Administratorto determine whether a violation of theH1B requirements has occurred, or theability of members of the public to haveinformation needed to file a complaintor information regarding allegedviolations of the Act.

Finally, the Department notes that thechanges to the method of makingprevailing wage determinations foracademic institutions and relatednonprofit entities, nonprofit researchorganizations, and Governmentalresearch organizations, set forth at



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655.731(a)(2) and 656.40, areeffective immediately and applyretroactively to all LCAs filed on or afterOctober 21, 1998, as well as to all LCAsfiled earlier to the extent that theprevailing wage determination wassubject to an administrative or judicialdetermination that was not final as of October 21, 1998. Pursuant to 5 U.S.C.553(d), the Department finds good causeto make these provisions effectiveimmediately in light of the statutoryprovisions at Section 415(b) of theACWIA, expressly making the changesin the prevailing wage determinationsapply retroactively.B. Dissemination of Information to thePublic

A significant concern expressed by alarge number of commenters is the needto ensure that both U.S. and H1Bworkers, as well as employers, are well-informed about their rights andobligations under the H1B program ingeneral, and the new provisions of theACWIA in particular. The Departmentappreciates the importance of sucheducation and intends to undertakeactive efforts to educate the public aboutthe H1B program. Specifically, theDepartment intends to prepare andmake available pamphlets, fact sheetsand a small business compliance guidein both written and electronic formats.These resources will explain theobligations of employers, the rights of H1B and U.S. workers, and the roles of the Department of Labor and the othergovernment agencies involved in theprogram (the INS, the Departments of

Justice and State). The resources willalso reference materials available fromthese agencies that bear on theemployment of H1B nonimmigrants.The Department also plans to work withthe INS and the State Department todevelop a pamphlet to be provided tovisa applicants and postedelectronically that will explain rightsand responsibilities under the H1Bprogram.

The electronic compliance materialwill be available through theDepartments web page at http://

www.dol.gov, which will provideelectronic links to other sources of information that bear on theemployment of nonimmigrants. Fromthe home page, the material will beaccessible either by going to DOLAgencies: Employment StandardsAdministration, Wage and HourDivision (WHD), then to Laws andRegulations, and then to ComplianceAssistance Information: Wage and HourDivision, or by going directly tohttp://www2.dol.gov/dol/esa/public/ regs/compliance/whd/whdcomp.htm.

The Department also intends to addan H1B Advisor to its InternetEmployment Laws Assistance forWorkers and Small Businesses(ELAWS) system (located at the bottomof the home page). The H1B ELAWSAdvisor will be an interactive programthat helps employers, employees, andother interested parties determine theirH1B rights and responsibilities, 24hours-a-day, 7 days-a-week. TheAdvisor imitates the interaction anindividual may have with a DOLexpertit asks questions, providesinformation, and directs the user to theappropriate resolution based on theresponses given.

This information may also beobtained from the Wage and HourDivisions national and local offices.Mail requests should be addressed tothe Wage and Hour DivisionImmigration Team, Room S3510, 200Constitution Avenue, NW., Washington,DC 20210. Telephone requests should be made of the Wage and Hour DivisionImmigration Team at (202) 6930071.

The addresses and phone numbers forWage-Hours district offices may befound on the Departments website athttp://www.dol.gov/dol/esa/public/ contacts/whd/america2.htm, and in theFederal government section of localtelephone directories. Additionally, theInterim Final Rule refers to threeelectronic resources: Americas JobBank, O*NET, and the OccupationalOutlook Handbook . The job bank may

be accessed at http://www.ajb.dni.us .

The O*NET may be downloaded for freeor ordered through the GovernmentPrinting Office, which can be reachedthrough the Departments weblink athttp://www.doleta.gov/programs/onet .The Occupational Outlook Handbook,published by the Department/s Bureauof Labor Statistics, may be found athttp://stats.bls.gov/ocohome.htm .

Finally, the Department will continueits practice of making available speakersfor groups affected by the Departmentsadministration of the H1B program.The Department will also furnishinformation and copies of its resource

materials to both employee and industryorganizations to facilitate distribution totheir member organizations.

IV. Discussion of Provisions of InterimFinal Rule and Comments

Issues arising under the ProposedRule, including the Departmentsresponse to comments thereon arediscussed below. For the convenience of the public, the numbering in this part of the Preamble remains the same as in theProposed Rule unless otherwiseindicated.

The Department notes that, in a fewinstances, it is requesting comments inthe Interim Final Rule on a regulation oran approach to a regulation on which ithas not previously sought comment.These provisions are not included in theInterim Final Rule, but rather will beconsidered when the Departmentpromulgates the Final Rule after reviewof any comments. These issues arehighlighted in the preamble.

The Department also notes that thenew regulatory text published heregenerally includes all of thesurrounding regulatory text in order toprovide context to the reader. However,the only provisions which are open forcomment are the issues discussed in thePreamble.

Further, the Department notes that theInterim Final Rule includes changes inthe regulations to implement theOctober 2000 Amendments. Thesematters are discussed in the appropriatesections of the Preamble, and commentson the provisions are invited.

The Department has been workingwith the INS to coordinate ourrespective rulemaking efforts under theAct and to achieve consistency in theimplementation of the ACWIAprovisions and the October 2000Amendments.A. What Constitutes an Employer for Purposes of the ACWIA Provisions? ( 655.736(b) and 655.730(e))

Section 212(n)(3)(C)(ii) of the INA asamended by the ACWIA directs thatany group treated as a single employer

under subsection (b), (c), (m), or (o) of section 414 of the Internal RevenueCode of 1986 shall be treated as a singleemployer for purposes of defining anH1B-dependent employer. Theseprovisions, found at 26 U.S.C. 414(b),(c), (m) and (o), concern thecircumstances in which ostensiblyseparate businesses are treated by theInternal Revenue Code (IRC) as a singleemployer for purposes of pension andother deferred compensation plans.

Section 414(b), (c), and (m) of the IRC,respectively, define controlled group of corporations, partnerships,

proprietorships, etc., which are undercommon control, and affiliatedservice group. Section 414(o) providesthat the Department of the Treasury mayissue regulations addressing other

business arra

Documents

Department of Labor: 65 FED REG 80109 1