Victory in Suite Against DOL Results in Voiding of Restrictive Labor Condition Requirements

The D.C. District Court, in the case National Association of Manufacturers v. Department of Labor, has invalidated key portions of the Department of Labor's H-1B Labor Condition regulations and permanently enjoined the Department from enforcing those provisions. The court found that the provisions were unlawfully implemented without proper notice and comment, and noted that "very substantial questions that may ultimately cause the court to strike the regulations as exceeding defendant's statutory authority..." were presented. The court let stand certain other, less draconian, provisions.

Paul, Hastings, Janofsky & Walker LLP represented the National Association of Manufacturers (NAM) in this suit, which attacked the more unrealistic provisions of the Department of Labor's regulations governing the H-1B process. According to Crystal Williams, one of the Paul, Hastings attorneys representing NAM, "Some employers already were not complying with certain parts of the regulations at the time the suit was brought, due to the sheer impossibility of compliance. The result of this action has been to shield these employers from penalties, such as fines, back pay and debarment from obtaining work authorization for international personnel, for violations of regulations that had no bearing on the substance or purpose of the law."

The Voided Provisions

The regulatory provisions voided by the court's order are:

  • The "90-day rule" that compelled employers to either monitor the cumulative visits of all of its H-1B workers in any given area to ensure that such placements do not exceed 90 days within any three-year period or file a new labor condition application ("LCA") for every business trip.
  • The requirement that H-1B employees on temporary assignment be paid per diem expenses at no less than the federal government's per diem rate.
  • The requirement that notices be posted at any site, including locations belonging to third parties, where any work-connected visit is made by an H-1B employee, if the site is in the same area stated on the LCA.
  • The requirement that employers develop an objective wage system and apply it to non-H-1B and H-1B employees alike.
  • The requirement that payroll records be kept on all employees in the same employment as the H-1B employee, regardless of whether those employees have comparable qualifications.
  • The rule compelling employers to pay for nonproductive time and allowing DOL to summarily adjust payment of part-time H-1B employees to full-time based on short-term situations. The court noted that these provisions have "the potential of creating strange and economically unsound incentives for the use of H-1B employees."

Department of Labor's Response

The Department of Labor did not appeal the court's order. In theory, the Department could re-issue the same regulations by complying with statutory requirements for notice and public comment. However, such an action could raise serious issues of good faith. In any event, as noted above, the judge in the NAM action indicated that serious questions had been raised regarding the Department's authority to issue these regulations, raising the strong possibility that duplicate regulations could be struck down on that basis as well.

Thus, even if the Department were to re-issue the regulations as they existed before the court's order, there is some question as to whether the court would allow them to stand. As of this writing, the Department has taken no action with respect to the regulations.

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