Who is an H-1B Dependent Employer?

A dependent H1B employer is a US employer that hires a larger number of H1B beneficiaries than the normal standard. These categories of employers are at greater risk because they will need to provide attestation obligations regarding the displacement of US workers. That means the employer must show proof that qualified US workers aren’t getting their jobs outsourced to foreign labor. H-1B dependent employers will face several series of questions to ascertain their eligibility to recruit H1B beneficiaries.

The H1B visa program attracts highly skilled professionals in specialty occupations seeking temporary job placements in the US in line with the American Competitiveness in the 21st Century Act. However, a company is at risk of being tagged “H1B-dependent” if it hires too many H1B employees. H1B-dependency is a serious matter as far as the Department of Labor is concerned.

This article provides general and further information and answers to frequently asked questions concerning H-1B dependent employers that can help part-time workers, those working in their first organization, those in their second organization, and many others to fully calculate their moves.

Who Are H-1B Dependent Employers?

H1B dependency is mainly determined using the size of a company based on any information or additional documentation provided. For example, an employer is said to be H-1B dependent if it has 1 to 25 workers, out of which 8 are H1B workers. Also, if they have twenty-six to fifty full-time employees, out of which thirteen are H1B beneficiaries.

An employee is also considered H1B-dependent if it has over fifty full-time employees and 15% or more are H-1B employees, provided such a person has common control and provides cash bonuses for the hours worked.

An H1B-dependent employer needs to take extra measures when submitting petitions for H1B workers, including advertising job vacancies. The H1B-dependent employer is also required to document the recruitment and offer the job to any US worker with equal or better qualifications. The H1B-dependent employer is also subject to special attestation and documentation requirements under regulations. One is that the employer has taken good-faith steps to employ US workers and will not displace any US employee for the H1B worker.

At What Stage of Filing Should Employers Determine Their H1B Dependency?

H1B employers must determine their dependency when filing the Labor Condition Application, a petition for nonimmigrant workers, or an H1B status extension request. The H1B-dependent employer filing the Labor Condition Application form is obligated to select its status by marking the applicable boxes on ETA Form 9035/9035E during the LCA filing.

If the employer ticks the designation of H1B-Dependent, such must designate whether the Labor Condition Application is for an exempt H1B worker, foreign workers, or controlled groups. Either that or the H-1B-Dependent employer must agree to the additional attestations concerning the displacement and recruitment of US workers.

An exempt H1B worker is one who will receive wages at an annual rate of at least $60,000 or $30,000 in one half of the year. The H1B worker is also exempt if he or she has a master’s or higher degree or its equivalent in a related specialty occupation or has an extraordinary ability needed by an accounting firm, law firm, or similar firms. Whenever the H1B employer’s dependency status changes, such cannot re-use the relevant Labor Condition Application for any future cases relating to visa services.

Change in dependency status affects dependent visas and calls for a new process for H-1B nonimmigrants. The employer will have to file a new LCA precisely designating its new status, using the new LCA for future cases.

What Attestations do H1B-Dependent Employers Need to Follow?

An H-1B dependent employer filing for a non-exempt H1B nonimmigrant is obligated to follow attestations relating to dependency status. The attestations are time-bound, between ninety days before and ninety days after filing Form I-129, and don’t remain true forever. The attestations include:

• That the H1B-dependent employer will not displace any similarly employed US citizen 90 days before and 90 days after filing the H1B nonimmigrant petition;
• That the employer will not place the H1B employee at another employer’s worksite. If the employer displaces a US worker between the stipulated period, such may be fined or disbarred;
• That the employer took or will take good-faith steps to follow industry-wide standards for recruiting US employees for the job the nonimmigrant is being outsourced. In which case, the employer must offer compensation at least as great as that intended to be given to the nonimmigrant. Also, that the employee will offer or has offered the job to an equally or better qualified US employee.

Who Are Full-Time Equivalent Employees?

Full-time equivalent employees are those employed by the employer, excluding bona fide consultants and independent contractors. The Department of Labor will accept the employer’s designation of persons as employees if they are consistently treated as employees.

FTEs are determined based on:

• Records of the employer’s number of employees and tax statement granted that all employees are listed on the tax statement;
• The number of hours part-time employees work, their last payroll, or those over the previous quarter. Where work hours records are unavailable, other available information can be used to make a reasonable approximation of work hours.

A full-time employee works at least forty hours per week unless less than forty hours per week is full-time employment in the company’s business course. In that case, work time less than thirty-five hours per week will not be considered full-time employment under any circumstances.

What Are the Implications of H1B Dependence?

If an employer is H1B-dependent or has willfully violated the H1B obligations within five years, the employer has attestation obligations to fulfill. The attestations are regarding the displacement of US workers, its recruitment efforts, and the general employer requirements for H-1B petitions.

Below are the implications for H1B dependence:

• The employers in this category must make a good-faith effort to employ US workers for the same position being offered an H1B beneficiary. The employer has to advertise job fairs and recruit US workers via other standard recruitment forms. In addition, such is not permitted to favor current nonimmigrant employees who don’t have their H1B status yet.
• The dependent H1B employer or employer applicant is prohibited from placing an H1B employee with another employer, whether full-time or part-time to avoid civil money penalties. The H1B employer cannot do this, especially if it would also result in displacing a similarly employed US worker.
• H1B-dependent employers hiring non-exempt workers must declare that they will not lay off a US worker in their organization or another’s (contractor).

Does H1B Dependence Trigger Additional Fees from a Parent Subsidiary Controlled Group?

H1B dependence doesn’t trigger any additional fees in itself, but some have been levied on employers at various points in history, especially when it is a controlled or combined group. Employers with more than fifty full-time employee equivalents, with more than fifty percent H1B and L-1 nonimmigrants, may get fined. The extra fees are levied by the USCIS (the United States Citizenship and Immigration Services) and Department of Homeland Security, including:

• Public Law 111-230 additional fee of $2,000, which only applied to petitions filed after August 14, 2010, until September 30, 2014. The fees were later extended by Public Law 111-347 till September 30, 2015. H1B visa petitions filed after that time were no longer subject to these additional fees.
• Public Law 114-113 additional fee of $4,000, which applies to all petitions postmarked on or after 18th December, 2015. These additional fees will be imposed until September 30, 2025.

What Are The Differences Between an H-1B Employer and an H-1B-Dependent Employer?

A regular H1B employer is not under the limitations and peculiarities of an H-1B dependent employer. For example, the former isn’t required to file any form of attestation before recruiting H1B beneficiaries for job opportunities in the US. H-1B dependent employers are mandated to complete several recruiting strategies for jobs in the US before filing H1B petitions. This gives them more limitations and difficulties when petitioning and may even result in outright H1B petition denial.

H-1B dependent employers often face more restrictions where displacement is concerned than regular H1B employers. Such is mandated to demonstrate several staffing requirements, including filing a recruitment attestation, to qualify for petitioning H1B visas. The H-1B dependent employer is required to complete the recruitment procedure before filing the LCA, H1B petition, or H1B extension.

Who Are Willful Violators?

The regulations classify an employer as a willful violator if they have committed a willful failure to meet an LCA condition. A willful violator is also an employer who misrepresents a material fact on the LCA and is required to make additional attestations to such material fact. Such employers will be subject to random DOL investigations for the five years after the final determination of such violation. This investigation will be done either in a DOL or Department of Justice proceeding.

An example of willful violation includes knowingly and willingly withholding information or providing false information on the LCA or supporting documents. It also includes aiding, abetting, or counseling companies to willingly provide false information on important documents and refusing to tick any appropriate box.

A single employer may use a snap-shot test if its dependence status isn’t apparent or is borderline. The snap-shot test compares the total number of H1B employees in the company to the entire workforce number.

Who Is An Exempt H1B Nonimmigrant, and Who Determines It?

An exempt H1B nonimmigrant is one holding a master’s degree or higher degree or its equivalent in an intended specialty occupation employment. An exempt H-1B nonimmigrant is also one who earns wages, including compensations, at an annual rate of 60,000 dollars or more. Anyone offering compensation of cash or any other similar compensation must ensure it follows the employment terms.

The INS determines the exempt status of an H-1B nonimmigrant whose petition an LCA supports, indicating it can be used for only exempt H-1B nonimmigrants who run sole proprietorships and not those who have full-time employees. The examination the INS conducts will be based on the wage level stipulated for the employee on the petition and LCA.

The examination will also be done based on full calculation to determine if the wage level is inadequate to support an exempt status for the H-1B nonimmigrant. If the INS initially determines that the individual is not exempt, it will issue an RFE (Request for Evidence) seeking a new LCA.

Alternatively, the INS will issue documentation of the individual’s exempt status, and the DOL will examine their education level. According to regulations, the DOL will only treat the INS’ determinations as conclusive if they were based on false information.

What Exempt Status Documentation Should Employers Keep?

The DOL wouldn’t normally require individual H1B petitions to be kept in the public access file. However, the employer is mandated to have them ready in case of a DOL investigation. The public access file is required to include a list of the names of H1B workers with LCA-supported petitions.

The petitions should indicate that they will only be used for exempt nonimmigrants unless the employer doesn’t employ non-exempt H1B workers. In that case, the employer is expected to include a simple statement of that fact in the public access file. To do all of these, you need to make a bona fide inquiry on the appropriate service organization to ensure all Labor Condition Applications filed are done appropriately.

Who Determines the Equivalent of a Degree, and How?

The IFR (Interim Final Rule) determines the equivalent of a foreign degree just as the USCIS is one of those who determine dependency. It states that the equivalent degree must be issued by an institution accredited or recognized by the country’s law. DOL doesn’t accept the use of work experience equivalence for this standard. It requires the individual to have the actual required master’s degree or its foreign equivalent.

DOL is moving for the inclusion of the guidelines published by the AACRAO (American Association of Collegiate Registrars and Admissions Officers) to determine this, and anything else you know outside this might amount to contrary knowledge.

The DOL proposes the AACRAO as part of the Final Rule to determine whether a foreign degree is equivalent to a US master’s degree. It proposes that employers can present evidence from a credential evaluations service if no foreign degree was listed as equivalent.

What Does Secondary Displacement Prohibition Cover?

The secondary displacement prohibition determines when an employer places a nonimmigrant at a worksite owned by another employer. This prohibition holds especially where there are indications of intended employment between the other employer and the H1B professional. DOL points out that such indicia doesn’t have to meet the definition of “employed by the employer.”

The relevant indicia included by the IFR include:

1. The other employer can control when, where, and where the H-1B nonimmigrant employee carries out his duties;
2. The other employer provides equipment, tools, and materials required to complete the job;
3. The United States employee performs the work on the other employer’s premises;
4. There is an ongoing relationship between H-1B nonimmigrants and the other employer;
5. The other employer reserves the right to assign more tasks and projects to the nonimmigrant;
6. The other employer is in business and can discharge the nonimmigrant worker based there from providing services;
7. The other employer sets the job hours and duration, and the work performed is part of their regular business following records provided.

Let Richard Herman Legal Group Help You

Trying to do everything as a dependent H1B employer can be tasking, and chances are that you may miss a step along the line. However, whether it is a brother-sister controlled group, a health-care organization, or any specialty related field, hiring a professional immigration attorney can make all the difference. At Herman Legal Group we have over 26 years experience handling immigration matters and we can help you as a dependent employer applicant.

Call +1-216-696-6170 to schedule a consultation with us or book online for a personal consultation with Richard Herman – a seasoned immigration lawyer and the best out there. Consultations can be done in our office or virtually using Zoom, Skype, Facetime, or Google Meet.

Conclusion

The Congress and Department of Labor consider the matter of H1B dependency to be a serious one, and that is why they oversee H-1B dependent, nonimmigrant worker, and H-1B nonimmigrant applications. Dependent H-1B employers are likely to be in trouble if they only check boxes without indicating that they clearly understand the regulations. H-1B dependent employers have a better chance of getting approval to recruit H1B workers if they work through experienced immigration attorneys. The attorneys will help them comply with the requirements for their protection and the safety of the H1B workers.