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Are Your Foreign National Workers in Legal Compliance?

Poonam Bhuchar Email Poonam Bhuchar
September 2009
Are Your Foreign National Workers in Legal Compliance?

Employers sponsoring H-1B workers are facing more and more scrutiny. In today’s uncertain economic climate, it is more important than ever for employers to make sure that they are complying with federal regulations. Employers who hire foreign national workers may be subject to various government audits, which are frequently conducted by the U.S. Department of Labor (DOL) or by the Immigration & Customs Enforcement (ICE), a division of the Department of Homeland Security. Additionally, the Internal Revenue Service (IRS) recently announced that they also plan to start conducting audits for payments made to foreign nationals temporarily employed by a U.S. employer.   

The DOL is monitoring and scrutinizing companies that hire H-1B workers much more closely. A DOL audit can result from a random investigation or a complaint by a disgruntled employee. The regulations allow the DOL to audit a company’s Public Access File (which employers are required to maintain for each H-1B beneficiary) and payroll records to ensure that the alien worker is being paid the correct wage. Audits frequently stretch out for several months or years. Even in the best case scenario, a government audit of your company can cost you a lot of time and place a huge burden on your Human Resources department, not to mention lower employee morale and negative publicity.

Many employers do not realize that even paper violations of these federal regulations may cost them hefty fines. If violations are found, an employer can be liable for any of the following: back wages to an employee, civil penalties, debarment from the H-1B program, and random audits by the DOL for five years. Some violations even carry criminal penalties.

ICE is responsible for worksite inspections and audits of I-9 forms. The I-9 form is used to verify the eligibility of an employee to work in the United States, and employers are required to maintain specific records and documentation in the event of an audit. ICE has been increasing the frequency of audits over the last several years. In fact, on July 1, 2009, ICE announced that they served 652 companies nationwide with audit notices—more notices than they issued throughout the entire 2008 fiscal year.

Another area of immigration compliance that may be subject to government audits is the PERM (Permanent Electronic Review Management) process. Employers who have filed green card applications under the PERM program are also required to maintain very specific records and evidence of their recruitment and hiring processes, which may be audited by the DOL. The ramifications of noncompliance found in DOL, I-9, and PERM audits can be extensive and far-reaching.

Internal audits can save you time and money

Many companies choose to hire external legal counsel to review their immigration files. Having your files audited by an attorney with experience in immigration compliance ensures they will be examined by an expert who is well-versed in the explicit requirements of immigration law—and most importantly, you’ll be able to identify and rectify any potential issues before you receive an audit letter from government agencies.

An internal audit allows an experienced professional to come in and advise your company on any recordkeeping/payroll business practices that may violate DOL regulations. Internal audits often disclose material misrepresentations made on the Labor Condition Application (LCA), improper prevailing wage levels, benching, incomplete public access files, lack of LCA postings, and non-compliance with the LCA attestations. Once discovered, the employer can move forward to change company policy and procedures in order to comply with the regulations.

If the first time a company’s files are reviewed is through a DOL audit, they may face huge fines or an administrative burden if any errors are found. By taking a proactive approach and conducting an internal audit, the company can save themselves time and money in the long run. More importantly, if audited by the government, you can demonstrate that you are making a good faith effort to comply with the regulations.

[Ms. Poonam Bhuchar is a Partner at Kumar Pathak, LLC. She has substantial experience practicing immigration law and representing a wide array of corporate clients. Ms. Bhuchar has successfully represented many clients at both state and federal Department of Labor audits.]


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