With H-1B filing season rapidly approaching, it is important to remember the importance of a proper prevailing wage determination for H-1B positions. This was made clear in the recent case of Health Carousel v. Bureau of Citizenship and Immigration Services(1/3/2014), where the United States District Court for the Southern District of Ohio, Western Division upheld U.S. Citizenship and Immigration Services’ (“USCIS”) denial of an H-1B petition for the position of International Recruiter in part on the grounds that the wage level offered by the employer on the Labor Condition Application (“LCA”) conflicted with the complexity of the duties described by the employer.

To qualify for H-1B classification an employer must attest on a LCA that it will pay the H-1B worker the required wage rate. The “required wage” is the greater of either the “prevailing wage” (based on external data of the wages paid by other employers for similar positions in the geographic area) or the “actual wage” (based on internal data from the petitioning employer of the wages paid to similar employees at the place of employment).

One common way of determining the prevailing wage is by referencing the U.S. Department of Labor’s Online Wage Library (available at http://www.flcdatacenter.com/oeswizardstart.aspx). The Online Wage Library provides wage data for a multitude of occupations, based on the geographic area of employment, with the wage for each occupation broken down into four wage levels. The four wage levels for an occupation are based on a comparison of the employer’s job requirements to the occupational requirements: tasks, knowledge, skills, and specific vocational preparation (education, training, and experience) generally required for acceptable performance in that occupation. Level I wage rates are generally assigned to entry-level positions requiring only a basic understanding of the occupation. On the other hand, Level IV wage rates are applicable to job offers for fully competent positions involving self-sufficient, experienced employees who exercise judgment and independent evaluation, selection, modification, and application of standard procedures and techniques. As expected, the prevailing wage for Level I positions is much lower than the prevailing wage for Level IV positions.

In the Health Carousel case, the AAO determined, and the District Court agreed, that the LCA did not correspond to the H-1B petition and failed to establish that Health Carousel will pay an adequate salary to the beneficiary. Specifically, Health Carousel claimed that the proffered position is a Level I, entry-level position (in which the employee has only a basic understanding of the occupation and performs routine tasks that require limited, if any, exercise of judgment), but Health Carousel also represented throughout the petition that the nature of the specific duties of the position of International Recruiter were specialized and complex (necessary to qualify for H-1B classification because the position was not clearly a “specialty occupation”). In particular, Health Carousel stated in its petition that the position required two or more years of relevant experience, that the beneficiary will engage in tasks that require the extensive use of independent judgment (such as identifying ways to improve and enhance existing company systems), and that the work of the beneficiary is “critical” to the company’s success.

The AAO found that if the beneficiary was paid the entry-level wage designated in the LCA, but was actually performing the higher-level position described in the H-1B petition, Health Carousel would be circumventing the requirements of INA § 212(n)(1)(A), which serves to protect U.S. workers’ wages, and simultaneously failing to pay the beneficiary an adequate salary. Furthermore, the AAO found that Health Carousel’s wage level designation of the position on the LCA undermined not only Health Carousel’s statements regarding the level of complexity, independent judgment and understanding required for the position, but also the overall credibility of the petition. Due to these discrepancies the H-1B petition could not be approved.

The required wage differences in the Health Carousel case were sizeable, but not uncommon. The AAO noted that the prevailing wage for a Level I position of this type is $13.72 per hour ($28,538 per year), with an increase to $41,538 per year for a Level II position, $54,517 per year for a Level III position, and $67,517 per year for a Level IV position. The Court did not opine what the proper wage level was in this case, but it clearly viewed a Level I wage as improper for a “critical” position involving the extensive use of independent judgment.

This decision reinforces the old maxim that you cannot have your cake and eat it, too. If an employer cannot pay the proper wage for a position it will not do to merely list a lower wage. As noted in previous blog postings, intra-agency data sharing is at an all-time high and these issues can lead not only to denial of the H-1B petition but may trigger a full-scale wage and hour audit by the U.S. Department of Labor (“DOL”). The DOL has become more sophisticated in this area and has increased investigations on H-1B wage compliance. Additionally, we have seen plaintiff’s counsel in the wage and hour class action practice area identifying this issue as a basis to investigate employer’s public access files to determine compliance with the LCA wage obligations as well as federal and state overtime laws.

Should an employer find itself in a position where it has concerns about the proper salary we recommend utilizing the safe harbor of obtaining a prevailing wage determination directly from the DOL’s National Prevailing Wage Center on Form ETA-9141. Unfortunately, this process is taking about 12 weeks to complete which generally is too long for many employers to wait to file an H-1B petition. While the DOL regulations allow for the use of private wage surveys, they do not fall under the DOL safe harbor provision and should only be utilized under the guidance of counsel, to ensure the underlying methodology complies with the private survey regulations.