Can the Employer Shift Immigration-Related Expenses onto the Employee?

Probably Not…

“Employers should not assume that immigration costs can be shifted onto their foreign national employees  and should consult with qualified immigration counsel before deducting such costs from an employee’s wages, or entering into an arrangement with a foreign national employee that would obligate him/her to reimburse the employer for such costs.” 

Recently, I have received a number of inquiries from employers asking whether H-1B and PERM (Labor Certification)-related expenses, including filing fees and attorneys fees, may be paid by the foreign national employee. In some instances, it is the employee who has approached the employer offering to pay his or her way to H-1B or green card status.

A. Cost Shifting and the PERM (Labor Certification) Process

In the Labor certification context, which is a required phase of green card processing for many employment based immigrant visas, the U.S. Department of Labor (“DOL”) has been quite definitive in prohibiting employers from receiving payment of any kind from employee-beneficiaries related to obtaining a permanent labor certification, which expressly includes having them pay attorneys fees “whether as incentive or inducement for filing , or as reimbursement for costs incurred in preparing or filing a permanent labor certification application.”

What this means for employers is that all the costs, including the attorneys fees,  associated with preparing and filing an Application for Permanent  Labor  Certification may not be shifted to the employee, even if the employee accedes to paying such costs.

It should be noted that other stages of the employment-based green card process, following  Labor Certification, such as the filing of the visa application (known as an I-140, which is usually filed by the employer) and the final application for adjustment of status (known as an I-485, which is filed by the employee) are not expressly covered by DOL’s cost-shifting prohibition. As such, cost shifting is not yet prohibited with respect to these phases of the green card process. But a word of caution here, the general trend has been for the authorities to expand the scope of the prohibition against cost shifting, so it is conceivable that current standards may change.  

B. Cost Shifting and the H-1B Application Process.

While the regulatory language is not as definitive in connection with the preparation and filing of H-1B petitions, the DOL has, nonetheless, taken the position that all fees and expenses, including attorneys fees,  should also be borne by the employer. The regulatory support for the DOL’s view can be found at 20 CFR Section 656.731(c), which provides, in pertinent part, that allowable deductions from H-1B wages shall not include recoupment of an employer’s “business expenses”–a term that has been defined to include “attorneys fees and other costs connected to the performance of H-1B program functions which are required to be performed by the employer . . .”

One caveat here, however, is that fees associated with consular processing–applying for a visa from abroad–are not required to be borne by the employer, because  it is the responsibility of the foreign national to file his or her own visa application.  

While some critics of DOL’s expanding prohibition against cost shifting have argued that the prohibition unduly discourages employers from engaging legal counsel, the upshot is that no employer wants to serve as the guinea pig for testing this and other arguments.  Cost shifting, in a word, implicates a material risk that the employer can end up in a DOL enforcement proceeding.

Next- Shifting Rules can have Serious Consequences