[Federal Register Volume 60, Number 210 (Tuesday, October 31, 1995)]
[Proposed Rules]
[Pages 55339-55348]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-26921]



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DEPARTMENT OF LABOR

Employment and Training Administration

20 CFR Part 655

RIN 1205-AA89
Wage and Hour Division

29 CFR Part 507

RIN 1215-AA69


Labor Condition Applications and Requirements for Employers Using 
Nonimmigrants on H-1B Visas in Specialty Occupations and as Fashion 
Models

AGENCIES: Employment and Training Administration, Labor; and Wage and 
Hour Division, Employment Standards Administration, Labor.

ACTION: Proposed rule.

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SUMMARY: This rule is being proposed to obtain comments on certain 
provisions of the Department's Final Rule implementing provisions of 
the Immigration and Nationality Act (INA) as it relates to the 
temporary employment in the Untied States (``U.S.'') of nonimmigrants 
admitted under H-1B visas.

DATES: Public comments are invited. Comments shall be received by 
November 30, 1995 in order to expedite the Department's ability to 
provide additional guidance through issuance of a final rule.

ADDRESSES: Comments may be mailed to John R. Fraser, Deputy 
Administrator, 200 Constitution Ave., NW., Room S3510, Washington, DC 
20210.

FOR FURTHER INFORMATION CONTACT:
On 20 CFR part 655, subpart H, and 29 CFR part 507, subpart H, contact 
Flora T. Richardson, Chief, Division of Foreign Labor Certifications, 
U.S. Employment Service, Employment and Training Administration, 
Department of Labor, Room N-4456, 200 Constitution Avenue, NW., 
Washington, DC 20210. Telephone: (202) 219-5263 (this is not a toll-
free number).

    On 20 CFR part 655, subpart I, and 29 CFR part 507, subpart I, 
contact Thomas Shierling, Office of Enforcement Policy, Immigration 
Team, Wage and Hour Division, Employment Standards Administration, 
Department of Labor, Room S-3510, 200 Constitution Avenue, NW., 
Washington, DC 20210. Telephone: (202) 219-7605 (this is not a toll-
free number).

SUPPLEMENTARY INFORMATION:

I. Paperwork Reduction Act of 1995

    As discussed above, this Proposed Rule is a republication for 
notice and comment of various provisions published in the Final Rule. 
It is also proposed that Sec. ______.731(b)(1) be revised to require 
less recordkeeping than had been required in the Final Rule. Reporting 
and recordkeeping requirements contained in the regulations have been 
submitted for review to the Office of Management and Budget under 
Section 3507(d) of the Paperwork Reduction Act of 1995.
    Title: Wage recordkeeping requirements applicable to employers of 
H-1B nonimmigrants.
    Summary: This Proposed Rule requires that employers document an 
objective actual wage system to be applied to H-1B nonimmigrants and 
U.S. workers. it also requires that employers keep payroll records for 
non-FLSA exempt H-1B workers and other employees for the specific 
employment in question.
    Need: The statute requires that the employer pay H-1B nonimmigrants 
the higher of the actual or prevailing wage. In order to determine 
whether the employer is paying the required wage, the Department 
requires an employer to have and document an objective wage system used 
to determine the wages of non-H-1B workers. The Department also 
believes that it is essential to require the employer to maintain 
payroll records for the employer's employees in the specific employment 


[[Page 55340]]
in question at the place of employment to ensure that H-1B 
nonimmigrants are being paid at least the actual wage being paid to 
non-H-1B workers or the prevailing wage, whichever is higher.
    Respondents and proposed frequency of response: The Department 
estimates that approximately 26,480 of the 110,000 employers who file 
labor condition applications actually employ H-1B nonimmigrants. The 
Department further estimates that the public burden is approximately 1 
hour per employer per year to document the actual wage system for a 
total burden to the regulated community of 26,480 hours per year.
    The payroll recordkeeping requirements are virtually the same as 
those required by the Fair Labor Standards Act and any burden required 
is subsumed in OMB Approval No. 1215-0017 for those regulations at 29 
CFR Parts 516, except with respect to records of hours worked required 
to be maintained for H-1B nonimmigrants who are exempt from the FLSA. 
The Department estimates that the number of employers who are required 
to keep such hourly records is approximately 2,251. The Department 
estimates that each employer accounts for approximately 2.45 workers 
and that the burden to employers to keep hourly records is 2.5 hours 
per employee per year. Thus, the total burden for keeping hourly 
records per employer is 6.125 hours per year for a total yearly burden 
to the regulated community of 13,787 hours per year.
    Estimated total annual burden: The Department estimates, based on 
the figures above, that the total annual burden on the regulated 
community is 40,267 hours per year.
    The public is invited to provide comments on the collection of 
information requirements of these provisions so the Department may:
    (1) evaluate whether the proposed collection of information is 
necessary for the proper performance of the functions of the agency, 
including whether the information will have practical utility;
    (2) evaluate the accuracy of the agency's estimate of the burden of 
the proposed collection of information, including the validity of the 
methodology and assumptions used;
    (3) enhance the quality, utility, and clarify of the information to 
be collected; and
    (4) minimize the burden of the collection of information on those 
who are to respond, including through the use of appropriate automated, 
electronic, mechanical, or other technological collection techniques or 
other forms of information technology, e.g., permitting electronic 
submission of responses.
    Written comments should be sent to the Office of Information and 
Regulatory Affairs, Office of Management and Budget, Attention: Desk 
Officer for Employment Standards Administration, U.S. Department of 
Labor, Washington, D.C. 20503.

II. Background

    On November 29, 1990, the Immigration and Nationality Act (8 U.S.C. 
1101 et seq.) (INA or Act) was amended by the Immigration Act of 1990 
(IMMACT), Public Law 101-649, 104 Stat. 4978. On December 12, 1991, the 
INA was further amended by the Miscellaneous and Technical Immigration 
and Naturalization Amendments of 1991 (MTINA), Public Law 102-232, 105 
Stat. 1733. These amendments assign responsibility to the Department of 
Labor (Department of DOL) for the implementation of several provisions 
of the Act relating to the entry of certain categories of employment-
based immigrants, and to the entry and temporary employment of certain 
categories of nonimmigrants. One of the provisions of the Act governs 
the temporary entry of foreign ``professionals'' to work in ``specialty 
occupations'' in the U.S. under H-1B nonimmigrant status. 8 U.S.C. 
1101(a)(15)(H)(i)(b), 1182(n), and 1184(c).
    The H-1B category of specialty occupations consists of those 
occupations which require the theoretical and practical application of 
a body of highly specialized knowledge and the attainment of a 
bachelor's or higher degree (or its equivalent) in the specific 
specialty as a minimum for entry into the occupation in the U.S. 8 
U.S.C. 1184(i)(1). In addition, a nonimmigrant in a specialty 
occupation must possess full State licensure to practice in the 
occupation (if required), completion of the required degree, or 
experience equivalent to the degree and recognition of expertise in the 
specialty. 8 U.S.C. 1184(i)(2). The category of ``fashion model'' 
requires that the nonimmigrant be of distinguished merit and ability. 8 
U.S.C. 1101(a)(15)(H)(i)(b).
    The rulemaking history, as published in the Federal Register, is as 
follows:
    March 20, 1991, Advance Notice of Proposed Rulemaking, 56 FR 11705.
    August 5, 1991, Proposed Rule, 56 FR 37175.
    October 22, 1991, Interim Final Rule, 56 FR 54720.
    January 13, 1992, Interim Final Rule, 57 FR 1316.
    October 6, 1993, Proposed Rule, 58 FR 52152.
    December 30, 1993, Interim Final Rule, 58 FR 69226.
    December 20, 1994, Final Rule, 59 FR 65646.
    January 19, 1995, Final Rule, 60 FR 4028.
    September 26, 1995, Notice, 60 FR 49505.

III. Proposed Provisions

    The Department hereby republishes and reproposes several provisions 
adopted in the Final Rule (59 FR 65646, December 20, 1994) to provide 
the regulated community and the public an opportunity to comment on 
these provisions which were not specifically set forth in this format 
in the proposed rule. The Department also proposes to make an amendment 
to Sec. ______.731(b)(1) as it appeared in the Final Rule.
    With the exception of the Department's limited enforcement position 
on the recordkeeping provision of Sec. ______.731(b)(1) (see 60 FR 
49505, September 26, 1995), all provisions remain in effect and the 
issuance of this notice does not affect their enforcement. The 
Department will carefully consider all comments and will make any 
appropriate revisions to these provisions.
    The preamble explaining each of these provisions in the Final Rule 
is set forth below for the convenience of the public, with minor 
modifications where appropriate.

1. Labor Condition Application Filing Dates

(See Sec. ______.730(b).)
    Through administration and enforcement of the H-1B program, the 
Department became aware that some employers were filing labor condition 
applications for periods of anticipated employment which were well in 
the future (e.g., one year after the application filing date). This 
practice poses dangers of abuse and frustrates Congressional intent to 
protect the jobs and wages of U.S. workers. The prevailing wage, 
strike/lockout, and notice obligations are based, in large part, upon 
actions taken and conditions which exist at the time the labor 
condition application is filed. Therefore, in the Final Rule the 
Department established a time limit in advance of the beginning date of 
the period of employment that an employer may file a labor condition 
application. The Final Rule required and continues to require that a 
labor condition application can be filed no earlier than 6 months 
before the beginning date of the period of 

[[Page 55341]]
employment. Labor condition applications which are received by an ETA 
regional office more than 6 months prior to the beginning date of the 
period of employment will be returned to the employer as unacceptable 
for filing. This procedural change imposes few, if any, additional 
burdens on employers and facilitates the achievement of the statutory 
purposes.

2. Actual Wage

(See Sec. ______.731(a)(1) & Appendix A)
    As the H-1B program evolved, the Department became aware that 
inconsistent and perhaps confusing interpretations had, on occasion, 
been provided in response to public inquiries concerning the 
Department's enforcement position on the employer's responsibilities 
under the ``actual wage'' provisions of the statute and regulation. To 
rectify any misunderstanding within the regulated community, the 
Department provided in the Final Rule the following guidance regarding 
its enforcement policy concerning determination of the actual wage.
    In determining the required wage rate, the employer must not only 
obtain the prevailing wage, but also determine the actual wage for the 
occupation in which the H-1B nonimmigrant is to be employed by the 
employer. In establishing its compensation system for workers in an 
occupational category, of course, an employer may take into 
consideration objective standards relating to experience, 
qualifications, education, specific job responsibilities and functions, 
specialized knowledge, and other legitimate business factors. The use 
of any or all these factors is at the discretion of the employer. The 
employer must have and document an objective system used to determine 
the wages of non-H-1B workers, and apply that system to H-1B 
nonimmigrants as well. It is not sufficient for the employer simply to 
calculate an average wage of all non-H-1B employees in an occupation; 
the ``actual wage'' is not an ``average wage.''
    The documents explaining the wage system must be maintained in the 
public disclosure file. The explanation of the compensation system must 
be sufficiently detailed to enable a third party to apply the system to 
arrive at the actual wage rate computed by the employer for any H-1B 
nonimmigrant. The computation of the H-1B nonimmigrant's individual 
actual wage rate shall be documented in the H-1B nonimmigrant's 
personnel file.
    In the event the employer has not developed and documented an 
objective system and/or has not calculated the actual wage rate for an 
H-1B nonimmigrant, the Administrator--in determining the actual wage 
rate for enforcement and back wage computation purposes--may need to 
average the wages of all non-H-1B workers who are employed in the same 
occupation, rather than make determinations for each individual H-1B 
nonimmigrant; the employer in such circumstances would be cited for 
failure to comply with the requirements for determination of the actual 
wage.
    Assuming the actual wage is higher than the prevailing wage and 
thus is the required wage rate, if an employer gives its employees a 
raise at year's end, or if the employer's compensation system provides 
for other adjustments in wages, H-1B nonimmigrants must also receive 
the adjustment (consistent with legitimate employer-established 
criteria such as level of performance, attendance, etc.). This is 
consistent with Congressional intent that H-1B nonimmigrants be 
provided the same wages as similarly-employed U.S. workers.
    Where the employer's pay system or wage scale provides adjustments 
during the validity period of the labor condition application--e.g., 
cost-of-living increase or other annual adjustment, increase in the 
entry-level rate for the occupation due to market forces, or the 
employee moves into a more advanced level in the same occupation--the 
employer shall retain documentation explaining the changes and clearly 
showing that, after such adjustments, the wages paid to the H-1B 
nonimmigrant are at least the greater of the adjusted actual wage or 
the prevailing wage for the occupation in the area of intended 
employment.

3. Validity Period of a SESA Prevailing Wage

(See Sec. ______.731(a)(2)(iii)(A)(1).)
    Through administration and enforcement of the H-1B program, the 
Department became aware of confusion and potential adverse effect on 
workers' wages in situations in which employers filing LCAs relied on 
SESA prevailing wage determinations which were obtained on dates 
considerably earlier than the time of the filing (e.g., six months 
prior to LCA date). Employers were obtaining prevailing wage rates and 
holding them indefinitely before using them in conjunction with filing 
an LCA. The Department concluded that a practicable limit should be set 
on the use of prevailing wage rates, and that 90 days is a reasonable 
practicable limit.
    In order to alleviate confusion and to better assure the 
achievement of the Congressional purposes of protecting the wages of 
U.S. workers, the Department clarified the regulation to set a deadline 
for an employer's reliance on a SESA prevailing wage determination. An 
employer that obtains a SESA prevailing wage determination must file 
the labor condition application under which that rate will be paid 
within 90 days from the date of the SESA's determination.

4. Challenges of Prevailing Wage Determinations Only Through Employment 
Service Complaint System

(See Sec. ______ .731(a)(2)(iii)(A)(1), Sec. ______ .731(d)(2) and 
Sec. ______ .840(c).)
    Section ______ .731(a)(2)(iii)(A) lists the State Employment 
Security Agency (SESA) as one source for obtaining a prevailing wage 
determination. Although DOL regulations provide an avenue for an 
employer to challenge an SESA determination through the Employment 
Service (ES) complaint process (under 20 CFR part 658, subpart E), the 
Interim Final Rule did not make it sufficiently clear that challenges 
to SESA prevailing wage determinations were to be made only through 
that process. In designing the program, the Department had envisioned 
that the ES complaint process would be used for all prevailing wage 
challenges. However, after substantial enforcement litigation 
experience, the Department found that some employers were instead 
attempting to contest such determinations through the hearing provided 
under Sec. ______ .835. These enforcement procedures were not intended 
to handle such challenges.
    The Final Rule provided needed clarification by directing the 
employer to the ES complaint process and alerting the employer that a 
challenge of an SESA prevailing wage determination could be made only 
prior to filing an LCA in which that SESA determination is used. 
Implicit and essential in this process is the requirement that once an 
employer obtains a prevailing wage determination from the SESA and 
files an LCA using such determination without challenging it through 
the ES complaint process, the employer, in effect, has accepted the 
determination and waived its right to challenge the determination. 
Permitting an employer to operate under a SESA prevailing wage 
determination and later contest it in the course of an investigation or 
enforcement action is contrary to sound public policy; such a delayed, 
disruptive challenge would have a harmful effect on U.S. and H-1B 
employees, competing employers, and other parties who may have received 
notice of and/or relied on the prevailing wage at issue. Section ______ 
.731(a)(2)(iii)(A) of the Final Rule 

[[Page 55342]]
explicitly stated the Department's clarification of the use and 
consequences of the ES complaint process. Challenges to SESA prevailing 
wage determinations can be made only through the State agency's ES 
process. See 20 CFR 658.410 et seq.
    Where the prevailing wage determination is made by the SESA prior 
to the filing of the LCA, the employer's avenue of appeal is through 
the ES complaint system, entering the system at the State level. See 20 
CFR 658.410 et seq. However, where the prevailing wage determination is 
made by ETA (with or without consultation with the SESA) during the 
course of a Wage and Hour Division enforcement action, the employer's 
avenue of appeal also is through the ES complaint system, but the 
employer enters the system at the ETA regional office level. The 
employer will be notified where to file any appeal. For purposes of the 
H-1B program only, this is a collateral change to the ES complaint 
system regulations, which generally require all complaints to be filed 
at the SESA level (see 20 CFR 658.420 et seq.) and is notwithstanding 
the provisions of 20 CFR 658.421(a) and 658.426. Similarly, Sec. ______ 
.731(d) provides that, where the employer does not have a valid 
prevailing wage determination, the Administrator, during the course of 
an investigation, may obtain a prevailing wage determination from ETA, 
which, in turn, may consult with the SESA and then determine the 
appropriate prevailing wage. Some employers also were contesting these 
ETA prevailing wage determinations at the Wage and Hour enforcement 
hearing provided under Sec. ______ .835. The Department believes that 
the proper forum for all prevailing wage determination challenges--
whether the wage determination was obtained by the employer or by the 
Administrator (where the employer does not have a valid prevailing wage 
determination)--is the ES complaint process. Once the prevailing wage 
determination is final, either through the lack of a timely challenge 
or through the completion of the ES process, the determination will be 
conclusive for purposes of enforcement. In such cases where the 
prevailing wage determination is made by ETA at the Administrator's 
request, any challenge must be initiated at the ETA regional office 
level within 10 days after the employer receives the ETA prevailing 
wage determination. Section ______ .731(d) was amended in the Final 
Rule to reflect this clarification.
    Finally, Sec. ______.840(c) provides that where the Administrator 
has found a wage violation based on a prevailing wage determination 
obtained by the Administrator from ETA, the Administrative Law Judge 
(ALJ) in the enforcement proceeding ``shall not determine the 
prevailing wage de novo, but shall * * * either accept the wage 
determination or vacate the wage determination.'' This provision had 
been interpreted by some employers as permitting a challenge of 
prevailing wage determinations obtained by the Administrator for ETA. 
Section ______.840(c) was not intended to function as a mechanism from 
such challenges. Accordingly, Sec. ______.840(c) was clarified in the 
Final Rule to reflect that once the Administrator obtains a prevailing 
wage determination from ETA and the employer either fails to challenge 
such determination through the ES complaint process within the 
specified time of 10 days, or, after such a challenge, the 
determination is found to be accurate by the ES complaint process, the 
ALJ must accept the determination as accurate and cannot vacate it. As 
with other final decisions of the Department, the employer continues to 
have access to Federal district court if the issues are not 
satisfactorily resolved.

5. Documentation of the Wage Statement

(See Sec. ______.731(b)(1).)
    Section ______.731(b)(1) of the Final Rule requires that, in 
documenting its compliance with the wage requirements, an employer 
shall maintain certain documentation, not only for the H-1B 
nonimmigrant(s), but for ``all other employees for the specific 
employment in question at the place of the employment.'' In the 
preamble to the Final Rule, the Department stated that ``[t]his 
information is ordinarily maintained by the employer for purposes of 
showing compliance with other applicable statutes (e.g., the Fair Labor 
Standards Act) and will permit the Department to determine whether in 
fact the required wage has been paid'' (59 FR 65654, December 20, 
1994).
    Upon further consideration, the Department issued a Notice of 
Enforcement Position (60 FR 49505, September 26, 1995) announcing that, 
with respect to any additional workers for whom the Final Rule may have 
applied recordkeeping requirements, the Department would enforce the 
provision to require the employer to keep only those records which are 
required by the Fair Labor Standards Act (``FLSA''), 29 CFR part 516. 
The Department concluded that, in virtually all situations, the records 
required by the FLSA would include those listed under the H-1B Final 
Rule.
    An amendment is proposed to be made to Sec. ______.731(b)(1)(v). 
This section requires employers to retain records of hours worked for 
all employees in the same specific employment as the H-1B nonimmigrant 
if employees are paid on other than a salary basis or if the actual or 
prevailing wages are expressed as an hourly wage. The Department finds 
that it is unnecessary to require employers to retain records of hours 
worked for FLSA-exempt, similarly employed non-H-1B workers when the 
employer expresses its actual wage as a salary, even if the prevailing 
wage is expressed as an hourly wage. Therefore, the Department is 
proposing to amend Sec. ______.731(b)(1)(v) so that employers are not 
required to retain records of hours worked for FLSA-exempt, similarly 
employed non-H-1B workers if the actual wage is expressed as a salary 
but the prevailing wage is expressed as an hourly rate.

6. Enforcement of Wage Obligation

(See Sec. ______.731(c)(5).)
    The Act requires an employer to state that it is offering and will 
offer the H-1B nonimmigrant, during the period of authorized 
employment, wages that are at least the required wage rate. The 
required wage rate is the actual wage rate or the prevailing wage rate, 
whichever is greater. Furthermore, the employer is required to indicate 
on the LCA whether an H-1B nonimmigrant will work full-time or part-
time. Under the Secretary's statutory authority to implement the Act, 
the regulations do not authorize an employer to fail to pay the 
required wage rate. In enforcement proceedings, however, the Department 
has encountered confusion over an employer's obligations in 
circumstances where the H-1B nonimmigrant is in a nonproductive status 
or circumstance.
    There is no statutory or regulatory authorization for a reduction 
in the prescribed wage rate for any H-1B nonimmigrant who is not 
engaged in productive work for the LCA-filing employer due to 
employment-related conditions such as training, lack of work, or other 
such reasons. The H-1B program was not intended and should not operate 
to provide an avenue for nonimmigrants to enter the U.S. and await work 
at the employer's choice or convenience, as has been found to be 
occurring. Compare 8 U.S.C. 1101(a)(15)(H)(iii). Instead, the H-1B 
program's purpose is to enable employers to temporarily employ fully-
qualified workers for whom employment opportunities currently exist. 
The employer, having attested to the duration and scope of the intended 


[[Page 55343]]
employment (i.e., beginning and ending dates; full or part-time), 
controls the nonimmigrant's employment status. The Immigration and 
Nationality Act (8 U.S. C. 1182(n)(1)) requires that once the H-1B 
status has been approved for the period specified by the employer, the 
employer controls the status and work of the H-1B nonimmigrant, who is 
unable to accept employment elsewhere without a certified labor 
condition application and approved I-129 petition filed on the worker's 
behalf by another employer.
    For the purpose of DOL administration and enforcement of the H-1B 
program pursuant to these regulations, an H-1B nonimmigrant is 
considered to be under the control or employ of the LCA-filing employer 
from the time of arrival in the United States and throughout the period 
of his or her employment--regardless of whether the nonimmigrant is in 
training or other nonproductive status, unless during the period 
employment an H-1B nonimmigrant experiences a period of nonproductive 
status due to conditions which are unrelated to the employment and 
render the nonimmigrant unable to work--e.g., maternity leave, 
automobile accident which temporarily incapacitates the nonimmigrant, 
caring for an ill relative. In such circumstances where a period of 
nonproductive status is due to conditions unrelated to employment, the 
employer shall not be obligated to pay the required wage rate during 
that period, provided that the INS permits the employee to remain in 
the U.S. without being paid and provided further that such period is 
not subject to payment under 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.).
    It is the Department's position that an LCA-filing employer has no 
prereogative--other than in circumstances described above--but to pay 
the required wage beginning no later than the day the H-1B nonimmigrant 
is in the United States under the control and employ of that LCA-filing 
employer, and continuing throughout the nonimmigrant's period of 
employment. Any H-1B nonimmigrant to be employed under an LCA in a 
full-time capacity (the part-time block not having been checked on Item 
7(b) of the LCA) shall be guaranteed full-time pay (ordinarily 40 
hours' pay) each week, or the weekly equivalent if paid a monthly or 
annual salary. If an employer's LCA shows ``part-time employment,'' the 
employer will be required to pay the nonproductive employee for at 
least the number of hours to be worked per week indicated on the I-129 
petition filed by the employer with the INS. If the employer indicates 
on the LCA that an employee is to work only part-time and subsequent 
investigation discloses that, in fact, the employee was working full-
time in a majority of the weeks during the period covered by the 
investigation, the employer will be responsible for full-time pay 
including during nonproductive periods for which the worker received 
either no pay or less than the required wage.

7. Notification

(See Sec. ______. 734(a)(1)(ii)(D).)
    Section 212(n)(1)(C) of the INA requires that an employer seeking 
to hire an H-1B nonimmigrant shall notify, at the time of filing the 
application, the bargaining representative of its employees of the 
filing of the labor condition application or, if there is no bargaining 
representative, post notice of filing in conspicuous locations at the 
place of employment. 8 U.S.C. 1182(n)(1)(C). The interim final 
regulations at Sec. ______. 730(h)(1) implemented this statutory 
requirement.
    Based on program experience, the Final Rule clarified the 
regulations to better assure the worker protections which Congress 
intended the notice requirement to achieve. The Department had become 
aware that some employers which place H-1B nonimmigrants at new 
worksites within areas covered by existing LCA's failed to fulfill 
their LCA obligations, but, because notices were not posted at the new 
worksites, potentially adversely affected workers were not informed of 
the LCA conditions or of their own rights to examine certain documents 
and to file complaints. The Department recognized that it could take 
the position that an employer wishing to place H-1B nonimmigrants at 
worksites where notice had not been given could be required to both 
post a notice and file a new LCA before placing H-1B nonimmigrants at a 
new worksite within an area of intended employment. However, such a 
two-step requirement appeared to the Department to be burdensome. The 
protections intended by Congress can be effected by notice posted by 
the employer at each new worksite within an area of intended employment 
at the time the H-1B nonimmigrants are sent there to work, without the 
employer being required to file new LCA's. The Final Rule, therefore, 
imposed a less burdensome but equally worker-protective standard, by 
providing that the employer shall post worksite notices on the first 
day of work by an H-1B nonimmigrant at a new worksite, which will 
remain posted for at least ten days.
    A clarification of the regulation, based upon program experience, 
was also made in the Final Rule with regard to the timing of an 
employer's notice of filing an LCA. The Department became aware of 
confusion and potential adverse effects in situations in which 
employers provided the required notice of filing the application to the 
bargaining representative, or to its employees by posting at the place 
of employment, considerably in advance of the date the application was 
filed (e.g., six months prior to filing). In order to alleviate 
confusion and to better assure the achievement of Congressional intent 
that U.S. workers who work side-by-side with H-1B nonimmigrants be 
notified of the employer's intent and their ability to file complaints 
if they believe violations have occurred, the Final Regulation required 
that notice, provided by the employer under the fourth labor condition 
statement, was to be provided on or within 30 days prior to the date 
the labor condition application is filed.

8. Short-Term Placement of H-1B Nonimmigrants at Worksites Outside the 
Location(s) Listed on the LCA

(See Sec. ______.735.)
    Until the October 1993 NPRM, the Department had indicated that job 
contractors would be treated like any other employer under the H-1B 
program. After obtaining considerable programmatic experience regarding 
the operations and effects of job contractors using H-1B nonimmigrants, 
the Department proposed in its NPRM to clarify how LCA's should be 
completed by job contractors, and proposed to amend the regulations to 
create certain additional standards for such employers.
    In the NPRM, as part of the proposal to develop special procedures 
for job contractors, the Department defined the term ``job contractor'' 
and the proposed requirements to be met, including the general 
requirement to assure that the information provided on the LCA in Item 
7 (occupational information) must pertain to the location(s) (city and 
State) of any and all worksites where H-1B nonimmigrants would be 
employed. The Department further proposed that a job contractor filing 
an LCA must indicate thereon the place of employment at which the H-1B 
nonimmigrant will actually work (and for which the prevailing wage must 
be determined) as opposed to the employer's headquarters or other 
office location, if such location is different from the place of 
employment. The Department also proposed that, if the 

[[Page 55344]]
contractor wishes to relocate an H-1B nonimmigrant to work at any 
location not listed on a certified LCA, a corresponding LCA shall be 
filed and certified (and the appropriate prevailing wage determined) 
before any H-1B nonimmigrant may be employed at that location. The NPRM 
addressed other job contractor matters, such as the contractor's actual 
wage obligation.
    Of the 264 comments received in response to the NPRM, 171 commented 
on these proposals and 153 (nearly 90%) opposed it--128 of those 153 
coming from business commenters. The negative comments related to the 
concept as a whole or related to a part of it--such as the nationwide 
actual wage, worksite posting, and place of employment designation on 
the labor condition application.
    Concerns were expressed about an employer's ability to find workers 
to fill health care needs, especially in the physical therapist 
occupation. Other commenters expressed concern that the proposed rule 
would impose special hardships on job contractors, would be onerous, 
and would be discriminatory. Several commenters suggested that the 
Department consider a time test methodology, rather than a ``job 
contractor'' concept, in identifying the responsibilities of an 
employer which places H-1B nonimmigrants at worksites owned or 
controlled by entities other than the employer. Suggestions for the 
allowable duration of temporary placement ranged from 30 days to 180 
days.
    Of the comments received in response to the January 13, 1992, 
Interim Final Rule, concerning the worksite movement of H-1B 
nonimmigrants, 13 commenters (11 of which were businesses) expressed 
the view that the initial LCA filing should be sufficient when an H-1B 
nonimmigrant is transferred between temporary worksites such as branch 
offices or customer offices. These comments advocated the position that 
an employer should be able to move H-1B nonimmigrant employees to 
worksites where the tour of duty would be of a short or temporary 
nature.
    In promulgating the Final Rule, the Department carefully considered 
the comments concerning the job contractor concept as proposed, and 
decided based thereupon not to establish special procedures applicable 
only to those businesses operating as job contractors. Based on the 
overwhelming weight of the comments and the Department's experience in 
the program, the Final Rule contained a modification of the proposed 
rule, consistent with commentors' suggestions, to implement a ``time 
test'' for short-term assignments of H-1B nonimmigrants to worksite(s) 
outside the area(s) of employment covered by already-certified LCAs, 
whether the new worksite is another establishment of the employer or is 
the worksite of another entity (e.g., a customer of a job contractor 
providing H-1B nonimmigrants or services provided by H-1B nonimmigrants 
at the customer's location.) The Final Rule is both less burdensome for 
employers and more protective of workers than was the provision as 
proposed in the NPRM.
    The Department recognizes that it is common practice for 
employers--not only job contractors, but also other employers which 
operate in more than one place of employment within the United States--
to move employers from one place of employment (worksite) to another 
for short periods of time in response to business demands. The Final 
Rule takes into consideration the practical and real world experience 
of such short-term placement of employees.
    The Final Rule applying to all LCA-filing employers includes a 90 
workday placement option within a three-year period, beginning with the 
first work day at any worksite in a new area of intended employment, 
for an employer who shifts H-1B nonimmigrant workers to any worksite(s) 
outside the location listed on the employer's already-certified LCA. 
The 90-day option applies separately for each area of intended 
employment (e.g., 90 cumulative days for Los Angeles, 90 cumulative 
days for San Francisco). Under this option an employer may place H-1B 
nonimmigrant(s) at such worksite(s)--without filing a new LCA (and thus 
without meeting the notice, prevailing wage, and actual wage 
requirements for such area of intended employment)--provided that the 
employer complies with three requirements:
    1. Unless an LCA has been filed and certified for the new area of 
intended employment, no H-1B nonimmigrant continues to work at a 
worksite in such area after 90 cumulative workdays by H-1B 
nonimmigrants at all worksites within the area (starting with the first 
day on which any H-1B nonimmigrant worked at any worksite in the area) 
and the employer makes no further placement of H-1B worker(s) in such 
area within the three-year period which began with the first day of 
placement.
    2. The H-1B nonimmigrant(s) working in the area is (are) 
compensated at the required wage rate applicable under the employer's 
already-certified LCA plus expenses for the other area of employment 
when placed. The Department has incorporated the regulations 
promulgated by the General Services Administration (``GSA'') for 
Federal employees as the basis for such travel expenses as it is 
unaware of any other universally available source of this information 
for employers. GSA advises us that the rates are based on surveys of 
two-star hotels and comparable restaurants. Furthermore, under IRS 
guidelines, employers are not required to provide receipts for employee 
travel expenses if the employer has used the Federal per diem rates. 
(See IRS Rev. Proc. 94-77). Finally, some Federal District Courts have 
found Federal per diem rates to be a ``fair method of compensation.'' 
(See PPG Industries, Inc. v. Celanese Polymer Specialties Co., 658 
F.Supp. 555 (W.D.Ky. 1987), rev'd on other grounds, 840 F.2d 1565 (Fed. 
Cir. 1988) and Arthur S. Langenderfer, Inc. v. S.E. Johnson Co., 684 
F.Supp. 953 (N.D.Ohio 1988)). Thus, GSA per diem rates are recognized 
as providing reasonable reimbursement for travel expenses.
    3. No H-1B nonimmigrant is placed at a worksite where there is a 
strike or lockout in the same occupational classification.
    Of course, at any time an employer may file a new LCA covering the 
new area of intended employment (complying with all LCA requirements, 
including determination of actual and prevailing wage rates as well as 
notice to employees). This filing can be done in advance of the 
placement or, if such new LCA is filed and certified after placement 
and the employer complies with any obligations attendant to the new 
LCA, the employer could cease payment of per diem and transportation 
rates. If, at the accumulation of 90 workdays, the employer has H-1B 
nonimmigrants at any worksite(s) in the new area of intended 
employment, the employer must have filed and received approval of a new 
LCA and complied with all requirements attendant to such filing.
    This 90 workday placement option does not apply to the placement of 
H-1B nonimmigrants at any new worksite(s) within an area covered by an 
already-certified LCA filed by the employer. Such worksite(s) would be 
encompassed within and fully subject to the requirements of that LCA, 
including prevailing wage and worksite notice(s) (see Sec. c.1.b 
NOTIFICATION, above, regarding notification at new worksites). The only 
additional action required for the employer in this circumstance is to 
post notice for a period of 10 days at the new worksite.

[[Page 55345]]


IV. Executive Order 12866

    The Department has determined that this Proposed Rule is not an 
``economically significant regulatory action'' within the meaning of 
Executive Order 12866, in that it will not have an annual effect on the 
economy of $100 million or more or adversely affect in a material way 
the economy, a sector of the economy, productivity, competition, jobs, 
the environment, public health or safety, or State, local, or tribal 
governments or communities.

V. Regulatory Flexibility Act

    The Department of Labor has notified the Chief Counsel for 
Advocacy, Small Business Administration, and made the certification 
pursuant to the Regulatory Flexibility Act at 5 U.S.C. 605(b), that the 
rule does not have a significant economic impact on a substantial 
number of small entities.

Catalog of Federal Domestic Assistance Number

    This program is not listed in the Catalog of Federal Domestic 
Assistance.

List of Subjects

20 CFR Part 655

    Administrative practice and procedure, Agriculture, Aliens, 
Crewmembers, Employment, Enforcement, Fashion models, Forest and forest 
products, Guam, Health professions, Immigration, Labor, Longshore work, 
Migrant labor, Nurse, Penalties, Registered nurse, Reporting and 
recordkeeping requirements, Specialty occupation, Students, Wages.

29 CFR Part 507

    Administrative practice and procedures, Aliens, Employment, 
Enforcement, Fashion models, Immigration, Labor, Penalties, Reporting 
and recordkeeping requirements, Specialty occupation, Wages, Working 
conditions.

Adoption of the Joint Rule

    The agency-specific adoption of the joint rule, which appears at 
the end of the common preamble, appears below:

    Signed at Washington, DC, this 24th day of October, 1995.
Tim Barnicle,
Assistant Secretary for Employment and Training.
Bernard E. Anderson,
Assistant Secretary for Employment Standards.

    Accordingly, certain amendments to part 655 of chapter V of title 
20, and part 507 of chapter V of title 29 of the Code of Federal 
Regulations, as published earlier in the Federal Register, are 
republished for comment, and other amendments are proposed, as follows:

TITLE 20--EMPLOYEES' BENEFITS

PART 655--TEMPORARY EMPLOYMENT OF ALIENS IN THE UNITED STATES

    1. The authority citation for Part 655 continues to read as 
follows:

    Authority: Section 655.0 issued under 8 U.S.C. 1101(a)(15)(H)(i) 
and (ii), 1182(m) and (n), 1184, 1188, and 1288(c); 29 U.S.C. 49 et 
seq.; sec. 3(c)(1), Pub. L. 101-238, 103 Stat. 2099, 2103 (8 U.S.C. 
1182 note); sec. 221(a), Pub. L. 101-649, 104 Stat. 4978, 5027 (8 
U.S.C. 1184 note); and 8 CFR 214.2(h)(4)(i).
    Section 655.0 issued under 8 U.S.C. 1101(a)(15)(H)(ii), 1184, 
and 1188; 29 U.S.C. 49 et seq.; and 8 CFR 214.2(h)(4)(i).
    Subparts A and C issued under 8 U.S.C. 1101(a)(15)(H)(ii)(b) and 
1184; 29 U.S.C. 49 et seq.; and 8 CFR 214.2(h)(4)(i).
    Subpart B issued under 8 U.S.C. 1101(a)(15)(H)(ii)(a), 1184, and 
1188; and 29 U.S.C. 49 et seq.
    Subparts D and E issued under 8 U.S.C. 1101(a)(15)(H)(i)(a), 
1182(m), and 1184; 29 U.S.C. 49 et seq.; and sec. 3(c)(1), Pub. L. 
101-238, 103 Stat. 2099, 2103 (8 U.S.C. 1182 note).
    Subparts F and G issued under 8 U.S.C. 1184 and 1288(c); and 29 
U.S.C. 49 et seq.
    Subparts H and I issued under 8 U.S.C. 1101(a)(15)(H)(i)(b), 
1182(n), and 1184; 29 U.S.C. 49 et seq.; and sec. 303(a)(8), Pub. L. 
102-232, 105 Stat. 1733, 1748 (8 U.S.C. 1182 note).
    Subparts J and K issued under 29 U.S.C. 49 et seq.; and sec. 
221(a), Pub. L. 101-649, 104 Stat. 4978, 5027 (8 U.S.C. 1184 note).

TITLE 29--LABOR

CHAPTER V--WAGE AND HOUR DIVISION, DEPARTMENT OF LABOR

Part 507--Enforcement of H-1B Labor Condition Applications

Subparts A, B, C, D, E, F, and G--(Reserved)

    2. The authority citation for part 507 continues to read as 
follows:

    Authority: 8 U.S.C. 1101(a)(15)(H)(i)(b), 1182(n), and 1184, and 
29 U.S.C. 49 et seq.; and Pub. L. 102-232, 105 stat. 1733, 1748 (8 
U.S.C. 1182 note).

    3. In Sec. ______.730, in paragraph (b), the first sentence is 
republished as follows:


Sec. ______.730   Labor condition application.

* * * * *
    (b) Where and when should a labor condition application be 
submitted? A labor condition application shall be submitted, by U.S. 
mail, private carrier, or facsimile transmission, to the ETA regional 
office shown in Sec. ______.720 of this part in whose geographic area 
of jurisdiction the H-1B nonimmigrant will be employed no earlier than 
six months before the beginning date of the period of intended 
employment shown on the LCA. * * *
* * * * *
    4. In Sec. ______.731, paragraph (a)(2)(iii)(A)(1) is republished 
as follows:


Sec. ______.731   The first labor condition statement: wages.

    (a) * * *
    (2) * * *
    (iii) * * *
    (A) * * *
    (1) An employer who chooses to utilize a SESA prevailing wage 
determination shall file the labor condition application not more than 
90 days after the date of issuance of such SESA wage determination. 
Once an employer obtains a prevailing wage determination from the SESA 
and files an LCA supported by that prevailing wage determination, the 
employer is deemed to have accepted the prevailing wage determination 
(both as to the occupational classification and wage) and thereafter 
may not contest the legitimacy of the prevailing wage determination 
through the Employment Service complaint system or in an investigation 
or enforcement action. Prior to filing the LCA, the employer may 
challenge an SESA prevailing wage determination through the Employment 
Service complaint system, by filing a complaint with the SESA. See 20 
CFR 658.410 through 658.426. Employers which challenge an SESA 
prevailing wage determination must obtain a final ruling from the 
Employment Service complaint system prior to filing an LCA based on 
such determination. In any challenge, the SESA shall not divulge any 
employer wage data which was collected under the promise of 
confidentiality.
* * * * *
    5. In Sec. ______.731, paragraph (b)(1) is revised to read as 
follows:


Sec. ______.731   The first labor condition statement: wages.

* * * * *
    (b) Documentation of the wage statement. (1) The employer shall 
develop and maintain documentation sufficient to meet its burden of 
proving the validity of the wage statement required in paragraph (a) of 
this section and attested to on Form ETA 9035. The documentation shall 
be made available to DOL upon request. Documentation shall also be made 
available for public examination to the extent required by 
Sec. ______.760(a) of this part. The employer shall also document that 
the 

[[Page 55346]]
wage rate(s) paid to H-1B nonimmigrant(s) is (are) no less than the 
required wage rate(s). The documentation shall include information 
about the employer's wage rate for all other employees for the specific 
employment in question at the place of employment, beginning with the 
date the labor condition application was submitted and continuing 
throughout the period of employment. The records shall be retained for 
the period of time specified in Sec. ______.760 of this part. The 
payroll records for each such employee shall include:
    (i) Employee's full name;
    (ii) Employee's home address;
    (iii) Employee's occupation;
    (iv) Employee's rate of pay;
    (v) Hours worked each day and each week by the employee if:
    (A) The employee is paid on other than a salary basis; or
    (B) The actual wage is expressed as an hourly rate; or
    (C) With respect only to H-1B nonimmigrants, the prevailing wage is 
expressed as an hourly rate.
    (vi) Total additions to or deductions from pay each pay period by 
employees; and
    (vii) Total wages paid each pay period, date of pay and pay period 
covered by the payment by employee.
* * * * *
    6. In Sec. ______.731, paragraph (c)(5) is republished as follows:


Sec. ______.731  The first labor condition statement: wages.

* * * * *
    (c) * * *
    (5)(i) For the purpose of DOL administration and enforcement of the 
H-1B program, an H-1B nonimmigrant is considered to be under the 
control or employ of the LCA-filing employer, and therefore shall 
receive the full wage which the LCA-filing employer is required to pay 
beginning no later than the first day the H-1B nonimmigrant is in the 
United States and continuing throughout the nonimmigrant's period of 
employment. Therefore if the H-1B nonimmigrant is in a nonproductive 
status for reasons such as training, lack of license, lack of assigned 
work or any other reason, the employer will be required to pay the 
salaried employee the full pro-rata amount due, or to pay the hourly-
wage employee for a full-time week (40 hours or such other numbers of 
hours as the employer can demonstrate to be full-time employment for 
the occupation and area involved) at the required wage for the 
occupation listed on the LCA. If the employer's LCA carries a 
designation of ``part-time employment,'' the employer will be required 
to pay the nonproductive employee for at least the number of hours 
indicated on the I-129 petition filed by the employer with the INS. If 
during a subsequent enforcement action by the Administrator it is 
determined that an employee designated in the LCA as part-time was in 
fact working full-time or regularly working more hours than reflected 
on the I-129 petition, the employer will be held to the factual 
standard disclosed by the enforcement action.
    (ii) If, however, during the period of employment, an H-1B 
nonimmigrant experiences a period of nonproductive status due to 
conditions unrelated to employment which render the nonimmigrant unable 
to work--e.g., maternity leave, automobile accident which temporarily 
incapacitates the nonimmigrant, caring for an ill relative--then the 
employer shall not be obligated to pay the required wage rate during 
that period provided that the INS permits the employee to remain in the 
U.S. without being paid and provided further that such period is not 
subject to payment under 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.).
* * * * *
    7. In Sec. ______.731, paragraph (d)(2) is republished as follows:


Sec. ______.731  The first labor condition statement: wages.

* * * * *
    (d) * * *
    (2) In the event the Administrator obtains a prevailing wage from 
ETA pursuant to paragraph (d)(1) of this section, the employer may 
challenge the ETA prevailing wage only through the Employment Service 
complaint system. See 20 CFR part 658, subpart E. Notwithstanding the 
provisions of 20 CFR 658.421 and 658.426, the appeal shall be initiated 
at the ETA regional office level. Such challenge shall be initiated 
within 10 days after the employer receives ETA's prevailing wage 
determination from the Administrator. In any challenge to the wage 
determination, neither ETA nor the SESA shall divulge any employer wage 
data which was collected under the promise of confidentiality.
    (i) Where the employer timely challenges an ETA prevailing wage 
determination obtained by the Administrator, the 30-day investigative 
period shall be suspended until the employer obtains a final ruling 
from the Employment Service complaint system. Upon such final ruling, 
the investigation and any subsequent enforcement proceeding shall 
continue, with ETA's prevailing wage determination serving as the 
conclusive determination for all purposes.
    (ii) Where the employer does not challenge ETA's prevailing wage 
determination obtained by the Administrator, such determination shall 
be deemed to have been accepted by the employer as accurate and 
appropriate (both as to the occupational classification and wage) and 
thereafter shall not be subject to challenge in a hearing pursuant to 
Sec. ______.835 of this part.
* * * * *
    8. In Sec. ______.734, paragraphs (a)(1)(ii) (C) and (D) are 
republished as follows:


Sec. ______.734  The fourth labor condition statement: notice.

    (a) * * *
    (1) * * *
    (ii) * * *
    (C) The notices shall be posted on or within 30 days before the 
date the labor condition application is filed and shall remain posted 
for a total of 10 days.
    (D) Where the employer places any H-1B nonimmigrant(s) at one or 
more worksites not contemplated at the time of filing the application, 
but which are within the area of intended employment listed on the LCA, 
the employer is required to post notice(s) at such worksite(s) on or 
before the date any H-1B nonimmigrant begins work, which notice shall 
remain posted for a total of ten days.
* * * * *
    9. Sec. ______.735 is republished as follows:


Sec. ______.735  Special provisions for short-term placement of H-1B 
nonimmigrants at place(s) of employment outside the area(s) of intended 
employment listed on labor condition application.

    (a) Subject to the conditions specified in paragraph (b) of this 
section, an employer may place H-1B nonimmigrant(s) at worksite(s) 
(place(s) of employment) within areas of employment not listed on the 
employer's labor condition application(s)--whether or not the employer 
owns or controls such worksite(s)--without filing new labor condition 
application(s) for the area(s) of intended employment which would 
encompass such worksite(s).
    (b) The following restrictions shall be fully satisfied by an 
employer which places H-1B nonimmigrant(s) at worksite(s) (place(s) of 
employment) within areas of employment not listed on the employer's 
labor condition application(s):
    (1) The employer has fully satisfied the requirements of 
Secs. ______.730 

[[Page 55347]]
through ______.734 of this part with regard to worksite(s) located 
within the area(s) of intended employment listed on the employer's 
labor condition application(s).
    (2) The employer shall not place, assign, lease, or otherwise 
contract out any H-1B nonimmigrant(s) to any worksite where there is a 
strike or lockout in the course of a labor dispute in the same 
occupational classification(s) as the H-1B nonimmigrant(s).
    (3) For every day of the H-1B nonimmigrant's(s') placement outside 
the LCA-listed area of employment, the employer shall pay such 
worker(s) the required wage (based on the prevailing wage at such 
worker's(s') permanent work site, or the employer's actual wage, 
whichever is higher) plus per diem and transportation expenses (for 
both workdays and non-workdays) at rate(s) no lower than the rate(s) 
prescribed for Federal Government employees on travel or temporary 
assignment, as set out in 41 CFR Part 301-7 and Ch. 301, App. A.
    (4) The employer's placement(s) of H-1B nonimmigrant(s) at any 
worksite(s) in an area of employment not listed on the employer's labor 
condition application(s) shall be limited to a cumulative total of 
ninety workdays within a three-year period, beginning on the first day 
on which the employer placed an H-1B nonimmigrant at any worksite 
within such area of employment. For purposes of this section, 
``workday'' shall mean any day on which one or more H-1B nonimmigrants 
perform any work at any worksite(s) within the area of employment. For 
example, one ``workday'' would be counted for a day on which seven H-1B 
nonimmigrants worked at three worksites within one city, and one 
``workday'' would be counted for a day on which one H-1B nonimmigrant 
worked at one worksite within a city. The employer may rotate such 
workers into worksites within such area of employment or may maintain a 
constant work force. However, on the first day after the accumulation 
of 90 workdays, the employer shall not have any such H-1B 
nonimmigrant(s) at any worksite(s) within such area of employment not 
included on a certified LCA.
    (c) At the accumulation of the 90 workdays described in paragraph 
(b)(4) of this section, the employer shall have ended its placement of 
all H-1B nonimmigrant(s) at any worksite(s) within the area of 
employment not listed on the labor condition application, or shall have 
filed and received a certified labor condition application for the 
area(s) of intended employment encompassing such worksite(s) and 
performed all actions required in connection with such filing(s) (e.g., 
determination of the prevailing wage; notice to collective bargaining 
representative or on-site notice to workers).
    (d) At any time during the 90-day period described in paragraph 
(b)(4) of this section, the employer may file a labor condition 
application for the area of intended employment encompassing such 
worksite(s), performing all actions required in connection with such 
labor condition application. Upon certification of such LCA, the 
employer's obligation to pay Federal per diem rates to the H-1B 
nonimmigrant(s) shall terminate. (However, see 
Sec. ______.731(c)(7)(iii)(C) regarding payment of business expenses 
for employee's travel on employer's business.)
    10. Appendix A to Subpart H--Guidance for Determination of the 
``Actual Wage'' is republished as follows:

Appendix A to Subpart H--Guidance for Determination of the ``Actual 
Wage''

    In determining the required wage rate, in addition to obtaining 
the prevailing wage, the employer must establish the actual wage for 
the occupation in which the H-1B nonimmigrant is employed by the 
employer. For purposes of establishing its compensation system for 
workers in an occupational category, an employer may take into 
consideration objective standards relating to experience, 
qualifications, education, specific job responsibility and function, 
specialized knowledge, and other legitimate business factors. The 
use of any or all these factors is at the discretion of the 
employer. The employer must have and document an objective system 
used to determine the wages of non-H-1B workers, and apply that 
system to H-1B nonimmigrants as well. It is not sufficient for the 
employer simply to calculate an average wage of all non-H-1B 
employees in an occupation; the actual wage is not an ``average 
wage''.
    The documents explaining the system must be maintained in the 
public disclosure file. The explanation of the compensation system 
must be sufficiently detailed to enable a third party to apply the 
system to arrive at the actual wage rate computed by the employer 
for any H-1B nonimmigrant. The computation of the H-1B 
nonimmigrant's individual actual wage rate must be documented in the 
H-1B nonimmigrant's personnel file.
    Assuming the actual wage is higher than the prevailing wage and 
thus is the required wage rate, if an employer gives its employees a 
raise at year's end or if the system provides for other adjustments 
in wages, H-1B nonimmigrants must also be given the raise 
(consistent with legitimate employer-established criteria such as 
level of performance, attendance, etc.). This is consistent with 
Congressional intent that H-1B nonimmigrants and similarly employed 
U.S. workers be provided the same wages.
    Where the employer's pay system or scale provides adjustments 
during the validity period of the LCA--e.g., cost-of-living increase 
or other annual adjustments, increase in the entry-level rate for 
the occupation due to market forces, or the employee moves into a 
more advanced level in the same occupation--the employer shall 
retain documentation explaining the changes and clearly showing 
that, after such adjustments, the wages paid to the H-1B 
nonimmigrant are at least the greater of the adjusted actual wage or 
the prevailing wage for the occupation in the area of intended 
employment.
    The following examples illustrate these principles:
    (2) Worker A is paid $10.00 per hour and supervises two 
employees. Worker B, who is similarly qualified and performs 
substantially the same job duties except for supervising other 
employees, is paid $8.00 per hour because he/she has no supervisory 
responsibility.
    The compensation differential is acceptable because it is based 
upon a relevant distinction in job duties, responsibilities, and 
functions: the difference in the supervisory responsibilities of the 
two employees. The actual wage in this occupation at the worksite 
for workers with supervisory responsibility is $10.00 per hour; the 
actual wage in this occupation at the worksite for workers without 
supervisory responsibility is $8.00 per hour.
    (2) Systems Analyst A has experience with a particular software 
which the employer is interested in purchasing, of which none of the 
employer's current employees have knowledge. The employer buys the 
software and hires Systems Analyst A on an H-1B visa to train the 
other employees in its application. The employer pays Systems 
Analyst A more than its other Systems Analysts who are otherwise 
similarly qualified.
    The compensation differential is acceptable because of the 
distinction in the specialized knowledge and the job duties of the 
employees. Systems Analyst A, in addition to the qualifications and 
duties normally associated with this occupation at the employer's 
worksite, is also specially knowledgeable and responsible for 
training the employer's other Systems Analysts in a new software 
package. As a result, Systems Analyst A commands a higher actual 
wage. However, if the employer employs other similarly qualified 
systems analysts who also have unique knowledge and perform similar 
duties in training other analysts in their area of expertise, the 
actual wage for Systems Analyst A would have to be at least 
equivalent to the actual wage paid to such similarly employed 
analysts.
    (3) An employer seeks a scientist to conduct AIDS research in 
the employer's laboratory. Research Assistants A (a U.S. worker) and 
B (an H-1B nonimmigrant) both hold Ph.D's in the requisite field(s) 
of study and have the same number of years of experience in AIDS 
research. However, 

[[Page 55348]]
Research Assistant A's experience is on the cutting edge of a 
breakthrough in the field and his/her work history is distinguished 
by frequent praise and recognition in writing and through awards. 
Research Assistant B (the nonimmigrant) has a respectable work 
history but has not conducted research which has been 
internationally recognized. Employer pays Research Assistant A 
$10,000 per year more than Research Assistant B in recognition of 
his/her unparalleled expertise and accomplishments. The employer now 
wants to hire a third Research Assistant on an H-1B visa to 
participate in the work.
    The differential between the salary paid Research Assistant A 
(the U.S. worker) and Research Assistant B (an H-1B nonimmigrant) is 
acceptable because it is based upon the specialized knowledge, 
expertise and experience of Research Assistant A, demonstrated in 
writing. The employer is not required to pay Research Assistant B 
the same wage rate as that paid Research Assistant A, even though 
they may have the same job titles. The actual wage required for the 
third Research Assistant, to be hired on an H-1B visa, would be the 
wage paid to Research Assistant B unless he/she has internationally 
recognized expertise similar to that of Research Assistant A. As set 
out in Sec. ______.731(1)(A) the employer must have and document the 
system used in determining the actual wage of H-1B nonimmigrants. 
The explanation of the system must be such that a third party may 
use the system to arrive at the actual wage paid the H-1B 
nonimmigrant.
    (4) Employer located in City X seeks experienced mechanical 
engineers. In City X, the prevailing wage for such engineers is 
$49,500 annually. In setting the salaries of U.S. workers, employer 
pays its nonsupervisory mechanical engineers with 5 to 10 years of 
experience between $50,000 and $75,000 per year, using defined pay 
scale ``steps'' tied to experience. Employer hires engineers A, B, 
and C, who each have five years of experience and similar 
qualifications and will perform substantially the same 
nonsupervisory job duties. Engineer A is from Japan, where he/she 
earns the equivalent of $80,000 per year. Engineer B is from France 
and had been earning the equivalent of $50,000 per year. Engineer C 
is from India and had been earning the equivalent of $20,000 per 
year. Employer pays Engineer A $80,000 per year, Engineer B $50,000, 
and Engineer C $20,000 as the employer has had a long-established 
system of maintaining the home-country pay levels of temporary 
foreign workers.
    The INA requires that the employer pay the H-1B nonimmigrant at 
least the actual wage or the prevailing wage, whichever is greater, 
but there is no prohibition against paying an H-1B nonimmigrant a 
greater wage. Therefore, Engineer A may lawfully be paid the $80,000 
per year. Engineer B's salary of $50,000 is acceptable, since this 
is the employer's actual wage for an engineer with Engineer B's 
experience and duties. Engineer C's salary, however, at a rate of 
$20,000 per year, is unacceptable under the law, even given the 
employer's ``long-established `home country' system,'' since $20,000 
would be below both the actual wage and the prevailing wage. The 
latter situation is an example of an illegitimate business factor, 
i.e., a system to maintain salary parity with peers in the country 
of origin, which yields a wage below the required wage levels.

    11. In Sec. ______.840, paragraph (c) is republished as follows:


Sec. ______.840  Decision and order of administrative law judge.

* * * * *
    (c) In the event that the Administrator's determination(s) of wage 
violation(s) and computation of back wages are based upon a wage 
determination obtained by the Administrator from ETA during the 
investigation (pursuant to Sec. ______.731(d) of this part), and the 
administrative law judge determines that the Administrator's request 
was not warranted (under the standards in Sec. ______.731(d) of this 
part), the administrative law judge shall remand the matter to the 
Administrator for further proceedings on the issue(s) of the existence 
of wage violation(s) and/or the amount(s) of back waged owed. If there 
is no such determination and remand by the administrative law judge, 
the administrative law judge shall accept such wage determination as 
accurate. Such wage determination is one made by ETA, from which the 
employer did not file a timely complaint through the Employment Service 
complaint system or from which the employer has appealed through the ES 
complaint system and a final decision therein has been issued. See 
Sec. ______.731 of this part; see also 20 CFR 658.420 through 658.426. 
Under no circumstances shall the administrative law judge determine the 
validity of the wage determination or require source data obtained in 
confidence by ETA or the SESA, or the names of establishments contacted 
by ETA or the SESA, to be submitted into evidence or otherwise 
disclosed.
* * * * *
[FR Doc. 95-26921 Filed 10-30-95; 8:45 am]
BILLING CODE 4510-27-M