DOL Awards 3 Years H-1B Back Pay to F-1 Who Never Worked on H-1B

The Office of the Administrative Law Judge, on behalf of the Department of Labor, has recently decided that an employer who has terminated employment of a foreign national on Optional Practical Training and for whom it has received an approved H-1B visa petition, is liable for H-1B wages even though the foreign worker was terminated prior to the starting date of the H-1B visa petition. The employer could have avoided liability by simply withdrawing the H-1B Petition with USCIS at the time of the termination, however the decision is still troubling for the expansion of employer obligations under the H-1B program.

Kevin Limanseto was a native of Indonesia who initially came to the United States on an F-1 student visa, which in time led to optional practical training. (OPT). This is the one-year of work authorization that foreign students receive after attaining a degree in the United States. The purpose of OPT is to give students an opportunity to use the skills they have learned while in college. Most foreign nationals on OPT ask their employer to sponsor them for an H-1B visa to coincide with the expiration of their OPT. Kevin Limanseto was no different. After working for Ganze Company as a tax accountant on OPT, Ganze sponsored him for an H-1B to start on October 1, 2008 and end in September 2011. However, in August 2008, Ganze terminated Limanseto’s employment for cause. Ganze did not withdraw the H-1B Petition and did not offer to pay for Limanseto’s return trip home, as he found employment elsewhere in the United States.

In 2011, Limanseto complained to the DOL and the DOL brought suit against Ganze for back pay and other H-1B program violations under the never used H-1B visa petition. Limanseto v. Ganze Company, Case No. 2011-LCA-00005. Ganze claimed that because it ended its working relationship with Limanseto before the H-1B term began, it was not liable to the employee for any of the payment or benefits under the program. The DOL Administrative Law Judge (ALJ) disagreed.

The ALJ held that the employer’s liability for compliance with all the terms and conditions of the H-1B program began with the filing of Labor Condition Application and would not end until Ganze withdrew the H-1B visa by notifying USCIS in writing. The ALJ held that in order to effect a legally bona fide termination of an H-1B worker (or F-1 worker with an approved H-1B petition) three elements must be met: a) notice to the worker, b) notice to USCIS that the I-129 (Petition for Nonimmigrant Worker) is withdrawn, and c) payment for the worker’s transportation home.

The Judge found that while Ganze did satisfy the first prong of the test, it failed to satisfy requirements for a bona fide termination on the bases that it did not timely notify USCIS of the termination, and also that the company did not pay for Limanseto’s eventual trip home. Therefore, Ganze was liable for 3 years of back pay and interest to Limanseto.

Ganze attempted to raise the affirmative defense that Limanseto should have mitigated damages: After leaving Ganze’s employ, Limanseto worked as an accountant for another firm in San Francisco. The ALJ rejected the defense, holding that there was strict liability regarding the terms of the H-1B visa program, and that such a defense was not proper because the matter at hand did not involve a breach of an employment contract, or a case of invidious discrimination.

To add insult to injury, the ALJ also held Ganze liable for legal fees associated with the preparation of the 2008 H-1B visa petition. In addition, Ganze was found to owe pre-judgment and post-judgment interest on all amounts due to Limanseto; interest was found to be due on the wages from the time each installment of wages became due.

The lessons to learn from this unfortunate case are easy to implement, and are things H-1B employers should be doing anyway (although now you should add your never used H-1B petitions to the list):

(1) Withdraw all H-1B petitions whether ongoing or for a future effective date on the day the employee is terminated by sending a letter to USCIS:

(2) Withdraw Labor Condition Applications on the day of termination through the iCert Electronic Portal;

(3) Pay H-1B legal fees if the payment of those fees by the employee would cause their effective wage to drop below the “actual wage.” (In reality this will be 95% of the cases)

(4) Offer in writing to provide any H-1B employee with a one-way ticket to their home country at the time of termination, even if the H-1B petition has not yet gone into effect.

And yet, in spite of the easy fix for employers, while reading this case and again now as I am writing this article, I get more and more upset. The level of unfairness to the employer in this circumstance is indescribable. To be hit with 3 years of back pay and interest for an H-1B visa petition that the employee never worked on for one day is an egregious example of how far the Department of Labor can go to punish employers who innocently use the H-1B program. This decision adds nothing to the integrity of the H-1B program or the protection of legitimate H-1B workers. It should be overturned.

For more information on H-1B compliance or any other immigration issues, please contact Valentine Brown at vbrown@duanemorris.com or by phone (215) 979-1840

About vbimmigration

For More Information Call 215 979 1840 Immigration Law Partner at Duane Morris, LLP. 20 years representing companies and individuals in all aspects of immigration law. H-1Bs, L-1s, TNs, PERM, Global immigration; compliance; working visas; green cards; consular processing citizenship and deportation.
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