March 03, 2024
Volume XIV, Number 63
Legal Analysis. Expertly Written. Quickly Found.
DOL Judge Says Flagging Economy Insufficient Basis to Relieve H-1B Employers of Wage Obligations
Thursday, July 21, 2016

Employers employing foreign nationals in H-1B nonimmigrant visa status must pay their H-1B employees the wage specified on the Labor Condition Application (LCA) certified by DOL, regardless of whether the H-1B employer is enduring difficult economic or financial periods due to struggling national economy, an Administrative Law Judge for the Department of Labor has ruled in Department of Labor Wage and Hour Division v. Shriiji Krupa Inc.

This ruling reminds H-1B employers that they must adhere to the attestations made in the LCA governing the employment of their H-1B employees, even in the face of claimed business hardship.

An H-1B employer must pay an employee the greater of the actual or prevailing wage specified in the certified LCA (see 20 C.F.R. § 655.731). If the actual wage is the same as the prevailing wage, then the employer must pay that wage to the employee during the term of the approved employment, even during periods of nonproductive time due to lack of available or assigned work. An employer is relieved from fulfilling its wage obligation only where an H-1B employee has voluntarily requested or decided to minimize or leave employment or where an employer has effectuated a bona fide termination of the employee (see 20 C.F.R. § 655.731(c)(7)(ii)).

In Shrijii Krupa, the Administrator for the DOL’s Wage and Hour Division alleged that the employer, which operates two gas station convenience stores in Florida, failed to pay three of its H-1B employees wages totaling nearly $230,000 in violation of its obligations under the applicable LCAs. WHD alleged the employees were essentially paid on a part-time basis, at a lower wage than specified on the LCA, in which the employer attested it would pay these full-time employees the prevailing wage for their positions. The employer argued the effects of the national recession of 2008 made it impossible to meet the wage obligations under the LCA.

Siding with WHD, the ALJ rejected the employer’s “flagging economy” defense as legally insufficient to justify relief of its obligation to pay the required wage under the LCA. The ALJ emphasized that the employer’s non-payment of the required wage was not due to any voluntary action or request of the H-1B employees. The ALJ further noted the employer’s delayed submittal of a new LCA to reflect part-time employment did not relieve it of its obligation to pay full-time wages under the LCA applicable to the H-1B employees’ employment prior to submittal of the new LCA. Accordingly, the ALJ found that the employer must pay the nearly $230,000 in back wages to its H-1B employees.

This case is a stark reminder to H-1B employers that they must comply with wage obligations under the certified LCA unless the employee voluntarily reduces work, there is a bona fide termination of employment, or a new LCA becomes effective. Absent one of those circumstances, the employer must pay wages as attested in the controlling LCA.


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