On November 23, 2010 USCIS released a new form I-129 that will become mandatory on December 23, 2010.  While the form has many new interesting features, the most notable is the effect on the nation's thriving business and IT consulting firms that place H-1B and L-1 workers at client worksites.  We believe that litigation may arise over the definition of "employer" in the actual wage requirement between the Department of Labor and business and IT consulting companies that place H-1B workers at client company worksites.

The Actual Wage Problem

The actual wage is defined at 20 CFR 655.731(a)(1) as:

The wage rate paid by the employer to all other individuals with similar experience and qualifications for the specific employment in question.  In determining such wage level, the following factors may be considered: experience, qualifications, education, job responsibility and function, specialized knowledge, and other legitimate business factors.

In January 2010, USCIS waded into the question of which company is the employer, the consulting/staffing firm, or its client company.  For a discussion of the January 8, 2010 USCIS memo by Donald Neufeld addressing this issue, click here.  To read the USCIS memo itself, click here.

The Practical Problem of Only Counting the Petitioner's Employees at a Third Party Worksite

Whether the government will litigate this position remains to be seen.  But the policy problem facing the Department of Labor is that by counting only the consulting/staffing company's employees, it allows large companies to evade the actual wage requirement by indirectly employing H-1B workers.  Suppose, for example, that a large database software company called MondoBase wanted to hire 1,000 H-1B workers and pay them about 20% less than simiarly employed US workers.  It would be illegal to do this directly.  But if they engage a third-party firm that pays its workers 20% less, it becomes legal because the third-party firm can pay its H-1B workers 20% less than MondoBase and still pay them at a rate equal to the actual wage that it is paying its own "similarly employed" workers placed at MondoBase, even if MondoBase pays its similarly employed workers at the same worksite 20% more.

The unfortunate snag is that consulting and staffing firms that pay generous wages will still face the problem of having to ask a client company for a list of its employees in jobs similar to the H-1B worker's and also ask for their actual salaries.

The new form asks specifically if the employee will work "off-site" and then also if the beneficiary will be paid the higher of the prevailing or actual wage at any and all off-site locations.  The problem this poses is that to calculate the actual wage at an off-site location, which is presumably always a client company's worksite, the petitioner would need to ask the client company for a list of the wages of all similarly employed workers at that worksite working for the client company.  It is unthinkable that any IT or business consulting firm placing workers at client company worksites will ask for a list of the client company's similarly employed workers at that site and their salaries.  And for the business or IT company that was audacious enough to do so, it seems impossibly unlikely that the client company will release such sensitive information to an outside company.

Which "Employees" Are Counted in Actual Wages?

Employers must pay the higher of the prevailing wage and the actual wage.  20 CFR 655.731(a)(3).  The two possible readings of the regulation are that: (1) the actual wage is calculated using only the wages paid to the petitioner's employees working at a specific worksite, or (2) the actual wage is calculated using the wages of all workers working at the specific worksite including the client company's employees if similarly employed.

The H-1B regulations have always required the petitioner to pay the higher of the prevailing and actual wage to the H-1B worker.  The actual wage is the mean wage of similarly employed workers at the worksite where the H-1B worker will work.  And subject to some exceptions, employers must file a new labor condition application when there is a material change in employment.  A change in worksite location is normally a material change in employment if it is outside of he "area of intended employment."

When a New Labor Condition Application Is Required

A new labor condition application (LCA) is required when there is a material change in employment, which usually includes:

Overview of the New Form I-129

Important changes in the new form I-129:

• Part 5 asks specifically if the employee will work "off-site"
• Part 6 of form I-129 asks the employer to certify under penalty of perjury that it has read and reviewed the Export Administration Regulations and International Trade in Arms Regulations and determined that an export license is not required
• Part 7 signature section directs the signatory to "read the information on penalties in the instructions before completing this section"
• H Supplement Part A asks if the petitioner employs 50 or more individuals in the United States and if so whether 50% or more are H-1B or L-1 nonimmigrants
• H Supplement Part C asks the petitioner to specify which cap if any the petition should be counted against
• H Supplement Part D asks whether the beneficiary will be paid the higher of the prevailing or actual wage at any and all off-site locations

Excerpted Images of Parts of the New Form I-129

The new form I-129 H Supplement Part D asks whether the beneficiary will be paid the higher of the prevailing or actual wage at any and all off-site locations.

The new Part 6 of form I-129 asks the employer to certify under penalty of perjury that it has read and reviewed the Export Administration Regulations and International Trade in Arms Regulations and determined that an export license is not required.

The new Part 7 signature section directs the signatory to "read the information on penalties in the instructions before completing this section."  The new Part 9 explanation page requires a separate signature and date to join the information to the form's perjury certification.

The new I-129 H Supplement Part A asks if the petitioner employs 50 or more individuals in the United States and if so whether 50% or more are H-1B or L-1 nonimmigrants.  This welcome addition will reduce the number of requests for evidence seeking to learn the answer to this question first posed in a law signed by President Obama that became effective August 24, 2010 requiring employers who answer yes to both questions to pay an additional filing fee of $2,000 for new H-1B petitions and $2,250 for new L-1 petitions.  For more on that story, please click here.

The new I-129 H Supplement Part C asks the petitioner to specify which cap if any the petition should be counted against.