The American Competitiveness and Work Force Improvement Act, Title IV, Pub. L. No. 105277, ("ACWIA" or "the Act") was signed into law on October 21, 1998. The ACWIA creates new prohibitions and requirements for employers of H-1B workers in order to protect the interests of United States employees, while temporarily increasing the annual limits on new H-1B approvals. The complexity of the ACWIA.s provisions and the fact that the Department of Labor and the Immigration and Naturalization Service have not yet issued regulations implementing the Act mean that we are operating in an uncertain legal environment. The following is a brief summary of some of the new restrictions placed on employers by the Act. For a complete description of the ACWIA and a comprehensive analysis of its impact on employers, please refer to the recent article: " The Practical Impact of the American Competitiveness and Workforce Improvement Act on Employers of H-1B Aliens," prepared by Cooley Godward.s immigration and employment attorneys.
New Attestation Requirements
Under the ACWIA, an employer seeking to employ a foreign worker under the H-1B program must make certain new statements or "attestations" in support of its H-1B petition. The "no-displacement attestation" requires an employer to state that it has not and will not lay off a United States worker (which includes certain foreign workers) within 90 days before or after the filing of a petition for an H-1B worker to fill that position. Similarly, job contractors that contract out H-1B workers to other employers must attest that they will not place an H-1B beneficiary with another company without inquiring whether the foreign worker will fill the position of a United States employee laid off within 90 days before or after the date of the placement. Under the "recruitment attestation," an employer must attest that it has made a "good faith" effort to recruit United States workers for the position to be filled by the H-1B beneficiary. These new attestation requirements will become effective when the DOL issues its final regulations. As currently drafted in the ACWIA, these requirements will end on October 1, 2001.
Who Is Covered by the New Attestation Requirements?
The new attestations are required for "H-1B dependent" employers, and for employers that have been found by the DOL to have committed a willful failure or a misrepresentation with respect to any requirement of the H-1B program within five years of filing the relevant H-1B petition. An H-1B dependent employer is an employer that:
- Employs 25 or fewer full-time employees and employs more than 7 H-1B workers;
- Employs between 26 and 50 full-time employees and employs more than 12 H-1B workers;
- Employs at least 51 full-time employees and at least 15 percent of its work force is comprised of H-1B workers.
The new attestation requirements do not apply if an employer is filing an H-1B petition for a foreign worker who will receive compensation of $60,000 or more or who holds a Master.s or higher degree. In addition, these "exempt" H-1B workers are not counted in the calculation of an employer.s H-1B dependent status. Thus, the attestation requirements will have little impact on employers that generally pay their foreign workers more than $60,000 or that hire foreign workers with Master.s or higher degrees.
Which Layoffs Are Restricted?
Under the Act, H-1B dependent employers and willful violators must attest that they have not laid off a United States worker from a job that is "essentially equivalent" to the job to be held by the H-1B beneficiary for a period of 90 days before or after the filing of the petition. The Act defines a "lay off" as an action taken by an employer to cause the loss of a worker.s employment. A lay off does not include:
- loss of employment for inadequate performance;
- A loss of employment for violation of workplace rules;
- Voluntary departure or retirement;
- The expiration of an employment grant or contract.
In addition, if the employer offers the United States worker similar employment at the same or higher compensation and benefits, no actionable lay off will have occurred, regardless of whether or not the United States worker accepts this employment.
The ACWIA defines an "essentially equivalent" job as one that involves essentially the same responsibilities, is held by a United States worker with substantially equivalent qualifications, and is located within the same normal commuting distance as the position to be held by the H-1B beneficiary. The attestation requirements do not apply if the job to be filled by the H-1B worker is not essentially equivalent to that of the laid off United States worker.
New Protections for All H-1B Workers
The ACWIA contains several protections for H-1B workers employed by any employer. The Act prohibits employers that hire H-1B workers on a full-time basis from reducing the worker.s pay, placing the worker in nonproductive status without pay, or temporarily laying off the worker due to a lack of work. These prohibitions apply even if the H-1B worker is unable to work because he or she has not yet obtained the requisite license or permit. However, nothing in the Act prohibits an employer from terminating an H-1B worker due to lack of work, or for other reasons. Similarly, the Act allows an employer to place an H-1B worker on unpaid leave for purposes of Family and Medical Leave or other corporate policies such as annual office shutdowns. When an employer cannot continue paying an H-1B alien the wages stated in the petition, the employer can either terminate the H-1B worker or file an amended petition reclassifying the H-1B worker as part-time or reducing his or her wage rate.
In addition to the wage and hour protections for H-1B workers, the ACWIA requires employers to offer H-1B workers the same eligibility for benefits and the same benefits as those offered to United States employees in the same positions. The Act defines benefits to include health, life, disability and other insurance plans; retirement and saving plans; cash bonuses; and non-cash compensation such as stock options. Unlike the attestation requirements, the same-benefit provision applies to all employers currently employing H-1B workers, regardless of when they were hired. This requirement was effective October 21, 1998 and it will not end on October 1, 2001.
New Penalties for Violations
The ACWIA contains stringent penalties for employers that violate the new attestation requirements of the H-1B program. Employers that are determined to have willfully violated the ACWIA by replacing United States workers with H-1B workers, or by underpaying an H-1B worker, will be subject to a three-year debarment from the H-1B program and a $35,000 fine.
Practical Advice For Employers
Until now, only the WARN Act and similar state WARN statutes have restricted the timing or size of layoffs. The new attestation requirements could greatly restrict the flexibility and competitiveness of employers, especially those who operate in markets that are volatile. For example, an employer that lays off United States employees as a result of a product cancellation or economic downturn would be prohibited from hiring foreign workers on an H-1B visa in the event that the project is revived within the relevant time period. Employers can lessen the Act.s impact if they adopt the following strategies:
Before filing a petition for an H-1B worker, employers should determine whether the worker is exempt from the attestation requirements by virtue of the salary or educational requirements of the job. In addition, employers should determine if they qualify as an H-1B dependent employer. If they are subject to this portion of ACWIA, employers should carefully consider the timing of layoffs, keeping in mind the company.s future need for foreign workers in the same position. Whenever possible, employers should offer United States workers affected by lay off similar employment at the same or higher compensation and benefits levels to avoid having the employment action be defined as a "lay off" under the ACWIA. In addition, employers should discontinue the practice of "laying off" marginal employees as a way to avoid the sometimes difficult task of addressing the employee.s performance problems or violation of company policy. In such cases, hiding behind the term "lay off" instead of terminating the employee can jeopardize the employer.s ability to meet the ACWIA.s no-displacement requirements. Finally, employers should review their pay policies and benefit plans to ensure that the requirements of the ACWIA are met.
Employers faced with specific issues concerning the practical application of the ACWIA are encouraged to contact their immigration and/or employment counsel.