Prince George's County Public Schools agreed to a settlement with the Department of Labor to pay $4,222,146 in back wages owed to 1,044 H-1B workers because the county made the workers pay H-1B filing fees and costs that reduced the workers' compensation below the lawfully required wage.  Because some of the violations were willful, the school district also agreed to pay $100,000 in civil money penalties and to be barred for two years from filing H-1B petitions, including extensions and also employment-based immigrant petitions under any employment-based program.

The case is interesting because it reminds employers that H-1B fees and costs paid by the H-1B worker may not reduce the worker's compensation below the "actual" wage and not just the "prevailing wage."  The prevailing wage is the mean wage paid to workers in similar jobs working for a statistical sample of employers in the same geographical area (usually a county) as reflected in wage surveys.  The actual wage is the mean wage paid to workers in similar jobs working for the same employer in the same geographical area.  (For a discussion of prevailing wages, please visit our prevailing wage page).

In other words, if an employer tends to pay its US workers less than other employers, it must pay H-1B workers the "going rate" as reflected in wage surveys.  If the employer usually pays more than other employers, it must pay H-1B workers this same higher rate.  The only situation where it is acceptable to allow or make an H-1B worker pay the fees and costs associated with H-1B processing is where the H-1B worker makes at least that much more than the going rate at employers generally and at that specific employer, whichever is higher.

For example, if Company A in Totten County pays its Software Engineers Level I an average salary of $75,000 per year and employers generally in Totten County pay Software Engineers Level I $70,000 per year, Company A must pay an H-1B worker working as a Software Engineer Level I $75,000 per year.  If Company A pays its Software Engineers Level I $65,000 per year, it still must pay H-1B workers it hires into the Software Engineer Level I job in Totten County $70,000 per year.

It is not unlawful to allow or make H-1B workers pay the costs associated with preparing and filing an H-1B petition.  But if the cost of preparing and filing the petition when deducted from the H-1B worker's salary reduces it to below the actual or prevailing wage, this is a violation.  Let's take our first example above where Company A pays Software Engineers Level I an average of $75,000 per year and employers generally in Totten County pay Software Engineers $70,000 per year.  if Company A asked a new H-1B worker to pay the $2,325 in H-1B filing fees and Company A paid the H-1B worker $76,000 per year, this is an H-1B violation.  Why?  Because when the $2,325 is deducted from $76,000, the result is $73,675, which is less than the $75,000 "actual wage" (the average salary Company A pays its Software Engineers Level I in Totten County).

This may seem like a technicality to some employers, but as the Prince George's County Schools learned, it is a technicality that can cost $4.2 million.

In addition to the $4.2 million, the Prince George's County Schools are bound to face some difficulties with the two year debarment period.  If they have even close to 1,000 H-1B workers, the inability to file to extend the status of H-1B workers during a two year period is bound to result in significant new job openings for US workers as H-1B workers with expiring status are forced to look elsewhere for employment because Prince George's County Schools cannot timely extend their status.  Under the statute governing the H-1B program, willful wage violations may result in a penalty of debarment from the H-1B program and other employment-based immigration programs for two years. Violations are willful when an employer knew or acted in reckless disregard for whether its actions were impermissible.

The Department of Labor's Wage and Hour Division conducted its investigation worker paid fees associated with the H-1B application process from May 2005 to January 2011.

The settlement agreement is subject to approval by an administrative law judge.