Restrictions on H-1B Employers Making Employee Pay Deductions

The Department of Labor (DOL) judge clarified that employers can deduct legal filing fees from the paychecks of H-1B workers if the deductions do not cause the worker's wages to dip below requirements as stipulated in the certified Labor Condition Application (LCA).

Administrative Law Judge Jonathan C. Calianos ruled that The Woodmen of the World Life Insurance Society does not have to pay back wages it deducted from an H-1B software engineer's paycheck to pay legal fees to secure his visa. Woodmen deducted $5,800 from the worker's unused vacation pay when he voluntarily resigned.

The DOL's Wage and Hour Division argued that employer expenses such as attorney fees and other costs connected with the performance of the H-1B program are specifically prohibited from recoupment by the employer.

Woodmen Life argued—and Calianos agreed—that it did not violate the regulation on recoupment because the deductions did not cause the worker to fall below the required wage.

An employer attests when filing an LCA with the DOL that it will pay the foreign worker the required wage, which is the greater of the job's actual wage or the prevailing wage, throughout the entire period of authorized employment.

"An H-1B employer is prohibited from imposing its business expenses on the H-1B worker—including attorney fees and other expenses associated with the filing of an LCA and H-1B petition—only to the extent that the assessment would reduce the H-1B worker's pay below the required wage," Calianos said.

He added that the Wage and Hour Division's "reading of the regulation as prohibiting any deduction of H-1B attorney fees and costs from an employee's pay or benefits is far too broad and not supported by the plain language of the regulation."

H-1B visa workers can never be required to pay:

• A penalty for the worker's failure to complete the full employment period.
• The statutory training, processing and fraud detection fees imposed by U.S. Citizenship and Immigration Services.
• For the employer's business expenses including attorney fees, premium processing fees or travel expenses while on the employer's business that would reduce an H-1B worker's pay below the required wage rate.

Any employer who wished to sponsor an H-1B employee for a visa was required to file a Labor Condition Application (LCA) with the Department of Labor. The LCA requires that the employer attest to several conditions, including that they will pay the H-1B employee the required wage for their position. The required wage is the higher of either the actual wage paid to other employees with similar qualifications in the same geographic area, or the prevailing wage for the position as determined by the Department of Labor. An H-1B employer is not allowed to make deductions from an employee's pay that would reduce their wage below the required rate. This protects H-1B employees from being paid less than their similarly situated American counterparts. It also ensures that H-1B workers are not used to undercut wages in the labor market.

The H-1B program allows employers to hire foreign workers in specialty occupations. These workers are typically employed in the fields of science, engineering, or computer programming. In order to hire an H-1B employee, the employer must first obtain a Labor Condition Application (LCA) from the Department of Labor.

The LCA sets the required wage for the position, which must be at least the prevailing wage for the occupation in the area of employment. The employer is also not allowed to make any deductions from the employee's pay that would reduce their wage below the required rate. This means that employers cannot deduct any business expenses from an employee's pay, such as attorney fees or travel expenses. Only deductions for items that are considered necessary for the employee's job are allowed, and even then, these deductions cannot reduce the employee's pay below the required wage.

It is important for H-1B employees and their employers to be aware of these restrictions, as they can impact how much money the employee actually receives. Employers should make sure they are aware of all the applicable rules and regulations when it comes to paying their employees.

What Are The Consequences of Violating The Wage Requirements?

If an employer violates the wage requirements, they may be subject to penalties from the Department of Labor. These penalties can include back wages owed to the employee, as well as liquidated damages. The employer may also be required to post a notice informing other employees of their rights under the H-1B program.

Will My Employee Be Removed From The Country If I violate The Wage Requirements?

No, your employee will not be removed from the country if you violate the wage requirements. However, if your employee quits or is fired because you violated the wage requirements, they may be subject to removal proceedings.

Can I Deduct Business Expenses From My Employee's Pay?

No, you cannot deduct any business expenses from your employee's pay. This includes expenses such as attorney fees or travel expenses. Only deductions for items that are considered necessary for the employee's job are allowed, and even then, these deductions cannot reduce the pay below the required wage.

Conclusion:

As an employer, it is important to be aware of all the restrictions that come with hiring an H-1B employee. One of these restrictions is that you are not allowed to make any deductions from their pay that would reduce their wage below the required rate set by the Labor Condition Application. Violating this requirement can result in penalties from the Department of Labor, such as back wages owed to the employee or liquidated damages. Make sure you are familiar with all the rules and regulations before hiring an H-1B worker!