[Federal Register Volume 64, Number 2 (Tuesday, January 5, 1999)]
[Proposed Rules]
[Pages 628-678]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-34668]



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Part IV





Department of Labor





_______________________________________________________________________



Employment and Training Administration



_______________________________________________________________________



20 CFR Parts 655 and 656



Labor Condition Applications and Requirements for Employers Using 
Nonimmigrants on H-1B Visas in Specialty Occupations and as Fashion 
Models; Labor Certification Process for Permanent Employment of Aliens 
in the United States; Proposed Rule

  Federal Register / Vol. 64, No. 2 / Tuesday, January 5, 1999 / 
Proposed Rules  

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DEPARTMENT OF LABOR

Employment and Training Administration

20 CFR Parts 655 and 656

RIN 1215-AB09


Labor Condition Applications and Requirements for Employers Using 
Nonimmigrants on H-1B Visas in Specialty Occupations and as Fashion 
Models; Labor Certification Process for Permanent Employment of Aliens 
in the United States

AGENCY: Employment and Training Administration, Labor, in concurrence 
with the Wage and Hour Division, Employment Standards Administration, 
Labor.

ACTION: Notice of Proposed Rulemaking; request for comments.

-----------------------------------------------------------------------

SUMMARY: The Department of Labor is proposing regulations to implement 
recent legislation and clarify existing Departmental rules relating to 
the temporary employment in the United States of nonimmigrants under H-
1B visas. Specifically, the Department publishes this notice of 
proposed rulemaking to obtain public comment on issues to be addressed 
in regulations to implement changes made to the Immigration and 
Nationality Act (INA) by the American Competitiveness and Workforce 
Improvement Act of 1998 (ACWIA). For certain of these ACWIA issues, the 
Department is proposing regulatory language for comment; for other 
issues, the Department is identifying concerns and its proposed 
approach to addressing them or alternative approaches, on all of which 
comments are requested. In addition, the Department is providing an 
opportunity for additional comments on certain provisions which were 
previously published for comment as a Proposed Rule in 1995 (60 FR 
55339).
    The Department is also proposing to modify regulations to implement 
an ACWIA provision which modifies the methodology for the determination 
of the prevailing wage under the Permanent Labor Certification program 
(20 CFR Part 656), but is not proposing specific regulatory text at 
this time. This methodology is also applicable to prevailing wages for 
the H-1B program. The Department is working in close cooperation with 
the Immigration and Naturalization Service (INS) in developing these 
regulations, since certain definitions and terms must be consistently 
applied by the two agencies in their respective regulations.
    After receiving public comments on this notice of proposed 
rulemaking, the Department plans to publish an Interim Final Rule 
(inviting further comment) and a Final Rule (after reviewing all the 
comments received).

DATES: Submit written comments by February 4, 1999. The Department 
encourages submission of comments as soon as possible before that date. 
Any comments received by the Department after that date will be part of 
the rulemaking record and will be considered, fully, in subsequent 
rulemaking, but they may not receive full consideration in the interim 
implementing regulations. Congress expressed its intent that the 
Department act swiftly to issue regulations by waiving the customary 
60-day comment period.

ADDRESSES: Submit written comments concerning Part 655 to Deputy 
Administrator, Wage and Hour Division, ATTN: Immigration Team, U.S. 
Department of Labor, Room S-3502, 200 Constitution Avenue, NW, 
Washington, DC 20210. If you want to receive notification that we 
received your comments, you should include a self-addressed stamped 
post card. You may submit your comments by facsimile (``FAX'') machine 
to (202) 219-5122. This is not a toll free number.
    Submit written comments concerning Part 656 to the Assistant 
Secretary for Employment and Training, ATTN: 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. If you want to receive notification 
that we received your comments, you should include a self-addressed 
stamped post card. You may submit your comments by facsimile (``FAX'') 
machine to (202) 208-5844. This is not a toll-free number.

FOR FURTHER INFORMATION CONTACT: On Part 655, contact either of the 
following:
    Michael Ginley, Director, Office of Enforcement Policy, Wage and 
Hour Division, Employment Standards Administration, Department of 
Labor, Room S-3510, 200 Constitution Avenue, NW, Washington, DC 20210. 
Telephone: (202) 693-0745 (this is not a toll-free number).
    James Norris, 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 Part 656, contact James Norris, 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).

SUPPLEMENTARY INFORMATION:

I. Paperwork Reduction Act

    The H-1B visa program is a voluntary program that allows employers 
to temporarily secure and employ nonimmigrants admitted under H-1B 
visas to fill specialized jobs in the United States. (Immigration and 
Nationality Act (INA), 8 U.S.C. 1101 et seq.). The statute, among other 
things, requires that an employer pay an H-1B worker the higher of its 
actual wage or the locally prevailing wage, to protect U.S. workers' 
wages and moderate any economic incentive or advantage in hiring 
temporary foreign workers. Under the Immigration and Nationality Act 
(INA), as amended by the Immigration Act of 1990 and the Miscellaneous 
and Technical Immigration and Naturalization Amendments of 1991, an 
employer seeking to employ an alien in a specialty occupation or as a 
fashion model of distinguished merit and ability on an H-1B visa is 
required to file a labor condition application with and receive 
certification from the Department of Labor before the Immigration and 
Naturalization Service (INS) may approve an H-1B visa petition. The 
labor condition application (LCA) process is administered by the 
Employment and Training Administration (ETA); complaints and 
investigations regarding labor condition applications are the 
responsibility of the Wage and Hour Division, Employment Standards 
Administration (ESA).
    This proposed rule would implement statutory changes in the H-1B 
visa program made to the INA by the American Competitiveness and 
Workforce Improvement Act of 1998 (ACWIA) (Title IV of Pub. L. 105-277, 
Oct. 21, 1998; 112 Stat. 2681). The ACWIA, among other things, 
temporarily increases the maximum number of H-1B visas permitted each 
year; temporarily requires new non-displacement (layoff) and 
recruitment attestations by ``H-1B dependent'' employers (as defined by 
ACWIA) and by employers found to have committed willful violations or 
misrepresentations; and requires all employers of H-1B workers to offer 
the same fringe benefits

[[Page 629]]

to H-1B workers as it offers to U.S. workers.

A. Labor Condition Application (LCA)

    Summary: The process of protecting U.S. workers begins with a 
requirement that employers file a labor condition application (Form ETA 
9035) with the Department. In this application the employer is required 
to attest: (1) that it will pay H-1B aliens prevailing wages or actual 
wages, whichever are greater; (2) that it will provide working 
conditions that will not adversely affect the working conditions of 
U.S. workers similarly employed; (3) that there is no strike or lockout 
at the place of employment; and (4) that it has publicly notified its 
employees of its intent to employ H-1B workers. In addition, the 
employer must provide the information required in the application about 
the number of aliens sought, occupational classification, wage rate, 
the prevailing wage rate and the source of such wage data, the date of 
need and period of employment.
    Need: Pursuant to ACWIA, new attestation requirements become 
applicable to H-1B dependent employers or willful violators after 
promulgation of implementing regulations. The LCA, currently approved 
by OMB under OMB No. 1205-0310, is being revised to identify H-1B 
dependent employers and willful violators and provide for their 
attestation to the new requirements, and to accommodate electronic 
processing.
    Respondents and frequency of response: ACWIA increased the number 
of available H-1B nonimmigrant visas from 65,000 to 115,000 in fiscal 
years 1999 and 2000 and to 107,500 in fiscal year 2002. Besides the 
increase in LCAs filed for these additional workers, the proposed 
regulation provides that H-1B dependent employers could be required to 
file new LCAs. It is estimated that 249,500 LCA's will be filed 
annually by 50,000 H-1B employers (dependent and nondependent). This 
estimate is based on the assumption that the alternative LCA format 
preferred by the Department is selected.
    Estimated total annual burden: The only added LCA burden is for 
employers to determine if they are dependent. In most cases employers 
will be able to immediately answer this question, without review of 
their payroll records. Where dependent or non-dependent status is not 
readily apparent, employers would be required to make a mathematical 
calculation to determine if they must make the additional attestations 
required of an H-1B employer. (See C. below for further explanation.) 
The time required to review records and make the determination is 
estimated to take an average of 30 minutes per employer. Since it is 
estimated that only 50 H-1B employers will find it necessary to make 
this calculation, out of a total of 50,000 H-1B employers, the estimate 
of the average time necessary to complete the form remains at 1 hour. 
Total annual burden is 249,500 hours.

B. Documentation of Corporate Identity

    Summary: Currently, the regulatory requirement is that a new labor 
condition application (LCA) must be filed when an employer's corporate 
identity changes and a new Employer Identification Number (EIN) is 
obtained. Under the proposed rule, an employer who merely changes 
corporate identity through acquisition or spin-off need merely document 
the change in the public file (including an express acknowledgement of 
all LCA obligations on the part of the successor entity), provided it 
satisfies the Internal Revenue Code definition of a single employer, 
found at 26 U.S.C. 414 (see 8 U.S.C. 1182(n)(3)(C)(ii)).
    Need: The regulation is designed to eliminate a burden on 
businesses to file a new LCA, while at the same time ensuring that the 
public is aware of the changes and that the employer will continue to 
follow its LCA obligations.
    Respondents and Proposed Frequency of Response: It is estimated 
that 500 H-1B employers will be required to file the subject 
documentation annually.
    Estimated total annual burden: It is estimated that the recording 
and filing of each such document will take 15 minutes for a total 
annual burden of 125 hours.

C. Determination of H-1B Dependency

    Summary: An H-1B employer must calculate the ratio between the 
number of H-1B workers it employs and the number of full-time 
equivalent employees (FTEs) to determine whether it meets the statutory 
definition of an H-1B dependent employer . (8 U.S.C. 1182 (n)(3)(A)). 
When it is a close question, this determination would ordinarily be 
made by examination of an employer's quarterly tax statement and last 
payroll or other evidence as to average hours worked by part-time 
employees to aggregate their hours into FTEs, together with a count of 
the number of workers employed under H-1B petitions. Documentation of 
this determination must be made where non-dependent status is not 
readily apparent and a mathematical determination must be made. A copy 
of this determination must be placed in the public disclosure file. In 
addition, if an employer changes from dependent to non-dependent 
status, or vice versa, a simple statement of the change in status must 
be placed in the public disclosure file. An employer must retain hours 
worked records or other evidence of the average work schedules of part-
time employees only, and copies of H-1B petitions for its H-1B workers.
    Need: Documentation of a determination of an H-1B dependency where 
it is a close question is necessary to determine employer compliance 
with H-1B requirements, and to advise the public of an employer's 
status. The underlying documentation must be retained to allow the 
Department to check this determination.
    Respondents and proposed frequency of response: All employers will 
be required to keep the underlying documentation. It is estimated that 
approximately 50 H-B employers will be required to review their records 
in order to make the determination, with 25 employers who are found not 
to be dependent employers required to document this determination 
annually.
    Estimated annual burden: The making and documentation of each such 
determination will take approximately 15 minutes, and occur at least 
twice annually, for a total annual burden of 12.5 hours.

D. Filing of Copy of INS Documentation for Exempt H-1B Employees in 
Public Access File

    Summary: The ACWIA provisions regarding non-displacement and 
recruitment of U.S. workers do not apply where the LCA is used only for 
petitions for exempt H-1B workers. (8 U.S.C. 1182(n)(1)(E)(ii)) Where 
the Immigration and Naturalization Service (INS) determines a worker is 
exempt, employers are required to maintain a copy of such documentation 
in the public access file.
    Need: Determinations as to whether or not H-1B workers meet the 
requirements to be classified as exempt H-1B nonimmigrants will be made 
initially by the INS in the course of adjudicating the petitions filed 
on behalf of H-1B nonimmigrants by dependent employers. In the event of 
an investigation, it is anticipated that considerable weight will be 
given to the INS determination that H-1B nonimmigrants were exempt 
based on the educational attainments of the workers, since INS has 
considerable experience in evaluating the educational qualifications of 
aliens. Retention of copies of such determinations will aid DOL in 
determining compliance with the H-1B requirements.

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    Respondents and frequency of response: It is estimated that 28,125 
such documents will need to be filed annually.
    Estimated total annual burden: Each such filing will take 
approximately one minute for an annual burden of approximately 468.8 
hours.

E. Record of Assurance of Non-displacement of U.S. Workers at Second 
Employer's Worksite

    Summary: 8 U.S.C. 1182(n)(1)(F)(ii) generally requires an H-1B 
dependent employer not to place H-1B nonimmigrant with another employer 
unless it has first inquired as to whether the other employer will 
displace a U.S. worker. The proposed regulation would require an 
employer seeking to place an H-1B nonimmigrant with another employer to 
secure and retain either a written assurance from the second employer, 
a contemporaneous written record of the second employer's oral 
statements regarding non-displacement, or a prohibition in the contract 
between the H-1B employer and the second employer.
    Need: Pursuant to ACWIA, 8 U.S.C. 1182(n)(2)(E), an H-1B employer 
may be debarred for a secondary displacement ``only if the Secretary of 
Labor found that such placing employer * * * knew or had reason to know 
of such displacement at the time of the placement of the nonimmigrant 
with the other employer.'' Congress clearly intended that the employer 
make a reasonable inquiry and give due regard to available information. 
In order to assure that the purposes of the statute are achieved, the 
Department is developing a regulatory provision to require that the H-
1B employer make a reasonable effort to inquire about potential 
secondary displacement and to document those inquiries.
    Respondents and proposed frequency of response: It is estimated 
that approximately 150 employers will place H-1B nonimmigrants with 
secondary employers where assurances are required.
    Estimated total annual burden: It is estimated each such assurance 
will take approximately 5 minutes and each such employer will obtain 
such assurances 5 times annually for an annual burden of 62.5 hours.

F. Documentation of Non-Displacement of U.S. Workers

    Summary: ACWIA (8 U.S.C. 1182(n)(1)(E) prohibits H-1B dependent 
employers and willful violators from hiring an H-1B nonimmigrant if 
their doing so would displace a U.S. worker from an essentially 
equivalent job in the same area of employment. The regulations will 
require H-1B dependent employers to keep certain documentation with 
respect to each former worker in the same locality and same occupation 
as any H-1B worker, who left its employ 90 days before or after an 
employer's petition for an H-1B worker. For all such employees, the 
Department proposes that covered H-1B employers maintain the name, 
last-known mailing address, occupational title and job description, and 
any documentation concerning the employee's experience and 
qualifications, and principal assignments. Further, the employer is 
required to keep all documents concerning the departure of such 
employees and the terms of any offers of similar employment to such 
U.S. workers and responses to those offers.
    Need: These records are necessary for the Department to determine 
whether the H-1B employer has displaced similar U.S. workers with H-1B 
nonimmigrants.
    Respondents and proposed frequency of response: It is estimated 
that 200 H-1B-dependent and willfully violating employers will need to 
maintain documentation for any workers who leave their employment 
during the prescribed period.
    Estimated total annual burden: No records need be created to comply 
with these requirements, since the Equal Employment Opportunity 
Commission (EEOC) already requires under its regulations that the 
records described above be maintained.

G. Documentation of U.S. Worker Recruitment

    Summary: Pursuant to ACWIA (8 U.S.C. 1182(n)(1)(G)), H-1B dependent 
employers are required to make good faith efforts to recruit U.S. 
workers before hiring H-1B workers. Under the regulations, H-1B 
employers will be required to retain documentation of the recruiting 
methods used, including the places and dates of the advertisements and 
postings or other recruitment method used, the content of the 
advertisements or postings, and the compensation terms. In addition, 
the employer must retain any documentation concerning consideration of 
applications of U.S. workers, such as copies of applications and 
related documents, rating forms, job offers, etc. The Department has 
also requested comments regarding how employers should determine 
industry-wide standards, and how to make this determination available 
for public disclosure to U.S. workers and others.
    Need: The documentation noted above is necessary for the Department 
of Labor to determine whether the employer has made a good faith effort 
to recruit U.S. workers and for the public to be aware of the 
recruiting methods used and the industry standard. Retention of the 
records regarding consideration of applications is required to ensure 
employers have given good faith consideration of applications from U.S. 
workers.
    Respondents and proposed frequency of response: It is estimated 
that annually 200 H-1B dependent employers will need to document their 
good faith efforts to recruit U.S. workers.
    Estimated total annual burden: The filing of such records will take 
approximately twenty minutes per employer for an annual burden of 
approximately 66.7 hours. The retention of documents relating to 
applications by U.S. workers is already required by EEOC regulations, 
and therefore no additional burden is created.

H. Documentation of Fringe Benefits

    Summary: Pursuant to ACWIA (8 U.S.C. 1182(n)(2)(C)(viii)), all 
employers of H-1B employees are required to offer benefits to H-1B 
workers on the same basis and under the same terms as offered to 
similarly employed U.S. workers. The regulations require employers to 
retain copies of all fringe benefit plans and any summary plan 
descriptions, including all rules regarding eligibility and benefits, 
evidence of what benefits are actually provided to individual workers 
and how costs are shared between employers and employees.
    Need: These records are necessary for the Department to determine 
whether the H-1B nonimmigrants are offered the same fringe benefits as 
similarly employed U.S. workers.
    Respondents and proposed frequency of response: Records are 
required to be retained for all H-1B employers, estimated to total 
50,000. Because copies of fringe benefit plans and records are 
generally required to be maintained by the Pension and Welfare Benefits 
Administration (PWBA) and Internal Revenue Service (IRS) regulations, 
there should be no additional recordkeeping burden from these 
requirements. It is also believed that a prudent businessman would keep 
these records, in the order course of business, in any event. However, 
because some plans such as unfunded vacation plans and cash bonuses may 
not be documented, it is estimated that approximately 5%, or 2,500 
employers, will need to record and retain some

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documentation which would not otherwise be kept.
    Estimated annual burden: It is estimated that 2,500 employers will 
spend approximately 15 minutes each documenting unwritten plans for an 
annual burden of 625 hours.

I. Wage Recordkeeping Requirements Applicable to Employers of H-1B 
Nonimmigrants

    Summary: The Department has also republished and asked for comment 
on several provisions of the December 20, 1994 Final Rule (59 FR 
65646), which were published for notice and comment on October 31, 1995 
(60 FR 55339). All H-1B employers are required to document their 
objective actual wage system to be applied to H-1B nonimmigrants and 
U.S. workers. They are also required to keep payroll records for non-
FLSA exempt H-1B workers and other employees for the specific 
employment in question. This proposal would decrease the burden on 
employers of keeping hourly pay records for U.S. workers, requiring 
such records only if the worker is either not paid on a salary basis, 
or if the actual wage is stated as an hourly wage. For H-1B workers, 
such records must also be kept if the prevailing wage is expressed as 
an hourly rate.
    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 must 
be able to ascertain the system an employer uses 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 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 50,000 employers employ H-1B 
nonimmigrants. The documentation of the actual wage system must be done 
only one time for each employer. Hourly pay records would have to be 
prepared with respect to all affected employees each pay period.
    Estimated annual burden: The Department 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 
50,000 hours in a year. The payroll recordkeeping requirements are 
virtually the same as those required by the Fair Labor Standards Act 
(FLSA) 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 for exempt employees. There will be no burden 
for U.S. workers since as a practical matter, hours worked records will 
be required for U.S. workers only if they are not exempt from FLSA, or 
if they are exempt but paid on an hourly basis (certain computer 
professionals). The Department estimates that 55,000 H-1B workers will 
be paid on a salary basis. Hours worked records would be required for 
these workers only if the prevailing wage is expressed as an hourly 
rate--estimated to be 17 percent of all cases. The Department estimates 
a burden of 2.5 hours per worker per year, for 9350 workers, and a 
total of 23,375 hours.
    Retention of Records: Pursuant to section 655.760(c) of 
Regulations, 20 CFR Part 655, copies of the LCAs, and its documentation 
are to be kept for a period of one year beyond the end of the period of 
employment specified on the LCA or one year from the date the LCA was 
withdrawn, except that if an enforcement action is commenced, these 
records must be kept until the enforcement procedure is completed as 
set forth in Part 655, Subpart I. The recordkeeping requirements in 
this proposed rule would be subject to the same retention period, 
except, as required by 20 CFR 655.760(c), the payroll records for the 
H-1B employees and other employees in the same occupational 
classification, which must be retained for a period of three years from 
the date(s) of the creation of the record(s); if an enforcement 
proceeding is commenced, all payroll records are to be retained until 
the enforcement proceeding is completed as set forth in Part 655, 
Subpart I. The existing record retention requirements in 20 CFR 
655.760(c) have been approved by OMB under OMB No. 1205-0310.
    Total public burden: H-1B employers and employees of H-1B employers 
may be from a wide variety of industries. Salaries for employers and/or 
their employees who perform the reporting and recordkeeping functions 
required by this regulation may range from several hundred dollars to 
several hundred thousand dollars where the Corporate Executive Office 
of a large company performs some or all of these functions themselves. 
Absent specific wage data regarding such employers and employees, 
respondent costs are estimated at $25 an hour. Total annual respondent 
hour costs for all information collections are estimated at 
$8,105,887.50 ($25.00 x 324,235.5 hours).
    Request for comments: The public is invited to provide comments on 
this information collection requirement so that the Department of Labor 
may:
    (1) Evaluate whether the proposed collections of information are 
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 estimates of the burdens 
of the collections of information, including the validity of the 
methodology and assumptions used;
    (3) Enhance the quality, utility and clarity of the information to 
be collected; and
    (4) Minimize the burden of the collections 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. Office of Management and Budget, 
Attention: Desk Officer for Employment Standards Administration, U.S. 
Department of Labor, Washington, DC 20503.

II. Background

    On November 29, 1990, the Immigration and Nationality Act was 
amended by the Immigration Act of 1990 (IMMACT) (Pub. L. 101-649, 104 
Stat. 4978) to create the ``H-1B visa program'' for the temporary 
employment in the United States (U.S.) of nonimmigrants in ``specialty 
occupations'' and as ``fashion models of distinguished merit and 
ability.'' The H-1B provisions of the INA were amended on December 12, 
1991, by the Miscellaneous and Technical Immigration and Naturalization 
Amendments of 1991 (MTINA) (Pub. L. 102-232, 105 Stat. 1733). Further 
amendments were made to the H-1B provisions of the INA on October 21, 
1998, by enactment of ACWIA.
    These cumulative amendments of the INA assign responsibility to the 
Department of Labor (Department or DOL) for implementing several 
provisions of the Act relating to the temporary employment of certain 
categories of nonimmigrants who have

[[Page 632]]

been granted entry into the United States by INS. The H-1B provisions 
of the Act govern the temporary entry of foreign ``professionals'' to 
work in ``specialty occupations'' in the U.S. under H-1B visas. 8 
U.S.C. 1101(a)(15)(H)(i)(b), 1182(n), and 1184(c). The H-1B category of 
specialty occupations consists of occupations requiring the theoretical 
and practical application of a body of highly specialized knowledge and 
the attainment of a Bachelor's or higher degree 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, an H-1B 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 ACWIA made numerous significant changes in the H-1B provisions. 
One such change is the temporary increase in the maximum number of H-1B 
visas over the next three fiscal years: for fiscal years 1999 and 2000, 
the cap is 115,000; for fiscal year 2001, the cap is 107,500; and for 
fiscal year 2002 (and thereafter), the cap returns to the original 
65,000. Another significant change is the imposition of additional 
attestation requirements for certain employers to provide better 
protections to some U.S. workers. The additional attestation 
requirements apply to an ``H-1B dependent employer'' and an employer 
who has been found to have committed a willful failure or 
misrepresentation with respect to the H-1B requirements (for ease of 
reference, referred to as a ``willful violator''). H-1B-dependent and 
willful violating employers must attest that they have not displaced 
and will not displace a U.S. worker from a job that is essentially like 
the job for which an H-1B worker(s) is being sought, that they will not 
place an H-1B worker with another employer without making an inquiry to 
assure such displacement will not take place, that they have taken good 
faith steps to recruit U.S. workers for the job for which the H-1B 
workers are sought, and that they will offer the job to any equally or 
better qualified U.S. worker. A labor condition application (LCA) for 
an H-1B worker who is ``exceptional,'' an ``outstanding professor or 
researcher,'' or a ``multinational manager or executive'' within the 
meaning of Section 203(b)(1) of the INA, is not subject to the 
recruitment provision. Both the displacement protection and the 
recruitment/hiring protection become effective upon the date of the 
Department's final regulation and expire with respect to LCAs filed 
before October 1, 2001. An H-1B dependent employer or willful violator 
filing an LCA which will be used only for ``exempt'' H-1B workers is 
not required to comply with the new attestation requirements.
    Also enacted via the ACWIA is a new fee of $500, to be collected by 
INS, for initial petitions and first extensions filed on or after 
December 1, 1998 and before October 1, 2001. Institutions of higher 
education, or related or affiliated nonprofit entities, nonprofit 
research organizations, or Governmental research organizations are 
exempt from the new fee. The fees are to be used for job training, low-
income scholarships, and program administration/enforcement. The ACWIA 
includes other generally applicable worker protections, specifically 
whistleblower protection, prohibitions against fee reimbursement and 
penalizing an H-1B worker who terminates employment prior to a date 
agreed with the employer, and a requirement that the employer pay wages 
during nonproductive time if such time is not due to reasons occasioned 
by the worker. The ACWIA also requires employers to offer H-1B workers 
fringe benefits on the same basis and in accordance with the same 
criteria as U.S. workers. The ACWIA specifies new civil money penalties 
ranging from $1,000 to $35,000 per violation, along with debarment. New 
investigative procedures are created, authorizing the Department to 
conduct ``random'' investigations of willful violators during the five-
year period after the finding of such violation, and establishing an 
alternative investigation protocol based on information indicating 
potential violations obtained from sources other than aggrieved 
parties.
    The ACWIA mandates a particular method of computation of the local 
prevailing wage for employees of certain types of employers: 
institutions of higher education (as defined in section 101(a) of the 
Higher Education Act); nonprofit entities related or affiliated with 
such institutions; nonprofit research organizations; and Governmental 
research organizations. Under the ACWIA provision, the prevailing wage 
level is to take into account only employees at such institutions and 
organizations.
    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.
    October 31, 1995, Proposed Rule, 60 FR 55339.
    April 22, 1996, Proposed Rule, 61 FR 17610 (Part 656).
    May 3, 1996, Final Rule, 61 FR 19982.
    September 30, 1996, Final Rule, 61 FR 51013.
    November 30, 1998, Final Rule, 63 FR 65657 (Part 656).

III. The Process of Developing Proposed Regulations

    In developing proposed regulations, the Department has identified a 
number of issues arising from the provisions of the ACWIA. On some of 
these issues, the Department is proposing regulatory language and is 
seeking comments on those proposals. But on other issues, the 
Department has not yet developed regulatory language and, in this 
notice, is seeking public comments on the issues and possible 
regulatory approaches or alternatives which are set forth.
    In addition, the Department is continuing to examine several 
provisions that were previously addressed in a Notice of Proposed 
Rulemaking published in the Federal Register on October 31, 1995 (60 FR 
55339-55348). The Department considers it appropriate to provide, via 
this notice, an additional opportunity for public comment on those 
provisions. Some of these existing Final Rule provisions are affected 
by the enactment of ACWIA, and for some affected provisions the 
Department has not yet developed new or modified regulatory language. 
Other Final Rule provisions are being republished for comment, with 
limited proposed changes as discussed below.
    After review of the comments received, the Department intends to 
publish an Interim Final Rule, inviting comments on that rule, which 
will contain the full regulatory text. The Department will then review 
the comments and issue a Final Rule.

[[Page 633]]

    The Department requests comments on each of the following issues 
and proposals, and on any other related matters concerning the 
temporary employment in the U.S. of nonimmigrants under the H-1B visa 
program.

A. What Constitutes an ``Employer'' for Purposes of the ACWIA 
Provisions?

    In enacting certain new LCA attestations for ``H-1B-dependent'' 
(and certain other) employers in the ACWIA, Congress directed (in the 
definition of H-1B-dependent employer) that ``any group treated as a 
single employer under subsection (b), (c), (m), or (o) of section 414 
of the Internal Revenue Code of 1986 shall be treated as a single 
employer.'' These provisions, found at 26 U.S.C. 414(b), (c), (m) and 
(o), concern the circumstances in which separate businesses are treated 
as a single employer for purposes of the Internal Revenue Code (IRC). 
Specifically, the IRC provisions concern treatment of a controlled 
group of corporations (Sec. 414(b)); partnerships, proprietorships, 
etc., under common control (Sec. 414(c)); an affiliated service group 
(Sec. 414(m)); as well as separate organizations, employee leasing, and 
other arrangements (Sec. 414(o)). See Internal Revenue Service (IRS) 
regulations at 26 CFR 1.414(b)-1, 1.414(c)-1. See also 26 CFR 1.414(q)-
1T.
    Further, the Department is considering the effect and implications 
of adopting this single definition of ``employer'' for all purposes 
under this program, to the extent it may serve to accommodate common 
business activities and facilitate administration and enforcement of 
the program. The Department is interested in learning from commenters 
the consequences of a regulation which would provide that where an 
``employer'' files an LCA and thereafter undergoes some change of 
structure (e.g., buy-out by a successor corporation; corporate 
restructuring of subsidiaries), the ``employer'' for LCA purposes would 
be the entity which satisfies the Internal Revenue Code definition of a 
single employer. The Department is considering whether and how, under 
this approach, it may be able to modify its position that a new LCA 
must be filed when the corporate identity changes and a new Employer 
Identification Number (EIN) is obtained. Thus an employer which merely 
changes its corporate identity through acquisition or spin-off would be 
allowed to document this change in its public disclosure file 
(including an express acknowledgment of all LCA obligations on the part 
of the successor entity), provided that it satisfies the Internal 
Revenue Code definition of a single employer.
    The Department seeks comments on this proposed regulation and on 
other related matters, such as whether and how the Internal Revenue 
Code interpretation of ``single employer'' should be used for other 
purposes in the H-1B program, such as corporate restructuring, and 
whether another approach should be utilized to address corporate 
restructuring.

B. Which Employers are ``H-1B-dependent'' for Purposes of the ACWIA 
Provisions?

    The ACWIA requires new non-displacement and recruitment 
attestations by ``H-1B-dependent employers'' and by employers found 
after the date of enactment to have committed a willful violation or 
misrepresentation during the 5-year period preceding the filing of the 
LCA (see item M.2 below, regarding the ``finding'' of such violations). 
The ACWIA definition of ``H-1B-dependent employer'' provides a formula 
for comparing the number of H-1B nonimmigrants to the total number of 
full-time equivalent employees (including H-1B nonimmigrants) in the 
employer's workforce. ``Exempt H-1B nonimmigrants'' are not included in 
the H-1B-dependency computation during a certain period after enactment 
of the ACWIA (i.e., the longer of the period of six months from the 
date of enactment (until April 21, 1999), or the date of the 
Department's interim final rule on this provision).
    The Department is developing regulations on the following issues, 
and seeks comments on these and any other related matters.
1. What Is a ``Full Time Equivalent Employee''?
    The ACWIA definition of ``H-1B-dependent employer'' includes a term 
that is not defined: ``full-time equivalent employees'' (FTEs), as part 
of the calculation to determine an employer's H-1B dependency status 
based on the ratio between the number of H-1B workers (a ``head 
count'') and FTEs (the employer's workforce of employees, expressed as 
FTEs). Thus ACWIA defines an ``H-1B-dependent employer'' as an employer 
that has--
     25 or fewer full-time equivalent employees who are 
employed in the United States, and employs more than 7 H-1B 
nonimmigrants;
     At least 26 but not more than 50 full-time equivalent 
employees who are employed in the United States, and employs more than 
12 H-1B nonimmigrants; or
     At least 51 full-time equivalent employees who are 
employed in the United States; and employs H-1B nonimmigrants in a 
number that is equal to at least 15 percent of the number of such full-
time equivalent employees.
    For larger employers (at least 51 full-time equivalent employees), 
the number of H-1B workers is the numerator and the number of FTEs is 
the denominator in this computation; if 15 percent or more of the 
employer's workforce are H-1B workers, as computed in this ratio, then 
the employer is ``H-1B-dependent.''
    The term ``full-time equivalent'' lends itself to various 
interpretations, some of which could significantly increase an 
employer's possible paperwork burden. One interpretation would require 
maintaining a record and computing the hours worked in a period of time 
(a year, a workweek, or some intermediate period of time) for each 
worker in the entire workforce. For example, the total of all hours 
worked by all employees would be divided by the full-time ``standard'' 
in order to arrive at the FTE figure. Such an approach would 
necessitate collection and maintenance of hourly records for all 
workers, not just hourly wage earners. Moreover, the complexity of such 
an approach and the related computations could make it difficult for 
employers to recognize if and when they become H-1B-dependent. A less 
onerous approach would allow an employer to simply count the number of 
workers it employs on a full-time basis, using some standard threshold 
(e.g., 35 hours per week or more) for identifying a ``full-time'' 
schedule. This approach would only additionally require a showing of 
the average weekly hours worked by part-time employees, through hours 
worked records or by evidence regarding their standard working 
schedules. (It has been the Department's experience that hours worked 
records are ordinarily kept for part-time workers since they are 
ordinarily paid on an hourly basis and typically are not exempt from 
the Fair Labor Standards Act.) The number of FTEs in the workforce 
would then be determined by aggregating the average hours of the part-
time workers, dividing that total by the standard for a full-time 
schedule, and adding the resulting number to the number of full-time 
workers in the workforce.
    The Department proposes a procedure by which the determination 
would be made by an examination of the employer's quarterly tax 
statement (or

[[Page 634]]

similar document) to determine the number of workers on the payroll 
(assuming there is no issue as to whether all employees are listed on 
the tax statement), and a further examination of the last payroll (or 
the payrolls over the previous quarter if the last payroll is not 
representative) or other evidence as to average hours worked by part-
time employees, to aggregate the average hours of the part-time workers 
into FTEs based on the employer's definition of full-time employment. 
The Department would accept an employer's definition of full-time 
employment, provided that it is at least 35 hours or more per week; in 
the absence of such an employer definition, the Department would use 40 
hours per week as a full-time schedule. However, in no case would a 
single employee count as more than one FTE, even if the employee 
commonly worked more hours per week than the ``full-time'' schedule. 
Finally, it should be noted that the count would be made only of 
employees of the employer, including both H-1B nonimmigrants and U.S. 
workers, but would not include bona fide consultants and independent 
contractors who do not meet the employment relationship test described 
below (see item D.1). It is important to note that the number of H-1B 
nonimmigrants (the numerator in the H-1B-dependency ratio) would be 
determined by the number of H-1B nonimmigrants employed by the employer 
in the period reviewed--a simple ``head count''--without regard to 
their full-time or part-time status.
    The Department seeks comments on its proposed approach to 
determining full-time equivalency, and any other approaches which might 
be used to accurately make the determination without undue paperwork 
burden.
2. When Must an Employer Determine H-1B Dependency?
    The ACWIA definition of ``H-1B-dependent employer'' and the new LCA 
attestation elements that are required of such an employer do not 
clearly define the timing of the dependency determination. Certainly 
such a determination must be made when a new LCA is filed. The two 
issues to be resolved are when a new LCA must be filed, and what 
obligations, if any, an employer has if its dependency status changes.
    The Department is particularly concerned about the obligations of 
employers who already hold or may soon obtain certified LCAs. The 
Department's current regulations provide that an LCA is valid for three 
years from its date of certification, during which time the employer 
may file petitions for H-1B workers based on that LCA (not to exceed 
the number of positions shown on the LCA). The new recruitment and 
displacement attestation provisions of the ACWIA are expressly 
applicable to LCAs filed by a certain subset of H-1B employers after 
the date of issuance of the Department's interim final regulations. We 
expect that most H-1B-dependent employers have LCAs in effect and that 
many such employers may file additional LCAs during the period prior to 
the effective date of the regulations. Therefore--if this issue is not 
directly addressed by these regulations--these H-1B-dependent employers 
could avoid any application of the law's new dependency provisions, 
which are applicable only to applications filed before October 1, 2001, 
by continuing to use current or newly certified LCAs. Since this would, 
as a practical matter, potentially nullify these ACWIA requirements for 
all or many H-1B-dependent employers, the Department proposes that any 
current (or non-dependent) LCA will become invalid for H-1B-dependent 
employers by operation of these regulations with respect to any future 
H-1B petitions (including extensions), although an employer's 
obligations under the LCA would continue with respect to all H-1B 
nonimmigrant petitions under that LCA. The regulations would, 
therefore, require that all H-1B-dependent employers with existing LCAs 
file new LCAs if they wish to petition for any new H-1B nonimmigrants 
(or if they wish to seek the extension of any existing H-1B visas) on 
or after the effective date of the interim final regulations. 
Similarly, an employer with an existing LCA which is not H-1B-dependent 
on the effective date of the regulations but which later becomes H-1B-
dependent, would be required to file a new LCA if it wishes to petition 
for new H-1B nonimmigrants (or seek extensions of existing H-1B visas) 
at any time after the date it becomes dependent. An employer who fails 
to take such action but instead uses an existing LCA contrary to these 
regulations would be subject to sanctions, including debarment and 
civil money penalties. The Department seeks comments on this proposed 
approach and on any other approaches which might be used to ensure that 
U.S. workers are provided with the protections which the Act intended 
with regard to H-1B-dependent employers.
    As suggested above, the Department also recognizes that the makeup 
of an employer's workforce, and the ratio of H-1B nonimmigrants to 
total FTEs, could change significantly over the three-year validity 
period of an LCA. Thus an employer which is not H-1B-dependent at the 
time it files an LCA under these regulations might later become 
dependent, or an employer which is initially H-1B-dependent might later 
become non-dependent. The Department, after careful consideration, has 
concluded that, in order for the Congressional intent for the new 
provisions to be appropriately implemented, an employer's H-1B 
dependency may need to be redetermined as the composition of the 
workforce changes after the filing of the LCA, where the employer plans 
to take actions which require recruitment and non-displacement 
commitments by H-1B-dependent employers (or their clients).
    Thus, the Department proposes that an employer would be required to 
make a determination of dependency not just prior to or on the 
effective date of these regulations, but when it files any new LCA or 
H-1B petition (including extensions) after that date. If an employer is 
not H-1B-dependent at the time an LCA is filed, it would have a 
continuing obligation to ensure that if it later becomes H-1B-dependent 
and wishes to file new H-1B petitions (including extensions), it takes 
the steps necessary to comply with the requirements of the law and the 
Department's regulations applicable to dependent employers during the 
period it is H-1B-dependent, with respect to all H-1B nonimmigrant 
petitions filed under that LCA. Similarly, if an employer which is 
initially dependent and files an LCA so indicating its dependency later 
determines that it has become not dependent, it would not be required 
to comply with the attestation elements applicable to dependent 
employers with respect to any H-1B workers during any period in which 
it is not dependent.
    The Department believes that this approach is necessary to properly 
effectuate the law's new requirements and does not believe that this 
continuing obligation places any undue burden on employers. As a 
practical matter, the Department's experience in the H-1B program is 
that the large majority of employers which use the program clearly will 
not meet the test for H-1B-dependency and that most program users 
would, therefore, be entirely unaffected by this ACWIA provision and 
the Department's regulations. With regard to the small minority of 
employers who would meet the H-1B-dependency test, the

[[Page 635]]

Department's experience is that most such employers employ H-1B workers 
in such a large proportion that they would almost certainly be subject 
to the non-displacement and recruitment requirements during the entire 
LCA validity period. As a practical matter, therefore, any continuing 
obligation for an employer to monitor its workforce ratio would apply 
only in the very rare instance where the H-1B-dependency determination 
is a close question for a ``borderline'' employer on the effective date 
of these regulations, or upon the date of a subsequent LCA filing or 
petition and thereafter.
    The Department also considered whether the same issues would arise 
with respect to employers found after the effective date of ACWIA to 
have committed willful violations or misrepresentations. However, a 
finding of a willful violation or misrepresentation would commonly 
result in debarment and consequently, invalidation of all the 
employer's LCA's. The employer would then be required to file a new 
LCA(s) to petition for additional H-1B nonimmigrants (or to extend 
petitions) after the debarment period ends, attesting to the new 
attestation elements for H-1B dependent employers and willful 
violators.
    The Department seeks comments on its proposal, and specifically 
whether there are other ways to effectively accomplish the statutory 
intent that H-1B-dependent employers comply with the new attestation 
elements. For example, another possible regulatory approach could be to 
have the dependency up-date determined on a set, regular basis, such as 
for each calendar quarter. Alternatively, the Department could limit 
the use of an attestation to a shorter period, such as 90 or 180 days, 
instead of the current three years.
3. What Kind of Records Are Required Concerning the H-1B-Dependency 
Determination?
    The Department is considering several matters relating to 
documentation. First, the Department is examining the issue of the kind 
of record which might need to be made by an employer concerning its 
determination of whether it is or is not H-1B-dependent at the time 
that an LCA is completed and filed. It is the Department's view that no 
record needs to be created or maintained to show how an employer made 
that determination when its H-1B-dependency or non-dependency status is 
apparent, and it files an LCA reflecting that obvious status. As 
discussed above, the Department believes that for the vast majority of 
employers there is either such a small or large proportion of H-1B 
nonimmigrants employed that an employer's dependency status will not be 
a close question. With regard to an employer for which the H-1B-
dependency or non-dependency status is not readily apparent, the 
question of appropriate records is more difficult. The Department 
believes that it is important that the employer make this determination 
with proper care and consideration. Further, the Department believes 
that, in the event of an inquiry by an affected U.S. worker (concerning 
possible rights regarding displacement or recruitment) or an 
investigation by the Department, documentation of an employer's 
determination that it is not H-1B-dependent needs to be available to 
ascertain and evaluate the method by which the determination was made. 
Therefore the Department proposes that such documentation be required 
wherever the determination that an employer is not dependent is not 
readily apparent and a mathematical calculation must be made (i.e., 
where the ratio of H-1B workers to U.S. workers is close to that set 
forth in the statute for dependency). The Department solicits comments 
on whether the regulations need to define an explicit standard (for 
example, all circumstances where H-1B workers are 10 percent or more of 
the workforce) to determine the subset of employers which must make and 
retain such documentation when an attestation is made.
    The Department also is considering whether a record must be kept of 
an employer's H-1B-dependency status determinations (if any) which are 
made after the filing of an LCA which is used in support of a petition 
for an H-1B nonimmigrant worker. The Department believes that--in order 
that U.S. workers are aware of their rights concerning nondisplacement 
and recruitment, and that the Administrator is able to conduct fair and 
effective investigations on those matters--a record needs to be 
maintained of an employer's determination if at any time an employer 
which was non-dependent determines that it is dependent, or if an 
employer which was dependent determines that it is non-dependent. The 
Department is therefore proposing that a copy of the determination and, 
where an employer determines that it is not dependent, the underlying 
computation, be placed in the public disclosure file.
    The Department also requests comments on whether it would be 
feasible and appropriate to specify that no record of an employer's 
computations would be necessary, if the determination could be made 
from publicly available documents. This approach presents some 
difficulties, in that, for example, a publicly available list of an 
employer's employees may not show the workers' full-time or part-time 
status, or may not accurately reflect the number of workers who meet 
the ``employment relationship'' test, and these documents may not be 
readily available to U.S. workers. The Department therefore solicits 
comments as to the feasibility of this approach and whether there are 
any generally available public documents which would normally contain 
the required information.
    It is also necessary that an employer have the underlying records 
necessary to make the dependency determination. The records required to 
determine the number of workers on the payroll are required by 
Sec. 655.731(b) of the existing regulations. An employer would also be 
required to have a record of the hours worked by part-time workers, or 
a document showing their normal work schedule if no records of their 
hours of work are maintained. As discussed above (see item B.1), it has 
been the Department's experience that most part-time workers are paid 
on an hourly basis and, therefore, that employers maintain hours-worked 
records for such workers. Finally, the employer would need to maintain 
copies of its H-1B petitions, in order to determine the number of H-1B 
nonimmigrants on its payroll.
    The Department seeks comments on all of these issues and possible 
approaches.
4. What Information Will Be Required on the LCA Regarding an Employer's 
Status as H-1B-Dependent?
    The Department expects that every employer will need to read the 
instructions for determining H-1B dependency and make a determination 
that it is or is not dependent, in order to determine whether to attest 
to dependency. In most cases, the Department expects that the 
determination will be so clear that the employer will not need to make 
any mathematical calculation. The Department also believes that it is 
important that those employers constituting the vast majority of those 
filing LCAs not be subject to any unnecessary burden because of the 
relatively small number of employers who are dependent.
    The Department believes that the revised attestation form (LCA), at 
a minimum, should require that every

[[Page 636]]

employer which is H-1B-dependent affirmatively acknowledge its status 
and obligations by checking a box attesting to its dependency and its 
compliance with the additional attestation requirements concerning non-
displacement and recruitment of U.S. workers. Further, as discussed 
above, the Department proposes that H-1B-dependent employers which 
filed an LCA before these regulations become effective, may not use 
such an LCA in support of an H-1B petition filed after the effective 
date, or, if they do not become dependent until sometime after the 
effective date of the regulations, may not use such an LCA in support 
of an H-1B petition filed after they become dependent.
    The question arises as to what information should be required of 
employers who are not H-1B dependent when they file an LCA after the 
effective date of these regulations. The Department is considering 
three alternative revisions to the LCA form for such employers:
    1. The employer would expressly attest that it is not dependent and 
that if it later becomes dependent, it will comply with the additional 
attestation requirements; or
    2. The employer would not have to attest that it is not dependent, 
but the LCA would clearly state--and by signing the form the employer 
would agree--that the employer is required to comply with the 
additional attestation requirements if it does become dependent; or
    3. The employer would not have to attest that it is not dependent, 
but the LCA would clearly state that it could not be used in support of 
any H-1B petition filed after the employer became dependent.
    Under all of the alternatives an employer will be expected to make 
an initial determination as to whether it is or is not dependent; to 
remain cognizant as to its status if it later files a new H-1B 
petition; and would commit misrepresentation if it falsely fails to 
attest that it is dependent. The first two alternatives do not require 
the filing of a new LCA should a formerly non-dependent employer become 
dependent, but such employer will be obliged to comply with the 
substantive obligations of the additional attestation elements 
applicable to dependent employers. The third alternative would parallel 
the approach proposed for H-1B dependent employers with LCAs filed 
before the effective date of the regulations in that an employer which 
initially was not dependent would be required to file a new LCA if it 
later became dependent and would be subject to sanctions, including 
debarment and civil money penalties, if it failed to do so.
    The Department is concerned about the burden of requiring the 
filing of a new LCA as well as the burden of requiring the overwhelming 
majority of employers who are not dependent to check a box so 
attesting. The Department therefore proposes to utilize the second 
alternative, where the non-dependent employer would not be required to 
check any additional box(es). The Department is aware that under this 
alternative the lack of such identification will make it particularly 
important that the form clearly lay out the obligations of employers. 
The Department therefore seeks comments on the above alternatives, and 
the layout and clarity of the proposed attestation form, attached as 
Appendix I as well as any other comments on these and related matters.
5. What Changes Are Proposed for the Labor Condition Application Form 
and the Department's Processing Procedures?
    Based on the preceding discussion, the Department is publishing for 
public comment a proposed revised Labor Condition Application form (ETA 
9035), and providing advance public notice of a planned change in the 
existing system for processing LCAs. At present, such applications are 
submitted by mail, fax or private carrier to one of ten ETA regional 
offices with jurisdiction, as set forth in Sec. 655.720. The Department 
has been developing the capacity to automatically receive and, in many 
cases, automatically process LCAs submitted. The Department intends to 
implement an automatic system whereby all faxed LCAs will be processed 
in Philadelphia and San Francisco beginning in January 1999. This new 
capacity requires changes in the LCA form as well as in the filing 
instructions.
    The Department has redesigned the LCA form (attached as Appendix I) 
to both reflect the statutory changes in the ACWIA and facilitate the 
automated receipt and processing of applications. With the exception of 
the changes occasioned by the provisions of the ACWIA, as discussed in 
this proposed rulemaking, the proposed revisions to the LCA form are 
merely aesthetic. The Department's revised processing procedures will 
not require any substantive changes with respect to the information 
required of employers in preparing the LCA. When the Department 
publishes the Interim Final Rule pursuant to this proposal, contingent 
upon approval by the Office of Management and Budget, the revised form 
will become the sole form for public use; thereafter, prior versions of 
the ETA 9035 will not be accepted for processing.
    The Department proposes that, after the effective date of the 
Interim Final Rule, all LCAs--whether submitted by fax or not--will be 
filed with one of two ETA regional offices. Employers within the 
jurisdiction of ETA's current Boston, New York, Philadelphia, and 
Atlanta regions will submit LCAs only to the Philadelphia regional 
office; employers within the jurisdiction of ETA's current Chicago, 
Kansas City, Dallas, Denver, Seattle and San Francisco regions will 
submit LCAs only to the San Francisco regional office. There will be an 
automated back-up capacity in the Washington, D.C. headquarters for 
automated processing of LCAs, in the event of a system failure in one 
of the regional offices.
    The proposed revised LCA form can be completed in several ways--in 
handwriting, in typewriting, or through use of a new ``form filler'' 
electronic program that will be generally available to program users. 
The new LCA form will be posted and thereafter can be down-loaded and 
printed from the Department's World Wide Web site at http://
www.doleta.gov. The ``form filler'' electronic program will also be 
available to be down-loaded from this web site, or can be obtained from 
ETA headquarters, on request, via e-mail or on diskette. This ``form 
filler'' electronic program will enable the user to easily complete the 
LCA form with a font that can be reliably read by the Department's 
automated LCA processing system.
    The Department proposes that, under the Interim Final Rule, the LCA 
form--whether completed using the ``form filler'' program, in 
typewriting, or in handwriting--will be submitted by employer 
applicants to one of the two ETA regional offices either by facsimile 
transmission (fax), which is preferred, or by mail or private carrier. 
The Interim Final Rule and the LCA form itself will so indicate and 
will provide the appropriate fax numbers. The Department anticipates 
that LCAs submitted by fax can be readily received and processed by the 
automated system, and that a response--approval or rejection--can be 
returned to the employer's sending FAX number (i.e., the telephone 
number designated in the ``Return Fax Number'' block on the LCA form), 
usually within 48 hours of submission/receipt by ETA. For employer-
applicants without the capacity to send the LCA by FAX and receive 
ETA's response to the employer-applicants' sending FAX machine, the

[[Page 637]]

LCA may still be submitted by mail or other delivery in hard-copy paper 
form (either typewritten or handwritten) to the two ETA regional 
offices with jurisdiction Such non-FAX submissions will be processed by 
the ETA office by being faxed internally or scanned electronically into 
the automated system, and the ETA decision will be mailed to the 
submitter.
    The automated processing system will electronically scan the 
incoming facsimile, extract the information contained in the LCA, 
record the information to a database, and--in most cases--make the 
appropriate determination to approve/certify or reject the application, 
with little intervention by system administrators. As under the current 
manually-operated system, the LCA will be approved/certified and faxed 
(or mailed) back to the submitter if the appropriate boxes are checked 
and the required information is provided on the form. If the LCA is 
incomplete or contains obvious inaccuracies, it will be rejected under 
the automated system as it is under the manually-operated system.
    Comments are requested on the proposed electronic transmission 
system described and on the proposed form to be utilized.

C. What H-1B Worker Would be an ``Exempt H-1B Nonimmigrant''?

    The ACWIA provisions concerning non-displacement and recruitment of 
U.S. workers do not apply where the only H-1B workers sought in the LCA 
at issue are ``exempt H-1B nonimmigrants.'' In addition, for a limited 
time after the ACWIA's enactment, determining whether the employer is 
H-1B-dependent does not include ``exempt'' H-1B workers. The ACWIA 
contains alternative definitions of ``exempt H-1B nonimmigrant'' as one 
``who * * * receives wages (including cash bonuses and similar 
compensation) at an annual rate equal to at least $60,000; or * * * 
[who] has attained a master's or higher degree (or its equivalent) in a 
specialty related to the intended employment.''
    The Department notes that the statutory language seems clear--an H-
1B-dependent employer, or an employer found to have committed willful 
violations, is required to comply with the new attestation elements 
unless the only workers employed pursuant to the LCA are exempt 
workers. The non-displacement obligation, for example, applies for the 
period beginning 90 days before and ending 90 days after the filing of 
any H-1B petition supported by the LCA. The Department therefore reads 
the statute as requiring that an employer which uses an LCA in support 
of a petition for any non-exempt worker must comply with the new 
attestations with respect to all of its H-1B nonimmigrants employed 
pursuant to the LCA, even the exempt H-1B nonimmigrants.
    The Department recognizes that employers commonly apply for 
multiple positions, and often for multiple locations, on the same LCA. 
Further, the Department recognizes that when an employer recruits U.S. 
workers, it often cannot know whether in fact the H-1B worker for whom 
it eventually petitions will qualify as exempt or non-exempt, since it 
is not uncommon for both exempt and non-exempt workers to be qualified 
for the same job. In any event, the Department points out that an H-1B-
dependent (or willful violating) employer is free to file separate LCAs 
for its exempt and non-exempt workers, thereby obviating the 
requirement of complying with the new attestation elements for its 
exempt workers.
    Determinations as to whether or not H-1B workers meet the 
requirements necessary to be classified as exempt H-1B nonimmigrants 
will be made initially by the Immigration and Naturalization Service 
(INS) in the course of adjudicating the petitions filed on behalf of H-
1B nonimmigrants by employers. Employers should maintain, in the public 
access file, a copy of the INS determinations with the petitions 
approved for exempt H-1B workers. In the event of an investigation, it 
is anticipated that considerable weight will be given to INS' 
determinations that H-1B nonimmigrants, based on the educational 
attainments of the workers, were ``exempt'' since INS has considerable 
experience in evaluating the educational qualifications of aliens. 
However, with respect to H-1B workers claimed to be exempt on the basis 
of annual wages, employers will be expected in the event of an 
investigation to be able to document that such H-1B nonimmigrants 
received sufficient pay to satisfy the statutory wage ``floor'' of 
$60,000.
    The Department seeks comments on this proposed regulation, and on 
any other related matter including but not limited to the following 
questions.
1. How Would the $60,000 Annual Rate be Determined?
    The ACWIA sets the wage ``floor'' for an ``exempt'' H-1B 
nonimmigrant at $60,000 annually, which is to include ``cash bonuses 
and similar compensation.'' In order to ensure that this statutory 
standard is in fact met, the Department is of the view that this 
standard should be interpreted consistent with the existing DOL 
regulations for determining if an employer has satisfied its other wage 
obligations under the H-1B program (20 CFR 655.731(c)(3)). Future 
(i.e., unpaid but to-be-paid) cash bonuses and similar compensation 
would be ``counted'' toward the required wage if their payment is 
assured, but not if they are conditional or contingent on some event 
such as the employer's annual profits (unless the employer guarantees 
that the worker will receive payment of at least $60,000 per year, in 
the event the bonus contingency is not met). In addition, such bonuses 
and compensation are to be paid ``cash in hand, free and clear, when 
due * * *,'' meaning that they must have readily determinable market 
value, be readily convertible to cash tender, and be received by the 
worker when due (which must be within the year for which the employer 
wants to ``count'' the compensation).
    Similarly, in assessing payment to an H-1B nonimmigrant claimed to 
be ``exempt,'' the Department interprets the statutory language ``* * * 
receives wages (including cash bonuses and similar compensation) at an 
annual rate equal to at least $60,000; * * *'' to mean that the worker 
actually receives the $60,000 compensation in the year. Therefore, an 
H-1B nonimmigrant working part-time, whose actual annual compensation 
is less than $60,000, would not qualify as exempt on this basis, even 
if the worker's earnings, if projected to a full-time work schedule, 
would theoretically exceed $60,000 in a year.
    The Department seeks comments on this proposal and any alternative 
approaches that would ensure the $60,000 wage standard for ``exempt'' 
workers would be met.
2. How Would the ``Equivalent'' of a Master's or Higher Degree be 
Determined?
    The second definition of ``exempt H-1B nonimmigrant'' requires that 
the nonimmigrant ``has attained a master's or higher degree (or its 
equivalent) in a specialty related to the intended employment.'' Based 
on the language of this provision, the Department and the INS are of 
the view that work experience cannot be converted to the ``equivalent'' 
of an academic degree at the master's level or higher. The ACWIA's 
language differs from INA section 214(i) (8 U.S.C. 1184(i)), which 
explicitly authorizes a ``time equivalency'' approach. Section 214(i) 
provides that one of the ways to meet the requirements of a bachelor's 
or higher degree (or its equivalent) is by experience in the specialty 
equivalent to

[[Page 638]]

the completion of such a degree and ``recognition of expertise in the 
specialty through progressively responsible positions relating to the 
specialty.'' The contrast between these INA provisions demonstrates 
that when Congress intended to authorize a ``time equivalency,'' such 
authorization was expressly stated. Further, the statement of one of 
the sponsors of the legislation shows the intent of Congress: ``the 
term `or its equivalent' refers only to an equivalent foreign degree. 
Any amount of on-the-job experience does not qualify as the equivalent 
of an advanced degree.'' (144 Cong. Rec. H8571-05, H8584, Sept. 24, 
1998, remarks of Rep. Smith). The Department's proposed regulation, 
therefore, does not allow a work experience equivalency and recognizes 
only those foreign academic degrees as would be equivalent to a 
master's or higher degree in the U.S.
    The Department is consulting with the INS on this matter, and will 
work in close cooperation with that agency in developing regulations. 
As indicated above, the Department will give considerable weight to INS 
determinations concerning the academic credentials of H-1B 
nonimmigrants who are claimed to be ``exempt.'' Employers should note 
that INS' review of academic credentials for its determination on 
``exempt H-1B nonimmigrants'' is distinct from its review of academic 
credentials for its determination on ``specialty occupations'' under 
Section 214(i) of the INA and 8 CFR 214.2(h)(4).
    The Department seeks comments on this regulatory proposal, and on 
any other or alternative interpretations of the ``equivalency'' 
provision.
3. How is ``a Specialty Related to the Intended Employment'' Defined?
    The H-1B nonimmigrant who holds an advanced academic degree would 
be ``exempt'' only if that degree is in ``a specialty related to the 
intended employment.'' The Department proposes to make it clear that, 
in order for the degree specialty to be sufficiently ``related'' to the 
employment, the specialty must be generally accepted in the industry or 
occupation as an appropriate or necessary credential or skill for the 
person who undertakes the employment in question. Any ``specialty'' 
which is not generally accepted as appropriate or necessary to the 
employment would not be sufficiently ``related'' to afford the H-1B 
worker status as an ``exempt H-1B nonimmigrant.''
    The Department is consulting with the INS on this matter, and will 
work in close cooperation with that agency in developing regulations. 
As indicated above, the Department will give considerable weight to INS 
determinations concerning the academic credentials of H-1B 
nonimmigrants who are claimed to be ``exempt.'' Again, employers should 
note that INS' review of academic credentials for its determination on 
``exempt H-1B nonimmigrants'' is distinct from its review of academic 
credentials for its determination on ``specialty occupations'' under 
Section 214(i) of the INA and 8 CFR 214.2(h)(4).
    The Department seeks comments on this regulatory proposal, and on 
any other or alternative interpretations of the ``related'' provision.
4. Should the LCA be Modified to Identify Whether it Will be Used in 
Support of Exempt and/or Non-Exempt H-1B Nonimmigrants?
    The ACWIA provides that ``[a]n application is not described in this 
clause [i.e., is not subject to the new attestation requirements] if 
the only H-1B nonimmigrants sought in the application are exempt 
nonimmigrants.'' The Department is considering whether an employer's 
intention to use the attestation for exempt and/or non-exempt H-1B 
nonimmigrants should be indicated on the LCA, or whether this issue 
should be addressed in some other way. The Department recognizes that 
employers may wish to use separate LCAs for exempt and non-exempt H-1B 
workers, so they would not be required to comply with the attestations 
with respect to any exempt H-1B workers. As explained in the 
introductory discussion, the statutory language seems to require that 
an employer which initially believed its LCA would be used only for 
exempt H-1B nonimmigrants would have been obliged to comply with the 
attestations with respect to all of its H-1B workers under the LCA--
exempt and non-exempt--if it later used that LCA in support of a 
petition for any non-exempt worker.
    The Department therefore considered whether there would be any 
advantage to requiring such separate attestations. The Department is 
aware, however, that for many occupations, such as in information 
technology, two different workers might both be qualified for the same 
job, but because of education, for example, one might be exempt and 
another non-exempt. Therefore an employer might not know in advance 
whether the worker will be exempt.
    At the same time, the Department believes it is important than an 
H-1B-dependent employer which intends to use the LCA only for exempt H-
1B workers attest that the LCA will only be used to petition for such 
workers. The INS has made this request so as to allow both INS and the 
Department to know for which H-1B workers the ``exempt'' status must be 
ascertained. The Department therefore proposes to require such an 
attestation on the LCA. Of course, this requirement would not prevent 
an H-1B-dependent employer from either using separate LCAs for its 
exempt and non-exempt workers, or using one LCA for all H-1B workers 
(both exempt and non-exempt) and complying with the new attestation 
elements for all such workers.
    Comments are sought on this proposed approach and on any other 
alternatives.

D. What Requirements Apply Regarding no ``Displacement'' of U.S. 
Workers Under the ACWIA?

    The ACWIA imposes new obligations on an H-1B-dependent employer 
(see discussion in items A and B, above) and an employer found to have 
committed willful violations within the 5 years preceding the filing of 
an LCA (beginning on or after the date of the ACWIA's enactment). Such 
an employer is prohibited from ``displacing'' a U.S. worker who is 
``employed by the employer'' or is employed by some other employer at 
whose worksite the sponsoring employer places an H-1B nonimmigrant 
where there are ``indicia of employment'' between the H-1B worker and 
that other employer. The prohibition on displacement within the 
employer's own workforce applies for 90 days before and 90 days after 
the date of filing of any H-1B petition based on the LCA. The 
prohibition on ``secondary'' displacement, at another employer's 
worksite, applies for 90 days before and 90 days after the placement of 
H-1B worker(s) at the worksite. These prohibitions do not apply to the 
placement of ``exempt'' H-1B workers, if the employer's LCA involves 
only ``exempt'' nonimmigrants. (See discussion in item C, above).
    The Department recognizes that the non-displacement provisions in 
the ACWIA raise several issues, and proposes regulatory provisions on 
each of the following matters. The Department seeks comments on all of 
these proposed provisions, and on any other related matters.
1. What Constitutes ``Employed by the Employer,'' for Purposes of 
Prohibiting a Covered Employer From Displacing U.S. Workers in its Own 
Workforce?
    The ACWIA provides that a U.S. worker ``employed by the employer'' 
is protected from displacement by that employer's H-1B workers. 
However, the

[[Page 639]]

ACWIA contains no definition of the phrase ``employed by the 
employer.'' In this circumstance, where Congress has not specified a 
legal standard for identifying the existence of an employment 
relationship, the Department is of the view that Supreme Court 
precedent requires the application of ``common law'' standards in 
analyzing a particular situation to determine whether an employment 
relationship exists. Nationwide Mutual Insurance Co. v. Darden, 503 
U.S. 318 (1992). See Community for Creative Non-Violence v. Reid, 490 
U.S. 730 (1989). Mindful of the Supreme Court's teaching that since the 
common-law test contains ``no shorthand formula or magic phrase that 
can be applied to find the answer, * * * all of the incidents of the 
relationship must be assessed and weighed with no one factor being 
decisive'' (NLRB v. United Ins. Co. of America, 390 U.S. 254, 258 
(1968)), the Department proposes regulatory language setting out 
factors that would indicate the existence of an employment relationship 
under the common law test. These factors would include:
     The firm or the client has the right to control when, 
where, and how the worker performs the job;
     The work does not require a high level of skill or 
expertise;
     The firm or the client rather than the worker furnishes 
the tools, materials, and equipment;
     The work is performed on the premises of the firm or the 
client;
     There is a continuing relationship between the worker and 
the firm or the client;
     The firm or the client has the right to assign additional 
projects to the worker;
     The firm or the client sets the hours of work and the 
duration of the job;
     The worker is paid by the hour, week, month or an annual 
salary, rather than for the agreed cost of performing a particular job;
     The worker does not hire or pay assistants;
     The work performed by the worker is part of the regular 
business (including governmental, educational, and non-profit 
operations) of the firm or the client;
     The firm or the client is itself in business;
     The worker is not engaged in his or her own distinct 
occupation or business;
     The firm or the client provides the worker with benefits 
such as insurance, leave, or workers' compensation;
     The worker is considered an employee of the firm or the 
client for tax purposes (i.e., the entity withholds federal, state, and 
Social Security taxes);
     The firm or the client can discharge the worker; and
     The worker and the firm or client believe that they are 
creating an employer-employee relationship.
    (Factors adapted from EEOC Policy Guidance on Contingent Workers, 
Notice No. 915.002, Dec. 3, 1997). The Department is aware that these 
analytical factors--all of which are drawn from the Supreme Court's 
decision in Darden--may be expressed somewhat differently. See, e.g., 
Restatement (Second) of Agency Sec. 220(2) (1958) (listing 
nonexhaustive criteria for identifying master-servant relationship); 
Rev. Run. 87-41, 1987-1 Cum. Bull. 296, 298-299 (providing 20 factors 
as guides in determining whether an individual qualifies as a common-
law ``employee'' in various tax law contexts). The Department is also 
aware that some factors, such as the level of the worker's skill or 
expertise, have little relevance in the context of this program where, 
by the terms of the Act, all of the H-1B workers and similarly employed 
U.S. workers are skilled.
    The Department recognizes that there are a number of legal 
standards--other than the common law test--for determining the 
existence of an employment relationship. For example, it would appear 
that the standard most analogous to the H-1B worker protection 
provisions would be that found in the Fair Labor Standards Act, which 
provides minimum wage and overtime wage protections to ``employees.'' 
In addition, there is some suggestion of a preference on the part of 
some Members of Congress for the use of the Internal Revenue Service 
standards for the identification of an employment relationship under 
the ACWIA provisions (see Cong. Rec. S12751, Oct. 21, 1998; remarks of 
Sen. Abraham). While the Department considers both the FLSA and tax 
standards (which contain some special exemptions from the common law 
test) to be inappropriate under this statute, in light of the Supreme 
Court precedents discussed above, the Department would carefully 
consider any comments which suggest and support these or other 
alternate tests for determining whether an employment relationship 
exists.
    The Department seeks comments on the proposed regulation applying 
the common law standards, and on any other, related matters regarding 
the appropriate factors.
2. What Constitute ``Indicia of an Employment Relationship,'' for 
Purposes of the Prohibition on Secondary Displacement of U.S. Workers 
at Worksites Where the Sponsoring Employer Places H-1B Workers?
    In a provision described herein as the ``secondary displacement 
prohibition,'' the ACWIA prohibits the displacement of U.S. workers 
employed by another (``secondary'') employer, if an H-1B-dependent 
employer (or willful violator) intends or seeks to place its own H-1B 
workers with that other employer in a situation where, among other 
things, there are ``indicia of an employment relationship between the 
nonimmigrant and such other employer.'' The Department, after careful 
consideration, has concluded that this term--``indicia of an employment 
relationship''--identifies a relationship which is less than an 
employment relationship but more than the H-1B worker's mere 
performance of duties at the secondary employer's worksite (such as 
being dispatched for a brief part of a work day to diagnose or repair 
equipment at that other employer's location). Further, the Department 
has concluded that, for purposes of clarity and consistency, the 
standards indicative of ``indicia of an employment relationship'' with 
the secondary employer should be consistent with and a sub-set of the 
criteria which are used in determining an employment relationship 
between the covered (or ``primary'') employer and its own U.S. workers 
for purposes of the displacement prohibition concerning such workers 
(i.e., U.S. workers ``employed by the employer''). The Department 
considered proposing that indicia of employment would be found to exist 
wherever a certain number of these criteria are met, but does not 
believe such a quantitative standard to be appropriate since the 
determination requires consideration of all of the relevant facts of 
the relationship, with no single factor or set of factors decisive.
    The Department reviewed the factors considered in determining 
employment relationship, as discussed above, and proposes a sub-set of 
those factors which it believes are most useful in determining whether 
indicia of employment are present in evaluating a placement at another 
company's worksite (here referred to as ``the client''). The sub-set 
does not include those factors which are relevant to determining 
whether a worker is an employee of any company (e.g. worker's skill 
level). Such factors do not seem relevant where the H-1B worker is an

[[Page 640]]

acknowledged employee of some entity (i.e., the company filing the 
LCA), and would virtually never arise in a secondary placement of the 
H-1B worker (e.g., client's payment of wages and benefits to worker). 
The sub-set of factors the Department believes are relevant ``indicia 
of an employment relationship'' include:
     The client has the right to control when, where, and how 
the worker performs the job;
     The client furnishes the tools, materials, and equipment;
     The work is performed on the premises of the client;
     There is a continuing relationship between the worker and 
the client;
     The client has the right to assign additional projects to 
the worker;
     The client sets the hours of work and the duration of the 
job;
     The work performed by the worker is part of the regular 
business (including governmental, educational, and non-profit 
operations) of the client;
     The client is itself in business; and
     The client can discharge the worker from providing 
services to the client.
    (See discussion in item D.1 above). The Department seeks comments 
on this regulatory standard, including the factors to be considered and 
the manner in which the factors might be applied or weighed.
    The Department recognizes that alternative approaches may be 
available, such as some standard other than the common law factors, or 
having no regulatory standard. The Department seeks comments on any 
such alternative approaches, and on any other, related matters 
including, but not limited to, the possible contents and consequences 
of a regulation which would apply different standards.
3. What Constitutes an ``Essentially Equivalent Job,'' for Purposes of 
the Non-Displacement Provisions of ACWIA?
    The ACWIA definition of the prohibited displacement of a U.S. 
worker states, in part, that such displacement is ``lay[ing] off the 
[U.S.] worker from a job that is essentially the equivalent of the job 
for which the nonimmigrant or nonimmigrants is or are sought. A job 
shall not be considered to be essentially equivalent of another job 
unless it involves essentially the same responsibilities, was held by a 
United States worker with substantially equivalent qualifications and 
experience, and is located in the same area of employment as the other 
job.'' This definition, thus, requires three comparisons to determine 
whether displacement occurs: job responsibilities; workers; and 
locations.
    The Department is of the view that the job responsibility 
comparison must focus on the core elements of and competencies for the 
job, such as supervisory duties, or design and engineering functions, 
or budget and financial accountability. Peripheral, non-essential 
duties that could be tailored to the particular abilities of the 
individual workers would not be determinative in the comparison of the 
jobs. In other words, the job responsibilities must be similar and both 
workers capable of performing those duties. In this connection, the 
Department believes it may be useful to utilize standards under the 
Equal Pay Act (29 U.S.C. 206(d)(1)) for determining the essential 
equivalence of jobs. These standards focus on actual job duties and 
responsibilities, rather than a comparison of sometimes artificial job 
titles and position descriptions, and recognizes that precise overlap 
between jobs is not necessary to achieve essential equivalence (see the 
regulations at 29 CFR 1620.13 et seq.). Like the Equal Pay Act, ACWIA's 
remedial purpose could be thwarted by requiring a match of 
insubstantial aspects of jobs as a condition for determining their 
equivalence. The Department therefore seeks comments on the 
appropriateness of adapting these standards to ACWIA.
    As to the qualifications and experience of the workers, the 
Department considers the comparison to be confined to matters which are 
normal and customary for the job, and which are necessary for 
successful performance of the job. Thus, while it would be appropriate 
to compare whether the workers in question are qualified by virtue of 
education, skills and experience to perform the job, it would not be 
appropriate to compare their relative ages or their ethnic identities, 
nor whether they are exactly alike--which would virtually never be the 
case--in their educational background and work experience. For example, 
an H-1B worker who is ``over-qualified'' for a particular job could 
still ``displace'' a U.S. worker.
    The area of employment is defined in ACWIA as ``the area within 
normal commuting distance of the worksite or physical location where 
the work of the H-1B nonimmigrant is or will be performed. If such 
worksite or location is within a Metropolitan Statistical Area, any 
place within such area is deemed to be within the area of employment.'' 
This statutory definition is much the same as the Department's current 
regulatory definition of ``area of intended employment'' for prevailing 
wage purposes (20 CFR 655.715). (See item P.5, below.)
    The Department proposes regulatory language to implement these 
provisions and seeks comments on these and any other related matters.
4. How Does the ACWIA Distinguish Between a Prohibited ``Lay Off'' and 
a Permissible Termination of an Employment Relationship?
    The ACWIA distinguishes a ``lay off'' of a U.S. worker from certain 
other circumstances in which a worker's employment relationship may 
end. The ACWIA's non-displacement prohibition applies only to a ``lay 
off.''
    The ACWIA specifies that, even though an H-1B worker may be placed 
in a job similar to one formerly held by a U.S. worker, no 
``displacement'' or ``lay off'' is considered to have occurred if the 
U.S. worker left the job through ``voluntary departure or voluntary 
retirement.'' As a logical and obvious matter, the requirement of 
``voluntariness'' is crucial to the effectiveness of this provision in 
assuring appropriate protections of U.S. workers' jobs in situations 
where nonimmigrants are being hired. The Department takes the view that 
the totality of the circumstances must be considered in assessing 
whether a U.S. worker's departure was ``voluntary.'' Therefore, the 
Department will look to well-established principles concerning 
``constructive discharge'' of workers who are pressured to leave 
employment (e.g., a resignation letter would not be conclusive proof of 
``voluntariness'' where other information indicates coercion). The 
Department proposes a regulation that reflects this fair, common sense 
view of ``voluntary departure or voluntary retirement.''
    The ACWIA also specifies that no ``lay off'' is considered to have 
occurred where the U.S. worker's loss of employment is caused by the 
expiration of a grant or contract, other than a temporary employment 
contract entered into in order to evade the employer's obligations 
under the attestation. The Department believes that this language was 
designed to address the common situation where scientists and other 
academic personnel at universities are expressly hired to work under a 
contract or grant from another institution. Where such funding is lost, 
and the worker is not replaced because the project funded by the 
contract or grant ends, there would be no lay off within the meaning of 
the ACWIA. Similarly, a staffing firm or other commercial firm may hire 
an employee expressly to work on a specific project under a contract it 
has

[[Page 641]]

obtained from another entity. If the contract project ends and is not 
renewed, and the employer does not have a practice of then moving its 
employees to work under other contracts, or placing its employees on a 
call-back list or its equivalent, but rather terminates the employment 
relationship for lack of work, there would be no lay off. The 
Department does not believe, however, that this ACWIA provision applies 
to the common situation where a staffing firm, which places employees 
at other businesses, does not hire employees for a specific client 
contract, and (upon the expiration, termination, or loss of a client 
contract) ordinarily would move its employees to perform work under a 
different contract or on a different project. In such a situation, the 
Department may find a displacement has occurred if an employer 
terminates employment of its U.S. workers and hires H-1B workers to 
perform essentially the same job under a different contract at a 
different worksite in the same area of employment. The Department notes 
that the ACWIA provision expressly excludes temporary employment 
contracts entered into to evade the employer's obligations. The 
Department intends to closely scrutinize situations under commercial 
contracts and grants, as well as employment contracts, where it appears 
that such evasion may be occurring. The Department recognizes, however, 
that there are situations where employment contracts, like the 
commercial contracts described above, are excluded from the Act's 
definition of ``lays off.'' Such situations might include, for example, 
visiting professors who are hired for a semester or a year because of 
their special expertise. The expiration of such a contract would not 
constitute a ``lay off'' of the U.S. worker, unless the circumstances 
showed some subterfuge or contrivance by the employer to avoid the 
ACWIA prohibition.
    The Department seeks comments on this proposed approach, and on any 
related matters.
5. What Constitutes ``a Similar Employment Opportunity'' for a U.S. 
Worker, Which--if Offered--Would Not Constitute a Prohibited ``Lay 
Off'' or Displacement of That Worker?
    The ACWIA further provides that, even though an H-1B worker is 
placed in a job formerly held by a U.S. worker, no ``displacement'' or 
``lay off'' is considered to have occurred if the U.S. worker was first 
offered but refused ``a similar employment opportunity with the same 
employer.'' This provision thus allows an employer an affirmative 
defense to its displacement of a U.S. worker if the employer can 
establish that it offered a bona fide transfer opportunity to the 
worker. The Department interprets the ACWIA language to require not 
just that the U.S. worker be offered another job with a similar title, 
but that the offer must involve a similar opportunity in terms such as 
a similar level of authority and responsibility, a similar opportunity 
for advancement within the organization, similar tenure and work 
scheduling.
    The Department proposes a regulation to reflect this statutory 
requirement of ``opportunity'' for the U.S. worker who has lost a job. 
At a minimum the Department believes that an offer of a ``similar 
employment opportunity'' must be a bona fide offer, rather than an 
offer designed so as to induce the employee to refuse, or with the 
expectation that the employee will refuse the offer.
    The Department seeks comments on this proposed regulatory 
provision, and on any other related matters.
6. What Constitutes ``Equivalent or Higher Compensation and Benefits'' 
for a U.S. Worker, for Purposes of the Other Job Offer to That Worker 
so as to Not Constitute a Prohibited ``Lay Off'' or Displacement?
    The ACWIA provides that no prohibited ``lay off'' of a discharged 
U.S. worker has occurred, if the U.S. worker is offered another 
employment opportunity with the same employer ``at equivalent or higher 
compensation and benefits than the position from which the employee was 
discharged.'' It would appear obvious that an ``opportunity'' could not 
be considered to provide ``equivalent or higher compensation and 
benefits'' if that ``opportunity'' would provide the worker a lower 
disposable income or would require the worker to incur expenses that 
drive down his/her financial standing. By specifying ``equivalent or 
higher'' pay and benefits, Congress must have intended that the U.S. 
worker be offered a positive, rather than negative, ``employment 
opportunity.'' In this regard, one of the sponsors of the ACWIA 
compromise legislation stated that ``[t]he intent of Congress is that 
the `similar employment opportunity with the same employer at 
equivalent or higher compensation and benefits' would be a meaningful 
offer. It is Congress' intent that an employer should not be able to 
evade liability for a violation of the displacement attestation because 
an offer of an alternative employment opportunity was made without 
considerations such as relocation expenses and cost of living 
differentials if the alternative position was in a different 
geographical location.'' (See Cong. Rec. E2324, Nov. 12, 1998, remarks 
of Rep. Smith). Assuming the regulations provide that a ``similar 
employment opportunity'' may include a transfer to another commuting 
area, the Department takes the position that an alternative 
``opportunity'' offered to the U.S. worker must take into consideration 
matters such as cost of living differentials and relocation expenses 
(e.g., a New York City ``opportunity'' offered to a worker ``laid off'' 
in Kansas City would provide a wage adjustment from the Kansas City pay 
scale and would include relocation costs). The Department is also 
considering adapting relevant provisions of regulations defining 
equivalent compensation and benefits under the Equal Pay Act 
regulations (see item D.3, above) and of the Family and Medical Leave 
Act regulations, 29 CFR 825.215(c)-(d). The Department seeks comments 
on this proposal and on any related matters that encompass this 
concept.
7. What is Required of an H-1B-dependent (or Willful Violator) Employer 
Which Seeks Information About Displacement or Potential Displacement of 
U.S. Workers at a Second Employer's Worksite?
    The ACWIA's secondary displacement prohibition requires that 
certain H-1B employers (H-1B-dependent; willful violator) not place any 
H-1B worker at another employer's worksite (to work under ``indicia of 
employment'' with such secondary employer), ``unless the [H-1B] 
employer has inquired of the other employer as to whether, and has no 
knowledge that ... the other employer has not displaced or intends to 
displace a United States worker employed by the other employer'' within 
the period of 90 days before and 90 days after the H-1B worker's 
placement at that worksite. The ACWIA further specifies (in the 
enforcement and penalties provisions) that the H-1B employer may be 
debarred for a secondary displacement ``only if the Secretary of Labor 
found that such placing employer ... knew or had reason to know of such 
displacement at the time of the placement of the nonimmigrant with the 
other employer.'' The language and structure of these provisions 
demonstrates that Congress intended for the H-1B employer to take 
proactive steps to ascertain whether placement of H-1B workers would 
correspond with the lay off of similarly-employed U.S. workers. In 
enacting this provision, Congress clearly intended that the employer 
make a reasonable inquiry and

[[Page 642]]

give due regard to available information. Simply making a pro forma 
inquiry would not insulate a covered employer from liability should the 
secondary employer displace a U.S. worker from a similar job which 
would be performed by an H-1B worker.
    The Department recognizes that the ACWIA obligation concerning 
``secondary displacement'' could easily be subverted if a placing H-1B 
employer were merely to make a pro forma inquiry and rely on a pro 
forma reply. Thus, in order to assure that the purposes of the statute 
are achieved, the Department proposes to develop a regulatory provision 
to require that the H-1B employer make a reasonable minimal effort to 
inquire about potential secondary displacement. The Department believes 
that a covered H-1B employer may demonstrate such effort through a 
variety of methods that include, but are not limited to, the following:
     Securing and retaining a written assurance from the 
secondary employer that it has not and does not intend to displace a 
similarly-employed U.S. worker within the period 90 days before and 90 
days after the placement of an H-1B worker at the work site; or
     Preparing and retaining a note to the file, prepared at 
the same time or promptly after receiving the secondary employer's oral 
statement (including the substance of the conversation, the date of the 
communication, and the names of the individuals involved) that the 
secondary employer has not and does not intend to displace a similarly-
employed U.S. worker within the period 90 days before and 90 days after 
the placement of an H-1B worker at the work site; or
     Including a secondary displacement clause in the contract 
between the H-1B employer and the secondary employer, whereby the 
secondary employer would agree that it has not and will not displace 
similarly-employed U.S. workers at the work site at any time within the 
period 90 days before and 90 days after the placement of an H-1B 
worker.
    Further, even with such assurance, a placing H-1B employer should 
not be able to ignore other information that comes to its attention--
such as newspaper reports of relevant lay-offs by the secondary 
employer--if such information becomes available before its placement of 
H-1B workers with that other employer. Under such circumstances, the 
employer would be expected to recontact the secondary employer and 
receive credible assurances that no lay offs are planned or have 
occurred in the applicable time frame.
    The Department seeks comments on the methods described above, and 
any other methods for demonstrating that a placing employer has made a 
reasonable inquiry concerning potential secondary displacement of U.S. 
workers.
8. What Documentation Will be Required of Employers About ACWIA's Non-
Displacement Provisions?
    The ACWIA prohibits the small affected class of H-1B employers--H-
1B-dependent or willful violators--from hiring H-1B workers if their 
doing so would displace similar U.S. workers from an essentially 
equivalent job in the same area of employment. The employer will not be 
considered to have displaced the U.S. worker if that worker left 
voluntarily, was dismissed for a valid reason, or turned down the 
employer's offer of a similar employment opportunity with equivalent or 
higher compensation and benefits (as previously discussed).
    The Department proposes to require that covered H-1B employers 
retain certain documentation with respect to each U.S. worker in the 
same locality and same occupation as any H-1B nonimmigrants hired, and 
who left its employ in the period 90 days before or after the 
employer's petition for the H-1B worker(s). In addition, because an 
employer generally takes action to effectuate a layoff at a point 
before a worker's employment terminates, such documentation would be 
required for any such employee for whom the employer has taken any 
action during the period 90 days before or after the petition to cause 
the employee's termination (e.g., a notice of future termination of the 
employee's job). For all such employees, the Department proposes that 
covered H-1B employers maintain the name, last-known mailing address, 
occupational title and job description, as well as any documentation 
concerning the employee's experience and qualifications, and principal 
assignments. In addition, the Department proposes that the employer 
maintain copies of all documents concerning the departure of such 
employees, such as notification by the employer of termination of 
employment prepared by the employer or the employee and any responses 
thereto, evaluations of the employee's job performance, etc. Finally, 
the employer would be required to retain copies of the terms of any 
offers of similar employment to such U.S. workers and the employee's 
response thereto. Because EEOC regulations (29 CFR 1602.14) currently 
require retention of all personnel or employment records, the 
Department does not believe that this requirement in the H-1B 
regulation would impose any new burden on employers.
    The Department seeks comments on this proposed regulation, and on 
any related matters.

E. What Requirements Does the ACWIA Impose Regarding Recruitment of 
U.S. Workers, and Which Employers are Subject to Those Requirements?

    The ACWIA requires that an H-1B-dependent employer (or employer 
found by DOL to have committed willful H-1B violations within a 5-year 
period) take ``good faith steps to recruit, in the United States using 
procedures that meet industry-wide standards and offering compensation 
that is at least as great as that required to be offered to H-1B 
nonimmigrants . . ., United States workers for the job for which the 
nonimmigrant or nonimmigrants is or are sought.'' The Department is 
charged with enforcing this obligation, while the Attorney General 
administers a special arbitration process to address complaints 
regarding an H-1B employer's companion obligation to ``offer the job to 
any United States worker who applies and is equally or better qualified 
for the job for which the nonimmigrant or nonimmigrants is or are 
sought.'' The ACWIA further provides that ``[n]othing in subparagraph 
(G) [this new attestation element on recruitment] shall be construed to 
prohibit an employer from using legitimate selection criteria relevant 
to the job that are normal or customary to the type of job involved, so 
long as such criteria are not applied in a discriminatory manner.'' An 
H-1B employer is not subject to these recruitment requirements if its 
labor condition application involves only ``exempt'' H-1B workers, or 
if the H-1B worker has ``extraordinary ability,'' or is an 
``outstanding professor or researcher'' or a ``multinational manager or 
executive,'' as defined in section 203(b)(1)of the INA.
    It should be noted that the statutory attestation language requires 
the employer to affirm the statement that, ``prior to filing the 
application--[the employer] has taken good faith steps to recruit. . 
.'' This language appears to be based on the presumption that employers 
file LCAs for individual workers at the time the need for that worker 
arises. In fact, however, employers may and often do file one LCA for 
many workers and use that LCA into the future in support of H-1B 
petitions filed when the actual

[[Page 643]]

employment need does arise. For example, an LCA filed for 100 computer 
programmers may be used up to 100 times over a period of months or even 
years (through the three year validity period) in support of separate 
petitions for individual workers.
    Given this common practice by employers, it is not reasonable to 
assume Congressional intent to require a separate LCA for each worker, 
particularly in light of the existing regulatory provision allowing the 
listing of multiple positions and work locations on a single 
application, which was not altered by ACWIA. At the same time, it is 
not reasonable to assume that Congress expects employers using the H-1B 
program (in this case, only H-1B-dependent employers and willful 
violators) to be able to attest--on the LCA filing date--that they have 
already recruited in good faith in the U.S. for every job for which 
they may wish to petition for H-1B workers over the three-year life of 
the LCA, and further, that they already have offered that job to every 
equally or better qualified U.S. worker who applies. As a practical 
matter, it would be virtually impossible for employers to be able to 
conduct such recruitment, since they have not yet identified every job 
opportunity which might arise at some point in the LCA's three-year 
validity period, for which the employer might wish to file an H-1B 
petition for an H-1B worker. In this context, the Department believes 
that the ``good faith recruitment'' attestation must be read, 
interpreted and applied to mean that the employer promises--and agrees 
to be held accountable--that it has or will recruit with respect to any 
job opportunity for which the application is used, whether that 
recruitment occurs before or after the application is filed (if the 
application is to be used in support of multiple petitions for future 
workers). The Department invites comments on this approach and any 
alternative suggestions for how to appropriately balance employers' 
practices under the program with their good faith recruitment 
obligations in the context of the statutory language on this labor 
condition statement.
    The Department recognizes that the ACWIA requirements for a small 
sub-set of H-1B employers to recruit U.S. workers present several 
points on which views might differ. Therefore, the Department proposes 
a regulation addressing the following matters and seeks comments on all 
of these points, as well as on any other related matters.
1. How are ``Industry-wide Standards'' for Recruitment to be 
Identified?
    The benchmark for minimal U.S. worker recruitment under the ACWIA 
is ``industry-wide'' procedures. This provision allows employers to use 
normal recruiting practices which are common among similar employers in 
their industry in the United States (even though, in some cases at 
least, these have been demonstrably unsuccessful by virtue of the 
employer seeking access to foreign labor markets). The statute does not 
require employers to comply with any specific recruitment regimen or 
practice, nor does the Department believe it is authorized to prescribe 
any explicit regimen. In this regard, the Department is of the view 
that the H-1B-dependent employer should look, in particular, to those 
recruitment strategies by which employers in an industry have 
successfully recruited U.S. workers; through this rulemaking proposal, 
the Department solicits and will consider the views of major industry 
associations, employee organizations, and other interest groups 
concerning successful recruitment practices and strategies.
    The Department is considering a number of options regarding the 
type or level of recruitment necessary, ranging from prescribing 
specific required recruitment efforts to simply allowing employers to 
pursue what they perceive to be industry standard procedures.
    There are a number of recognized methods for successfully 
soliciting U.S. worker applicants, including: advertising in general 
distribution publications, trade or professional journals, or special 
interest (e.g., ethnic-oriented) publications; America's Job Bank or 
other Internet sites advertising job vacancies; outreach to trade or 
professional associations; use of public and/or private employment 
agencies, referral agencies, or ``headhunters;'' outreach to colleges, 
universities, community/junior colleges and business/trade schools; job 
fairs; contact with labor unions; and recruitment, development or 
promotion from within an employer's organization (or its competitors), 
including workers who may have been displaced from similar jobs. The 
Department's expectation is that good faith recruitment will ordinarily 
involve several of these methods of solicitation, both passive (where 
potential applicants find their way to an employer's job announcements, 
such as to advertisements in publications and the Internet) and active 
(where the employer takes proactive steps to identify and get 
information about it's job openings into the hands of potential 
applicants, such as through job fairs, outreach at universities, use of 
``headhunters,'' and providing training to incumbent employees in the 
employer's organization).
    The Department is considering whether the regulation should 
recognize that if an employer uses at least three of these recognized 
solicitation tools (at least one or two of which are active), it will 
be presumed to meet the ``good faith'' standard in this regard. This 
approach would, in effect, create a presumption for employers which do 
not wish to demonstrate industry practice for recruitment. An employer 
which did not use at least three of these approaches could still 
demonstrate its ``good faith'' by showing that its recruitment methods 
comport with the industry norm, as discussed below. However, the 
Department believes that good faith recruitment must, at a minimum, 
involve solicitation efforts which include advertising in relevant and 
appropriate print media or the Internet (where common in the industry), 
in publications and at facilities commonly used by the industry (e.g., 
higher education institutions), as well as solicitation of U.S. workers 
within the employer's organization. Of course, an employer would have 
to use good faith in the recruitment conducted. For example, an 
employer would be expected to advertise for a reasonable period of 
time, and would be expected to do so in those publications and to 
attend those job fairs which would ordinarily be read or attended by 
the types of workers being recruited. The Department seeks comments as 
to whether this approach offers an effective means of implementing the 
Act's objectives, including specifically whether such a presumption 
should be established and, if so, whether it should involve at least 
three recognized solicitation tools or some other number.
    The Department considers it important that there be a general 
recognition that good faith recruitment must involve some active 
methods of solicitation, rather than just passive methods such as 
posting job announcements at the employer's work site(s) or on its 
Internet web page. The Department's view is that ``industry-wide 
standards'' do not mean the lowest common denominator--i.e., the 
minimum recruitment or least effective methods in attracting U.S. 
workers used by companies in an industry. Rather, solicitation must be 
at a level and through methods and media which are normal, common or 
prevailing in an industry--the ``standard''--including at

[[Page 644]]

least the medium most prevalently used in the industry and employing 
those strategies that have been shown to be successfully used by 
employers in an industry to recruit U.S. workers.
    The Department believes that, as a general matter, the statutory 
intent of the recruitment attestation is best effectuated if employers 
are required to utilize the recruitment methods of the set of employers 
which primarily compete for the same types of workers as those who are 
the subjects of the H-1B petitions to be filed pursuant to the LCA. For 
example, a hospital, university, or computer software development firm 
would be required to use the standards utilized by the health care, 
academic, or information technology industries, respectively, in hiring 
workers in the occupations in question. Similarly, a staffing firm, 
which places its workers at job sites of other employers, would be 
required to utilize the standards of the industry which primarily 
employs such workers--e.g., the health care industry, if the staffing 
firm is placing physical therapists (whether in hospitals, nursing 
homes, or private homes); or the information technology industry, if 
the staffing firm is placing computer programmers, software engineers, 
or other such workers. These firms are competing for the same kind of 
workers and the ``industry standard'' should recognize that fact and 
not reward lack of success in attracting U.S. workers by some sectors 
of an industry.
    The Department seeks comments on this proposed regulation and on 
any other related matters, including any possible alternative 
regulatory standards and their contents and consequences.
2. What Constitute ``Good Faith Steps'' in Recruitment?
    The essential requirement for good faith recruitment, as mandated 
by the ACWIA, is that employers maintain a fair and level playing field 
for all applicants and be able to show that they have not skewed their 
recruitment process against U.S. workers. The Department believes that 
``good faith'' recruitment does not involve only the steps taken to 
communicate/advertise job openings and solicit applications (ending 
upon the employer's receipt of the applications), but also encompasses 
pre-selection treatment of the applicants. The level playing field for 
U.S. applicants mandated by the ACWIA cannot be guaranteed if only 
those steps taken to find potential applicants and solicit applications 
are considered; the pre-selection treatment of applicants must also be 
considered if good faith is to be assured. For example, an application 
screening process tailored to favor H-1B workers and bypass U.S. 
applicants would represent as much a violation of the good faith 
recruitment requirement as a failure to seek U.S. applicants in the 
first place.
    The Department does not propose any specific regimen or practice 
for pre-selection treatment of applications and applicants. However, in 
circumstances where H-1B employers are demonstrably unsuccessful (or 
less successful than their competitors) in hiring U.S. workers, the 
Department intends to scrutinize the recruitment process, including 
pre-selection treatment, to insure that U.S. workers are given a fair 
chance for consideration for a job, rather than being ignored or 
rejected through some tailored screening process based on an employer's 
preferences or prejudices with respect to the make up of its workforce. 
Examples of such processes could include a practice of interviewing H-
1B applicants but not U.S. applicants with equivalent qualifications, 
or assigning different staff to the screening or interviewing of H-1B 
and U.S. applicants.
    The Department solicits comments on this issue and the relevance of 
these examples in identifying less than ``good faith'' recruitment, and 
the existence of any other practices with a similar design or impact.
    The Department is of the view that--as a practical matter--there 
may be little reason to examine the particulars of an employer's 
recruitment efforts if the results of those efforts amply demonstrate 
the employer's good faith in employing U.S. workers. Thus, the 
Department is considering whether to craft a presumption of good faith 
recruitment based on an employer's hiring of a significant number of 
U.S. workers and, thereby, accomplishing a significant reduction in the 
ratio of H-1B workers to U.S. workers in the employer's workforce. Of 
course, such a presumption would not affect an individual worker's 
claim that he/she was discriminated against in recruitment or 
otherwise, or an individual U.S. worker's complaint that he/she was 
equally or better qualified than an H-1B worker and was not given an 
offer of employment (a matter which is under the jurisdiction of the 
Department of Justice). The Department seeks comments on the 
possibility, the contents, and the consequences of such a presumption.
    The Department's regulation will include notification of its 
intention to refer any potential violations of U.S. discrimination 
statutes revealed through this scrutiny to the appropriate enforcement 
agency.
    In addition, the Department's regulation will inform employers that 
the assessment of ``good faith'' recruitment will be based on the whole 
recruitment process, but will not include an examination or ``second 
guessing'' of the work-related screening criteria or the hiring 
decision(s) with regard to any particular applicant(s) (a matter 
specifically assigned by the ACWIA to the Attorney General's 
procedures).
    The Department seeks comments on this proposed regulation and on 
any other related matters.
3. How are ``Legitimate Selection Criteria Relevant to the Job That are 
Normal or Customary to the Type of Job Involved'' to be Identified and 
Documented?
    In conducting the ACWIA-mandated ``good faith'' recruitment of U.S. 
workers, an affected H-1B employer is specifically authorized to apply 
``legitimate selection criteria relevant to the job that are normal or 
customary to the type of job involved.'' This statutory standard, thus, 
has several parts. The criteria must be legitimate, which would exclude 
any criteria which would, in themselves, be violative of any applicable 
laws (e.g., age, sex, race). The criteria must be relevant to the job, 
which would require a nexus between the criteria and the job's duties 
and responsibilities. And the criteria must be normal or customary to 
the type of job involved, which would be based on the practices and 
expectations of the industry rather than on the preferences of a 
particular employer. The Department considers that this requirement 
would be satisfied, for example, if the employer uses criteria taken 
from the North American Industrial Classification System (NAICS) being 
developed to replace the Standardized Occupational Classifications. 
With regard to selection standards, the language and purpose of the 
statute mandate that the employer is not to impose spurious hiring 
criteria that discriminate against U.S. applicants in favor of H-1B 
workers; such employer actions would subvert the obligation to hire an 
``equally or better qualified'' U.S. worker. (See Cong. Rec. E2324, 
Nov. 12, 1998; Cong. Rec. S12751, Oct. 21, 1998).
    In evaluating an employer's ``good faith'' recruitment in the pre-
selection treatment of applicants and applications, the Department will 
limit its scrutiny of screening criteria (as opposed to processes) to 
those factors set forth in the law.

[[Page 645]]

    The Department is proposing a regulatory provision which informs 
the employer of these standards for acceptable hiring criteria. The 
Department seeks comments on this proposal and on any other related 
matters.
4. What Actions Would Constitute a Prohibited ``Discriminatory Manner'' 
of Recruitment?
    In prohibiting the employer's application of otherwise-legitimate 
hiring criteria ``in a discriminatory manner,'' the ACWIA mandates that 
the employer conduct recruitment on a fair and level playing field for 
all applicants without skewing the recruitment process against U.S. 
workers. Obviously, the use of hiring criteria prohibited by any 
applicable discrimination law (e.g., sex, race, age, national origin) 
would constitute a prohibited ``discriminatory'' recruitment. The 
Department is proposing a regulatory provision which will inform the 
employer of these basic standards, and that solicitation and pre-
selection screening processes or criteria that are applied in a 
disparate manner--either between foreign and U.S. workers, or for those 
jobs where H-1B workers are involved (as opposed to those where they 
are not involved)--shall constitute discriminatory recruitment. 
Employers will also be alerted to the Department's compliance with the 
Congressional intent that ``[e]mployers who consistently fail to find 
U.S. workers to fill positions should receive the Department's special 
attention in this context of `good faith' recruitment'' (See Cong. Rec. 
E2325, Nov. 12, 1998).
    The Department seeks comments on this proposed regulation and on 
any other related matters.
5. What Documentation Would be Required of Employers?
    In order for an employer to demonstrate that it has engaged in good 
faith recruitment of U.S. workers in accordance with industry-wide 
standards, and that the compensation offered is at least as great as 
that offered to H-1B nonimmigrants, an employer will be required to 
maintain certain documentation. The Department believes that it should 
not be necessary for the employer to retain actual copies of 
advertisements, etc., provided that it maintains documentation of the 
recruiting methods used, including the places and dates of the 
advertisements and postings or other recruitment methods used, the 
content of the advertisements and postings, and the compensation terms 
(if such are not included in the content of the advertisements and 
postings). In addition, the Department proposes that the employer's 
public disclosure file contain information summarizing the principal 
recruitment methods used and the time frame in which such recruitment 
was conducted.
    The Department requests comments on how employers can and should 
determine industry-wide standards, for example, by obtaining credible 
evidence such as trade organization surveys, studies by consultative 
groups, or a statement from a trade organization regarding the industry 
norm(s). The Department also seeks comments on how to make the 
employer's determination available for public disclosure to U.S. 
workers and others.
    In order to ensure that good faith recruitment was conducted, the 
Department proposes that employers retain any documentation they have 
received or prepared concerning the consideration of applications by 
U.S. workers, such as copies of applications and/or related documents, 
test papers, rating forms, records regarding interviews, job offers, 
etc. As discussed above with regard to documentation on the non-
displacement attestation element (see item D.8), the EEOC regulations 
already require that employers retain all personnel or employment 
records, and the Department therefore believes that this requirement in 
the H-1B regulation would create no new obligation for employers.
    The Department seeks comments on this proposed regulation and on 
any other related matters, including any possible alternative 
recordkeeping requirements.

F. What is Required for ``Electronic Posting'' of Notice to Employees 
of the Employer's Intention to Employ H-1B Nonimmigrants?

    The ACWIA modified the existing statutory requirement for worksite 
posting of notices (where there is no collective bargaining 
representative), to permit an H-1B employer to use electronic 
communication as an alternative to posting ``hard copy'' notices in 
conspicuous locations at the place of employment. In providing this 
alternative method for notification to affected workers, Congress in no 
way indicated an intention to reduce the effectiveness of the notice 
requirement which has been an element of the H-1B program from its 
inception. Thus, the ACWIA provision must be understood to mean that 
the electronically posted notices are readily available to the affected 
workers. An employer may accomplish this by any means it ordinarily 
uses to communicate with its workers about job vacancies or promotion 
opportunities, including through its ``home page'' or ``electronic 
bulletin board'' to employees who have, as a practical matter, direct 
access to the home page or electronic bulletin board; or through E-Mail 
or an actively circulated electronic message such as the employer's 
newsletter. Where employees are not on the ``intranet'' which provides 
direct access to the home page or other electronic site but do have 
computer access readily available, the employer may provide notice to 
such workers by direct electronic communication such as E-Mail. If the 
employees lack such electronic access, notification may by provided by 
physical (``hard copy'') posting at the worksite.
    The Department proposes regulatory language to convey this 
requirement, in a revision of the regulation on worksite notices (see 
item O.5, below, concerning republication for further comments). The 
Department seeks comments on this proposal, as well as on any 
alternative standard and its possible consequences for affected 
workers.

G. What Does the ACWIA Require of Employers Regarding Benefits to H-1B 
Nonimmigrants?

    The ACWIA has added to the H-1B statute an express statement of the 
inherent obligation of all H-1B employers, under the first attestation 
element on wages and working conditions, ``to offer to an H-1B 
nonimmigrant, during the nonimmigrant's period of authorized 
employment, benefits and eligibility for benefits (including the 
opportunity to participate in health, life, disability, and other 
insurance plans; the opportunity to participate in retirement and 
savings plans; and cash bonuses and non-cash compensation, such as 
stock options (whether or not based on performance) on the same basis, 
and in accordance with the same criteria, as the employer offers to 
United States workers.'' The Department proposes regulatory provisions 
that implement this obligation regarding benefits. The Department seeks 
comments on the following and related matters.
1. What Does ``Same Basis and * * * Same Criteria'' Mean With Respect 
to an Employer's Treatment of U.S. Workers and H-1B Workers With Regard 
to Benefits?
    In enacting an explicit statement of an employer's obligation to 
offer the H-1B worker benefits ``on the same basis, and in accordance 
with the same criteria, as the employer offers to [United States]

[[Page 646]]

workers,'' Congress emphasized its intention that the wages and working 
conditions of U.S. workers not be adversely affected through the 
employment of H-1B workers at wages and fringe benefit levels less than 
those provided to U.S. workers. It is the Department's view that an 
employer's obligation to provide benefits to workers ``on the same 
basis, and in accordance with the same criteria, as the employers 
offers to [U.S.] workers'' requires that an employer offer to its H-1B 
workers the same benefit package as is offered to U.S. employees, and 
on the same basis as it is offered to U.S. workers. In other words, an 
employer may not provide more strict eligibility or participation 
requirements for H-1B workers. Of course, the benefits actually 
provided would not have to be identical, since, for example, one worker 
might choose family health insurance coverage, and another individual 
coverage, and yet another might choose not to have health benefits 
because he or she did not want to pay the employee's share of the 
premium in a co-pay package. The comparison of the ``basis'' and 
``criteria'' should take into account the categories or types of 
workers to whom the benefits are being provided (e.g., full-time 
workers compared to full-time workers; professional staff compared to 
professional staff); in other words, the comparison is between 
similarly-employed workers. The Department also seeks comments as to 
whether the ``same basis'' requirement would allow an employer to 
provide a different, but equivalent, package of benefits. The 
Department recognizes that determining the equivalency of benefits 
could be quite burdensome for both employers and the Department--
particularly if the test were a qualitative evaluation of benefits, as 
distinguished from a comparison of the cost to employers.
    The Department further understands that this provision would allow 
an employer to provide greater or additional benefits to H-1B workers 
than are offered to U.S. workers--that, with respect to H-1B workers, 
the requirement sets a benefits floor, but not a ceiling. This 
construction of the statutory language is consistent with the ACWIA 
directive that the fringe benefits obligation is imposed under 
attestation (1)(A), which embodies the concept that the prescribed 
wages and working conditions are minimums which must be afforded the H-
1B workers.
    The Department recognizes that an alternative interpretation of the 
benefits standard would interpret the ACWIA phrases ``same basis'' and 
``same criteria'' to mean literally that they require the same (or 
possibly equivalent) treatment of similarly-situated U.S. and H-1B 
workers with respect to benefits. Such an interpretation would not 
permit more favorable treatment to either U.S. workers or H-1B 
nonimmigrants with regard to benefits.
    The Department is also aware that there is a possibility of 
complications with respect to the ``benefits'' obligations of a U.S. 
employer that is part of a multinational corporate operation, 
particularly where an H-1B worker works in the U.S. for only a short 
period of time. The Department recognizes that under these 
circumstances it may not be practical for the U.S. employer to provide 
the H-1B worker with exactly the same benefits provided to its U.S. 
workers. The Department proposes to provide that while U.S. employers 
may cooperate with their corporate affiliate(s) in the H-1B worker's 
home country with regard to payment of wages and maintenance of 
benefits (such as that country's retirement system), the U.S. employer 
is responsible for compliance with the ACWIA requirements. This concern 
arises where a foreign affiliate of a petitioning employer is involved 
as the agent for payment of wages and provision of benefits to H-1B 
workers. The statutory obligations must be fully met in such instances. 
The ultimate responsibility for all employer obligations under this 
Act, including the provision of benefits to the H-1B worker at least 
equal to those offered its U.S. workers, must lie with the U.S. 
employer which brings nonimmigrant workers into the country. 
Ultimately, it is the U.S. employer, not the foreign subsidiary, 
pledging the H-1B worker a benefit package like that of its U.S. 
workers. The Department will look with particular care at circumstances 
involving a foreign subsidiary where there is an appearance of 
contrivance to avoid the sponsoring employer's obligation to provide at 
least equal wages and benefits to H-1B and U.S. workers. At the same 
time, the Department will carefully examine the circumstances in such 
cases to consider non-equivalent but nonetheless equitable benefits, 
including in light of the actual length of stay of the H-1B worker in 
the U.S.
    Further, the Department proposes to modify section 655.732 of the 
existing regulations concerning fringe benefits pursuant to the 
``working conditions'' attestation, to make it clear that an employer 
must provide the H-1B worker at least the fringe benefits and working 
conditions provided to the employer's U.S. workers. This modification 
would make it clear that the requirement that the employer provide 
working conditions that will not adversely affect the working 
conditions, including fringe benefits, of U.S. workers similarly 
employed necessarily requires consideration of similarly employed 
workers in the employer's own work force, as well as to prevailing 
conditions in the area of employment in some circumstances.
    Finally, the Department seeks comments as to whether the Department 
should define ``benefits'' within the meaning of the ACWIA or simply 
give a list of examples. Although ``benefits'' are defined in various 
programs such as the Employee Retirement Income Security Act of 1974 
and the Service Contract Act, the Department notes that the ACWIA 
provision on ``benefits'' clearly contemplates the inclusion of various 
forms of cash and non-cash compensation, such as bonuses and stock 
options, which are ordinarily considered wages.
    The Department seeks comments on these matters, as well as on any 
other related matters.
2. How will Various Benefits be Evaluated, and What Documentation Would 
be Required?
    The new statutory language mandates that all employers of H-1B 
nonimmigrants offer benefits to H-1B workers ``on the same basis and in 
accordance with the same criteria'' as offered to similarly-employed 
U.S. workers. To allow the Department to determine whether this 
statutory obligation has been met, the Department believes it will be 
necessary at a minimum that employers retain copies of fringe benefit 
plans and summary plan descriptions provided to workers, including all 
rules regarding eligibility and benefits, evidence of what benefits are 
actually provided to individual workers, and how costs are shared 
between employers and employees.
    As discussed above, the Department is considering whether the 
statute will permit H-1B nonimmigrants to be provided different 
benefits or greater benefits, such as through an affiliate in their 
home country. If different benefits are provided, the Department 
believes an employer must be required to keep detailed information 
regarding the benefits provided to the H-1B worker and information to 
demonstrate the value of these benefits, as well as the benefits 
provided to U.S. workers. The Department solicits suggestions regarding 
exactly what records would be necessary for such determinations.
    It is the Department's understanding that these records are 
currently kept for most fringe benefits, pursuant to the

[[Page 647]]

requirements of the Employee Retirement Income Security Act of 1974 and 
the Internal Revenue Service.
    The Department seeks comments on this proposal and any related 
matters.

H. What Does the ACWIA Require of Employers Regarding Payment of Wages 
to H-1B Nonimmigrants for ``Nonproductive Time''?

    In response to concerns and information about many situations in 
which H-1B workers were brought for employment in the United States but 
were then ``benched'' in a nonproductive status and paid little or none 
of the required wages, Congress enacted an explicit requirement--
consistent with the Department's regulation--that the employer pay 
wages to an H-1B worker in ``nonproductive status'' in certain 
circumstances. This obligation is effective ``after the H-1B worker has 
entered into employment with the employer,'' but otherwise not later 
than 30 days after the worker's date of admission into the U.S. (if 
entering the country pursuant to the petition) or 60 days after the 
date the worker ``becomes eligible to work for the employer'' (if 
already present in the country when the petition is approved). The 
Department is considering whether the H-1B worker ``enters into 
employment'' when he first makes himself available for work, such as, 
for example, by reporting for orientation or training, or when he 
actually begins receiving orientation or training or otherwise performs 
work or comes under the control of his employer. Once the worker 
``enters into employment'' (or after the 30 or 60 day period expires), 
the ``benching'' rules apply. Subject to the qualifications discussed 
below, an H-1B worker who is already present in the U.S. is considered 
by the Department to be ``eligible to work for the employer'' (and thus 
covered by the ``benching'' rules) upon the completion of the visa 
issuance process; matters such as the worker's obtaining a State 
license would not be relevant to this determination.
    In a nutshell, the ``benching'' provisions forbid an employer 
paying an H-1B worker less than the required wage for nonproductive 
time, except in situations where the nonproductive status is due either 
to the worker's own initiative or to circumstances rendering the worker 
unable to work. The Department's enforcement experience has 
demonstrated that some employers bring H-1B workers into this country 
and then, for a variety of reasons, ``bench'' the workers in non-
productive status and fail to pay them the wages attested on the LCA. 
Most frequently, such ``benching'' occurs where the employer lacks work 
to assign to the H-1B worker, or the worker is engaged in training or 
development activities (such as orientation in the employer's 
operations or studying for a licensing exam). It is entirely 
appropriate--as Congress recognized in the ACWIA enactment--for an 
employer to be prohibited from evading its wage obligations to such 
workers, who are under the employer's control and entitled to the LCA-
attested wages. The ACWIA provisions recognize, however, that the 
employer should not be liable to pay wages for the worker's time which 
is nonproductive for reasons unattributable to the employer, such as 
the worker's hospitalization or requested leave-of-absence (consistent 
with the conditions related to the H-1B worker's maintenance of legal 
status in the U.S.).
    There is no authorization for a reduction in the prescribed wage 
rate for any H-1B worker who is in nonproductive status due to 
employment-related conditions such as training, lack of assigned work, 
lack of a license, 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. Instead, the H-1B program's purpose is to enable employers 
to employ fully-qualified nonimmigrants for whom employment 
opportunities currently exist. When the H-1B worker is ``benched'' and 
not being paid his/her required wages during nonproductive time, the 
worker is not permitted to be employed by any other employer (indeed, 
such employment would expose both the worker and the other employer to 
INS sanctions). The H-1B worker who is ``benched'' is without any legal 
means of support in this country. Thus, an H-1B worker affected by a 
temporary reduction in force or a temporary shut-down of the employer's 
operations could not accept any other employment (except with an LCA-
certified employer who files a petition for the worker, or with another 
employer able to provide some other adjustment of the nonimmigrant's 
status under the INA). In contrast, U.S. workers in a reduction in 
force or temporary shut-down would be able to seek employment elsewhere 
and, in addition, could be eligible for Federal programs such as food 
stamps, Aid to Families with Dependent Children, and other similar 
benefits not available to the H-1B nonimmigrants. (See, e.g., 7 CFR 
273.4; 45 CFR 233.50) Where an employer does not have sufficient work 
for the H-1B worker to make the payment of his/her required wages 
feasible or advantageous for the employer, such employer may, at any 
time, terminate the employment of the H-1B worker, notify the INS, pay 
for the worker's return to his/her country of origin as required by 
Section 214(c)(5) of the INA and INS regulations at 8 CFR 
214.2(h)(4)(iii)(E) (1995), and no longer be subject to the H-1B 
program's required wage.
    In all particulars, the ACWIA provision is a statutory enactment of 
the Department's current regulation, the enforcement of which (along 
with some other provisions) was enjoined by a district court on 
Administrative Procedure Act procedural grounds (National Association 
of Manufacturers v Reich, No. 95-0715, D.D.C. July 22, 1996). The 
Department has previously published this regulatory provision for 
notice and comment (60 FR 55339, Oct. 31, 1995), and is now 
republishing it for further comments. The Department encourages 
commenters to review the previous Final Rule and Notice of Proposed 
Rulemaking (60 FR 4028 and 60 FR 55339) in making their submissions. 
(See item O, below.)
    The Department proposes to modify the existing regulation, to 
implement the ACWIA provision and to require that the employer pay the 
H-1B worker's wages when the worker is in nonproductive status due to 
employment-related reasons such as training or lack of assigned work. 
The regulation does not require payment of such wages where the 
nonproductive status is due to reasons unrelated to employment (such as 
the worker's voluntary request and convenience or non-work-related 
circumstances rendering him/her unable to work), unless such payment is 
required by INS as a condition of the H-1B workers' continued 
maintenance of lawful status in the United States, or is required by 
some other statute, such as the Family and Medical Leave Act. Thus, the 
required wage need not be paid to the worker who--on his/her own 
initiative--requests ``time off'' to conduct research on matters 
unconnected to his/her employment, or requests a delay in his/her first 
day of work in order to have an opportunity to tour the U.S. before 
undertaking duties of employment. However, the employer would not be 
relieved of the wage obligation to H-1B worker(s) for any required 
leave of absence, even if such leave of absence includes U.S. workers.

[[Page 648]]

I. What Special Rule Does the ACWIA Provide for Academic Salaries?

    The ACWIA provision on ``benching'' has a special rule permitting 
``a school or other education institution'' to apply an established 
salary practice which might result in an H-1B worker being in an 
ostensibly ``unpaid'' status for some part of a calendar year. This 
provision specifies that the institution is permitted to disburse an 
annual salary over fewer than 12 months if two conditions are met:
     the H-1B worker agrees to the compressed salary payments 
prior to commencing employment, and
     the salary practice does not otherwise cause any violation 
of the H-1B worker's authorization to remain in the U.S.
    The Department understands this provision to be directed to the 
common practice by which colleges, universities, and other educational 
institutions disburse faculty salaries over a nine-or ten-month period, 
with no salary payments during the summer or some other period during 
which the faculty member may be away from the institution, which INS 
recognizes.
    The Department is proposing regulatory language to implement this 
ACWIA provision, and seeks comments on the proposal and any related 
matters.

J. What Actions or Circumstances Would be Prohibited as a ``Penalty'' 
on an H-1B Nonimmigrant Leaving an Employer's Employment?

    The ACWIA prohibits an employer from ``requir[ing] an H-1B 
nonimmigrant to pay a penalty for ceasing employment with the employer 
prior to a date agreed to by the nonimmigrant and the employer.'' The 
Department is authorized to ``determine whether a required payment is a 
penalty (and not liquidated damages) pursuant to relevant State law.'' 
This provision embodies well-established principles in employment 
contract law. Under those principles, Congress sought to assure that 
the application of State law was determinative (rather than the 
Secretary's independent interpretation of what constitutes ``liquidated 
damages'' under State law) so that non-punitive payments, serving to 
compensate an employer for matters such as the loss of proprietary 
information, would be permissible but that punitive payments would not.
    The Department proposes a regulation that would apprise employers 
and H-1B workers that an employer's ability to enforce ``agreed 
damage'' provisions in a contract between the parties is limited. The 
proposed rule would require employers to obtain a State court judgment 
as a condition for seeking to enforce such provisions (i.e., an 
employer may not obtain such recovery from the worker without a State 
court judgment). In the Secretary's view, this best effects the 
statutory prohibition against the enforcement of penalties by leaving 
to State courts the resolution of what may be difficult legal 
questions. In particular cases, for example, it will be necessary to 
determine the applicable State law to apply, requiring consideration 
of, among other factors: where the agreement was entered into, and, if 
entered into in another country, whether that Nation's laws get 
factored into the analysis; whether the parties have agreed that the 
contract will be administered in accordance with the laws of a 
particular State (and, if so, whether it is appropriate to defer to 
their choice); where the employee was located at the time of the 
termination; and where the employer seeks to enforce the provision. The 
regulation would not set out particular guidelines, since it would not 
be feasible or appropriate to digest the law of all the States in this 
rule.
    In proposing this approach, the Department considered the 
alternative of establishing a procedure by which the Department would 
determine whether a particular employment agreement provides for 
acceptable ``liquidated damages.'' In the Department's view, the State 
courts are much better versed than a Federal administrative forum to 
answer the various legal questions posed by any agreement between an 
employer and an H-1B worker, and to conclusively determine whether a 
particular provision runs afoul of State law. The Department has no 
particular expertise in interpreting State law, nor in discerning from 
the existing State decisional and statutory law (which may not be 
easily analogized to the H-1B context) the principles that a State 
court would apply in the particular context of a dispute between an 
employer and an H-1B worker.
    The Department also intends to make it clear that since the ACWIA 
does not permit employers to accept reimbursement from an H-1B worker 
of the additional $500 fee imposed on H-1B employers (see section K, 
below), in no event may the employer collect the fee under the guise of 
liquidated damages. The Department is also concerned about attempts by 
employers to collect liquidated damages where their violations of the 
INA, this program, or other employment law may have caused an H-1B 
worker to cease employment. The Department anticipates that State 
courts will often recognize that under these circumstances the claimed 
payment would constitute a penalty rather than liquidated damages, or 
that the payment otherwise would be unenforceable. The Department seeks 
comments as to whether guidelines on this issue would be appropriate 
and authorized by the statute.
    The Department seeks comments on its regulatory proposal and on any 
related matters.

K. What Standards Apply to Determine if an Employer Received a 
Prohibited Kickback of the Additional $500 Filing Petition fee From an 
H-1B Worker?

    The ACWIA prohibits an employer from ``requir[ing] an alien who is 
the subject of a [visa] petition . . . for which a fee is imposed under 
section 214(c)(9), to reimburse, or otherwise compensate, the employer 
for part or all of the cost of such fee. It is a violation for such an 
employer otherwise to accept such reimbursement or compensation from 
such an alien.'' The referenced filing fee is the additional $500 
filing fee enacted by the ACWIA, which is applicable to H-1B petitions 
filed before October 1, 2001. The effect of this ACWIA provision is to 
make the employer solely and entirely responsible for the additional 
$500 filing fee; the H-1B worker is not in any manner to pay or absorb 
the cost of any of the fee. The Department takes the position that the 
employee is not to be forced, encouraged, or permitted to rebate any 
part of the fee to the employer--directly or indirectly, e.g., through 
an intermediary such as an attorney, relative or co-worker.
    The Department proposes a regulatory provision making this 
requirement clear, and seeks comments on this proposal and any related 
matters.

L. What Penalties and Remedies Apply if the Employer Imposes an 
Impermissible Penalty or Receives an Impermissible Rebate?

    The ACWIA enforcement provision on penalties and kickbacks is self-
contained in that it provides its own sanctions authority. The 
Department may impose a civil monetary penalty of $1,000 for each 
violation (willful or non-willful) and, in addition, may order the 
employer to reimburse the worker (or the Treasury, if the worker cannot 
be located) for any such payment. The provision does not authorize 
debarment for these penalty and kickback violations. The Department 
seeks comments on its regulatory language implementing this ACWIA 
provision, and on any related matters.

[[Page 649]]

M. How did the ACWIA Change DOL's Enforcement of the H-1B Provisions?

    The ACWIA adds two new specific avenues for conducting 
investigations, explicitly protects employees who seek to exercise 
their rights against employer retaliation, and enhances the monetary 
and debarment sanctions against employers who willfully violate the 
requirements of this part. The Department proposes to modify Subpart I 
of the current regulations to reflect these new provisions, integrating 
them into the existing regulatory scheme. The Department requests 
comments on each of the enforcement-related issues identified below and 
on any other related matters, including but not limited to the 
Department's receipt of allegations of employer violations, the 
investigation and adjudication or other resolution of such allegations, 
and the extent of the Department's authority to remedy violations.
1. What Changes has the ACWIA Made in the DOL's Enforcement Based on 
Complaints From ``Aggrieved Parties''?
    The ACWIA adds to the Department's authority to investigate 
``aggrieved party'' complaints, by (1) specifically authorizing the 
Department to conduct ``random'' investigations of employers which have 
been found to have willfully violated their obligations under the H-1B 
program, and (2) establishing a specific protocol for investigations of 
possible violations based on information from sources other than 
aggrieved parties.
2. What Procedure Does the ACWIA Provide for Random Investigations?
    The ACWIA authorizes special Departmental scrutiny of any employer 
which has been found by the Secretary, after ACWIA's enactment on 
October 21, 1998, to have committed a willful failure to meet an LCA 
condition or a willful misrepresentation. The same special scrutiny is 
authorized where an employer is found by the Attorney General to have 
willfully failed to meet its obligation to offer a job to an ``equally 
or better qualified'' U.S. worker. ``Random'' investigations of such an 
employer may be conducted for a period of up to five years, beginning 
on the date of the finding of the willful violation.
    The Department proposes a regulatory provision which will interpret 
the ``finding'' of willful violation--which triggers such special 
scrutiny--to be the agency's final action concerning the violation 
(e.g., the Secretary's decision after opportunity for a hearing; 
settlement agreement between the Department and the employer; or the 
Attorney General's decision after an arbitration proceeding). This 
interpretation comports with the Department's current regulation 
concerning the debarment notice which is sent to the Attorney General 
after the completion of the DOL hearing and review process. 20 CFR 
655.855(a); 59 FR 65657 (Preamble to Final Rule). The Department seeks 
comments as to whether it should instead use an earlier date, such as 
the Wage and Hour Administrator's investigation finding or the ALJ's 
finding.
3. What Procedure Does the ACWIA Provide for Investigations Arising 
From Sources Other Than Aggrieved Parties?
    The ACWIA provides for the investigation of possible violations 
which come to the Secretary's attention based on information from 
sources other than aggrieved parties. Under this ACWIA provision (which 
will sunset on September 30, 2001), the Department will establish 
procedures for the receipt and recording of such information, 
notification where appropriate to employers regarding possible 
violations, and certification by the Secretary for an investigation 
where there is reasonable cause to infer the possibility of such 
violations and other statutory conditions are satisfied. The focus of 
such investigations will be on whether an employer has willfully failed 
to meet its statutory obligations, has engaged in a pattern or practice 
of such failure, or where its failure is ``substantial'' and affects 
multiple employees.
    The ACWIA specifies that the allegations must be put in writing, 
either by the ``source'' or by a DOL employee on behalf of the source, 
``[o]n a form developed and provided by the Secretary . . .''. The 
Department is developing this form, which like other DOL forms, will go 
through the normal Office of Management and Budget clearance process. 
When cleared, the form will be publicly available from Departmental 
offices and other sources.
    The Department proposes a revision of Subpart I of the regulations 
to recapitulate the new investigative protocol (along with the 
``random'' investigation process), so as to provide an integrated 
procedure for enforcement activities, which would include receiving and 
processing allegations of and information pertaining to violations of 
H-1B requirements, initiating and conducting investigations, providing 
hearings and notifications, and imposing appropriate penalties and 
remedies.
4. What Protections are Provided to ``Whistleblowers'' by the ACWIA?
    The ACWIA provides explicit protection for employees who exercise 
their H-1B rights by complaining about a violation of the Act or 
cooperating with an investigation. An employer may not ``intimidate, 
threaten, restrain, coerce, blacklist, discharge, or in any other 
manner discriminate against [such] employee.'' For purposes of this 
protection, ``employee'' is broadly defined to include former employees 
and applicants for employment. Like most whistleblower statutes, the 
ACWIA provision protects ``internal'' complaints--to the employer or 
any other person. The ACWIA provision is, in essence, a statutory 
enactment of the Department's long-existing whistleblower regulation 
for the H-1B program.
    To facilitate whistleblower protection by providing special 
assurances to nonimmigrants who might lodge complaints and be subject 
to retaliation from employers, the ACWIA directs the Department and the 
Attorney General to devise a process to enable such a person to remain 
in the U.S. and seek other employment for a period not to exceed the 
maximum length of time authorized for an employee in the H-1B 
classification (provided that the person is ``otherwise eligible'' to 
remain and be employed in this country). Congress intends that this 
process would be expeditious and easy to use. (See S12752, Oct. 21, 
1998; remarks of Sen. Abraham) The Department and the INS are working 
in close cooperation to develop this authorization procedure.
5. What Changes Does the ACWIA Make in Enforcement Remedies and 
Penalties?
    Before the ACWIA's enactment, the H-1B provisions of the INA 
provided one level of civil money penalty (CMP) (``up to $1,000 per 
violation'') and one level of debarment from the sponsorship of aliens 
for employment (``at least one year''). The ACWIA establishes a three-
tier scheme for sanctions and remedies, depending upon the nature and 
severity of the violations. In each of the three tiers, as in the 
previous statutory provision, the Department is authorized to impose 
``such . . . administrative remedies as the Secretary determines to be 
appropriate.'' The three tiers are:
     $1,000-per-violation maximum CMP, plus a one-year minimum 
debarment, for a failure to meet obligations pertaining to strike/
lockout or non-displacement of U.S. workers; a substantial failure 
pertaining to notification, LCA specificity, or recruitment of U.S. 
workers; or a

[[Page 650]]

misrepresentation of material fact on the LCA.
     $5,000-per-violation maximum CMP, plus a two-year minimum 
debarment, for a willful violation of any attestation element, a 
willful misrepresentation of a material fact on the LCA; or retaliation 
against a whistleblower.
     $35,000-per-violation maximum CMP, plus a three-year 
minimum debarment, for a willful violation of an attestation element or 
a willful misrepresentation of a material fact on the LCA which 
involves the displacement of a U.S. worker.
    The ``appropriate administrative remedies'' authorized in all of 
these ACWIA provisions would, in the Department's view, include the 
imposition of curative actions such as providing notice to workers and 
affording ``make-whole'' relief for displaced workers, whistleblowers, 
or H-1B workers who failed to receive proper wages, benefits or 
eligibility for benefits.
    The above-described penalty provisions do not apply to violations 
of the ACWIA prohibitions on penalizing an H-1B worker for early 
cessation of employment or kickback by the H-1B worker of the 
additional $500 filing fee. As discussed above (see item l), these 
violations are subject to separate penalties: $1,000 CMP for each 
violation, and restitution of any penalty or kickback to the H-1B 
worker (or to the Treasury, if the worker cannot be located).

N. What Modification to Part 656 Does the ACWIA Provide for the 
Determination of the Prevailing Wage for Employees of ``Institutions of 
Higher Education,'' ``Related or Affiliated Nonprofit Entities,'' 
``Nonprofit Research Organizations,'' or ``Governmental Research 
Organizations''?

    The ACWIA requires that the computation of the prevailing wage for 
employees of institutions of higher education, nonprofit entities 
related to or affiliated with such institutions, nonprofit research 
organizations and Governmental research organizations should only take 
into account the wages paid by such institutions and organizations in 
the area of employment. This ACWIA directive affects both the H-1B 
program and the Permanent Labor Certification program, since both 
programs use the prevailing wage computation procedures set out in the 
Permanent program regulation at 20 CFR 656.40.
    On March 20, 1998, the Department published a Final Rule amending 
its Permanent Labor Certification regulation to change the effects of 
the en banc decision of the Board of Alien Labor Certification Appeals 
in Hathaway Children's Services (9-INA-386, February 4, 1994), which 
required prevailing wages to be calculated by using wage data obtained 
by surveying across industries in the occupation in the area of 
intended employment. The Final Rule, in effect, allows prevailing wage 
determinations made for researchers employed by colleges and 
universities, Federally Funded Research and Development Centers (FFRDC) 
operated by colleges and universities, and certain Federal research 
agencies to be made by using wage data collected only from those 
entities. The Department stated in the Preamble to this Final Rule that 
the amendment to the regulation also changed the way prevailing wages 
are determined for those entities filing H-1B labor condition 
applications on behalf of researchers, since the regulations governing 
the prevailing wage determinations for the Permanent program are 
followed by State Employment Security Agencies (SESAs) in determining 
prevailing wages for the H-1B program as well (see 54 FR 13756).
    The ACWIA provision goes considerably beyond the regulatory 
amendments made by the Department, in that the ACWIA provisions extend 
to all nonprofit research organizations and Governmental research 
organizations. In addition, the ACWIA provisions extend not only to 
researchers, but to all occupations in which institutions of higher 
education, nonprofit entities related to or affiliated with such 
institutions, and nonprofit research organizations or Governmental 
research organizations may want to employ H-1B workers or aliens 
immigrating for the purpose of employment.
    The Department is consulting with the INS on the definitional 
issues, since that agency is addressing similar issues with regard to 
the implementation of the additional $500.00 fee which the ACWIA 
required for petitions on behalf of H-1B nonimmigrants. The employers 
excluded from that fee are the same as the employers specified in the 
ACWIA provision concerning prevailing wage determinations. The 
Department worked with the INS in developing the following definitions 
contained in its Interim Final Rule published on November 30, 1998 (63 
FR 65657)--
    An institution of higher education, as defined in section 801(a) of 
the Higher Education Act of 1965;
    An affiliated or related nonprofit entity. A nonprofit entity 
(including but not limited to hospitals and medical or research 
institutions) that is connected or associated with an institution of 
higher education, through shared ownership or control by the same board 
or federation, operated by an institution of higher education, or 
attached to an institution of higher education as a member, branch, 
cooperative, or subsidiary;
    A nonprofit research organization or Governmental research 
organization. A research organization that is either a nonprofit 
organization or entity that is primarily engaged in basic research and/
or applied research, or a U.S. Government entity whose primary mission 
is the performance or promotion of basic and/or applied research. Basic 
research is research to gain more comprehensive knowledge or 
understanding of the subject under study, without specific applications 
in mind. Basic research is also research that advances scientific 
knowledge, but does not have specific immediate commercial objectives 
although it may be in fields of present or potential commercial 
interest. Applied research is research to gain knowledge or 
understanding to determine the means by which a specific, recognized 
need may be met. Applied research includes investigations oriented to 
discovering new scientific knowledge that has specific commercial 
objectives with respect to products, processes, or services.
    The INS Interim Final Rule also provides, in relevant part, that a 
nonprofit organization or entity is one that is qualified as a tax 
exempt organization under section 501(c)(3), (c)(4) or (c)(6) of the 
Internal Revenue Code of 1986 and has received approval as a tax exempt 
organization from the Internal Revenue Service, as it relates to 
research or educational purposes.
    The Department seeks comments on the proper definitions of the 
entities to which the ACWIA prevailing wage provisions apply. The 
Department will share these comments with INS in the development of 
definitions to apply to both the INS and Departmental regulations.
    In order to determine prevailing wages as required by the ACWIA, it 
will be necessary for the Department to determine the appropriate 
universe(s) to survey, and to determine the availability of relevant, 
reliable data. The Act treats the four types of organizations in two 
groups: educational institutions and related research organizations; 
other nonprofit research organizations and Governmental research 
organizations. However, the Act does not seem to require that 
prevailing wages must be

[[Page 651]]

determined separately for those two groups, as distinguished from a 
universe consisting of all four groups, or surveys of the four types of 
organizations separately, or some other combination.
    Furthermore, the Department has reason to believe that it may not 
be feasible to identify the different kinds of entities that might 
comprise educational institutions' related or affiliated nonprofit 
entities, or nonprofit research organizations. If those entitles cannot 
be identified, it may not be possible to properly define the universe 
that should be surveyed to determine the appropriate prevailing wages. 
One possible alternative the Department is exploring is the use of the 
prevailing wage data it currently collects in surveying institutions of 
higher education to determine prevailing wages for one universe 
consisting of institutions of higher education, affiliated or nonprofit 
research institutions, and nonprofit research organizations. Data 
currently being collected by the Office of Personnel Management may be 
able to be used to determine prevailing wages for Federal Governmental 
research organizations.
    The Department seeks comments on the appropriate universes to use 
in determining prevailing wages for the entities (employers) mentioned 
in the ACWIA, methods to develop appropriate universe, and the 
feasibility and appropriateness of the Department's using data 
collected from institutions of higher education and Federal 
Governmental research organizations to determine prevailing wages.

O. What H-1B Regulatory Matters, in Addition to the ACWIA Provisions, 
are Addressed in This Notice of Proposed Rulemaking?

    The Department is re-publishing for notice and comment some of the 
provisions of the Final Rule promulgated in December 1994 which were 
proposed for further comment on October 31, 1995, during the pendency 
of the NAM litigation. That litigation resulted in an injunction 
against the Department's enforcement of some of provisions on 
Administrative Procedure Act (APA) procedural grounds (National 
Association of Manufacturers v. Reich, No. 95-0715, D.D.C., July 22, 
1996; see item H above).
    As indicated in the discussion of the ACWIA provisions above, some 
portions of these regulations are affected by the enactment of the 
ACWIA (e.g., ``benching'' or nonproductive time; posting of notice at 
worksites). For those ACWIA-affected provisions, the Department 
proposes modifications in the regulations and seeks comments on the new 
regulatory language. Other previously published provisions--not 
affected by ACWIA--are being re-proposed with some modifications based 
on a review of the comments received, as discussed below.
    All comments received in response to that earlier Notice of 
Proposed Rulemaking will be fully considered along with comments 
received in response to this Proposed Rule. Commenters are urged to 
review the Notice of Proposed Rulemaking published on October 31, 1995 
(60 FR 55339). The re-published provisions concern the following 
issues.
1. What Are the Opportunities and Guidelines for Short-term Placement 
of H-1B Workers at Worksite(s) Outside the Location(s) Listed on the 
LCA?
    The most significant regulatory provision affected by the NAM 
decision is the ``short-term placement'' rule (20 CFR 655.735), which 
the Department was enjoined from enforcing on APA procedural grounds. 
This provision was published in the October 31, 1995, Proposed Rule. 
The Department now provides another opportunity for comments, on a 
slightly-modified version of the provision--allowing the employer to 
track its ``short-term'' placements at a location via a worker-by-
worker count of days of employment in the area (rather than a worksite 
tally of cumulative workdays of all H-1B workers).
    The short-term placement provision was promulgated in the Final 
Rule (published December 20, 1994; 59 FR 65646), based on comments and 
suggestions submitted in response to the October 6, 1993, Proposed 
Rule. This provision--permitting short-term placement of H-1B workers 
at worksites outside the area(s) of employment listed on the LCA--was 
intended to allow employers greater flexibility in deploying their H-1B 
workers in response to business needs and opportunities in new areas. 
While the Department recognized that employers could, in any instance, 
choose to file a new LCA for the new area of employment, the Department 
provided a mechanism by which an employer desiring to move quickly or 
contemplating a temporary operation in a new location could be 
accommodated under the program without the delay or obligations 
involved in filing a new LCA. Simply put, the regulation authorizes the 
employer to use H-1B worker(s) in a non-LCA location (i.e., location 
not covered by an existing LCA) for a total of 90 workdays within a 
three-year period, without having to file a new LCA for that new 
location. Thus, the employer could use H-1B workers to respond 
immediately to an opportunity or a problem in a non-LCA location, 
without waiting to prepare and file an LCA for that location. If the 
situation were resolved within the regulation's ``short-term'' window 
(i.e., if the H-1B worker(s) were no longer needed at the location), 
then a new LCA would never be required. But if the H-1B worker(s) would 
be needed in the new location for a longer period, then the employer 
would have ample time within which to prepare and file a new LCA while 
already using the H-1B worker(s) at the location. The regulation 
specified that the ``short-term'' 90-day period would be calculated by 
totaling all days of work by all H-1B workers in the area of employment 
(thus covering all worksites within that area), beginning with the 
first workday by any H-1B worker at any worksite in that area. The 90-
day period is applied separately for each new area of employment (e.g., 
90 cumulative workdays for Los Angeles, 90 cumulative workdays for San 
Francisco).
    The Department has carefully reviewed the comments received on the 
October 31, 1995, Proposed Rule and, in response to those comments, 
proposes to modify the regulation to count workdays on a per-worker 
basis. Thus, the limit of 90 cumulative workdays (i.e., the end of the 
``short-term placement'' period) would be reached when any H-1B worker 
works for 90 days at any worksite or combination of worksites in the 
new area of employment. As soon as one H-1B worker has worked more than 
90 workdays within that area of employment, no more work could be 
performed by any H-1B worker at any worksite in that area unless and 
until the employer files and ETA has certified an LCA for the area. 
Therefore, the regulation, although based on a per-worker count of 
workdays, still applies to the employer's entire H-1B workforce and to 
all worksites in the new area of employment. For example, where an H-1B 
worker works 10 days at Worksite X in Dallas and 80 days at Worksite Y 
also in Dallas, the employer has exhausted its 90-day ``short-term 
placement'' period and is, therefore, required to file and have 
certified a new LCA for Dallas before any H-1B worker may work at any 
worksite in Dallas.
    Under the proposed rule, as an alternative to filing an LCA for a 
new area of employment, an employer could place H-1B worker(s) at 
worksite(s) in the new area--without filing a new LCA (and thus without 
satisfying the notice and prevailing wage requirements for

[[Page 652]]

such new area)--provided that the employer complies with all three of 
the following requirements:
     No H-1B worker(s) can work at any worksite(s) in the new 
(non-LCA-covered) area of employment beyond the cut off point of 90 
cumulative workdays (unless the employer filed and ETA has certified an 
LCA for such new area);
     Each H-1B worker working in the new area is compensated at 
the required wage rate applicable under the employer's already-
certified LCA for that worker's original or permanent work location 
plus travel-related expenses in the new area (with the Federal 
government per diem travel expense standards serving as the floor or 
minimum for such expenses); and
     No H-1B worker is placed at a worksite where there is a 
strike or lockout in the same occupational classification.
    Of course, an employer could at any time avoid the short-term 
placement option simply by filing an LCA covering the new area of 
employment and complying with all the LCA requirements, including 
determination of the prevailing wage rate for that area and providing 
notice at worksites in that area. Once an LCA is filed and certified 
for the new area of employment, the LCA would define the employer's 
obligations and the short-term placement option would no longer apply 
in any manner to H-1B workers or worksites in that area. Thus, the 
employer would be required to pay at least the prevailing wage for that 
area of employment to all H-1B workers placed at worksites there. Any 
H-1B worker on temporary business in the new area--away from his/her 
permanent worksite located in some other area of employment--could 
continue to be paid at the required wage rate for his/her permanent 
location. While the employer would pay that worker's travel costs 
(including food and lodging) while away from his/her permanent work 
location, the Federal government per diem travel expense standards 
would not be applicable as a ``floor'' (as they would be for H-1B 
workers working in the area under the short-term placement option).
    The short-term placement option would not apply when H-1B workers 
are sent to any new worksite(s) within an area covered by an already-
certified LCA filed by the employer. Such new worksite(s) would be 
fully subject to the requirements of that existing LCA, including 
payment of at least the prevailing wage, providing notice at the new 
worksite, and providing a copy of the LCA to H-1B worker(s) placed at 
the worksite (unless he/she had already received a copy of the LCA).
a. When is the Short-term Placement Option Available?
    This option would be available only when an employer wants to send 
its H-1B worker(s) (already in the U.S. under an LCA filed by the 
employer) to a new worksite which is in an area of employment for which 
the employer does not have an LCA in effect. The option would enable 
the employer to meet its business needs, by sending H-1B worker(s) to 
the new worksite(s) without waiting to complete the LCA and revised 
petition process. After the 90-workday limit is reached by any one H-1B 
worker, the short-term placement option would no longer be available 
for any workers; the employer would be required to have an LCA in 
effect for the new area and to be in full compliance with all the LCA 
requirements.
    The short-term placement option would not apply in any of the 
following circumstances:
     The H-1B worker being sent to the new areas is initially 
coming into the U.S. from outside the country (i.e., such a worker must 
be placed at a location covered by the LCA on which the H-1B petition 
is based);
     The H-1B worker is being relocated to a new worksite 
within the same area of employment for which the employer already has a 
valid LCA (i.e., new worksite is covered by the same LCA as the 
previous worksite); or,
     The H-1B worker is being relocated from one area of 
employment to another, but the employer has valid LCAs covering both 
areas (i.e., new worksite is covered by a different LCA than the LCA 
for the previous worksite).
    The short-term placement option would be irrelevant in 
circumstances where the employer is relocating H-1B workers (who are 
already in the U.S.) among worksites in areas covered by valid LCAs. In 
these circumstances, the employer would be required to comply with the 
LCA applicable to the new worksite (whether that is the same LCA 
applicable to the area of the old worksite, or a different LCA 
applicable to the area of the new worksite). Employers generally would 
be free to relocate H-1B workers among worksites in areas of employment 
for which they have valid LCAs, provided that the employer complies 
with all LCA obligations for the area--the relocation of an H-1B worker 
would be prohibited if there were a strike/lockout involving the H-1B 
worker's occupation at the new worksite; a wage adjustment for the 
relocated worker might be required; new notice at the worksite would 
not be required (assuming notice was already provided at that worksite, 
either when the LCA was filed or when some other H-1B worker was sent 
there).
    The short-term placement option also would be irrelevant in 
circumstances where the employer has an LCA in effect for an area of 
employment and wants to relocate or temporarily place H-1B worker(s) 
who would cause the LCA for that area to be ``overcrowded'' or 
``overfilled'' with H-1B workers (e.g., raising the number of H-1B 
workers in the area to 11 instead of the 10 stated on the certified 
LCA). The short-term placement option does not authorize an ``extra'' 
workforce of H-1B workers for temporary assignments in an area of 
employment covered by an LCA. The number of H-1B workers authorized for 
that employer in that area is determined by the employer's LCA (or 
combination of LCAs, if the employer has more than one LCA in effect 
for the area). Employers have inquired whether an H-1B worker can be 
relocated, even temporarily, to a worksite in an area of employment for 
which the employer has a valid LCA, if the relocation of that worker 
would raise the number of H-1B workers in that area to more than the 
number stated on the LCA. The short-term placement option cannot be 
invoked by the employer in such circumstances, because the employer has 
an LCA in effect for the area of employment and that LCA--applicable to 
all worksite in the area--is controlling. As a matter of enforcement 
discretion, the Department will look carefully at all the facts and 
circumstances surrounding situations in which H-1B workers are 
relocated among LCA-covered locations in a manner that results in more 
H-1B workers being employed in an area than are stated on the certified 
LCA(s) for that area. Absent other violations, in those circumstances 
that indicate good faith efforts by the employer to attempt to comply, 
the Department would not cite violations relating to the number of H-1B 
workers employed in an area, provided that the number employed does not 
significantly exceed the number shown on the LCA. In other 
circumstances, such as where there are other violations and/or the 
number of H-1B workers employed in an area significantly exceeds the 
number stated on the LCA(s), the employer may be cited for 
misrepresentation of a material fact or for a ``substantial failure'' 
to accurately state the information specified in the statute. In the 
situation identified above--an eleventh H-1B worker relocated to an 
area for which the LCA specifies ten H-1B workers--

[[Page 653]]

the Department would not cite a violation, so long as there were no 
other violations and there were indications of the employer's good 
faith (such as taking timely steps to file an additional LCA and a 
revised petition).
b. What Are the Standards for Payment of the H-1B Worker's Travel 
Expenses Under the Short-Term Placement Option?
    A component of the proposed short-term placement rule is a 
requirement that employers who wish to avail themselves of this option 
must pay travel-related expenses at a level at least equal to the rate 
prescribed for Federal Government employees on travel or temporary 
assignment, as set out in the General Services Administration (GSA) 
regulations 41 CFR Part 301-7 and Chapter 301, Appendix A. The 
Department believes that some uniform guidelines or benchmarks are 
necessary so that employers do not require H-1B workers to absorb some 
or all travel expenses themselves, or reimburse them at unreasonably 
low rates, while the workers are in travel status under the short-term 
placement option. Further, the Department is aware of no universally 
available source of information on per diem and travel expenses, other 
than the GSA regulations which are based on surveys of two-star hotels 
and comparable restaurants. Therefore, the Department proposes to 
continue to use the GSA regulations as the benchmark.
    The Department believes that some clarification of the requirements 
is appropriate. The proposed rule clarifies that the H-1B worker's 
travel expenses (lodging, transportation, meals and incidentals) are to 
be paid for all days in travel status (wages would not be required for 
non-workdays). The proposed rule also clarifies the application of the 
GSA standards to lodging, transportation, meals and incidental 
expenses. For lodging, the regulation would be modified to require the 
employer to reimburse no more than the worker's actual cost of lodging 
up to the GSA specified level for the location in question, plus 
applicable taxes. Where the H-1B worker incurs no lodging cost, no 
payment to the worker for lodging would be required. The Department 
proposes that the employer may house its workers on travel in company-
owned or company-leased accommodations and make no ``lodging'' payments 
to the workers, provided that such accommodations are reasonable and 
would be customarily used by its U.S. workers in a similar 
circumstance. The Department would consider the furnishing of or 
requirement to use overcrowded or otherwise unreasonable 
accommodations, as has sometimes been found to be the case, to be an 
unacceptable method of meeting the employer's obligation to cover the 
worker's lodging costs while on travel. If the employer provides a 
lodging allowance to the worker, such allowance would be required to 
cover the worker's actual expenses but need not be more than the GSA 
rate for the location in question, plus applicable taxes. For 
transportation, the employer would be required to pay the actual cost 
of transportation expenses, except that where the worker uses a 
privately-owned vehicle, the employer must cover the cost to operate 
the vehicle at the per-mile rate set out in 41 CFR 301-4, plus out-of-
pocket expenses such as tolls and parking fees. For meals and 
incidental expenses, the employer would be required to pay the H-1B 
worker at no less than the GSA per diem rate for the location. Back 
wages would be assessed based on the GSA rates where the employer fails 
to document actual costs or where the employer's payments do not 
satisfy the GSA standards.
2. What Are an Employer's Wage Obligations for an H-1B Worker's 
``Nonproductive Time''?
    As described above (see item H), the Department is publishing for 
further notice and comment the provision of the December 20, 1994 Final 
Rule concerning an employer's obligation to pay the H-1B worker's 
required wages for certain ``nonproductive'' time, which was enjoined 
by the district court in NAM for procedural reasons. In addition, the 
Department is proposing a modification of this regulation to implement 
the ACWIA provision which adds some flexibility for the employer with 
regard to an H-1B worker ``who has not yet entered into employment.''
3. What Are the Guidelines for Determining and Documenting the 
Employer's ``Actual Wage''?
    The Department is publishing for further notice and comment 
Appendix A to Subpart H--Guidance for Determination of the ``Actual 
Wage,'' certain provisions of which were enjoined by the court in the 
NAM litigation for procedural reasons. This provision was also 
published in the October 31, 1995, Proposed Rule. As the Preamble to 
that proposal stated, the contents of Appendix A--which consists of 
examples and guidance on the Department's enforcement policy regarding 
the computation and documentation of the actual wage--had first 
appeared, in slightly different format, in the Preamble to the January 
13, 1992, Interim Final Rule.
    Under Appendix A as proposed, the employer would not be required to 
create or to document an elaborate ``step'' or ``grid'' type pay 
system, such as that used by Federal agencies for government employees; 
no rigid or complex system is mandated by the regulations. The 
employer's actual wage system may take into consideration any 
objective, business-related factors relating to experience, 
qualifications, education, specific job responsibilities and functions, 
specialized knowledge and other legitimate business factors, including 
documented job performance. Whatever factors are used in the employer's 
actual wage system are to be applied to H-1B nonimmigrant workers in 
the same, nondiscriminatory manner that they are applied to U.S. 
workers in the occupational classification. The employer's public 
access documentation must include a description of its actual wage 
system. The description may consist of a summary document which 
identifies the business-related factors that are considered and which 
describes the manner in which they are implemented (e.g., stating the 
wage/salary range for the occupation in the employer's workforce and 
identifying the pay differentials assigned to factors such as holding 
an advanced degree or performing supervisory duties). The employer's 
description of its actual wage system should be sufficient to enable a 
third party--such as an employee looking at the public disclosure 
file--to understand how the system would apply to a particular worker 
and to derive a reasonably accurate understanding of that worker's 
wage. Wage rates for each H-1B worker must be in the public access 
file. However, computation of an H-1B worker's particular wage need not 
appear in the public access file; that information must be available in 
the worker's personnel file maintained by the employer. For clarity, 
the Department purposes to modify Appendix A to include job performance 
among the legitimate business factors which may be taken into 
consideration in determining the actual wage.
4. What Records Must the Employer Keep, Concerning Employees' Hours 
Worked?
    The Department seeks further comments on section Sec. 655.731(b)(1) 
of the regulation, which requires the employer to retain records for 
``all employees in the specific employment in question'' (i.e., same 
occupation as the H-1B worker). This provision, which has been enjoined 
by the NAM

[[Page 654]]

court for procedural reasons, revised former Sec. 655.730(e)(2)(i), 
which required the employer to maintain documentation for ``all other 
individuals with experience and qualifications similar to the H-1B 
nonimmigrant for the specific employment in question.'' For virtually 
all employers, this change in the regulation had no impact on 
recordkeeping because most records required under the H-1B program 
would be the same as those already required under the Fair Labor 
Standards Act (``FLSA''). However, for employers with salaried non-H-1B 
workers who satisfy the FLSA exemption for ``bona fide executive, 
administrative, or professional'' employees (29 CFR Part 541), the 
change resulted in a requirement not already imposed under the FLSA: to 
keep records of hours worked each day and each week for FLSA-exempt 
non-H-1B workers in the ``specific employment in question'' (regardless 
of their experience and qualifications) if the prevailing or actual 
wage is expressed as an hourly wage.
    On September 26, 1995, the Department issued a Notice of 
Enforcement Position (60 FR 49505) stating that, until further 
rulemaking, the Department would enforce Sec. 655.731(b)(1) of the 
Final Rule as stated, except that, with respect to any additional 
workers for whom that Rule extended recordkeeping requirements beyond 
those specified in the Interim Final Rule, the employer would need to 
keep only those records which are required by the FLSA regulations at 
29 CFR Part 516.
    In the October 31, 1995, Proposed Rule, the Department proposed to 
amend Sec. 655.731(b)(1) to make it consistent with FLSA recordkeeping 
requirements. Under the proposal, employers would be required to retain 
records of hours worked for non-H-1B workers in the specific employment 
in question (whether or not the non-H-1B workers have similar 
experience and qualifications) only if the non-H-1B workers are paid on 
an hourly basis or if the actual wage is expressed as an hourly rate. 
Since the first element of the FLSA Part 541 exemption test is that the 
employees be paid ``on a salary basis'' (i.e., not paid hourly wages 
(29 CFR 541.118)), the effect of this proposal would be that records of 
hours worked would be required for U.S. workers only if the worker is 
either not paid on a salary basis, or if the actual wage is stated as 
an hourly wage. For H-1B workers, such records must also be kept if the 
prevailing wage is expressed as an hourly rate.
5. What are the Requirements for Posting of ``Hard Copy'' Notices at 
Worksite(s) Where H-1B Workers are Placed?
    The Department proposes for comment a revision of 
Secs. 655.734(a)(1)(ii)(C) and (D) of the regulation, which it 
previously republished for notice and comment in the October 31, 1995, 
Proposed Rule. The Department proposes that this provision be modified 
to implement the ACWIA provision concerning electronic notification 
(see item F), but it would be unchanged with regard to ``hard copy'' 
notices. Subparagraph (C) requires employers to post notice at 
worksites on or within 30 days before the date the LCA is filed. 
Subparagraph (D) requires that, where the employer places an H-1B 
nonimmigrant at a worksite which is not contemplated at the time of 
filing the LCA but is within the area of intended employment listed on 
the LCA, the employer is to post notice at such worksite on or before 
the date any H-1B nonimmigrant begins work there. Under both 
subparagraphs, such notice is to remain posted for ten days. The 
regulation provides that worksite notice may be accomplished either by 
posting hard copies of the notice or by providing electronic notice. 
Where the H-1B worker(s) will be employed at the worksite of another 
employer, the H-1B employer is required to provide notice to the 
affected workers at that worksite, and may make arrangements with the 
other employer to accomplish the notice (e.g., have the other employer 
``post'' the electronic notice on its intranet or employee newsletter) 
.
    It should be noted that if a location does not constitute a 
``worksite,'' the employer is not required to post notice there. (See 
proposed Appendix B, below, regarding clarification of ``place of 
employment.'') The requirement to post notice at the ``place of 
employment'' is statutory. 8 U.S.C. 1182(n)(1)(C). The Department's 
definition of ``place of employment'' focuses on the ``worksite'' or 
place where the work is actually performed. This definition achieves 
the intent of the law's notice requirement to inform affected employees 
that an LCA has been filed and that nonimmigrants may work at that 
place of employment. Without such information, potentially affected 
employees would not be aware of employer obligations under and 
compliance with the LCA conditions, and would be unlikely to be able to 
file complaints where the situation would warrant it. As explained in 
proposed Appendix B, the Department has reasonably interpreted ``place 
of employment'' as not including locations where the H-1B worker's 
presence is short-sterm and transitory due to the nature of his/her job 
(e.g., computer ``troubleshooter''; sales representative; trial 
witness) or due to the developmental nature of his/her activity (e.g., 
management seminar; formal training seminar).
6. What Are the Time Periods or ``Windows'' Within Which Employers May 
File LCAs?
    The Department seeks further comment on two current regulatory 
provisions which restrict the time periods or ``window'' within which 
LCAs may be filed--no earlier than 180 days (6 months) prior to the 
starting date of the employment period identified on the LCA, and no 
later than 90 days (3 months) from the date of any State Employment 
Security Agency (SESA) prevailing wage determination used in the LCA. 
Both of these provisions are reproposed without modification.
    The October 31, 1995, Proposed Rule republished for notice and 
comment Sec. 655.730(b), which requires that the employer file the LCA 
no earlier than 6 months before the beginning date of the specified 
period of employment. This provision addressed the situation of some 
employers who were filing LCAs for periods of employment months in the 
future. The Department believes that, because the prevailing wage and 
notice obligations are based upon actions taken and conditions which 
exist at the time the LCA is filed, such premature applications can 
defeat the intent of these statutory elements. In one case, for 
example, an employer filed an LCA for a period of employment two years 
from the time of filing. Such an employer could use a prevailing wage 
determination from an independent authoritative source based on wage 
information which is up to four years old. By the time the 
nonimmigrants actually enter the U.S. two years after the LCA date, the 
prevailing wage information would be as much as six years old. In 
addition, this employer would post notice for ten days at the time of 
filing the LCA, and then import the nonimmigrants two years later. By 
that time, U.S. workers who might otherwise file complaints regarding 
violations of the LCA would be unaware of essential information listed 
on the posted LCA, such as the number of nonimmigrants, rate(s) of pay, 
job title(s), and the location where documentation is kept.
    The October 31, 1995, Proposed Rule also republished for notice and 
comment current

[[Page 655]]

Sec. 655.731(a)(2)(iii)(A)(1), which requires the employer to file an 
LCA relying upon a SESA prevailing wage determination within 90 days of 
the SESA's issuance of the determination. The 90-day validity period of 
a SESA prevailing wage determination is designed to prevent the 
employer's use of aged or stale wage determinations, which can 
adversely affect the wages of U.S. workers. In the Department's view, 
it is unreasonable to permit employers to use SESA determinations which 
are more than three months old since those determinations may well be 
based on wage information that is already years old, and they may be 
relied upon by the employer for the entire 3-year validity period of 
the LCA (periodic updates of the prevailing wage not being required 
under the Final Rule). An employer's use of SESA prevailing wage 
determinations more than three months old would be inconsistent with 
the statutory requirement that employers pay at least the wage which is 
prevailing at the time the LCA is filed.
    It should be noted that employers are not required to use SESA 
determinations in filing LCAs. Employers may, instead, determine the 
prevailing wage from other sources (i.e., independent authoritative 
sources or other legitimate sources of wage information). Those sources 
are not subject to a 90-day validity period, but must satisfy the 
appropriate regulatory definitions or description.
7. How May an Employer Challenge a SESA-Issued Prevailing Wage 
Determination?
    The Department seeks further comment on 
Secs. 655.731(a)(2)(iii)(A)(1), 655.731(d)(2), and 655.840(c) regarding 
the use of the Employment Service (``ES'') complaint system to 
challenge any SESA prevailing wage determinations. These provisions 
were republished for notice and comment in the October 31, 1995, 
Proposed Rule.
    Irrespective of whether the SESA wage determination is obtained by 
the employer prior to filing the LCA or by the Wage and Hour Division 
in an enforcement proceeding, these provisions (taken together) require 
employers to assert any challenge to the SESA prevailing wage 
determination under the ES complaint system, rather than in an 
enforcement proceeding before the Office of Administrative Law Judges. 
In designing the program, the Department had envisioned that the ES 
complaint process would be used for all challenges of SESA prevailing 
wage determinations. However, after substantial enforcement litigation 
experience, the Department found that some employers were instead 
attempting to contest these wage determinations through the enforcement 
hearing provided under Sec. 655.835. That hearing process was not 
intended to handle these prevailing wage challenges, and the proposed 
regulatory provisions (which are currently in effect) achieve the 
Department's original intent.

P. What Additional Interpretative Regulations is the Department 
Proposing?

    During the course of the Department's administration and 
enforcement of the H-1B program, a number of issues have been raised by 
employers and interest groups regarding the interpretation and 
application of the existing regulations. In order to provide more 
complete guidance for these affected parties--and thereby facilitate 
compliance, administration, and enforcement under the H-1B program--the 
Department is publishing for comment a proposed Appendix B for Part H 
of the regulation. The interpretations presented in Appendix B are 
matters which have been discussed with employers and interest groups in 
numerous outreach meetings over the last several years. The Department 
considers it appropriate to include these provisions in the 
regulations, either as an appendix or in the regulatory text, and 
therefore is providing a more formal process for interested parties to 
express their views concerning these interpretations.
    The Department seeks comments on the matters addressed in Appendix 
B (described below).
1. What Constitutes an H-1B Worker's ``Worksite'' or ``Place of 
Employment'' for Purposes of the Employer's Obligations Under the 
Program?
    The H-1B program's attestation requirements are largely focused on 
the H-1B worker's ``place of employment'' or ``worksite.'' That 
location--``place'' or ``site''--determines the appropriate prevailing 
wage; that location is where the employer must provide notice to 
workers concerning the employment of H-1B nonimmigrants; and the 
strike/lockout prohibition is applicable to that location. Thus, it is 
essential that employers be able to determine whether a particular 
location constitutes a ``worksite'' (triggering the program's 
requirements) or is, instead, a non-worksite at which the H-1B worker 
may perform certain of his/her job duties for a short period of time. 
Appendix B explains that ``worksite'' ordinarily encompasses any 
location at which the H-1B worker performs his/her job duties, but does 
not include a location at which the worker is engaged in employee 
development activity (e.g., receiving formal training) or at which the 
worker's presence is due to the nature of his/her duties and is of 
short duration (e.g., making a sales call on a customer; testifying at 
a court hearing; conducting research at a library).
2. Under What Circumstances May an H-1B Worker ``Rove'' or ``Float'' 
From His/Her ``Home Base'' Worksite?
    The Department recognizes that some employers--due to the nature of 
their businesses--need to move their H-1B workers from place to place 
in order to meet the needs of clients or to respond to new business 
opportunities. This practice is described as having H-1B workers 
``rove'' or ``float'' from their ``home base'' locations. Because the 
H-1B program's requirements focus on the H-1B worker's ``worksite'' 
(see item O.5), it is important that employers be able to determine the 
circumstances under which an H-1B worker may legally be dispatched from 
his/her ``home base'' worksite to other location(s) to perform job 
duties. In Appendix B, the Department explains that every H-1B worker 
is, by law, covered by an LCA and that, consequently, there is no means 
by which an H-1B worker may ``float'' in the U.S. economy without being 
subject to the wage, working conditions, and other requirements of an 
LCA. However, as the Appendix further explains, an H-1B worker may 
legally be dispatched from his/her home base location in any of three 
circumstances--
     H-1B worker is dispatched to a ``non-worksite'' location 
(see item O.5). The worker would still be covered by his/her home base 
LCA.
     H-1B worker is dispatched to a worksite that is covered by 
an LCA (either the LCA for the home base, or a different LCA if the new 
location is outside the home base LCA's area). The worker would be 
covered by the LCA applicable to the new worksite.
     H-1B worker is dispatched for a short-term placement under 
the regulation authorizing up to 90 workdays of such placement in an 
area not covered by an LCA (see item O.1, above). The worker would be 
covered by his/her home base LCA.
3. What H-1B Related Fees and Costs Are Considered to Be an Employer's 
Business Expenses?
    The Department believes that where the employer is required by law 
to perform certain functions and no other party can legally perform 
those functions, all expenses connected with such functions are the 
employer's

[[Page 656]]

business expenses, which must be borne by the employer without being 
imposed on the H-1B worker in any manner. As explained in Appendix B, 
the application of this analysis to the H-1B program leads, 
necessarily, to the conclusion that all fees and costs connected with 
the filing of the LCA and the H-1B petition (e.g., prevailing wage 
survey preparation; attorney fees; INS fees) are to be borne by the 
employer since--by the express terms of the statute--the employer must 
file both the LCA and the petition, and the H-1B worker is not 
permitted to perform either of those functions. As further explained in 
Appendix B, the Department recognizes that expenses connected to the H-
1B worker's own function of filing for and obtaining the visa itself 
(e.g., translations of academic records) could appropriately be borne 
by the H-1B worker, since such costs would not necessarily be the 
employer's business expenses. This interpretation is fully consistent 
with the ACWIA provision relating to the new $500 petition filing fee 
(see item K).
4. When Is the Service Contract Act Wage Rate Required to Be Applied as 
the ``Prevailing Wage''?
    The regulation provides that, if there is an SCA wage determination 
for the occupational classification in the area of employment for which 
an employer is filing an LCA, that SCA wage determination is considered 
by the Department to constitute the prevailing wage for that occupation 
in that area. Appendix B explains that, because the SCA rates cover the 
occupation in the area, these rates are applicable to the LCA, without 
regard to whether individual H-1B worker(s) eventually employed under 
the LCA may have qualifications or job descriptions that could satisfy 
an exemption from the rate if he/she were working on an SCA contract. 
Further, Appendix B explains that because the SCA wage determination 
for occupations in the computer industry are capped by statute (SCA, 
incorporating FLSA) at $27.63, even where the prevailing wage is 
higher, the Department has instructed the SESA not to issue a 
prevailing wage from the SCA wage determination where that SCA wage is 
stated as $27.63.
5. How Are the ``PMSA'' and ``CMSA'' Concepts Applied?
    Appendix B explains that in computing prevailing wages for an 
``area of intended employment,'' the Department will consider all 
locations within either a metropolitan statistical area (MSA) or a 
primary metropolitan statistical area (PMSA) to constitute ``normal 
commuting distance'' and, thus, subject to the same prevailing wage 
rates. Further, Appendix B explains that a consolidated metropolitan 
statistical area (CMSA) will not be used in this manner in determining 
the prevailing wage rates (i.e., all locations within a CMSA will not 
necessarily be deemed to be within normal commuting distance). The 
Department has determined, based on its operational experience, that 
CMSAs can be too geographically broad to be used in this manner. As 
explained in Appendix B, the Department has not adopted any rigid 
measure of distance as a ``normal commuting area'' (e.g., 20, 30, 50 
miles) and, therefore, locations that are outside any ``statistical 
area,'' locations near the boundaries of MSAs and PMSAs, and locations 
within or near the boundaries of CMSAs may be within normal commuting 
distance, depending on the factual circumstances.
6. How Does the ``Weighted Average'' Apply in the Determination of the 
Prevailing Wage?
    Appendix B explains that, due to the inadvertent omission of the 
word ``weighted'' from one provision in the regulation, there has been 
a suggestion of confusion for an employer which uses an ``independent 
authoritative source'' to determine the local prevailing wage to be 
used on an LCA. When read together, the regulations on the computation 
of the prevailing wage require the use of the ``weighted average'' 
statistical methodology. In Appendix B, the Department describes this 
methodology and clearly states how and when it is to be used.
7. What is the Effect of a New LCA on the Employer's Prevailing Wage 
Obligation Under a Pre-Existing LCA?
    Employers who, over a period of time, file several LCAs for the 
same occupation in the same area of employment--so as to increase their 
staff of H-1B workers--may well find that these LCAs reflect a changing 
prevailing wage for that occupation and area. There is a possibility 
for confusion in such situations, concerning the prevailing wage which 
is required for the various H-1B workers. As explained in Appendix B, 
the Department considers the employer's prevailing wage obligation to 
any individual H-1B worker to be prescribed by the LCA which supports 
the H-1B petition for that worker. Thus, the employer is required to 
pay that worker at least the amount of that prevailing wage; a 
different prevailing wage appearing on a different LCA would not be 
applicable. The employer is not required to ``adjust'' the prevailing 
wage amounts for the entire H-1B workforce, based on a new prevailing 
wage that appears on a new (later) LCA. However, as further explained 
in Appendix B, the employer would be required to make ``adjustments'' 
for all H-1B workers in accordance with the employer's actual wage 
system (e.g., merit increases; cost of living increases), since all H-
1B workers are covered by the actual wage system (regardless of any 
difference among prevailing wage rates under various LCAs).

IV. Summary

    The Department welcomes comments on any issues addressed in the 
proposed regulations--including the proposals caused by the enactment 
of the ACWIA; the reproposal of provisions published for comment in 
October, 1995; and the proposed interpretative provisions in Appendix 
B--as well as on any other issues that commenters believe need to be 
addressed.

V. Executive Order 12866

    This proposed rule is being treated as a ``significant regulatory 
action'' within the meaning of Executive Order 12866, because of its 
importance to the public and the Administration's priorities. 
Therefore, the Office of Management and Budget has reviewed the 
proposed rule. However, because this rule is not ``economically 
significant'' as defined in section 3(f)(1) of E.O. 12866, it does not 
require a full economic impact analysis under section 6(a)(3)(C) of the 
Order.
    The H-1B visa program is a voluntary program that allows employers 
to temporarily secure and employ nonimmigrants admitted under H-1B 
visas to fill specialized jobs not filled by U.S. workers. The statute 
requires that the employer pay an H-1B worker the higher of the actual 
wage or the prevailing wage, to protect U.S. workers' wages and 
eliminate any economic incentive or advantage in hiring temporary 
foreign workers. This rule would implement statutory changes in the H-
1B visa program enacted by the ACWIA of 1998. The ACWIA (1) temporarily 
increases the maximum number of H-1B visas permitted each year; (2) 
temporarily requires, during the increased H-1B cap period, new non-
displacement (layoff) and recruitment attestations by ``H-1B 
dependent'' employers and employers found to have committed willful 
violations or misrepresentations; (3) requires employers of H-1B 
workers to offer the same fringe benefits to H-1B workers as it offers 
its U.S. workers; (4) requires an employer in certain cases to

[[Page 657]]

pay an H-1B worker even if work is not available and the worker is 
placed in a non-productive status (but not for non-productive time due 
to non-work-related factors like a voluntary request to be absent); and 
(5) provides whistleblower protections to employees (including former 
employees and applicants) who disclose information about potential 
violations or cooperate in an investigation or proceeding.
    The direct, incremental costs that an employer would incur because 
of this rule above customary and usual business expenses for recruiting 
qualified job applicants and retaining qualified employees in 
specialized jobs are expected to be minimal. Collectively, the changes 
proposed by this rule 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, jobs, the environment, public 
health or safety, or State, local, or tribal governments or 
communities. Therefore, the Department has concluded that this rule is 
not ``economically significant.''

VI. Small Business Regulatory Enforcement Fairness Act

    The Department has similarly concluded that this proposed rule is 
not a ``major rule'' requiring approval by the Congress under the Small 
Business Regulatory Enforcement Fairness Act of 1996 (5 U.S.C. 801 et 
seq.). It will not likely result in (1) an annual effect on the economy 
of $100 million or more; (2) a major increase in costs or prices for 
consumers, individual industries, Federal, State or local government 
agencies, or geographic regions; or (3) significant adverse effects on 
competition, employment, investment, productivity, innovation, or on 
the ability of U.S.-based enterprises to compete with foreign-based 
enterprises in domestic or export markets.

VII. Unfunded Mandates Reform Act of 1995; Executive Order 12875

    Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531 
et seq.) directs agencies to assess the effects of Federal regulatory 
actions on State, local, and tribal governments, and the private 
sector, `` * * * (other than to the extent that such regulations 
incorporate requirements specifically set forth in law).'' For purposes 
of the Unfunded Mandates Reform Act, this rule does not include any 
Federal mandate that may result in increased annual expenditures in 
excess of $100 million by State, local or tribal governments in the 
aggregate, or by the private sector. Moreover, the requirements of the 
Unfunded Mandates Reform Act do not apply to this proposed rule because 
it does not include a ``Federal mandate,'' which is defined to include 
either a ``Federal intergovernmental mandate'' or a ``Federal private 
sector mandate.'' 2 U.S.C. 658(6). Except in limited circumstances not 
applicable here, those terms do not include ``a duty arising from 
participation in a voluntary program.'' 2 U.S.C. 658(5)(A)(i)(II) and 
(7)(A)(ii). A decision by an employer to obtain an H-1B worker is 
purely voluntary, and the obligations arise ``from participation in a 
voluntary Federal program.''
    For similar reasons, the proposed rule is not an ``unfunded 
mandate'' within the meaning of Executive Order 12875. By its terms, 
section 1 of E.O. 12875 applies to ``any regulation that is not 
required by statute and that creates a mandate upon a State, local or 
tribal government.'' The order requires agencies to consult with State, 
local, and tribal governments when developing regulatory proposals 
containing significant unfunded mandates. For the reasons noted, the 
proposed rule does not create any significant unfunded mandate on units 
of government.

VIII. Initial Regulatory Flexibility Analysis

    The Regulatory Flexibility Act (5 U.S.C. 601-612) requires agencies 
to prepare and make available for public comment an initial regulatory 
flexibility analysis, describing the anticipated impact of the proposed 
rule on small entities. The following analysis has been prepared to 
assess the impact of the proposed rule on small entities. Based on this 
analysis, we have concluded that this rule will not have a significant 
economic impact on a substantial number of small entities. The impact 
of the rule derives from specific statutory obligations set forth in 
the underlying H-1B legislation, which DOL does not have the discretion 
to alter. The direct, incremental costs are not believed to be 
significant in any case. Moreover, as discussed below, most of the new 
compliance obligations addressed in this rulemaking apply to only a 
small subset of the full universe of employers that participate in the 
H-1B program, namely, those that meet the new definition of ``H-1B-
dependent employer,'' which we estimate to number no more than 200. 
Even assuming that all of the entities within this subset of 200 
employers qualify as ``small,'' the number is not considered 
substantial.
1. Why Is This Action Being Considered?
    On October 21, 1998, President Clinton signed into law the American 
Competitiveness and Workforce Improvement Act of 1998 (ACWIA), which 
was enacted as Title IV of the Omnibus Consolidated and Emergency 
Supplemental Appropriations Act for Fiscal Year 1999 (Public Law 105-
277). ACWIA amended the Immigration and Nationality Act (INA), as 
amended (8 U.S.C. 1101 et seq.), relating to the H-1B visa program. 
Under the H-1B visaprogram, employers may temporarily import and employ 
nonimmigrants admitted into the U.S. under H-1B visas in specialty 
occupations and as fashion models, instead of employing U.S. workers, 
under certain conditions. Section 412(d) of ACWIA provides that some of 
the amendments made by ACWIA do not take effect until the Department 
promulgates implementing regulations, which are the subject of this 
proposed rulemaking. Under Section 412(e) of ACWIA, in order to 
promulgate implementing regulations in a timely manner, the Department 
of Labor may reduce to 30 days the period for public comment on 
proposed regulations.
2. What Are the Objectives of, and the Legal Basis for, the Proposed 
Rule?
    The proposed rule is issued pursuant to provisions of the INA, as 
amended, and the ACWIA, 8 U.S.C. 1101(a)(15)(H)(i)(b), 1182(n), and 
1184; 29 U.S.C. 49 et seq.; sec. 303(a)(8), Pub. L. 102-232, 105 Stat. 
1733, 1748 (8 U.S.C. 1182 note); and sec. 412(d) and (e), Pub. L. 105-
277, 112 Stat. 2681. Its objectives are to enable employers to 
understand and comply with applicable requirements under the amended H-
1B visa program, and to advise employees and applicants of the 
protections afforded by the amendments to U.S. and H-1B workers.
3. How Many Small Entities Will Be Covered by the Proposed Rule?
    At least some parts of this proposed rule would apply to all 
employers which seek to temporarily employ nonimmigrants admitted into 
the U.S. under the H-1B visa program in specialty occupations and as 
fashion models. The obligations differ under the law and the rules for 
``H-1B-dependent'' employers from those that are not ``H-1B-
dependent.''
    The definition of ``small'' business varies considerably, depending 
on the policy issues and circumstances under review, the industry being 
studied, and the measures used. The size standards

[[Page 658]]

used by the U.S. Small Business Administration (SBA) to define small 
business concerns according to their Standard Industrial Classification 
(SIC) codes are codified at 13 CFR 121.201. SBA's small size standards 
are generally expressed either in maximum number of employees or annual 
receipts (in millions of dollars).
    If we could construct a profile of each business that used H-1B 
workers showing both the total number of workers employed and the 
portion that are H-1B workers, together with total annual receipts and 
the applicable SIC industry code, we could then apply SBA's size 
standards and gauge precisely how many of the affected businesses are 
``small.'' Unfortunately, the precise data required for this analysis 
are not available. However, we know that nearly one-half (44.4 percent) 
of the job openings being certified under the H-1B program are for 
computer-related occupations, and over one-fourth (25.9 percent) are 
for therapists (principally physical and occupational).1 
Looking just at these categories would present a view of nearly three-
fourths of all the certified job openings under the H-1B program.
---------------------------------------------------------------------------

    \1\ Analysis of number of job openings certified in Fiscal Year 
(FY) 1997 by occupational classification. A total of 180,739 LCAs 
were filed with the Department in FY 1997, certifying 398,324 job 
openings.
---------------------------------------------------------------------------

    For Major Group 73, Business Services, the SBA's small business 
size standards for SIC codes in which computer-related occupations 
would likely be employed are all at the $18 million level (annual 
receipts).2 Data from the 1992 Census of Service Industries: 
Establishment and Firm Size (published February 1995) indicate that 
39,511 out of a total 40,242 firms (or 98.18 percent) have annual 
receipts less than $18 million.
---------------------------------------------------------------------------

    \2\ Major Group 73 includes the following SIC industries: 
Computer Programming Services (7371); Prepackaged Software (7372); 
Computer Integrated Systems Design (7373); Computer Processing and 
Data Preparation and Processing Services (7374); Information 
Retrieval Services (7375); Computer Facilities Management Services 
(7376); Computer Rental and Leasing (7377); Computer Maintenance and 
Repair (7378); and Computer Related Services, Not Elsewhere 
Classified (N.E.C.) (7379).
---------------------------------------------------------------------------

    The Business Services category would not include other users of H-
1B workers in computer-related occupations, such as computer equipment 
manufacturers. For computer and other electronic equipment 
manufacturers, the SBA's small size threshold is 1,000 
employees.3 In 1994 (latest data on size distribution), 1.6 
percent of the establishments employed 1,000 or more workers 
(comprising 42.1 percent of the employment in the 
industry).4 There were more than 14,000 establishments in 
this industry in 1996.
---------------------------------------------------------------------------

    \3\ According to BLS, the following five SICs comprise the 
electronic equipment manufacturing industry: 357, Computer and 
Office Equipment; 365, Household Audio and Video Equipment; 366, 
Communications Equipment; 367, Electronic Components and 
Accessories; and 381, Search and Navigation Equipment. These five 
SICs share common need for high levels of computer programmers, 
analysts, engineers and other computer scientists. BLS has published 
data on establishment size for the industry as a whole, but not its 
five components. See Career Guide to Industries, BLS Bulletin 2503, 
pp. 53-56, January 1998. The products of this industry include 
computers and computer storage devices such as disk drives; 
semiconductors (silicon or computer chips or integrated circuits) 
which are the core of computers and other advanced electronic 
products; computer peripheral equipment such as printers and 
scanners; calculating and accounting machines such as automated 
teller machines; and other electronic equipment using highly skilled 
computer and other scientists and professionals.
    \4\ BLS Bulletin 2503 (January 1998). Source: U.S. Department of 
Commerce, County Business Patterns, 1994.
---------------------------------------------------------------------------

    For Major Group 80, Health Services, the SBA's small size threshold 
for all categories within the group are at the $5 million (annual 
receipts) level. Data from the 1992 Census of Service Industries: 
Establishment and Firm Size (February 1995) indicate that 244,437 out 
of a total 249,052 firms (or 98.15 percent) have annual receipts less 
than $5 million.5
---------------------------------------------------------------------------

    \5\ SIC industries 8021 (Offices and Clinics of Dentists), 8042 
(Offices and Clinics of Optometrists), 8072 (Dental Laboratories), 
and 8092 (Kidney Dialysis Centers) were subtracted from the total 
number of health service firms in SIC 80 for purposes of this 
analysis, based on the assumption that such firms would not likely 
employ physical or occupational therapists.
---------------------------------------------------------------------------

    Based on the above data, the vast majority (over 98 percent) of the 
businesses in the industries in which H-1B workers are likely to be 
employed would meet SBA's definition of ``small.'' However, as noted 
above, the new compliance obligations under ACWIA (and, therefore, 
under these regulations) differ for employers who meet a new statutory 
definition of being ``H-1B dependent'' or have been found after the 
effective date of ACWIA to have committed willful violations or 
misrepresentations. Section 412(a)(3) of ACWIA defines ``H-1B-dependent 
employer'' as an employer that has 25 or fewer full-time equivalent 
employees employed in the U.S. and more than 7 H-1B nonimmigrants, at 
least 26 but not more than 50 full-time equivalent employees and more 
than 12 H-1B nonimmigrants, or at least 51 full-time equivalent 
employees and a workforce of H-1B nonimmigrants comprising at least 15 
percent of its full-time equivalent employees. ACWIA requires H-1B-
dependent employers and employers found to have willfully violated H-1B 
requirements to attest that they will not displace (layoff) U.S. 
workers and replace them with H-1B workers in essentially equivalent 
jobs, that they will not place H-1B workers with other employers 
without first inquiring as to whether they intend to displace U.S. 
workers, and that they have taken good faith steps to recruit in the 
United States for U.S. workers to fill the jobs for which they are 
seeking H-1B workers. An employer filing an LCA pertaining only to 
``exempt H-1B nonimmigrants'' need not comply with the non-displacement 
and good faith recruitment attestations, regardless of status as an H-
1B-dependent or willful violator. ``Exempt H-1B nonimmigrants'' are 
defined as those who earn at least $60,000 annually or who have 
attained a master's degree or its equivalent in a specialty related to 
the intended employment.
    The Department estimates that approximately 50,000 employers a year 
file LCA's for H-1B nonimmigrants. The Department estimates that not 
more than ten (10) employers a year will be found to have committed 
willful violations. There are no data available to determine precisely 
how many ``H-1B-dependent'' employers will exist under the rule. We 
tried to estimate the number of ``H-1B-dependent'' employers for 
purposes of this analysis, as follows. Although the test for H-1B 
dependency varies with the size of the employer, an employer must 
employ at least seven (7) H-1B workers to be dependent. Therefore, if 
we assume that every H-1B-dependent employer had the smallest workforce 
threshold (25 full-time equivalent employees) and therefore subject to 
the ``more than seven H-1B'' workers test, we can estimate the maximum 
potential number of H-1B-dependent employers in computer-related fields 
and health services (using therapists) by determining how many of those 
employers submitted LCAs seeking certification of more than seven H-1B 
nonimmigrants on a single LCA. This approach undercounts the potential 
number of H-1B-dependent employers because some employers requesting 
fewer than seven H-1B workers on a single LCA may already employ other 
H-1B workers or may file more than one LCA. For purposes of this 
analysis, therefore, we calculated the number of employers for which 
more than five (5) H-1B nonimmigrants were certified on a single LCA to 
work in computer-related fields or as therapists in FY 1997, to 
estimate an upper-bound limit of the maximum potential number of H-1B-
dependent employers. This yielded a

[[Page 659]]

total of 1,425 employers (8.7 percent of the total in the sample). This 
approach for setting the maximum upper limit greatly overstates H-1B 
dependency, however, because many larger firms employing more than 25 
full-time employees would automatically be included in the count of H-
1B dependents. For example, we know, that many major employers of H-1B 
workers have workforces larger than 25 full-time equivalent employees. 
In addition, some employers file LCAs certifying a need for H-1B 
workers but for various reasons never fill all the positions. 
Realistically, we estimate that the actual number of H-1B-dependent 
employers and willful violators under the rule to be no more than from 
between 100 and 200 employers.
4. What Are the Projected Reporting, Recordkeeping and Other Compliance 
Requirements of the Proposed Rule, Which Small Entities Will They 
Affect, and What Type of Professional Skills are Needed to Meet the 
Requirements?
    The reporting and recordkeeping requirements of this rule are 
described above in the Supplementary Information section entitled 
``Paperwork Reduction Act'' and in various places throughout the 
preamble. They are also briefly summarized here. In sum, the reporting 
and recordkeeping requirements of the rule are not overly complex, and 
in most cases simply require that a copy be kept of a record made for 
other purposes or that a simple arithmetic calculation be performed. 
There are no requirements for technical, specialized or professional 
skills to comply with the reporting or recordkeeping provisions of the 
rule.
    As noted, most new recordkeeping and compliance requirements 
imposed by ACWIA and this rule apply only to employers meeting the new 
definition of ``H-1B-dependent employer'' or employers found to have 
committed willful violations or misrepresentations, which we estimate 
to number between 100 and 200. To determine if it meets the new 
definition of ``H-1B-dependent employer,'' an employer of H-1B workers 
must compare the number of its H-1B workers to the number of full-time 
equivalent employees. H-1B-dependent employers and willful violators 
must comply with the new ``non-displacement'' and ``good faith 
recruitment'' requirements of ACWIA. In many cases, it will be readily 
apparent, at either end of the spectrum, whether an employer is or is 
not H-1B dependent. When H-1B dependency is not apparent or it is a 
close question, the employer must make a mathematical determination, 
and if it determines it is not dependent, document the determination in 
its public disclosure file. In order to make the determination, 
employers will need to keep copies of H-1B petitions and, for part-time 
workers, either hourly payroll records or a document showing the 
employee's regular schedule.
    The ACWIA provisions on non-displacement and recruitment of U.S. 
workers do not apply if the LCA is used for petitioning only ``exempt 
H-1B nonimmigrants.'' If INS determines in the course of adjudicating 
an H-1B petition that an H-1B nonimmigrant is exempt, the employer must 
keep a copy of the determination in the public access file.
    The proposed rule would require an H-1B-dependent employer or 
willful violator that is seeking to place an H-1B nonimmigrant with 
another employer to secure and retain either a written assurance from 
the second employer, a contemporaneous written record of the second 
employer's verbal statement, or a prohibition in the contract between 
the two employers, stating that it has not displaced and intends not to 
displace a U.S. worker.
    H-1B-dependent employers and willful violators must maintain 
documentation that they have not displaced U.S. workers for a period 90 
days before and 90 days after the employer petitions for an H-1B 
worker. The rule proposes that employers maintain typical personnel 
records that would ordinarily be readily available, including name, 
last known mailing address, title and description of job, and any 
documentation kept on the employee's experience and qualifications and 
principal assignments, for all U.S. workers who left employment during 
the 180-day window. The employer must also keep all documents 
concerning the departure of any such U.S. employees and the terms of 
any offers of similar employment made to them and their responses. No 
special records need to be created to meet these requirements. EEOC 
requires under its regulations that any such existing records be 
maintained by employers.
    H-1B-dependent employers and willful violators must make good faith 
efforts to recruit U.S. workers using procedures that meet industry-
wide standards before hiring H-1B workers. These employers will be 
required to keep documentation of the recruiting methods they used, 
including the places, dates, and contents of advertisements or 
postings, and the compensation terms (if not included in contents of 
advertisements and postings). These employers must also summarize in 
the public disclosure file the principal recruitment methods used and 
the time frame within which the recruitment was conducted. The 
Department has requested comments on how employers should determine 
industry-wide standards, and how to make this determination available 
to U.S. workers. We expect that most employers would ordinarily follow 
industry standards for recruiting qualified job applicants for 
specialized jobs. Thus, inasmuch as the requirements are based on 
industry-wide standards, meeting this statutory standard should not 
impose significant burdens on affected employers in most cases. To 
ascertain whether employers have given good faith consideration to U.S. 
worker/applicants, the proposed regulation would also require retention 
of applications and related documents, rating forms, job offers, etc. 
Retention of such records is already required by EEOC, so no additional 
burden will be imposed.
    All employers of H-1B workers must offer fringe benefits to H-1B 
workers on the same basis and terms as offered to similarly-employed 
U.S. workers. To document that they have done so, employers must keep 
copies of their fringe benefit plans and summary plan descriptions, 
including rules on eligibility and benefits, evidence of what benefits 
are actually provided to workers, and how costs are shared between 
employers and employees. Because regulations of the Pension and Welfare 
Benefits Administration and the Internal Revenue Service generally 
require employers to keep copies of such fringe benefit information, 
meeting this requirement should not impose any additional burdens on 
most affected employers, and in the few cases where such information is 
not currently retained, it is anticipated that the additional burden 
will be minor.
    The Department has also republished and asked for comment on 
several provisions of the December 20, 1994 Final Rule (59 FR 65646), 
which were published for notice and comment on October 31, 1995 (60 FR 
55339). As explained above, H-1B workers are required to be paid at 
least the actual wage or the prevailing wage, whichever is higher. To 
ensure this requirement is met, employers are required to include in 
the public access file documents explaining their actual wage system, 
and to maintain payroll records for the specific employment in question 
for both their H-1B workers and their U.S. workers. This proposal 
modifies the payroll recordkeeping requirement with respect to U.S. 
workers, to require that hours worked records be retained only if the 
employee is not paid on a salary

[[Page 660]]

basis or the actual wage is expressed as an hourly rate. In virtually 
all cases, these employees would be paid hourly and hourly pay records 
would therefore be kept.
5. Are There Any Federal Rules That Duplicate, Overlap or Conflict With 
This Proposed Rule?
    Title VII of the Civil Rights Act of 1964 (42 U.S.C. 2000e et 
seq.), enforced by the U.S. Equal Employment Opportunity Commission 
(EEOC), prohibits national origin discrimination by employers with 15 
or more employees (see 29 CFR 1606). The Immigration Reform and Control 
Act of 1986 (see 8 U.S.C. 1324b; 8 U.S.C. 1103(a)), enforced by the 
U.S. Department of Justice, prohibits national origin discrimination by 
employers with between four (4) and 14 employees (those not covered by 
Title VII), and citizenship-status discrimination by employers with at 
least four (4) employees (see 28 CFR 44). In addition, under ACWIA, an 
``H-1B dependent'' employer must attest that it has taken good faith 
steps to recruit in the U.S. for the position for which it is seeking 
the H-1B worker, and that it has offered the job to any U.S. worker/
applicant who is equally or better qualified. The Department of Labor 
is responsible for enforcing the required recruitment, and the 
Department of Justice is responsible for administering an arbitration 
process detailed in ACWIA if U.S. worker/applicants complain that they 
were not offered a job for which they were equally or better qualified, 
as required.
6. Are There Significant Alternatives Available Such as Differing 
Compliance or Reporting Requirements or Timetables for Small Entities?
    The compliance and reporting requirements of the proposed rule, 
together with those significant alternatives which have been 
identified, are discussed in the ``Supplementary Information'' section 
of the preamble above. Different timetables for implementing the 
statutory requirements for smaller businesses would not appear to be 
consistent with the statute. The legislation temporarily increases the 
maximum allowable number of nonimmigrants that may be admitted into the 
U.S. to perform specialized jobs not filled by U.S. workers, and 
temporarily adds corresponding provisions intended to protect the wages 
and working conditions of U.S. workers in similar jobs during the same 
period.
7. Can Compliance and Reporting Requirements be Clarified, 
Consolidated, or Simplified Under the Proposed Rule for Small Entities?
    The compliance and reporting requirements of the proposed rule, and 
each of the alternatives considered together with their expected 
advantages and disadvantages, are described in the preamble above. The 
Department has attempted to keep new recordkeeping requirements to the 
minimum necessary for the Department to ascertain compliance and for 
the public to be aware of the primary documentation relied on by the 
employer to satisfy the statutory requirements. (See Section 212(n)(1) 
of the INA.) In addition, most recordkeeping requirements are already 
imposed by other statutes, or only require retention of documents which 
would be kept by a prudent businessman. Comments are invited on ways to 
clarify or simplify the compliance requirements for small businesses 
without undermining the Congressional intent of the new statutory 
provisions.
8. Can Other Standards be Used (Such as Performance, Rather Than Design 
Standards)?
    The underlying legislation allows employers to temporarily import 
and employ nonimmigrants admitted into the U.S. under H-1B visas to 
fill specialized jobs not filled by U.S. workers. As a condition of 
participating in this voluntary program, the employer must pay the H-1B 
worker at least the prevailing wage or the actual wage (whichever is 
higher). Certain employers of H-1B workers must also engage in good 
faith recruitment to try to find qualified U.S. workers to fill their 
job openings, and may not displace (lay off) a U.S. worker in order to 
hire an H-1B worker in the same job. Given the objectives of the 
applicable statutory provisions, the use of performance rather than 
design standards has been considered and such alternatives, where 
perceived to be appropriate, are discussed. For example, the Department 
is considering a presumption of good faith recruitment based on the 
employer's hiring a significant number of U.S. workers and, thereby, 
accomplishing a significant reduction in the ratio of H-1B workers to 
U.S. workers in the employer's workforce. The available alternatives 
that were considered in developing this proposed rule are discussed in 
the preamble above and are not repeated here.
9. Can Small Entities be Exempted From Coverage of the Rule, or Any 
Part of the Rule?
    Exemption from coverage under this proposed rule for small entities 
would not be appropriate under the terms of the controlling H-1B 
statutory mandates. The ACWIA contains no authority for the Department 
to grant such an exemption except to the extent that the statute itself 
grants an exemption (e.g., the definition of ``H-1B-dependent 
employer'').

IX. Catalog of Federal Domestic Assistance Number.

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

List of Subjects in 20 CFR Part 655

    Administrative practice and procedure, Agriculture, Aliens, 
Employment, Forest and forest products, Health professions, 
Immigration, Labor, Longshore work, Migrant labor, Penalties, Reporting 
requirements, Students, Wages.

Text of the Proposed Rule

    The text of the proposed rule to amend 20 CFR chapter V appears 
below. (In addition to the proposed regulatory text, other proposed 
changes to parts 655 and 656 are discussed in the preamble.)

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

    1. The authority citation for Part 655 is proposed to be revised 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); Title IV, Pub. L. 105-277, 112 Stat. 2681; and 8 
CFR 214.2(h)(4)(i).
    Section 655.00 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.; sec. 303(a)(8), Pub. L. 
102-232, 105 Stat. 1733, 1748 (8 U.S.C. 1182

[[Page 661]]

note); and Title IV, Pub. L. 105-277, 112 Stat. 2681.
    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).

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

    2. In Sec. 655.700, paragraph (a)(1) is proposed to be revised to 
read as follows:


Sec. 655.700  Purpose, procedure and applicability of subparts H and I.

    (a) * * *
    (1) Establishes the following annual ceilings (exclusive of spouses 
and children) on the number of foreign workers who may be issued H-1B 
visas or otherwise accorded H-1B nonimmigrant status):
    (i) 115,000 in fiscal year 1999;
    (ii) 115,000 in fiscal year 2000;
    (iii) 107,500 in fiscal year 2001; and
    (iv) 65,000 in each succeeding fiscal year;
* * * * *
    3. In Sec. 655.715, a new definition of ``Employed or employed by 
the employer'' is proposed to be added, to read as follows:


Sec. 655.715  Definitions.

* * * * *
    Employed or employed by the employer means the employment 
relationship as determined under the common law, under which ``no 
shorthand formula or magic phrase * * * can be applied to find the 
answer, * * * all of the incidents of the relationship must be assessed 
and weighed with no one factor being decisive'' (NLRB v. United Ins. 
Co. of America, 390 U.S. 254, 258 (1968)), in considering the following 
factors that would indicate the existence of an employment 
relationship:
    (1) The firm or the client has the right to control when, where, 
and how the worker performs the job;
    (2) The work does not require a high level of skill or expertise;
    (3) The firm or the client rather than the worker furnishes the 
tools, materials, and equipment;
    (4) The work is performed on the premises of the firm or the 
client;
    (5) There is a continuing relationship between the worker and the 
firm or the client;
    (6) The firm or the client has the right to assign additional 
projects to the worker;
    (7) The firm or the client sets the hours of work and the duration 
of the job;
    (8) The worker is paid by the hour, week, month or an annual 
salary, rather than for the agreed cost of performing a particular job;
    (9) The worker does not hire or pay assistants;
    (10) The work performed by the worker is part of the regular 
business (including governmental, educational, and nonprofit 
operations) of the firm or the client;
    (11) The firm or the client is itself in business;
    (12) The worker is not engaged in his or her own distinct 
occupation or business;
    (13) The firm or the client provides the worker with benefits such 
as insurance, leave, or workers' compensation;
    (14) The worker is considered an employee of the firm or the client 
for tax purposes (i.e., the entity withholds federal, state, and Social 
Security taxes);
    (15) The firm or the client can discharge the worker; and
    (16) The worker and the firm or client believe that they are 
creating an employer-employee relationship.
* * * * *
    4. In Sec. 655.730, in paragraph (b), the first sentence is 
proposed to continue to read as follows:


Sec. 655.730  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. 655.720 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. * * *
* * * * *
    5. In Sec. 655.730, paragraph (d)(4)(i)(B) is proposed to be 
revised to read as follows:


Sec. 655.730  Labor condition application.

* * * * *
    (d) * * *
    (4) * * *
    (i) * * *
    (B) If there is no such bargaining representative, provides 
electronic notice or posts notice of the filing of the labor condition 
application in conspicuous locations in the employer's establishment(s) 
in the area of intended employment, in the manner described in 
Sec. 655.734(a)(1)(ii) of this subpart, and provides a copy of the 
labor condition application to the H-1B worker, in the manner described 
in Sec. 655.734(a)(2) of this subpart; and
* * * * *
    6. In Sec. 655.731, the second sentence of paragraph (a)(1) is 
proposed to be amended by adding the phrase ``job performance,'' after 
the phrase ``job responsibility and function,''.
    7. In Sec. 655.731, paragraph (a)(2)(iii)(A)(1) is proposed to 
continue to read as follows:


Sec. 655.731  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 a SESA prevailing wage determination through the Employment 
Service complaint system, by filing a complaint with the SESA. See 20 
CFR part 658.410 et seq. Employers which challenge a 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.
* * * * *
    8. In Sec. 655.731, paragraph (b)(1) is proposed to be revised to 
read as follows:


Sec. 655.731  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

[[Page 662]]

examination to the extent required by Sec. 655.760(a) of this part. The 
employer shall also document that the 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. 655.760 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 
employee; and
    (vii) Total wages paid each pay period, date of pay and pay period 
covered by the payment by employee.
* * * * *
    9. In Sec. 655.731, paragraph (b)(3)(iii)(B)(1) is proposed to be 
revised to read as follows:


Sec. 655.731  The first labor condition statement: wages.

* * * * *
    (b) * * *
    (3) * * *
    (iii) * * *
    (B) * * *
    (1) Reflect the weighted average wage paid to workers similarly 
employed in the area of intended employment;
* * * * *
    10. In Sec. 655.731, paragraph (c)(4) is proposed to be deleted and 
reserved.
    11. In Sec. 655.731, paragraph (c)(5) is proposed to be revised to 
read as follows:


Sec. 655.731  The first labor condition statement: wages.

* * * * *
    (c) * * *
    (5)(i) In accordance with the standards specified in paragraphs 
(c)(5) (ii) and (iii) of this section, an H-1B nonimmigrant shall 
receive the full wage which the LCA-filing employer is required to pay, 
beginning on the date when the nonimmigrant enters into employment with 
the employer and continuing throughout the nonimmigrant's period of 
employment. In the case of an H-1B nonimmigrant who has not yet entered 
into employment with an employer who has had approved a labor condition 
application and an H-1B petition for such nonimmigrant, the employer's 
obligation to pay wages in accordance with the standards specified in 
paragraphs (c)(5) (ii) and (iii) of this section shall begin 30 days 
after the date the nonimmigrant first is admitted into the U.S. 
pursuant to the petition, or 60 days after the date the nonimmigrant 
becomes eligible to work for the employer (if the nonimmigrant is 
present in the U.S. on the date of the approval of the petition).
    (ii) 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 number 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.
    (iii) If, however, during the period of employment, an H-1B 
nonimmigrant experiences a period of nonproductive status due to 
conditions unrelated to employment which take the nonimmigrant away 
from his/her duties at his/her voluntary request and convenience (e.g., 
touring the U.S. prior to commencing performance of duties for 
employer, caring for ill relative) or render the nonimmigrant unable to 
work (e.g., maternity leave, automobile accident which temporarily 
incapacitates the nonimmigrant), then the employer shall not be 
obligated to pay the required wage rate during that period, provided 
that 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 the employer's benefit plan or other statutes such as the Family 
and Medical Leave Act (29 U.S.C. 2601 et seq.) or the Americans with 
Disabilities Act (42 U.S.C. 12101 et seq.).
* * * * *
    12. In Sec. 655.731, paragraph (d)(2) is proposed to continue to 
read as follows:


Sec. 655.731  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. 655.835 of this part.
* * * * *
    13. In Sec. 655.734, paragraph (a)(1)(ii) is proposed to be revised 
to read as follows:


Sec. 655.734  The fourth labor condition statement: notice.

    (a) * * *
    (1) * * *
    (ii) Where there is no collective bargaining representative, the 
employer shall, on or within 30 days before the date the labor 
condition application is

[[Page 663]]

filed with ETA, provide a notice of the filing of the labor condition 
application. The notice shall indicate that H-1B nonimmigrants are 
sought; the number of such nonimmigrants the employer is seeking; the 
occupational classification; the wages offered; the period of 
employment; the location(s) at which the H-1B nonimmigrants will be 
employed; and that the labor condition application is available for 
public inspection at the employer's principal place of business in the 
U.S. or at the worksite. The notice shall also include the statement: 
``Complaints alleging misrepresentation of material facts in the labor 
condition application and/or failure to comply with the terms of the 
labor condition application may be filed with any office of the Wage 
and Hour Division of the United States Department of Labor. Complaints 
alleging failure to offer employment to an equally or better qualified 
U.S. worker, or an employer's misrepresentation regarding such offer(s) 
of employment, may be filed with the Department of Justice, 10th Street 
& Constitution Avenue, N.W., Washington, D.C. 20530.'' The notice shall 
be provided in one of the two following manners:
    (A) By posting a notice in at least two conspicuous locations at 
each place of employment where any H-1B nonimmigrant will be employed.
    (1) The notice shall be of sufficient size and visibility, and 
shall be posted in two or more conspicuous places so that the 
employer's workers at the place(s) of employment can easily see and 
read the posted notice(s).
    (2) Appropriate locations for posting the notices include, but are 
not limited to, locations in the immediate proximity of wage and hour 
notices required by 29 CFR 516.4 or occupational safety and health 
notices required by 29 CFR 1903.2(a).
    (3) 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.
    (4) 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.
    (B) By providing electronic notification to employees in the 
occupational classification for which H-1B nonimmigrants are sought. 
Such notification shall be given on or before the date any H-1B 
nonimmigrant begins work, and shall be available to the affected 
employees for a total of ten days. Such notification shall be readily 
available to the affected employees. An employer may accomplish this by 
any means it ordinarily uses to communicate with its workers about job 
vacancies or promotion opportunities, including through its ``home 
page'' or ``electronic bulletin board'' to employees who have, as a 
practical matter, direct access to the home page or electronic bulletin 
board; or through E-Mail or an actively circulated electronic message 
such as the employer's newsletter. Where employees are not on the 
``intranet'' which provides direct access to the home page or other 
electronic site but do have computer access readily available, the 
employer may provide notice to such workers by direct electronic 
communication such as E-Mail.
* * * * *
    14. Section 655.735 is proposed to be revised to read as follows:


Sec. 655.735  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) without filing new labor 
condition application(s) for the area(s) of intended employment which 
would encompass such worksite(s).
    (b) The following restrictions must 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. 655.730 through 655.734 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:
    (i) 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);
    (ii) Pay such worker(s) the actual cost of lodging (for both 
workdays and non-workdays) up to the rate prescribed by the General 
Services Administration (``GSA'') for Federal Government employees on 
travel or temporary assignment, plus applicable taxes, as set out in 41 
CFR Part 301-7 and Ch. 301, App. A.; and
    (iii) Provide such worker(s) per diem for meals and incidental 
expenses (for both workdays and non-workdays) at rate(s) no lower than 
the rate(s) prescribed by the GSA as set out in 41 CFR Part 301-7 and 
Ch. 301, App. A.
    (iv) Provide such worker(s) the actual cost of transportation 
expenses, except that where the worker uses a privately-owned vehicle, 
the employer must provide such worker(s) the cost to operate the 
vehicle at the rate(s) set out in 41 CFR Part 301-4, plus out-of-pocket 
expenses for miscellaneous expenses such as tolls and parking fees.
    (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 total of ninety workdays 
for any H-1B nonimmigrant within a three-year period. For purposes of 
this section, ``workday'' shall mean any day on which an H-1B 
nonimmigrant performs any work at any worksite(s) within the area of 
employment. For example, three workdays would be counted where a 
nonimmigrant works three non-consecutive days at three different 
worksites, whether or not the employer owns or controls such 
worksite(s), within the same area of employment.
    (c) Once any H-1B nonimmigrant has worked 90 workdays in a three-
year period in any area of employment, the employer may not continue to 
employ H-1B nonimmigrant(s) in the same occupational classification at 
any worksite(s) within the area of employment unless the employer has 
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; on-site notice to workers), whether or not the employer 
owns or controls such worksite(s).

[[Page 664]]

    (d) The employer may not continuously rotate H-1B nonimmigrants to 
an area of employment in a manner that would defeat the purpose of the 
short-term placement option, which is to provide the employer with 
enough time to file an LCA for areas where it intends to have a 
significant presence (e.g., an employer may not rotate H-1B 
nonimmigrants to an area of employment for 60-day periods, with the 
result that nonimmigrants are continuously or virtually continuously 
employed in the area of employment, in order to avoid filing an LCA 
would be found to be in violation of these short-term placement 
provisions).
    (e) The employer may at any time file a labor condition application 
for an area of intended employment, performing all actions required in 
connection with such labor condition application. Upon certification of 
such application, the employer's obligation to comply with paragraph 
(b)(3) shall terminate. (However, see Sec. 655.731(c)(7)(iii)(C) 
regarding payment of business expenses for employee's travel on 
employer's business.)
    15. Appendix A to Subpart H is proposed to be revised to read 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, 
job performance, 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:
    (1) 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, 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. 655.731(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

[[Page 665]]

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.
    16. A new Appendix B to Subpart H is proposed to be added, to 
read as follows:

Appendix B to Subpart H--Guidance for Determination of the ``Place of 
Employment'' and Other Matters.

    a. ``Place of employment'' or ``worksite.''
    The regulation defines ``place of employment'' as ``the worksite 
or physical location where the work actually is performed'' 
(Sec. 655.715). The Department recognizes that some H-1B employers 
have expressed a concern that a strict or literal application of 
this definition might lead to absurd and/or unduly burdensome 
compliance requirements, particularly with regard to the employer 
providing required notices and adjusting the H-1B worker's wages to 
comport with different prevailing wages for various locations. These 
employers have inquired whether the ``worksite'' definition would be 
applicable where, for example, an H-1B worker has a business lunch 
at a local restaurant, or appears as a witness in a court, or 
attends a training seminar at an out-of-town hotel.
    1. The term ``place of employment'' or ``worksite'' (defined as 
``physical location where the work actually is performed'') is 
interpreted by the Department as not including any location where 
either of the following criteria--1 or 2--is satisfied:
    i. Employee developmental activity. An H-1B worker who is 
stationed and regularly works at one location may temporarily be at 
another location for a particular individual or employer-required 
developmental activity such as a management conference, a staff 
seminar, a business meeting or a formal training course (other than 
``on-the-job-training'' at a location where the employee is 
stationed and regularly works). For the H-1B worker participating in 
such activities, the location of the activity would not be 
considered a ``place of employment'' or ``worksite,'' and that 
worker's presence at such location--whether owned or controlled by 
the employer or by a third party--would not invoke H-1B program 
requirements with regard to that employee at that location. However, 
if the employer uses H-1B nonimmigrants as instructors or resource 
or support staff who continuously or regularly perform their duties 
at such locations, the locations would be ``places of employment'' 
or ``worksites'' for any such employees and, thus, would be subject 
to H-1B program requirements with regard to those employees.
    ii. Employee's job functions. The nature and duration of an H-1B 
worker's job functions may necessitate frequent changes of location 
with little time spent at any one location. For such a worker, a 
location would not be considered a ``place of employment'' or 
``worksite'' if the following 3 requirements are all met--
    A. The nature and duration of the H-1B worker's job functions 
mandates his/her short-time presence at the location. For this 
purpose, either the H-1B worker's job must be peripatetic in nature, 
in that the normal duties of the worker's occupation (rather than 
the nature of the employer's business) requires frequent travel 
(local or non-local) from location to location; or the H-1B worker's 
duties must require that he/she spend most work time at one location 
but occasionally travel for short periods to work at other 
locations; and
    B. The H-1B worker's presence at the locations to which he/she 
travels from the ``home'' worksite is on a casual, short-term basis, 
which can be recurring but not excessive (i.e., not exceeding five 
consecutive workdays for any one visit); and
    C. The H-1B worker is not at the location as a ``strikebreaker'' 
(i.e., not performing work in an occupation in which workers are on 
strike or lockout).
    2. Examples of ``non-worksite'' locations based on worker's job 
functions: a computer engineer sent out to customer locations to 
``troubleshoot'' complaints regarding software malfunctions; a sales 
representative making calls on prospective customers or established 
customers within a ``home office'' sales territory; a manager 
monitoring the performance of out-stationed employees; an auditor 
providing advice or conducting reviews at customer facilities; a 
physical therapist providing services to patients in their homes 
within an area of employment; an individual making a court 
appearance; an individual lunching with a customer representative at 
a restaurant; or an individual conducting research at a library.
    3. Examples of ``worksite'' locations based on worker's job 
functions: a computer engineer who works on projects or accounts at 
different locations for weeks or months at a time; a sales 
representative assigned on a continuing basis in an area away from 
his/her ``home office;'' an auditor who works for extended periods 
at the customer's offices; a physical therapist who ``fills-in'' for 
full-time employees of health care facilities for extended periods; 
or a physical therapist who works for a contractor whose business is 
to provide staffing on an ``as needed'' basis at hospitals, nursing 
homes, or clinics.
    4. Whenever an H-1B worker performs work at a location which is 
not a ``worksite'' (under either criterion above), that worker's 
``place of employment'' or ``worksite'' for purposes of H-1B 
obligations is the worker's home station or regular work location. 
The employer's obligations regarding notice, prevailing wage and 
working conditions are focused on the home station ``place of 
employment'' rather than on the above-described location(s) which do 
not constitute worksite(s) for these purposes.
    5. In applying this interpretation of ``place of employment'' or 
``worksite,'' the Department will look carefully at situations which 
appear to be contrived or abusive. The Department would seriously 
question any situation where the H-1B worker's purported ``place of 
employment'' is a location other than where the worker spends most 
of his/her work time, or where the purported ``area of employment'' 
does not include the location(s) where the worker spends most of 
his/her work time. For example, where an H-1B worker is nominally 
``home-based'' in City A and is claimed by the employer to be 
covered by the LCA for City A, but spends most of his/her time in 
City B, going from one customer location to another, the Department 
would consider City B to be the worker's ``area of employment'' and, 
further, would expect the employer to have a certified LCA for City 
B and be in compliance with all of the program requirements under 
that LCA.
    6. The Department's interpretation of the regulation will not 
result in absurd or unduly burdensome situations, and should 
alleviate the legitimate concerns of employers seeking to comply 
with the requirements of the H-1B program. However, employers should 
carefully note that whether or not a location is considered to be a 
``worksite''/``place of employment'' for an H-1B worker, the 
employer is required to provide reimbursement to the H-1B worker for 
expenses incurred in traveling to that location on the employer's 
business, since such expenses are considered to be ordinary business 
expenses of employers which may not be transferred to employees 
(Secs. 655.731(c)(7)(iii)(C); 655.731(c)(9)).
    b. ``Roving'' or ``floating'' H-1B employees.
    The statute and regulations do not permit the employment of H-1B 
workers as ``roving'' or ``floating'' employees for whom no 
particular LCA (and thus no specific set of LCA requirements) would 
be applicable. While H-1B workers may move about (``floating'' or 
``roving'' from their ``homebase'' worksites), they are subject to 
the following restrictions and standards.
    (1) Employers are advised that, under the H-1B program, every H-
1B worker is protected by an LCA, and no H-1B worker is legally 
permitted to ``rove'' or ``float'' without an applicable LCA 
prescribing the employer's obligations as to notice, wages, and all 
other program requirements for that worker. Every H-1B worker has a 
``home station,'' ``home office,'' or ``home base,'' regardless of 
frequency of travel or variation in job duties. The LCA for the 
worker's ``home station'' area of employment prescribes the 
employer's obligations as to that worker, unless or until an LCA for 
some other area of employment becomes applicable due to the nature 
and duration of the worker's presence at worksite(s) in that other 
area.
    (2) Employers are cautioned that an H-1B worker may legitimately 
and legally be dispatched from his/her home station worksite--thus, 
``rove'' or ``float'' from that worksite--only in the following 
three circumstances:
    (i) Dispatch to non-worksite location(s). An H-1B employee may 
leave his/her home station worksite to perform job functions at 
location(s) which do not constitute ``worksites(s)'' within the 
regulatory definition as interpreted by the Department (see 
subparagraph (a), above). The employer's obligations as to that H-1B 
worker for work time at that non-worksite location (e.g., wages; 
travel expenses) are prescribed by the LCA for the worker's home 
station area of employment, even if the non-worksite

[[Page 666]]

location is within an area of employment covered by a different LCA.
    (ii) Dispatch to worksite(s) within area(s) of employment 
covered by LCA(s). An H-1B worker may leave his/her home station 
worksite to perform job functions at worksite(s) within the same 
area of employment and thus covered by the same LCA already 
applicable for that employee, or at worksite(s) in some other area 
of employment covered by a different LCA. The employer's obligations 
as to that H-1B worker for that work time (e.g., wages, travel 
expenses) are prescribed by the home station LCA unless the worker 
is permanently reassigned to the new area or is dispatched to that 
area for an extended period of time (to be determined case-by-case, 
depending on the nature of the employee's job functions and the 
employer's operations in the area). When a different LCA becomes 
applicable for the employee, the employer would be required to 
assure compliance with that LCA (e.g., wage adjustments, if 
appropriate).
    (iii) Dispatch to worksite(s) not covered by any LCA, pursuant 
to short-term placement option. An H-1B worker may leave his/her 
home station worksite to perform job functions at worksite(s) not 
covered by any LCA, provided the placement of the worker at such 
worksite(s) is in compliance with the short-term placement option 
(Sec. 655.735).
    c. Attorney fees and H-1B petition fees as employer's business 
expense.
    (1) Under the regulations, an employer is not permitted to 
impose its business expense(s) on its H-1B workers 
(Secs. 655.731(c)(7)(iii)(C); 655.731(c)(9)). To the extent that an 
employer shifts any portion of business expense(s) to an H-1B 
worker, that action constitutes a failure by the employer to satisfy 
the required wage obligation to that worker, regardless of whether 
the required wage is the employer's actual wage rate or the local 
prevailing wage rate.
    (2) The employer's business expenses include costs incurred in 
the filing of an LCA with ETA and of an H-1B petition with INS 
(regardless of whether the INS filing is to bring an H-1B 
nonimmigrant into the U.S., or to amend, change, or extend an H-1B 
nonimmigrant's visa status). These filing functions are legal 
obligations of the employer; the employer is required by law to 
perform these functions and the H-1B nonimmigrant is not permitted 
by law to do so. Performance of such a legal obligation is 
necessarily an integral part of the employer's administration of its 
business. Therefore, any costs associated with such filings--
including attorney fees--are business expenses to be borne by the 
employer. The regulations prohibit the employer from shifting such 
expenses to the H-1B worker(s), either directly (e.g., by the 
employer paying an attorney's fees and then recouping the costs 
through deduction from the worker's wages) or indirectly (e.g., by 
the employer requiring or encouraging the worker to pay for an 
attorney's services to perform these functions). Some employers have 
contended that they have experienced situations in which prospective 
H-1B nonimmigrants have demanded the responsibility for obtaining 
and paying the attorney who prepares the LCA and H-1B petition. 
Employers are cautioned that their business expenses are not to be 
paid by the nonimmigrant, and that an employer cannot acquiesce to 
the nonimmigrant's ``demand for responsibility'' which amounts to 
shifting the employer's legal responsibilities to the nonimmigrant.
    (3) Bona fide costs in connection with visa functions which are 
required by law to be performed by the nonimmigrant (e.g., 
translation fees and other costs relating to visa application and 
processing for prospective nonimmigrant residing outside the U.S.) 
do not constitute and will not be considered to be an employer's 
business expense. The Department will, however, look behind what 
appear to be contrived allocations of costs--such as attorney's fees 
for preparing the H-1B LCA and/or H-1B petition being assigned to 
the nonimmigrant's visa application or to petitions for the 
nonimmigrant's family members--should such situations appear to be 
occurring.
    d. SCA wage determinations as prevailing wage.
    (1) Under the regulation, if there is a Service Contract Act 
(``SCA'') wage determination for the occupational classification in 
the area of employment, that SCA wage determination is considered by 
the Department to constitute the prevailing wage for that occupation 
in that area (Sec. 655.731(a)(2)(i) and (iii)(A)). Therefore, the 
SCA wage rate will be issued by the SESA in response to a request 
for a prevailing wage determination and should be used by the 
employer in the event that the employer chooses to determine the 
prevailing wage without consulting the SESA. However, where an SCA 
wage determination for an occupational classification in the 
computer industry states a rate of $27.63, that rate will not be 
issued by the SESA and may not be used by the employer as the 
prevailing wage; that rate does not represent the actual prevailing 
wage but, instead, is reported by the Wage and Hour Division in the 
SCA determination merely as an artificial ``wage cap'' as 
contemplated by an SCA exemption provision (see 29 CFR 4.156; 
541.3). In such circumstances, the SESA and the employer must 
consult another source for wage information (e.g., Bureau of Labor 
Statistics report).
    (2) For purposes of the determination of the H-1B prevailing 
wage for an occupational classification through the use of an SCA 
wage determination, it is irrelevant whether a particular job or 
particular worker would be exempt from the SCA wage determination in 
the performance of an SCA contract, through application of the SCA/
FLSA ``professional employee'' exemption test (i.e., duties and 
compensation; see 29 CFR 4.156; 541.3). Thus, in issuing the SCA 
wage rate as the prevailing wage determination for the occupational 
classification, the SESA will not consider questions of employee 
exemption, and in an enforcement action, the Department will 
consider the SCA wage rate to be the prevailing wage without regard 
to whether any particular H-1B employee(s) could be exempt from that 
wage as SCA contract workers under the SCA/FLSA exemption. An 
employer who employs H-1B employee(s) to perform services under an 
SCA-covered contract may find that the H-1B employees are required 
to be paid the SCA rate as the H-1B prevailing wage even though non-
H-1B employees performing the same services may be exempt from the 
SCA rate pursuant to the SCA regulation.
    e. ``CMSA'' and ``PMSA.''
    (1) There is some possibility for confusion regarding the 
appropriate interplay among several concepts or terms--area of 
intended employment, area of employment, metropolitan statistical 
area (``MSA''), primary metropolitan statistical area (``PMSA''), 
and consolidated metropolitan statistical area (``CMSA''). The 
following clarification is intended to alleviate any confusion and 
to facilitate compliance with H-1B program requirements.
    (2) For purposes of determining the applicable locally 
prevailing wage under the H-1B program, the procedures at 20 CFR 
656.40, governing the Permanent Alien Labor Certification Program, 
are to be used. Section 656.40(a)(2)(i) ties the prevailing wage to 
the ``area of intended employment.'' ``Area of intended employment'' 
is defined at 20 CFR Sec. 656.3 as:
    `` * * * the area within normal commuting distance of the place 
(address) of intended employment. If the place of intended 
employment is within a Metropolitan Statistical Area (MSA), any 
place within the MSA is deemed to be within normal commuting 
distance of the place of intended employment.''

Pursuant to 44 U.S.C. 3504(d)(3), 31 U.S.C. 1104(d), and Executive 
Order No. 10,253 (June 11, 1951), the Office of Management and 
Budget (OMB) defines MSAs and PMSAs for use in Federal statistical 
activities. The Department takes the position that where a worksite 
is within an MSA or PMSA as defined by OMB, any other location 
within the MSA or PMSA shall be deemed to be within normal commuting 
distance of the worksite and, therefore, within the area of intended 
employment for purposes of both the permanent and H-1B programs. 
Thus, one prevailing wage determination for an occupational 
classification would be applicable throughout an MSA or PMSA. 
However, this concept of ``commuting distance'' for prevailing wage 
purposes is not extended to all locations within a CMSA, because the 
Department has determined, based on its operational experience, that 
CMSAs can be too geographically broad for this purpose. Thus, all 
locations within a CMSA will not automatically be deemed to be 
within ``normal commuting distance.'' This does not mean, however, 
that a location outside of an MSA, PMSA, or for that matter a CMSA, 
cannot be ``within normal commuting distance'' of a worksite that 
is, for example, close to the border of the MSA and adjacent to the 
other location.
    (3) The Department has not adopted any rigid measure of distance 
involved in a ``normal commuting area'' (e.g., 20, 30, 50 miles), 
because, in the Department's view, it is necessary that the concept 
afford sufficient flexibility to be able to reflect widely varying 
factual circumstances among different locations.
    f. ``Weighted average'' in determining prevailing wages.

[[Page 667]]

    (1) The regulation requires that a legitimate source of wage 
information (other than one specified in the regulations such as a 
SESA determination or an independent authoritative source) must 
``reflect the weighted average wage paid to workers similarly 
employed in the area of intended employment'' 
(Sec. 655.731(b)(3)(iii)(C)(1)). The regulation also requires that 
an independent authoritative source must ``reflect the average wage 
paid to workers similarly employed in the area of intended 
employment'' (Sec. 655.731(b)(3)(iii)(B)(1)). Because the word 
``weighted'' was left out of the subparagraph dealing with 
independent authoritative sources, there have been some suggestions 
of confusion as to whether use of a weighted average of wages for an 
occupational classification is necessary only when the employer uses 
``another legitimate source'' of wage information.
    (2) When used in a statistical sense, the word ``average'' 
ordinarily refers to the arithmetic mean; i.e., a weighted average. 
The Department has always required that a weighted average be used 
in determining the prevailing wage (except where either the Davis-
Bacon Act or the McNamara-O'Hara Service Contract Act applies). It 
is DOL's long-standing position--because Congress expressly stated 
that prevailing wages for the H-1B program are to be determined in 
accordance with the methodology used for the permanent employment-
based immigration program, which produces a weighted average--that 
the H-1B employer's prevailing wage determination must be based on a 
weighted average. (See 20 CFR 656.40(a)(2)(i).) The word 
``weighted'' was inadvertently omitted from 
Sec. 655.731(b)(3)(iii)(B)(1).
    g. Effect of New LCA on Prevailing Wage Obligation Under Old 
LCA.
    (1) There is some possibility for confusion regarding the 
prevailing wage obligation of an employer which has filed more than 
one LCA for the same occupational classification in the same area of 
employment. In such circumstances, the employer could have H-1B 
employees in the same occupational classification in the same area 
of employment, brought into the U.S. (or accorded H-1B status) based 
on petitions approved pursuant to different LCAs (filed at different 
times) with different prevailing wage determinations. Employers are 
advised that the prevailing wage rate as to any particular H-1B 
nonimmigrant is prescribed by the LCA which supports that 
nonimmigrant's H-1B petition. The regulations require that the 
employer obtain the prevailing wage at the time that the LCA is 
filed (Sec. 655.731(a)(2)). The LCA is valid for the period 
certified by ETA, and the employer must satisfy all the LCA's 
requirements (including the ``required wage'' which encompasses both 
prevailing and actual wage rates) for as long as any H-1B 
nonimmigrants are employed pursuant to that LCA (Sec. 655.750). 
Where new nonimmigrants are employed pursuant to a new LCA, that new 
LCA prescribes the employer's obligations as to those new 
nonimmigrants. The prevailing wage determination on the later/
subsequent LCA does not ``relate back'' to operate as an ``update'' 
of the prevailing wage for the previously-filed LCA for the same 
occupational classification in the same area of employment.
    (2) Employers are cautioned that the actual wage component of 
the ``required wage'' may, as a practical matter, eliminate any 
wage-payment differentiation among H-1B employees based on different 
prevailing wage rates stated in applicable LCAs. Every H-1B worker 
is to be paid in accordance with the employer's actual wage system, 
and thus is to receive any pay increases which that system provides.

Subpart I--Enforcement of H-1B Labor Condition Applications

    17. Sec. 655.800 is proposed to be revised to read as follows:


Sec. 655.800  Enforcement authority of Administrator, Wage and Hour 
Division.

    (a) Authority of Administrator. Except as provided in Sec. 655.806 
of this part, the Administrator shall perform all the Secretary's 
investigative and enforcement functions under section 212(n) of the INA 
(8 U.S.C. 1182(n)) and subparts H and I of this part.
    (b) Conduct of Investigations. The Administrator, either pursuant 
to a complaint or otherwise, shall conduct such investigations as may 
be appropriate and, in connection therewith, enter and inspect such 
places and such records (and make transcriptions or copies thereof), 
question such persons and gather such information as deemed necessary 
by the Administrator to determine compliance regarding the matters 
which are the subject of the investigation.
    (c) Availability of Records. An employer being investigated shall 
make available to the Administrator such records, information, persons, 
and places as the Administrator deems appropriate to copy, transcribe, 
question, or inspect. No employer subject to the provisions of section 
212(n) of the INA (8 U.S.C. 1182(n)) and/or subpart H or I of this part 
shall interfere with any official of the Department of Labor performing 
an investigation, inspection or law enforcement function pursuant to 8 
U.S.C. 1182(n) or subpart H or I of this part. Any such interference 
shall be a violation of the labor condition application and these 
regulations, and the Administrator may take such further actions as the 
Administrator considers appropriate. (Note: Federal criminal statutes 
prohibit certain interference with a Federal officer in the performance 
of official duties. 18 U.S.C. 111 and 18 U.S.C. 1114.)
    (d) Employee Protection. (1) No employer subject to subpart H or I 
of this part shall intimidate, threaten, restrain, coerce, blacklist, 
discharge or in any other manner discriminate against an employee 
(which term includes a former employee or an applicant for employment) 
because the employee has
    (i) Disclosed information to the employer, or to any other person, 
that the employee reasonably believes evidences a violation of section 
212(n) of the INA or subpart H or I of this part; or
    (ii) Cooperated or sought to cooperate in an investigation or other 
proceeding concerning the employer's compliance with the requirements 
of section 212(n) of the INA or subpart H or I of this part.
    (2) It shall be a violation of Sec. 655.805(a)(12) of this part for 
any employer to engage in such retaliatory conduct. Such conduct shall 
be subject to the penalties prescribed by section 212(n)(2)(C)(ii) of 
the INA and Sec. 655.810 of this part, i.e., a fine of up to $5,000 and 
debarment for at least two years, and such further action as the 
Administrator considers appropriate.
    (3) An employee who has filed a complaint alleging that an employer 
has discriminated against the employee in violation of paragraph (d)(1) 
of this section may be allowed to seek other appropriate employment in 
the United States, provided the employee is otherwise eligible to 
remain and work in the United States. Such employment may not exceed 
the maximum period of stay authorized for a nonimmigrant classified 
under section 212(n) of the INA (8 U.S.C. 1182(n)).
    (e) Confidentiality. The Administrator shall, to the extent 
possible under existing law, protect the confidentiality of any person 
who provides information to the Department in confidence in the course 
of an investigation or otherwise under subpart H or I of this part.
    18. Section 655.805 is proposed to be revised to read as follows:


Sec. 655.805  Complaints and investigative procedures.

    (a) The Administrator shall receive allegations that an employer 
subject to subpart H or I of this part has violated section 212(n) of 
the INA or these regulations from any aggrieved party (as defined at 
Sec. 655.715 of this part, including a government agency other than the 
Labor Department) or other sources where these sources meet the 
conditions prescribed by Sec. 655.806 of this part, and shall conduct 
such investigations as may be appropriate in accordance with 
Sec. 655.806 of this part (pertaining to allegations from other 
sources), Sec. 655.807 of this part (pertaining to spot 
investigations), or as the Administrator, on his or her own

[[Page 668]]

initiative, directs. In conducting such investigations, the 
Administrator shall determine whether an H-1B employer has:
    (1) Filed a labor condition application with ETA which 
misrepresents a material fact; (Note: Federal criminal statutes provide 
penalties of up to $10,000 and/or imprisonment of up to 5 years for 
knowing and willful submission of false statements to the Federal 
Government. 18 U.S.C. 1001; see also 18 U.S.C. 1546);
    (2) Failed to pay wages as required under Sec. 655.731 of this part 
(including payment of wages for certain nonproductive time), for 
purposes of the assessment of back wages;
    (3) Failed to provide fringe benefits and other working conditions 
as required under Sec. 655.732 of this part;
    (4) Filed a labor condition application for H-1B nonimmigrants 
during a strike or lockout in the course of a labor dispute in the 
occupational classification at the place of employment (see 
Sec. 655.733 of this part);
    (5) Failed to provide notice of the filing of the labor condition 
application as required in Sec. 655.734 of this part;
    (6) Failed to be specific on the labor condition application as to 
the number of workers sought, the occupational classification in which 
the H-1B nonimmigrants will be employed, or the wage rate and 
conditions under which the H-1B nonimmigrants will be employed;
    (7) Failed to comply with the displacement protections for U.S. 
workers (if applicable);
    (8) Failed to make the required displacement inquiry provision of 
another employer (if applicable);
    (9) Failed to take good faith steps in recruitment (if applicable);
    (10) Required, accepted, or attempted to require an employee to 
remit to the employer payment for any part of the additional $500 fee 
incurred in filing a petition in connection with the employee's visa 
(if applicable);
    (11) Required or attempted to require an employee to pay a penalty 
for ceasing employment prior to an agreed upon date (see 
Sec. 212(n)(2)(C)(vi)(I) of INA);
    (12) Discriminated against an employee as prohibited by 
Sec. 655.800(d) of this part;
    (13) Failed to make available for public examination the 
application and necessary document(s) at the employer's principal place 
of business or worksite as required in Sec. 655.760(c) of this part;
    (14) Failed to retain documentation as required by Sec. 655.760(c) 
of this part; and (15) Failed otherwise to comply in any other manner 
with the provisions of subpart H or I of this part.
    (b) Failures pertaining to the violations (a)(1) through (a)(9) may 
be cited as ``willful'' failures. Failures pertaining to the violations 
(a)(5), (6), and (9) may be cited as ``substantial'' failures. The 
determination letter (see Sec. 655.815 of this part) shall specifically 
cite the appropriate finding and the requirement to notify the Attorney 
General and the Employment and Training Administration as required for 
purposes of debarment. See section 655.855 of this part.
    (c) For purposes of this part, ``willful failure'' means a knowing 
failure or a reckless disregard with respect to whether the conduct was 
contrary to section 212(n)(1)(A)(i) or (ii) of the INA, or 
Secs. 655.731 or 655.732 of this part. See McLaughlin v. Richland Shoe 
Co., 486 U.S. 128 (1988); see also Trans World Airlines v. Thurston, 
469 U.S. 111 (1985).
    (d) Pursuant to Secs. 655.740(a)(1) and 655.750 of this part, the 
provisions of this part become effective upon the date of ETA's 
notification that the employer's labor condition application is 
certified, whether or not the employer hires any H-1B nonimmigrants in 
the occupation for the period of employment covered in the labor 
condition application. Should the period of employment specified in the 
labor condition application expire or should the employer withdraw the 
application in accordance with Sec. 655.750(b) of this part, the 
provisions of this part will no longer be in effect with respect to 
such application, except as provided in Sec. 655.750(b)(3) and (4) of 
this part.
    (e) Any aggrieved person or organization (including bargaining 
representatives and governmental officials) may file a complaint 
alleging a violation described in paragraph (a) of this section. The 
procedures for filing a complaint and its processing by the 
Administrator are set forth in this section. Other persons with 
information regarding an employer's alleged violation of section 212(n) 
of the INA or subpart H or I of this part instead should follow the 
requirements of Sec. 655.806 of this part. With regard to complaints 
filed by any aggrieved person or organization--
    (1) No particular form of complaint is required, except that the 
complaint shall be written or, if oral, shall be reduced to writing by 
the Wage and Hour Division official who receives the complaint.
    (2) The complaint shall set forth sufficient facts for the 
Administrator to determine whether an investigation is warranted, in 
that there is reasonable cause to believe that a violation as described 
in paragraph (a) of this section has been committed. This determination 
shall be made within 10 days of the date that the complaint is received 
by a Wage and Hour Division official. If the Administrator determines 
that the complaint fails to present reasonable cause for an 
investigation, the Administrator shall so notify the complainant, who 
may submit a new complaint, with such additional information as may be 
necessary. No hearing pursuant to this subpart shall be available where 
the Administrator determines that an investigation on a complaint is 
not warranted.
    (3) If the Administrator determines that an investigation on a 
complaint is warranted, the complaint shall be accepted for filing; an 
investigation shall be conducted and a determination issued within 30 
calendar days of the date of filing.
    (4) In the event that the Administrator seeks a prevailing wage 
determination from ETA pursuant to Sec. 655.731(d) of this part, or 
advice as to prevailing working conditions from ETA pursuant to 
Sec. 655.732(c)(2) of this part, the 30-day investigation period shall 
be suspended from the date of the Administrator's request to the date 
of the Administrator's receipt of the wage determination (or, in the 
event that the employer challenges the wage determination through the 
Employment Service complaint system, to the date of the completion of 
such complaint process).
    (5) A complaint must be filed not later than 12 months after the 
latest date on which the alleged violation(s) were committed, which 
would be the date on which the employer allegedly failed to perform an 
action or fulfill a condition specified in the LCA, or allegedly took 
an action which, through such action or inaction, demonstrates a 
misrepresentation of a material fact in the LCA regarding such action 
or inaction. This jurisdictional bar does not affect the scope of the 
remedies which may be assessed by the Administrator. Where, for 
example, a complaint is timely filed, back wages may be assessed for a 
period prior to one year before the filing of a complaint.
    (6) A complaint may be submitted to any local Wage and Hour 
Division office. The addresses of such offices are found in local 
telephone directories. The office or person receiving such a complaint 
shall refer it to the office of the Wage and Hour Division 
administering the area in which the reported violation is alleged to 
have occurred.
    (f) When an investigation has been conducted, the Administrator 
shall, pursuant to Sec. 655.815 of this part, issue

[[Page 669]]

a written determination as to whether or not any violation(s) as 
described in paragraph (a) of this section has been committed.
    19. A new Sec. 655.806 is proposed to be added, to read as follows:


Sec. 655.806  Allegations of employer violations by persons other than 
aggrieved parties.

    (a) Sources other than aggrieved parties may submit information 
alleging that an employer may have violated section 212(n) of the INA 
or these regulations by committing a willful failure to meet certain of 
the conditions prescribed by section 212(n)(2)(G)(i) of the INA. Such 
information should be submitted to the Administrator by contacting any 
local Wage and Hour Division office. The Administrator shall receive 
and process such information in accordance with this subsection, 
subject to the personal determination by the Secretary or the Acting 
Secretary pursuant to paragraph (e) of this section as to whether an 
investigation should be commenced based on the information.
    (b) Information from sources other than aggrieved parties must be 
submitted not later than 12 months after the latest date on which the 
alleged violation(s) were committed. The 12-month period shall be 
applied in the manner described in Sec. 655.805(e)(5) of this part.
    (c) In submitting information, sources other than aggrieved parties 
are encouraged to utilize the form provided by the Administrator for 
this purpose. The Administrator will prepare the form where the source 
provides information but does not utilize the form.
    (d) Where the Administrator receives information from a source 
other than an aggrieved party, the Administrator (by mail or facsimile 
transmission) shall notify the employer that the information has been 
received, describe the nature of the allegation in sufficient detail to 
permit the employer to respond (but without providing the identity of 
the source), and request that the employer respond to the allegation 
within 10 days of its receipt of the notification. The Administrator 
may dispense with such notification if the Administrator determines 
that such notification might interfere with an effort to secure the 
employer's compliance.
    (e) Upon the receipt of such information and review of the 
employer's response, if any, to the allegations, the Administrator will 
determine whether the allegations should be referred to the Secretary 
(or the Acting Secretary in the case of the Secretary's absence or 
disability) for a determination whether an investigation should be 
commenced by the Administrator. The Administrator may request 
authorization to commence an investigation where the following 
conditions are satisfied:
    (1) The source of the information identifies himself or herself;
    (2) The source likely possesses knowledge of the employer's 
practices or employment conditions or the employer's compliance with 
the with the requirements of this part;
    (3) The source has provided specific credible information alleging 
a violation of the requirements of this part;
    (4) The information provided is other than the information 
submitted by the employer to the Attorney General or the Secretary in 
securing the employment of an H-1B nonimmigrant;
    (5) The information originated from a source other than an officer 
or employee of the Department of Labor, or, if it originated from an 
officer or employee of the Department of Labor, it was obtained in the 
course of a lawful investigation; and (6) The information in support of 
the allegations provides reasonable cause to believe that an employer 
has
    (i) Willfully failed to meet a condition established by--
    (A) Section 655.731 of this part relating to wages or Sec. 655.732 
of this part relating to working conditions;
    (B) Section 655.733 of this part relating to strikes or lockouts;
    (C) Section 655.------of this part relating to the displacement of 
U.S. workers (see Section 212(n)(1)(E) of INA); \1\
---------------------------------------------------------------------------

    \1\ Note: The sections referenced in Sec. 655.806(e)(6)(i)(C) 
through (E) are under development. See discussion in the preamble.
---------------------------------------------------------------------------

    (D) Section 655.------ of this part relating to displacement of 
U.S. workers by receiving employer (see Section 212(n)(1)(F) of INA); 
or
    (E) Section 655.------ of this part relating to recruitment of 
qualified U.S. workers (see Section 212(n)(1)(G)(i)(I)); or
    (ii) Engaged in a pattern or practice of failures to meet a 
condition contained in subparagraph 6(i); or
    (iii) Committed a substantial failure, affecting multiple 
employees, to meet a condition contained in paragraph (e)(6)(i) of this 
section.
    (f) No investigation pursuant to this section will be commenced 
unless the Administrator requests authorization from the Secretary (or 
the Acting Secretary under the circumstances noted above) and the 
Secretary or the Acting Secretary personally certifies that the 
conditions listed in Sec. 655.806(d) of this part have been met. If the 
Secretary issues a certification, an investigation shall be conducted 
and a determination issued within 30 days after the certification is 
received by the local Wage and Hour office undertaking the 
investigation.
    (g) No hearing shall be available from a decision by the 
Administrator declining to refer allegations addressed by this section 
to the Secretary; and none shall be available from a decision by the 
Secretary certifying or declining to certify that an investigation is 
warranted.
    (h) If following the Secretary's certification, the Administrator 
determines that a reasonable basis exists for a determination that the 
employer has violated a requirement of subpart H or I of this part, the 
Administrator shall notify the employer and other interested parties of 
the Administrator's determination and their right to a hearing, subject 
to the limitation established by paragraph (f) of this section, under 
the procedure prescribed in Sec. 655.815 of this part.
    (i) The identity of the source of information submitted to the 
Administrator shall not be disclosed.
    (j) This section shall expire on October 1, 2001 unless section 
212(n)(2)(G) of the INA is extended by future legislative action.
    20. A new Sec. 655.807 is proposed to be added, to read as follows:


Sec. 655.807  Authority to investigate employers found to have 
committed willful violations

    (a) The Administrator may conduct random investigations of an 
employer during a five-year period beginning on the date of one of the 
following findings (on or after October 21, 1998, the date of the 
enactment of the ACWIA)--
    (1) A finding by the Secretary that the employer willfully failed 
to meet a condition of section 212(n) of the INA (pertaining to 
attestations in the labor condition application; see Sec. 655.730 et 
seq. of subpart H);
    (2) A finding by the Secretary that the employer willfully 
misrepresented material fact(s) in a labor condition application (see 
Sec. 655.730 et seq. of subpart H); or
    (3) A finding by the Attorney General that the employer willfully 
failed to meet the condition of section 212(n)(1)(G)(i)(II) of the INA 
(pertaining to an offer of employment to an equally or better qualified 
U.S. worker).
    (b) Where the Administrator undertakes such an investigation, the 
Administrator shall issue a determination in the manner provided by 
Sec. 655.805(e) and Sec. 655.815 of this part.

[[Page 670]]

    (c) The Administrator's authority to undertake such investigations 
does not affect the Administrator's authority to undertake 
investigations under other circumstances (see Secs. 655.805; 655.806).
    20. Section 655.810 is proposed to be revised to read as follows:


Sec. 655.810  Remedies.

    (a) Upon determining that an employer has failed to pay wages as 
required by Sec. 655.731 of this part, the Administrator shall assess 
and oversee the payment of back wages to any H-1B nonimmigrant employed 
by the employer in the specific employment in question. The back wages 
shall be equal to the difference between the amount that should have 
been paid and the amount that actually was paid to such 
nonimmigrant(s). The Administrator may appropriately impose an 
administrative remedy or order for any violation of the Act.
    (b) The Administrator may assess appropriate administrative 
remedies (including civil monetary penalties in an amount not to exceed 
$1,000 per violation) for the following violations:
    (1) A failure pertaining to strike/lockout, displacement, or 
contractor inquiry;
    (2) A substantial failure pertaining to notification, labor 
condition application specificity, or recruitment; or
    (3) A misrepresentation of material fact on the labor condition 
application.
    (c) The Administrator may assess a civil monetary penalty of 
$1,000--and also issue an administrative order requiring the employer 
to return to the employee (or pay to the U.S. Treasury if the employee 
cannot be located) any money paid to the employer--for the following 
violations:
    (1) A penalty paid by the employee to the employer for ceasing 
employment with the employer prior to a date agreed to by the employee 
and employer; or
    (2) A payment or compensation by the employee to the employer of 
the additional $500 filing fee required for the filing the petition 
under section 214(c)(9) of the INA.
    (d) The Administrator may assess appropriate administrative 
remedies (including civil monetary penalties in an amount not to exceed 
$5,000 per violation) for the following violations:
    (1) A willful failure pertaining to wages/working conditions, 
strike/lockout, notification, labor condition application specificity, 
displacement, or recruitment;
    (2) A willful misrepresentation of a material fact on the labor 
condition application; or
    (3) A discrimination, retaliation or intimidation against an 
employee (see Sec. 655.800(d)).
    (e) The Administrator may assess appropriate administrative 
remedies (including civil monetary penalties in an amount not to exceed 
$35,000 per violation) for a displacement violation which is 
accompanied by one of the following violations:
    (1) A willful failure pertaining to wages/working condition, 
strike/lockout, notification, labor condition application specificity, 
displacement, or recruitment; or
    (2) A willful misrepresentation of a material fact on the labor 
condition application.
    (f) The Administrator shall notify the Attorney General (pursuant 
to Sec. 655.855) for the implementation of the following period(s) of 
disqualification of the employer from approval of any petitions filed 
by or on behalf of the employer:
    (1) Disqualification for at least one year, for violation(s) 
specified in paragraph (b) of this section;
    (2) Disqualification for at least two years, for violation(s) 
specified in paragraph (d) of this section; or
    (3) Disqualification for at least three years, for violation(s) 
specified in paragraph (e) of this section;
    (g) In determining the amount of the civil money penalty to be 
assessed, the Administrator shall consider the type of violation 
committed and other relevant factors. The factors which may be 
considered include, but are not limited to, the following:
    (1) Previous history of violation, or violations, by the employer 
under the INA and subpart H or I of this part;
    (2) The number of workers affected by the violation or violations;
    (3) The gravity of the violation or violations;
    (4) Efforts made by the violator in good faith to comply with the 
provisions of 8 U.S.C. 1182(n) and subparts H and I of this part;
    (5) The violator's explanation of the violation or violations;
    (6) The violator's commitment to future compliance; and
    (7) The extent to which the violator achieved a financial gain due 
to the violation, or the potential financial loss, potential injury or 
adverse effect with respect to other parties.
    (h) Appropriate administrative remedies, which may be assessed by 
the Administrator under subparagraphs (b), (d) and (e) of this section, 
include make-whole relief for displaced U.S. workers, whistleblowers, 
or H-1B workers who failed to receive benefits or eligibility for 
benefits.
    (i) The civil money penalties, back wages, and/or any other 
remedy(ies) determined by the Administrator to be appropriate are 
immediately due for payment or performance upon the assessment by the 
Administrator, or upon the decision by an administrative law judge 
where a hearing is timely requested, or upon the decision by the 
Secretary where review is granted. The employer shall remit the amount 
of the civil money penalty by certified check or money order made 
payable to the order of ``Wage and Hour Division, Labor.'' The 
remittance shall be delivered or mailed to the Wage and Hour Division 
office in the manner directed in the Administrator's notice of 
determination. The payment or performance of any other remedy 
prescribed by the Administrator shall follow procedures established by 
the Administrator. Distribution of back wages shall be administered in 
accordance with existing procedures established by the Administrator.
    21. In Sec. 655.815, paragraph (a) is proposed to be revised to 
read as follows:


Sec. 655.815  Written notice and service of Administrator's 
determination.

    (a) The Administrator's determination, issued pursuant to 
Secs. 655.805, 655.806, or 655.807 of this part, shall be served on the 
complainant, the employer, and other known interested parties by 
personal service or by certified mail at the parties' last known 
addresses. Where service by certified mail is not accepted by the 
party, the Administrator may exercise discretion to serve the 
determination by regular mail.
* * * * *
    22. Section 655.855 is proposed to be revised to read as follows:


Sec. 655.855  Notice to the Employment and Training Administration and 
the Attorney General.

    (a) The Administrator shall notify the Attorney General and ETA of 
the final determination of any violation requiring the Attorney General 
not to approve petitions filed by an employer. The Administrator's 
notification will address the type of violation committed by the 
employer and the appropriate statutory period for disqualification of 
the employer from approval of petitions. Violations requiring 
notification to the Attorney General are identified in Sec. 655.810(f).
    (b) The Administrator shall notify the Attorney General and ETA 
upon the earliest of the following events:
    (1) Where the Administrator determines that there is a basis for a 
finding of violation by an employer, and no timely request for hearing 
is made pursuant to Sec. 655.820 of this part; or

[[Page 671]]

    (2) Where, after a hearing, the administrative law judge issues a 
decision and order finding a violation by an employer, and no timely 
petition for review to the Secretary is made pursuant to Sec. 655.845 
of this part; or
    (3) Where a petition for review is filed from an administrative law 
judge's decision finding a violation and the Secretary either declines 
within thirty days to entertain the appeal, pursuant to Sec. 655.845(c) 
of this part, or the Secretary affirms the administrative law judge's 
determination; or
    (4) Where the administrative law judge finds that there was no 
violation by an employer, and the Secretary, upon review, issues a 
decision pursuant to Sec. 655.845 of this part, holding that a 
violation was committed by an employer.
    (c) The Attorney General, upon receipt of notification from the 
Administrator pursuant to paragraph (a) of this section, shall not 
approve petitions filed with respect to that employer under sections 
204 or 214(c) of the INA (8 U.S.C. 1154 and 1184(c)) for nonimmigrants 
to be employed by the employer, for the period of time required by the 
Act and described in Sec. 655.810(f).
    (d) ETA, upon receipt of the Administrator's notice pursuant to 
paragraph (a), shall invalidate the employer's labor condition 
application(s) under subparts H and I of this part, and shall not 
accept for filing any application or attestation submitted by the 
employer under 20 CFR part 656 or subparts A, B, C, D, E, H, or I of 
this part, for the same calendar period as specified by the Attorney 
General.
    23. In Sec. 655.840, paragraph (c) is proposed to continue to read 
as follows:


Sec. 655.840  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. 655.731(d) of this part), and the 
administrative law judge determines that the Administrator's request 
was not warranted (under the standards in Sec. 655.731(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 wages 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. 655.731 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.
* * * * *
    Signed at Washington, DC, this 23rd day of December, 1998.
Raymond J. Uhalde,
Deputy Assistant Secretary for Employment and Training, Employment and 
Training Administration.

John R. Fraser,
Deputy Administrator, Wage and Hour Division, Employment Standards 
Administration.

    Appendix I (Not to be codified in the CFR): Form ETA 9035.

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[FR Doc. 98-34668 Filed 12-31-98; 8:45 am]
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