Topics Immigration

DOL Administrative Review Board Nixes Greedy H-1B Worker's Front Pay Appeal Based on New H-1B Employer Petition Approval

Date   Jan 5, 2015

The U.S. Department of Labor (DOL) has just released a final decision and order rendered this past July by the Administrative Review Board (ARB), holding that an H-1B worker's front pay claim against a former employer is cut off where it is clear that the worker changed employers and is the beneficiary of an approved H-1B petition filed by the new employer.

Executive Summary:  The U.S. Department of Labor (DOL) has just released a final decision and order rendered this past July by the Administrative Review Board (ARB), holding that an H-1B worker's front pay claim against a former employer is cut off where it is clear that the worker changed employers and is the beneficiary of an approved H-1B petition filed by the new employer. In the Matter of Batyrbekov v. Barclays Capital (Barclays Group US Inc.), ARB Case No. 13-013, Final Decision and Order (ARB, July 16, 2014).

Background Information:  In September 2008, Lehman Brothers Holdings, Inc. entered into an asset purchase agreement with Barclays Capital, Inc. under which Barclays assumed Lehman's obligations to its H-1B foreign temporary workers under the DOL labor condition application (LCA) regulations.  Barclays issued WARN Act 60-day termination notices to these H-1B workers in October 2008, along with many U.S. workers who were being laid off due to the economic collapse.   

Unfortunately for Barclays, it was unaware of DOL's LCA rule requiring an employer to notify the U.S. Citizenship and Immigration Service (USCIS) that it was withdrawing the respective H-1B petitions and to offer to pay the return transportation costs of terminated H-1B workers. Barclays otherwise paid the terminated workers their base wages for 60 days, plus a $3,000 severance payment.  In a prior ruling, the ARB had found an employer liable for payment of front pay to an H-1B worker through the end of her H-1B/LCA approval period, based on the employer's failure to provide notice of termination to USCIS and to offer payment of the H-1B worker's return transportation costs.  

One of the terminated H-1B workers, Kuanysh Batyrbekov, whose approval period ran through August 2010, filed a complaint with the DOL Wage and Hour Division (WHD), accusing Barclays and its predecessor, Lehman Brothers, of providing incorrect or false information on the LCA, failing to pay the higher of the actual or prevailing wage, failing to provide H-1B workers with fringe benefits equivalent to those paid to U.S. workers, failing to comply with the LCA notice requirements, failing to comply with the recordkeeping and public access file requirements, and failing to pay return transportation costs for himself and his belongings.  Following an investigation, the WHD Administrator issued a determination finding Barclays liable to the complainant for payment in the amount of $9,707.24, which represented the difference between the wages and severance benefit paid to Batyrbekov by Barclays, and the base wages Batrybekov would have earned through March 31, 2009, based on Batrybekov's admission that he had obtained new employment in April 2009.  Barclays voluntarily complied with the Administrator's wage payment order. 

Batrybehov appealed the determination and filed a request for a hearing de novo before a DOL administrative law judge.  At hearing, the WHD investigator testified as to the basis upon which the Administrator's benching pay findings were calculated through March 31, 2009, and the grounds upon which the complainant's remaining allegations were found to be without merit.  Barclays submitted evidence that the complainant obtained a new H-1B employer sponsor in January 2009 based on a petition approved January 21, 2009, cutting off liability for benching pay under the LCA regulations. Alternatively, Barclays argued that its back wage liability ended as of March 4, 2009, based upon an independent trade report that the complainant was employed in Kazakhstan.   Ultimately, the ALJ held that Barclays' liability was cut off as of March 4, 2009, but rejected an earlier cut-off based on the employer petition approved in January 2009 because it was subsequently withdrawn.  As a result, the ALJ held that Barclays had voluntarily overpaid the complainant by $3,764.59 in response to the Administrator's determination – but that Barclays was not entitled to recovery of the overpayment.

Barclays elected not to appeal the ALJ's decision, but Batyrbekov did, and the ARB granted his petition for review.   Although the ARB refused to entertain arguments from Barclays by way of cross appeal, the ARB nevertheless rejected Batyrbekov's assertions that he was entitled to back wage payments through the end of the Lehman Brothers-Barclays approval period under the substantial evidence standard of review of the record before the ALJ.  However, the ARB ruled that the ALJ had committed a mistake of law in interpreting ARB precedent to render an H-1B employer liable for payment of the LCA wage until the H-1B worker is actually re-employed rather than the date by which the H-1B worker secures approval for a change of employment to employment by a new H-1B sponsor.  Unfortunately for Barclays, the ARB affirmed the ALJ's finding that it was not entitled to a refund. 

The Impact of the Court's Decision on H-1B Employers 

The ARB's decision in Matter of Batyrbehov is significant because it recognizes that the filing and approval of a new H-1B petition for a terminated H-1B worker cuts off the prior H-1B employer's continuing liability for payment of LCA wages through the expiration of the petition approval period – even if the prior employer failed to comply with the USCIS notice requirement and the requirement that it offer to pay the reasonable cost of return transportation to the terminated worker – provided the notice of termination to the H-1B worker was clear and unequivocal. 

Unfortunately, the ARB laid down an important technical caveat.  According to the ARB, the liability cut off will apply only if the new employer sponsor checks off either the "change of employment" or "new employment" category on the H-1B petition form.  If the new sponsor checks off "new concurrent employment," the first sponsor's liability will not end until it provides notice to USCIS of the withdrawal of its petition. This technicality poses proof problems for respondent employers because the federal Privacy Act prevents third parties from obtaining immigration petition materials under the Freedom of Information Act.   In the past, WHD has not been responsive to requesting new petition information from USCIS during its investigation.  Should the Administrator enter a significant back wage order, however, the respondent employer is well advised to file a timely request for hearing and utilize the discovery rules to request that H-1B workers produce copies of all subsequent petitions filed on their behalf.  The ARB upheld the ALJ's determination in Matter of Batyrkehov that an H-1B worker's refusal to produce a copy of the new employer's petition is grounds to draw an adverse inference with respect the petition category designated by the new employer.

If you have questions regarding H-1B/LCA compliance and wage liability issues, please feel free to contact Geetha Adinata, or Charles Roach,, all of whom are attorneys in FordHarrison's Business Immigration practice group. You may also contact the FordHarrison attorney with whom you usually work.