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DOL awards 3 years of H-1B Back pay to Foreign National whose OPT Employment was terminated prior to H-1B Commencement Date


The Office of the Administrative Law Judge, on behalf of the Department of Labor, has recently decided that an employer who has terminated employment of a foreign national on Optional Practical Training  and for whom it has received an approved H-1B visa petition, is liable for H-1B wages even though the foreign worker was terminated prior to the starting date of the H-1B visa petition. The employer could have avoided liability by simply withdrawing the H-1B Petition with USCIS at the time of the termination, however the decision is still troubling for the expansion of employer obligations under the H-1B program.

Kevin Limanseto was a native of Indonesia who initially came to the United States on an F-1 student visa, which in time led to optional practical training. (OPT). This is the one-year of work authorization that foreign students receive after attaining a degree in the United States. The purpose of OPT is to give students an opportunity to use the skills they have learned while in college.  Most foreign nationals on OPT ask their employer to sponsor them for an H-1B visa to coincide with the expiration of their OPT. Kevin Limanseto was no different. After working for Ganze Company as a tax accountant on OPT, Ganze  sponsored him for an H-1B  to start on  October 1, 2008  and end in  September 2011. However, in August 2008, Ganze terminated Limanseto’s employment for cause.  Ganze did not withdraw the H-1B  Petition and did not offer to pay for Limanseto’s return trip home, as he found employment elsewhere in the United States.

In 2011, Limanseto complained to the DOL and the DOL brought suit against Ganze for back pay and other H-1B program violations under the never used H-1B visa petition.  Limanseto v. Ganze Company, Case No. 2011-LCA-00005.  Ganze claimed that because it ended its working relationship with Limanseto before the H-1B term began, it was not liable to the employee for any of the payment or benefits under the program.   The DOL Administrative Law Judge (ALJ) disagreed.

The ALJ held that  the employer’s liability for compliance with all the terms and conditions of the H-1B program began with the filing of Labor Condition Application and  would not end until Ganze withdrew the H-1B visa by notifying  USCIS in writing.  The ALJ held that  in order to effect a legally bona fide termination of an H-1B worker (or F-1 worker with an approved H-1B petition) three elements must be met: a) notice to the worker, b) notice to USCIS  that the  I-129 (Petition for Nonimmigrant Worker) is withdrawn, and c) payment for the worker’s transportation home. 

The Judge found that while Ganze did satisfy the first prong of the test, it failed to satisfy requirements for a bona fide termination on the bases that it did not timely notify USCIS of the termination, and also that the company did not pay for Limanseto’s eventual trip home. Therefore, Ganze was liable for 3 years of back pay and interest to Limanseto. 

Ganze attempted to  raise the affirmative defense that Limanseto should have mitigated damages:  After leaving Ganze’s employ, Limanseto worked as an accountant for another firm in San Francisco.  The ALJ rejected the defense, holding that there was strict liability regarding the terms of the H-1B visa program, and that such a defense was not proper because the matter at hand did not involve a breach of an employment contract, or a case of invidious discrimination. 

To add insult to injury, the ALJ also held Ganze liable for legal fees  associated with the preparation of the 2008 H-1B visa petition. In addition, Ganze was found to owe pre-judgment and post-judgment interest on all amounts due to Limanseto; interest was found to be due on the wages from the time each installment of wages became due.

The lessons to learn from this unfortunate case are easy to implement, and are things H-1B employers should be doing anyway (although now you should add your never used H-1B petitions to the list):

(1) Withdraw  all H-1B petitions whether ongoing or for a future effective date on the day the employee is terminated by sending a letter to USCIS:

(2) Withdraw Labor Condition Applications on the day of termination through the iCert Electronic Portal;

(3) Pay H-1B legal fees if the payment of those fees by the employee would cause their effective wage to drop below the “actual wage.” (In reality this will be 95% of the  cases)

(4) Offer in writing to provide any H-1B employee with a one-way ticket to their home country at the time of termination, even if the H-1B petition has not yet gone into effect.

And yet, in spite of the easy fix for employers, while reading this case and again now as I am writing this article, I get more and more upset.  The level of unfairness to the employer in this circumstance is indescribable. To be hit with 3 years of back pay and interest for an H-1B visa petition that the employee never worked on for one day is an egregious example of how far the Department of  Labor  can go to punish employers who innocently use the H-1B program. This decision adds nothing to the integrity of the H-1B program or the protection of legitimate H-1B workers. It should be overturned.

 For more information on H-1B compliance or any other immigration issues, please contact Valentine Brown at vbrown@duanemorris.com or by phone  (215) 979-1840

 
 
 
 

USCIS Unveils Proposed Changes to Help Immigrant Entrepreneurs


On August 2nd, USCIS Director Alejandro Mayorkas and Secretary of Homeland Security Janet Napolitano delineated a number of initiative ideas to increase investment and bolster the nation’s economy.  These initiatives aim to streamline visa adjudications for certain categories of immigrant entrepreneurs and to  draw immigrants from around the world to invest their energy, ideas, and talents to work and grow American employment, as well as stimulate entrepreneurship.   

 

It has been about six months since the inception of Startup America, an initiative executed by the White House to accelerate growth for America’s entrepreneurs.  Startup America serves as one key focus of the President’s Council on Jobs and Competitiveness, which seeks to establish the United States as the primary innovator, competitor, and contributor to the world’s economy.  T USCIS has now contributed the following proposals to the Startup America initiative. Many are in the proposal stage and will be made official USCIS policy sometime in the future. We will keep you updated as the various programs come on line. 

EB-2 National Interest Waivers: First, the national interest waiver for the EB-2 visa (which covers aliens of exceptional ability in the arts, sciences, or business) is accessible now to immigrant entrepreneurs who can show  that their business efforts will be in the United States’ national interest. We will have an upcoming blog post on the details of this change, as it may be very beneficial for many immigrants stuck in EB-3 who would like to start their own businesses. 

H-1Bs for Business Owners: Second, H-1B visas are now being made available to entrepreneurs with an ownership stake in their own companies, if an alien in question can show that his company has an independent right to control its employment.  USCIS has provided updated guidance to all of its Service Centers for adjudication of these types of petitions. We will be keeping you updated as the developments and adjudication trends unfold in the coming months.  

More Access for EB-5 Applicants: Third, USCIS  will be streamlining the EB-5 immigrant investor process by extending the availability of premium processing for EB-5 applications, establishing direct lines of communication between the applicants and USCIS, and providing applicants with an opportunity to speak before a panel of USCIS experts to resolve any issues regarding a given application. There is no time line in place for these improvements. We would not advise any investor to hold their breath, as it could be a while to put these proposals into place.

Premium Processing for Intra-Company Transferee I-140s: Fourth,  USCIS is looking to expand its premium processing service to I-140 petitions for multinational executives and managers.  Premium Processing allows employers to expedite the processing of their petitions as long as there exists no fraud, evidentiary deficiencies, or concerns regarding national security.  Unfortunately, there is no date set yet for the implementation of this service.

Finally, the Office of Public Management plans to hold a series of meetings to field issues of importance for foreign entrepreneurs and start-up companies.  Such meetings will give USCIS information regarding how such groups may be eligible for certain employment-based visa categories.  The first of these meetings was held last week on August 11th.  In a similar vein, USCIS is hosting Conversations with the Director, which involves a series of small group meetings with Director Mayorkas to discuss important immigration issues pertinent to communities across the United States.  The first of these meetings occurred earlier this week on August 15th, and addressed economic development and the EB-5 investor program.

For more information on any of these topics, please contact Valentine Brown vbrown@duanemorris.com.

 

 

 

 

 

 

 

 

 

 

 

 
 
 
 
 

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The opinions expressed on this blog are those of the author and are not to be construed as legal advice.