DOES A RELEASE AND SETTLEMENT PREVENT AN H-1B WORKER FROM BACK WAGES ?

When an H-1B employee separates employment from an H-1B employer, the H-1B employer often seeks a Settlement and Release.  The employer’s goal is to put the matter to rest.  It does not want the H1-B employer to file a private lawsuit seeking back wages or to file a Complaint with the Department of Labor. 

H-1B employers also often are seeking to collect on liquidated damage provisions, which allow the employer to recoup the costs associated with the separation of the employment relationship.  Costs such as reputational loss, replacement costs, and travel costs are usually recoverable under the H-1B rules

H-1B employer and employees often seek a “global settlement,” which settles all outstanding claims between the parties. 

A 2015 Department of Labor decision, Gupta v. Headstrong, 2014-LCA-00008, confirms the appropriateness and enforceability of these settlement agreements.  In Gupta, the Administrative Law Judge held that the Settlement and Release extinguish all of the h-1B employee’s claims to back wages.  Notably in Gupta, the two parties were the employer and the employee.  The DOL was not a party to that lawsuit.

It remains an open question whether an H-1B employer can legally prevent an employee from filing a Complaint with DOL following a proper Settlement and Release.  The DOL does not want to see any hindrance on an employee’s ability to file a Complaint to their agency. 

In Gupta the Department attempted to have the ALJ validate their reading of the law buy filing an amicus brief.   The ALJ did not address this issue in the Decision. The Department would not, of course, have bothered to raise the issue in the amicus brief if it were a settled issue of law. 

Nevertheless, an H-1B employee who fairly settles a back wage claim and who subsequently or concurrently files a complaint with the DOL solely on a back wage claim (and who continues to assert to the Department that the back wage claim remains unsettled following a settlement on those same claims) may be committing fraud before a government agency.  

H-1B SERIES PART THREE: WHEN DOES THE H-1B EMPLOYER’S WAGE OBLIGATION END ?

H-1B SERIES PART THREE: WHEN DOES THE H-1B EMPLOYER’S WAGE OBLIGATION END ?

An H-1B employer’s wage obligation when it effects a bona-fide termination.  The employer must take three steps to effect a bona-fide termination.  Once all three steps are taken, the employer is said to have made the bona-fide termination: (1) The H-1B employer expressly terminated the employment relationship with the H-1B worker; (2) It notified USCIS of the termination so that the petition could be cancelled; and (3) It offers to pay or reimburse the worker for the reasonable cost of return transportation to his or her home country.  This three step test is taken from Amtel Group of Fla., Inc. v. Yongmahapakorn, ARB No. 04-087, ALJ No. 2004-LCA-006, slip op. at 11 (ARB Sept. 29, 2006). 

The Dedios court pointed out that there are some very limited exceptions to the three step test outlined in Amtel Group.  The exceptions are found in cases such as: Batyrbekov v. Barclays Capital, ARB No. 13-013, ALJ No. 2011-LCA-025 (ARB July 16, 2014): see also Puri v. University of Alabama Birmingham Huntsville, ARB No. 13-022, ALJ Nos. 2012-LCA-010, 2008-LCA-038, 2008-LCA-043 (ARB Sept. 17, 2014).

The most obvious way for an H-1B employer to meet the first step is to send a letter or email to the H-1B employee notifying him of the termination of employment.  Since the H-1B employer in Dedios waited many months before sending the employee a termination letter, the Court found that the wage obligation continued until October 27, 2010, in spite of the fact that the employer notified USCIS on June 1, 2010 and offered a flight back to the employee’s native Philippines on May 21, 2010.

H-1B SERIES PART TWO: WHEN DO H-1B EMPLOYERS’ SALARY OBLIGATIONS BEGIN ?

H-1B Series Part Two: When do H-1B employers’ salary obligations begin ?

An employer must pay wages on the date that an H-1B employee enters into employment with the employer.  An H-1B employee “enters into employment” when the employee makes himself available for work or otherwise comes under the control of the employer, such as by waiting for an assignment, reporting for orientation or training, going to an interview or meeting with a customer, or studying for a licensing examination, and includes all activities thereafter. 

An H-1B worker is automatically deemed to have entered into employment 30 days after he enters the United States, or 60 days after H-1B approval if he is already in the United States.

The H-1B employee in Dedios met with clients “interviewing” with a potential client of the H-1B employer.  The DOL correctly found that this constituted “entering into employment,” in spite of the fact that the work with the end-client never materialized.

H-1B SERIES PART ONE: WHO CAN PAY H-1B FILING FEES AND PROFESSIONAL FEES ?

H-1B SERIES PART ONE: WHO CAN PAY H-1B FILING FEES AND PROFESSIONAL FEES ?

The H-1B regulations prohibit an employer from receiving, or the employee from paying, the filing fee for the visa. 20 C.F.R. §655.731(c)(10)(ii). H-1B employers must also pay certain other “business expenses” that are connected to the H-1B program.

In Dedios, the court found that the H-1B employee’s payment of legal fees, USCIS filing fees, and educational evaluation fees were all “business expenses” connected to the H-1B program.  Therefore when the H-1B employer required the H-1B employee to make these payments, the H-1B employer violated law.

In limited circumstances H-1B employees can pay for some costs that may be related to an H-1B employee’s employment.  These circumstances are found at 20 CFR 655.731(c)(9)(iii).  

DOL CASE HIGHLIGHTS ALL ASPECTS OF H-1B EMPLOYER LIABILITY

A recent Department of Labor decision, DeDios v. Medical Dynamic Systems, Inc., is a great primer on how employers and attorneys should treat H-1B employee salary obligations.  The case highlights several key issues: when does an H-1B employer’s salary obligation begin, when does it end, whether an employee may pay the H-1B filing and professional fees, and how to treat “benching”.

MU Law is using the DeDios case for a series on H-1B employer wage obligations.  We have also updated our “Top 10 things employers should keep in mind in order to stay compliant with the H‐1B visa process”.  If you would like a copy of the Top 10, please let us know.

The series will run over the next few blog posts.