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Wage Obligations of H1B Employers

In a Q&A guideline dated February 17, 2011, the U.S. Department of Labor (DOL) discussed the obligations of an H1B petitioner. Among these obligations is the payment of the required wages.

In the labor condition application (LCA) filed with the DOL, the H1B employer must promise that it has paid or will pay the required wage for the worker for the entire period of the authorized employment.

The employer attests that it will pay whichever is higher between the actual wage rate (the rate the employer pays all other individuals with similar experience and qualifications for the position in question) or the prevailing wage (the wage paid to workers in the same occupational classification in the area of intended employment)

Wage violations carry with them sanctions such as civil penalties, back wages and debarment from the H1B program. Violations may be reported to the USCIS or DOL.

To find out what the prevailing wage is, the employer may request a prevailing wage determination from the National Prevailing Wage Center (NPWC). Alternative wage sources for the prevailing wage include the collective bargaining agreement, a wage survey conducted by an independent authoritative source, and the Bureau of Labor Statistics Occupational Employment Statistics Survey (OES) data that can be accessed online through the iCERT Portal System and the FLC Data Center. The employer should keep documentation of the offered wage on file.

The prevailing wage is valid during the validity of the H1B petition. In no case may the employer pay a wage lower than the federal, state, or local minimum wage, whichever is higher. The current federal minimum wage rate is $7.25 per hour.

The obligation to pay the required wage rate begins when the employee “enters into employment”, which is when the employee presents him/herself for work or comes under the control of the employer. According to regulations, this includes waiting for an assignment, reporting for orientation or training, going to an interview, or studying for a licensing examination. Even when the employee has not yet “entered into employment”, he/she must be placed on the payroll beginning on the 30th day after admission into the U.S. pursuant to the H1B petition, or if already in the U.S., beginning on the 60th day after he/she becomes eligible to work for the employer.

The employer is not exempted from paying an employee on nonproductive or “benched” status. If the employee works full-time, he/she must still be paid the full pro-rata amount due (if the employee is salaried) or for an entire workweek (if paid hourly). Part-time employees must be paid for at least the number of hours indicated in the H-1B petition.

Law and regulations require that the H-1B worker continues to be paid even during a temporary reduction in force or temporary shut-down. If the employee is nonproductive because of his/her own decision to be unavailable for work and for a reason unrelated to employment, there is generally no obligation to pay the wage rate.

In some instances, the employer’s obligation to pay terminates prior to the expiration of the LCA’s validity, such as when the H1B worker resigns, moves to another employer, or is terminated from work. When the employee voluntarily leaves, the employer may not charge the H1B worker a penalty fee outright or through deductions, but they may enter into an agreement for the payment of liquidated damages in case of early termination by the worker.

A bona fide termination also ends the employer’s obligation to pay the required wage. The employer must have notified both the employee and the Department of Homeland Security, and it must also pay for the worker’s cost of return transportation to his/her last place of foreign residence. This offer of transportation cost does not extend to the worker’s dependents.

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