Judge Rules Salary Withholding For H-1B Worker Is Not Discriminatory

by Gregory Siskind

In the Matter of Administrator, Wage and Hour Division, Department of Labor, v. Teachers’ Placement Group, et al., 2003-LCA-14 (OALJ, Feb. 23, 2004), the Office of Administrative Law Judges said that there was a need for a salary withholding from the salaries of fifteen H-1B teachers because the Newark Public School System refused to pay the Teachers’ Placement Group (TPG), the H-1B Employer/Contractor for the teachers’ services, and instead insisted on paying the teachers directly. 

On February 5, 2003, the Administrator of the Wage and Hour Division of the US Department of Labor issued a determination letter to TPG for willfully failing to pay the required wages to fifteen H-1B immigrant teachers, discriminating against the fifteen teachers and failing to establish a prevailing wage in accordance with Labor Condition Application (LCA) regulations.  TPG contested the determination and requested a hearing, which was held from June 9-10, 2003.

TPG hired fifteen math and science teachers from India for the Newark, New Jersey public school system and filed an LCA with the Department of Labor in March 2001.  The LCA set the prevailing wage at $18,680 per year according to the Occupational Employment Wage Survey.  The LCA was certified in April 2001.

TPG had all fifteen teachers sign an employment agreement that stated TPG would pay $38,000 per year to those teachers who passed all of the Praxis examinations required for teacher certification in New Jersey.  Those who did not pass the exams would receive a salary of $22,000 per year.

TPG’s petition for fifteen H-1B visas was approved in August 2001.  The teachers arrived in the US in late September and early October, and began working in early October.  As there was a three-month delay in paying the teachers, TPG paid the teachers three salary advances at $1,250 per advance.  The advances were repaid in full to TPG in December 2001 when the teachers received their salaries.

The delay in paying the salaries was due to confusion between Newark Public Schools and TPG.  When Newark Public Schools contracted TPG to hire the teachers, it was agreed that the school system would pay TPG and TPG would pay the teachers.  In November, the Superintendent of Human Resources for Newark Public Schools, Randall Kanter, informed TPG that Newark Public Schools could not make TPG a vendor and the teachers would have to be paid directly by the school system.  TPG explained that because it was the employer listed on the H-1B visas, it had to pay the teachers’ salaries. Newark Public Schools reached a compromise with TPG whereby the school system would pay the teachers directly and would arrange for money to be deducted from the teachers’ salaries and paid to TPG.  The teachers’ salaries would be set at the Newark salary scale minus twenty-five percent, which would be paid to TPG.

TPG met with the teachers in December 2001 to inform them of Newark’s decision regarding their salaries and asked the teachers to sign an agreement authorizing Newark Public Schools to deduct twenty-five percent of the gross salary as a fee to TPG.  A Newark Public Schools representative also met with the teachers to ensure that there were no concerns about the salaries to be paid.  All fifteen teachers signed the agreement.

Shortly after signing the agreement, the teachers filed a grievance with the Superintendent of Schools regarding the twenty-five percent withholding from their salaries.  The school board determined that the situation was a problem between TPG and the teachers.  The withholding continued until May 2002 when the teachers informed Newark Public Schools that it was revoking the withholding authorization.  Newark Public Schools subsequently sponsored the teachers’ H-1B visas.  TPG then filed a Civil Action for damages against the Newark Public Schools and the fifteen teachers in US District Court.

The Administrator of the Wage and Hour Division charged TPG with failing to establish a proper prevailing wage.  To support this charge, the Administrator brought the testimony from the Enforcement Coordinator for the DOL, Wage and Hour Division, Mary Dodds.  Dodds testified that while the prevailing wage chosen by TPG is applicable to teachers, only  educational institutions could use this rate. As TPG is clearly not an educational institution, Dodds stated that TPG should have chosen a “slightly higher” wage rate, but did not specify what the rate should have been.  The Office of Administrative Law Judges (OALJ) stated that the Administrator did not establish that the Respondent had a violation with its choice of prevailing wage rates.  The OALJ further ruled that “the Administrator has not shown that TPG did not pay the wage required by its LCA to the fifteen non-immigrant teachers it employed to teach at Newark.”

In its letter to TPG, the Administrator contended that $3,050 was improperly collected by TPG from each teacher for reimbursement of business expenses.  20 CFR § 655.731(c)(9)(iii)(c) states that authorized deductions from an employer’s wage cannot include reimbursement for the employer’s business expenses.  The OALJ agreed with the Administrator and ruled that TPG must return the $3,050 it collected from each teacher.

The Administrator also asserted that TPG discriminated against the fifteen teachers when it had them sign the withholding agreement.  Under 20 CFR § 655.801(a), for an employer’s actions toward an employee to be considered discriminatory, the actions must be in response to the employee disclosing information that “evidences a violation of section 212(n) of the INA or any regulation relating [thereto] or cooperated or sought to cooperate in an investigation or other proceeding concerning the employer’s compliance with the requirements of section 212(n) of the INA.”  The OALJ found that “the conduct described by the Administrator as discriminatory was not in response to a disclosure of a violation or participation in an investigation.”

The OALJ concluded that TPG must pay the DOL $3,050 for each of the fifteen teachers it sponsored for H-1B visas, the DOL’s claim that TPG failed to pay the required wage was dismissed, the DOL’s claim that TPG discriminated against the teachers was dismissed, the DOL’s claim that TPG failed to establish a prevailing wage in compliance with the LCA was dismissed and the DOL’s assessment of a penalty against TPG was dismissed.

About The Author

Gregory Siskind is a partner in Siskind Susser's Memphis, Tennessee, office. After graduating magna cum laude from Vanderbilt University, he received his Juris Doctorate from the University of Chicago. Mr. Siskind is a member of AILA, a board member of the Hebrew Immigrant Aid Society, and a member of the ABA, where he serves on the LPM Publishing Board as Marketing Vice Chairman. He is the author of several books, including the J Visa Guidebook and The Lawyer's Guide to Marketing on the Internet. Mr. Siskind practices all areas of immigration law, specializing in immigration matters of the health care and technology industries. He can be reached by email at gsiskind@visalaw.com.