Immigration and Nationality Act,

Administrator v. Cornet Enterprises, Inc., 95-LCA-1 (ALJ Nov. 1, 1995)

U. S. Department of Labor Office of Administrative Law Judges
Federal Building, Suite 4300
501 W. Ocean Boulevard
Long Beach, California 90802
(310) 980-3594
(310) 980-3596
FAX: (310) 980-3597

DATE: November 1, 1995

CASE NO.: 95-LCA-1

In the Matter of

ADMINISTRATOR,
WAGE AND HOUR DIVISION,
U.S. DEPARTMENT OF LABOR,
Complainant,

v.

CORNET ENTERPRISES, INC.,
Respondent.

DECISION AND ORDER REVERSING
THE ADMINISTRATOR’S FINAL DETERMINATION

This matter arises under the Immigration and Nationality Act,
as amended by the Immigration Act of 1990 (“IMMACT”), 8 U.S.C. 
1101(a)(15)(H)(i)(b), 1182(n), and the regulations promulgated
thereunder at 29 C.F.R. Part 507. Cornet Enterprises
(“Respondent”), requested this administrative hearing pursuant to
29 C.F.R.  507.820, seeking a reversal of the imposition of fines
in the amount of $34,578.33, as determined by the Administrator,
Wage and Hour Division, Department of Labor (“Complainant” or
“Administrator”). Said sum represents back wages allegedly owed by
Respondent to an H-1B nonimmigrant worker, as found in the
Administrator’s Determination Letter of September 20, 1994.

A hearing was held before the undersigned administrative law
judge on December 8, 1994, at Long Beach, California. Both
Complainant and Respondent were represented by counsel, who were
afforded full opportunity to present evidence and argument. No
witness testimony was presented by either party. However,
Complainant’s Exhibits A-E were entered into evidence, as were
Respondent’s Exhibits A-B (Tr. pp.7, 8).

Summary of the Case

The facts surrounding this case are not disputed by the
parties. On October 14, 1992, Respondent filed a labor condition
application (“LCA”) with the Department of Labor, stating that it
would employ a nonimmigrant worker as a market research analyst
under the H-1B program (See CX A). The filing and
certification of the LCA is a prerequisite to an employer’s
participation in the H-1B program, which allows for the issuance of
visas to nonimmigrant workers in specialty occupations, as well as
those in the modeling profession. 8 U.S.C.  1101(a)(15)(H)(i)(b);
29 C.F.R.  507.700.

As part of its LCA, Respondent stated that it would pay this
nonimmigrant, Ms. Alda Florencio, an hourly wage rate of $17.21 for
the full-time position (CX A). The Department of Labor certified
Respondent’s LCA for three years of employment beginning December,
1992, and expiring December, 1995 (CB p.2).

On November 30, 1992, Respondent filed an I-129 petition with
the Immigration and Naturalization Service (CX B). In this
petition, Respondent again stated that the market research analyst
position was for forty (40) hours per week at an hourly wage of
$17.21 (CX B p.2). This petition was subsequently approved and a
visa was issued (CB pp.2-3). Ms. Florencio, a resident of the
Philippines, came to the United States in January, 1993, and began
work for Respondent on February 5, 1993 (Tr. p.14; CB p.3; RB p.2).

The records indicate, and it is not disputed, that the
nonimmigrant never did in fact work forty (40) hours per week for
Respondent. Rather, since beginning her employment, Ms. Florencio
has worked an average of approximately eleven (11) hours per week.
According to Respondent, this reduction in the amount of hours was
precipitated by an unforeseen change in business conditions related
to the business (RB p.2). This change apparently occurred sometime
between the filing of the INS petition (November 30, 1992), and the
employee’s first day work (February 5, 1993). It is further agreed
that the worker was paid at the hourly rate of $17.21, as stated in
Respondent’s LCA.

At the time of hearing, it was apparent that Ms. Florencio was
continuing to work for Respondent (Tr. p.23). According to a
stipulation of the parties, the worker continued to average the
same amount of hours per week from June 10, 1994, to the date of
hearing (Tr. p.11).

Issue Presented

Based upon the facts presented, as well as the stipulations of
the parties, the dispute in this matter is purely legal in nature.
Specifically, it must be determined whether an employer under the
H-1B program is required to pay the nonimmigrant full-time wages if
the LCA and INS petition filed by that employer state that the
position for which the nonimmigrant is being brought to this
country is indeed a full-time position. If so, it must be
determined whether the payment of back wages is the proper remedy
for a violation of this requirement.

DISCUSSION

It is apparent that the issue presented is one of first
impression. Neither Complainant nor Respondent has presented any
prior decisions, interpretations from the Secretary of Labor, or
pertinent sections of legislative history addressing this
particular matter. Both counsel indicated that such precedent does
not exist due to the recent enactment of the statute, and after a
diligent search, the undersigned must agree. Therefore, resolution
of the issue identified above will depend upon the undersigned’s
interpretation of the statute as well as the regulations
promulgated thereunder.

At the outset, the undersigned is careful to note that this
matter is governed by the Rules of Practice and Procedure for
Administrative Hearings Before the Office of Administrative Law
Judges, set forth at 29 C.F.R. Part 18. See 29 C.F.R. 
507.825(a). Therefore, the rules set forth in the Administrative
Procedures Act (“APA”), 5 U.S.C.  551 et seq., will also be
applicable.

Therefore, the undersigned is mindful of the recent United
States Supreme Court decisions interpreting Section 7(c) of the
APA, which states in pertinent part that “the proponent of a rule
or order has the burden of proof.” 5 U.S.C.  556(d). In
particular, the Court has held that this provision of the APA
places the burden of persuasion on the proponent of the rule or
order. See Director, OWCP v. Greenwich Collieries, et.
al, 114 S.Ct. 2251 (1994). Consequently, as the party seeking
to impose sanctions, the Complainant in this matter has the burden
of persuasion, by a preponderance of the evidence.

Authority to Assess Payment of Back Wages

Pursuant to the applicable regulations, the authority for the
enforcement of H-1B LCA’s lies with the Administrator. 29 C.F.R.
 507.800. In this regard, the regulations provide as follows:

[u]pon determining that the employer has failed to pay
wages as required by  507.730(e) of this part, the
Administrator shall assess and oversee the payment of
back wages to any H-1B nonimmigrant employed by the
employer in the specific employment in question. The
back wages shall be equal to the difference between the
amount that should have been paid and the amount that
actually was paid to such nonimmigrant(s).

29 C.F.R.  507.810. It was upon this authority that the
Administrator assessed back wages in the amount of $40,724.73, as
of the date of hearing. Complainant does not seek any civil
penalties or debarment of Respondent from the H-1B program, both of
which are available remedies in the event of a willful violation of
the regulations. 29 C.F.R.  507.810(b).

Therefore, in order to determine the appropriateness of the
imposition of back wages in this case, the undersigned must
determine whether there was indeed a violation of Section
507.730(e), as found by the Administrator in the Determination
Letter.

Was the Required Wage Rate Paid

Section 507.730(e) provides in pertinent part:

(e) The first labor condition statement: wages.
An employer seeking to employ H-1B aliens in a specialty
occupation . . . shall state on Form ETA 9035 (the LCA)
that it will pay the H-1B aliens the required wage rate.

(1) Establishing the wage
requirement. The first labor condition
application requirement shall be satisfied
when the employer signs Form ETA 9035,
attesting that, for the entire period of
authorized employment, the required wage rate
will be paid to the H-1B alien(s); that is,
that the wage shall be the greater of:

(i) The actual wage rate paid by the
employer to all other individuals with similar
experience and qualifications for the specific
employment in question . . .; or

(ii) The prevailing wage level for the
occupational classification in the area of
intended employment determined as of the time
of filing the application and every 24 months
thereafter . . . .

29 C.F.R. 507.730(e). The undersigned must interpret this Section
of the regulations to determine whether Respondent was required to
pay the nonimmigrant for forty (40) hours per week of work, based
upon its attestation in the LCA.

RESPONDENT’S ARGUMENT

Respondent argues that the facts presented, as stipulated to
by Complainant, do not present a violation of Section 507.730(e) of
the regulations. It is not disputed that the nonimmigrant employee
was paid at the $17.21 hourly rate, and that this was the “required
wage rate.” Respondent correctly points out that no authority has
been presented to support Complainant’s contention that Respondent
was obligated to pay the nonimmigrant that hourly rate for hours
which were not worked, but were attested to being available in the
LCA.

Further, Respondent cites Section 507.730(c)(3), for the
proposition that a position identified in the LCA may be full-time
or part-time, or a combination of both. 29 C.F.R.  507.730(c)(3).
Respondent argues that adopting Complainant’s position would
effectively make any position under the program a full-time, salary
position, therefore eliminating the flexibility employers currently
have in participating by offering part-time positions (RB p.5).
This would be financially burdensome for employers, and would
unjustly enrich nonimmigrant workers by paying them for work they
did not perform (RB p.7).

COMPLAINANT’S ARGUMENTS

Complainant argues that an H-1B employee is “entitled to the
statutorily-required (sic) wage rate at all times, including
periods when the employee is in nonproductive status due to work-
related circumstances” (CB p.8). Although Complainant points to no
authority for this proposition, it presents several arguments based
upon the rationale of the statutorily created program.

First, Complainant points out that an H-1B worker is entirely
controlled by the employer. That employee is not allowed to work
for any other employer in this country (CB p.9). Therefore, if an
employer is allowed to decrease the available hours for such
employees without paying for hours not worked, the nonimmigrant’s
sole income could be reduced dramatically.

This reduction in income could lead to several consequences
which the statutory framework of the program has tried to avoid.
First, the nonimmigrant may work illegally for another employer to
supplement his or her income. Or, the worker may be eligible for
benefits under state or federal welfare programs. Complainant
argued at trial that Ms. Florencio’s current yearly earnings put
her only slightly above the national poverty line (CB p.12; CX E).

By forcing employers to pay hourly wages for the amount of
hours anticipated in the LCA, even if those hours are not worked,
Complainant argues these consequences will be avoided. A
nonimmigrant can calculate his or her yearly salary based upon the
LCA attestations, and determine whether that pay is enough for
adequate support (CB p.11).

Complainant further argued at the hearing that Respondent
never filed an amended LCA or notified the INS of the decrease in
work hours (Tr. pp.12-15).

INTERPRETATION OF THE REGULATIONS

Based upon the fact that there is apparently no case law or
interpretations from the Secretary of Labor on the specific issue
presented, resolution of this matter will depend upon the
undersigned’s interpretation of the relevant regulations.

Any such interpretation must begin with the regulation which
Respondent allegedly violated, and for which it is being penalized
with back wages. This of course, is Section 507.730(e), quoted
above. As noted, this regulation requires that the employer attest
in the LCA that “it will pay the H-1B aliens the required wage
rate.” 29 C.F.R.  507.730(e) (emphasis added). The dispute
in this case is based upon the interpretation of these last two
words.

The logical place to start with the interpretation of what
these words mean is with the definition given to them by the
Secretary of Labor. This definition is contained in the
regulations themselves, which can be found at Section 507.715,
entitled “Definitions.” This section defines the phrase “wage
rate” as “the remuneration (exclusive of fringe benefits) to be
paid in terms of amount per hour, day, month or year.” 29 C.F.R.
 507.715.

The undersigned finds that this definition is clear on its
face. Therefore, under the well defined rules of statutory
interpretation, “wage rate” must be interpreted in accordance with
this clear language.

As defined, “wage rate” clearly contemplates an hourly wage,
just as it clearly allows for a yearly salary. Respondent in this
case chose to pay the H-1B alien at a wage rate of $17.21 per hour,
a choice which was certainly allowable under the regulations. It
is undisputed that the employee was in fact paid this hourly rate,
and that this hourly rate met the “required wage rate” as that
phrase is defined. Therefore, under a strict interpretation, the
undersigned finds that Respondent could not have violated Section
507.730(e) by failing to pay the “required wage rate.”

Complainant urges the undersigned to interpret the regulations
more broadly. In particular, Complainant would have the
undersigned read an hourly component into the definition of “wage
rate.” This additional component would require any employer to pay
not only the hourly wage rate, but to pay it for the specific
number of hours identified in the LCA and INS petition, whether the
employee actually works those hours or not.

This, the undersigned refuses to do. Granted, this additional
language in the regulations might improve the H-1B program by
insuring that all aliens participating would be assured of the
total annual compensation anticipated by the LCA. But adding this
language to the relevant regulations is not a proper task for the
undersigned. Rather, it is something that Congress must do through
revision of the statute, or that the Secretary of Labor must do
through revision of the regulations or a published interpretation
of the current language. Without this guidance, the undersigned
refuses to invoke the judicial activism urged by Complainant, and
necessary for an affirmance of the sanctions imposed upon
Respondent.

The undersigned is also mindful of Complainant’s further
argument that “[t]here is no exception nor exemption, nor any
authority whatsoever, for a modification of the required payment to
the employee based on the employer reducing the number of hours
that the employee may work” (CB p.8). However, as discussed above,
the Administrative Procedures Act places the burden on the
Complainant to establish the existence of such a requirement. It
is not on the Respondent to establish an “exception or exemption”
to a requirement that can not be found in the plain language of the
regulations. Complainant has failed to carry its burden of
persuasion, and therefore, the sanctions imposed upon Respondent
must be reversed.

Finally, the undersigned finds it necessary to address
Complainant’s argument that Respondent was required to file a
revised LCA and INS petition, indicating the reduction in hours
(Tr. pp.12-14). Even if this assertion is correct, the undersigned
notes that this is not a requirement contained in Section
507.730(e), the section which Respondent allegedly violated. The
remedy of back wages is allowed under Section 507.810(a) only for
a violation of Section 507.730(e), which as found above, did not
occur here. Consequently, any violation by Respondent in failing
to update the LCA would not warrant the sanctions imposed.

ORDER

IT IS HEREBY ORDERED that:

1. The Final Determination Letter dated September 20, 1994,
ordering Respondent to pay back wages in the amount of $34,578.33,
is reversed;

2. Respondent is not responsible for the payment of a
monetary penalty for any violation of 29 C.F.R. §
507.730(e)(1), or 29 C.F.R. § 507.805(a)(2)(i); and

3. Respondent’s current LCA is not in violation of the above
referenced regulations, and therefore, need not be withdrawn based
upon these grounds.

Entered this 1st day of November, 1995, at Long Beach,
California.

SAMUEL J. SMITH
Administrative Law Judge

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