Changes in the H1B Labor Condition Application (LCA)

As part of the H1B visa petition, prospective employers must fill out the Labor Condition Application (LCA).  This is an important part of the application process, and now the Department of Labor is proposing changes to the LCA to prevent some abuses of the H1B visa for non-immigrant workers.

Proposed Rule Change to the LCA

The LCA has always asked employers for the work location of the proposed worker.  Last year, the DOL implemented a new rule requiring an employer to fill out a new LCA when a worker changed location for any reason.  This imposed something of a burden on employers that wanted to shift an employee to another location to fill a temporary need for skills at a regional branch or office.

The new LCA rules will take that a step further to identify when an H1B worker is being contracted out to unnamed companies in the original petition.  Soon, the employer will have to list in the LCA the name of the “secondary employer”, if that company will have the right to control the employee’s work, as well as terminate the employee.

There are several primary effects of this proposed rule change, all which reflect the ongoing policy of the administration to tighten H1B visa rules:

  • Limit the practice of outsourcing or contracting a single worker to multiple companies

IT outsourcing firms have been under fire this year as the main culprit when it comes to offering the services of foreign workers, often at a wage that is much lower than that earned by either US citizens or full time H1B positions.

  • Prevent ‘benching’ of H1B visa workers between contracts

One of the main issues with outsourcing is that once a contract is done, the worker is ‘benched’ until the next job, often without pay.  This violates the conditions of H1B employment to pay the worker the full-time wage stated in the petition.

  • Enforcement of the ‘prevailing wage’ requirement for H1B visas, which in part are based on the worksite location of the employee

The LCA is crucial in establishing the wage for the H1B worker.  The stated location is one factor to ensure that the ‘prevailing wage’ for the position is being paid to the worker.  Sponsors have gotten around this rule by stating one location, and then outsourcing the worker to another employer and location with a different wage scale.

When the new rule is in effect, any ‘downstream’ or secondary employer will have to be named in the LCA, and that will impact the wage being paid and ability of the original sponsor to outsource the worker to multiple clients.  Given the increase of work site inspections of H1B visa workers, any discrepancies could threaten the immigration status of the employee, as well as the ability of the sponsor to participate in the H1B program.

How Will Outsourcing Companies Comply With this Rule Change?

In order to comply, a sponsor must name the company where the employee will be outsourced, state that the secondary employer has direct control over the daily work and also pay the prevailing wage for that location.  In essence, outsourcing companies would have to know the contracting company when filling out the H1B petition and LCA.  This will have an obviously chilling effect on IT outsourcing, which has already seen many loopholes closing to prevent this use of the H1B visa program to sub-contract low wage workers.

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  • October 20th, 2017
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