On November 9, 2015, in New York State Court, a group of immigrant software engineers filed a class action lawsuit against a global consulting company.  The suit claims that the company discriminates against foreign workers under the New York State Human Rights Law (N.Y. EXC. LAW § 296), as well as a similar municipal law.  Both laws make it illegal for employers to discriminate against employees or job seekers because of race, color, national origin, and other protected characteristics.  Specifically, the laws “prohibit discrimination in compensation or in terms, conditions, or privileges of employment.”  The suit filed on November 9 alleges that the company paid higher wages and offered better benefits packages to U.S. workers in violation of these laws.

What does this lawsuit mean for employers?  First, companies should ensure their internal policies for foreign workers comply not only with Federal immigration law, but also with relevant Federal, state, and local employment laws.  Companies that hire H-1B nonimmigrants, for example, should look beyond the U.S. Department of Labor prevailing wage regulations when determining how much to pay their H-1B workers.  H-1B employers should analyze how much they are paying U.S. workers who are performing the same or similar job duties at the same worksite as the H-1B workers and ensure the H-1B workers’ wages are reasonably comparable.  In addition, these companies should assess whether the benefits they offer H-1B workers (including bonuses and other forms of performance-based compensation) are reasonably similar to those they offer to U.S. workers.

Second, in cases where discrepancies exist between the wages and benefits offered to foreign workers and those offered to U.S. workers, employers should be prepared to justify the discrepancies and document those justifications.  Proper justifications for paying U.S. workers more than foreign workers include differences in: education and experience (a U.S. worker with a Master’s degree and 10 years of relevant experience could be paid more than a foreign worker with a Bachelor’s degree and 5 years of relevant experience); seniority (a U.S. worker who has been employed with the company for 10 years could receive a higher salary and benefits than a foreign worker who has been with the company for 2 years); and managerial or supervisory duties (a U.S. worker who manages a team of 5 subordinates could be paid a more and receive higher benefits than a foreign worker who has no direct reports). 

For H-1B workers, justification for wage and benefits discrepancies must be documented in an “Actual Wage Memorandum,” which should be placed in the H-1B worker’s Public Access File.  The Actual Wage Memorandum should list the number of employees at the H-1B employee’s worksite who are performing the same or similar job duties as those the H-1B employee is performing, along with the education and experience of those employees. If any foreign or U.S. workers are receiving higher pay than the H-1B employee, the employer should include in the Actual Wage Memorandum an explanation of why these workers are receiving higher wages.  Employers are required to attach to the Actual Wage Memorandum a summary of the benefits the company offers to all of its employees, to demonstrate that the benefits it offers to the H-1B employee are reasonably comparable to those it offers its other employees.  As a best business practice, employers should consider including similar documentation in other (non H-1B) foreign workers’ personnel files, as evidence that the company’s compensation and benefits policies comply with relevant anti-discrimination laws.

Kristin Aquino-Pham also contributed to this article.