Employer Personally Liable for Back Wages, Costs of Obtaining J-1 Waivers and H-1B Visas
It has been the position of the Department of Labor for some time that the legal fees and filing fees to obtain H-1B visas are an employer expense. However, a recent case expanded the employer’s responsibility to include the cost of obtaining a J-1 waiver. On August 20, 2014, the United States Court of Appeals for the Sixth Circuit held that an employer may be held liable personally liable for back wages, the cost of obtaining H-1B visas, and the cost of J-1 waivers.
In the case, Kutty v. United States Department of Labor, the defendant, Kutty, owned several medical clinics in Tennessee and Florida. He hired foreign physicians who entered the U.S. on J-1 foreign medical graduate visas. These visas let foreign physicians receive medical training in the U.S., but require them to return to and reside in their home countries for two years. After the two years, they may return to the U.S., change to another non-immigrant status, or apply for a green card.
This two-year residency requirement can be avoided with J-1 waiver. The foreign physician may submit an application to the US Department of State demonstrating that there is a contract to practice medicine for at least three years in an area designed by the Secretary of Health and Human Services as having a shortage of health-care professionals. If a foreign physician obtains a J-1 waiver, he or she may apply for an H-1B visa.
The foreign physicians hired by Kutty obtained J-1 waivers based on employment contracts with Kutty. As part of the physician’s H-1B applications, Kutty signed Labor Condition Applications (LCA). These LCAs stated that the employer would pay the wage rate required by law and that he would comply with the LCA. The wage rates listed on the LCAs ranged from $52,291 to $115,357, but Kutty actually paid his physicians far less than the LCA wage rates.
Eight physicians filed a complaint with the Department of Labor (DOL), which initiated an investigation. The DOL found Kutty had violated several LCA requirements, including:
- willful failure to pay the required wage rates,
- failure to make the LCA available for inspection,
- failure to maintain proper payroll records, and
- retaliation against the physicians who complained to the DOL.
An Administrative Law Judge ordered Kutty and the medical clinics to pay the physicians back wages and the costs of obtaining the J-1 waivers and H-1B visas. Kutty appealed to the US Court of Appeals for the Sixth Circuit, which affirmed the ALJ’s decision.
This case is a reminder of how serious penalties are for employers who violate LCAs. Kutty faces $1,444,294 in fines and $108,800 in civil penalties.
Ivener & Fullmer, LLP is a business immigration law firm. We serve business owners, human resource professionals, and in-house counsel in public and private companies, as well as international business people, investors, and entertainers. If you have any questions about H1-B visa, please contact one of our partners in our Los Angeles office.