US DOL Publishes Final Rule Eliminating Substitution of Employees in Permanent Labor Certification Program

On May 17, 2007, the U.S. Department of Labor (“DOL”) published a new Final Rule addressed at eliminating fraud and maintaining the security and integrity of the permanent labor certification program.  As our readers understand, employers who want to sponsor foreign national employees for permanent residence must first secure labor certification from the DOL for most of these employees.  By issuing an approved labor certification, the DOL is certifying that there are no qualified U.S. workers in the job location who can fill the sponsored position.  Labor certification is a protection for U.S. workers to make sure that foreign nationals do not take their jobs.

According to the DOL, there has been a high incidence of fraud in the permanent labor certification program.  One of the chief concerns of the DOL is what it calls the common practice of selling or bartering approved labor certifications to foreign nationals who have no intention of occupying, and are not qualified to fill, the sponsored position.  To eliminate this practice, the Final Rule specifically bars the sale, barter or purchase of permanent labor applications and certifications.  It also defines the procedures for DOL debarment of any employer found to be acting fraudulently.

To curtail what the DOL sees as the pernicious nature of the practice of “substitution,” the new Final Rule also prohibits employers from substituting different employees in pending or approved labor certifications. Due to the length of the permanent residence process, employers found that they still had a need to fill the certified position but that the foreign national originally selected for the job was no longer available for the job.  Employers then could “substitute” a different foreign national into the certified position and, without losing the original place in line, use the existing approval to support the new employee’s permanent residence efforts.  Once it takes effect on July 16, 2007, the new Final Rule prohibits the substitution of alien beneficiaries in approved permanent labor certifications as well as those awaiting review in the DOL Backlog Elimination Centers.

The new Final Rule also prohibits employers from recouping foreign workers’ costs, including legal fees and recruiting expenses, related to preparing, submitting and obtaining a permanent labor certification.  The DOL believes that the process of sponsoring a foreign national is in the employer’s interest,  not the employee’s, and thus the employer should bear the entire expense of the process.  As a result, the DOL feels that requiring the employer to pay all expenses associated with the PERM process will prevent fraud by limiting applications to just those filed by employers with a strong interest in retaining an important and necessary employee.  To prevent circumvention of this prohibition, the new Final Rule  prevents employers from seeking reimbursement of these expenses through payroll deductions or any other means, such as lump sum payments.

Finally, as an additional effort to prevent fraud, the new Final Rule imposes a 180-day limit on the validity period for all approved labor certifications after July 16, 2007, the effective date of the rule.  This applies to both PERM approvals as well as those obtained under the traditional and “RIR” labor certification procedures that predated PERM.  It means that employers will have 180 calendar days to file an I-140 Immigrant Petition for Alien Worker that is based on an approved permanent labor certification.  If the I-140 petition is not filed within this time, the approved labor certification will become void. 

This new Final Rule requires employers to review their roster of approved and pending labor certification applications promptly to determine several factors.  First, are there any approved or pending applications that might support substitution?  Second, are there any PERM applications in process that are being paid for by the sponsored employee and will not be filed by July 16, 2007?  Finally, are there any approved applications for which no I-140 petition has been filed.  The new Final Rule threatens to adversely impact cases in these and possibly other areas unless employers review each case against the specific requirements of the rule.

USCIS Expands Filing Period for O/P Petitions

On April 16, 2007, the USCIS issued a new Final Rule to permit petitioning employers and other organizations to file O and P nonimmigrant petitions up to one year in advance of the scheduled event, competition or performance. O petitions are filed on behalf of foreign nationals who have extraordinary ability in the arts, sciences, education, business or athletics.  P petitions are for foreign nationals who are coming temporarily to the United States to perform as an artist or entertainer under a reciprocal exchange program or for foreign artists or entertainers who seek to come here to perform, teach or coach under a commercial or noncommercial program that is culturally unique.

Under prior USCIS rules, O and P petitions, like all other nonimmigrant petitions, could not be filed more than six months prior to the schedule event.  Employers, agents, promoters and others complained that events using O and P nonimmigrants often had to be scheduled more than a year in advance and that this six month limitation on filing imposed a significant hardship on scheduling and promoting these performances.  The USCIS agreed and issued this new Final Rule allowing O and P petitions to be filed up to one year in advance of the scheduled event.

 The Senate Considered Comprehensive Immigration Reform

On May 22, 2007, the Senate opened debate on Comprehensive Immigration Reform (“CIR”). The focus was S. 1348, a “compromise” struck between the Senate leadership and the White House on the key components of this complex and politically explosive issue.  S.1348 went through the legislative process in which numerous amendments were offered by both parties in an effort to narrow or even upset the “compromise.”  Even if S. 1348 had passed, the CIR legislation still must pass the House where it would face an even more uncertain future.  As a result, the prospect of CIR was problematic and, even if it is passed by Congress, it would not become a reality for months.

Because this legislative process occurred during a presidential election cycle, as anticipated CIR was significantly changed over time as legislators proposed amendments to S. 1348 provisions.  Notwithstanding the current uncertainty, the CIR proposal broke down into several broad areas that are the focus of the legislative process:

1.         Border Enforcement:

Title I of S. 1348 address the area of border enforcement.  It sought to add personnel, technology and additional resources to prevent illegal aliens from crossing the country’s borders.  It also sought to set up a biometric exit-entry system to capture data and other information from foreign nationals entering and departing the United States, and to increase the country’s detention capacity.

2.         Interior Enforcement:

Title II of S. 1348 deals with interior enforcement.  It proposed to add new prosecutors, judges and other law enforcement personnel that would deal primarily with immigration violations.  It also would permit more detention of illegal aliens, strengthen the provisions for the deportation of criminals, increase the criminal penalties for those who violate the laws relating to immigration, and further limit access to the courts for those involved in deportation proceedings.  Finally, it provided for federal funding for state and local law enforcement authorities so they could help enforce the federal immigration laws.

3.         Employment Verification System:

Title III of S. 1348 would establish an Electronic Eligibility Verification System (“EEVS”) that would require employers to verify work authorization of employees from a central database operated by the Department of Homeland Security (“DHS”).  Employers would be trained on the EEVS and then be given 18 months to verify new hires and an additional 18 months to re-verify all employees.  To protect employees, the legislation would set up a review process within DHS that would allow employees to claim that the EEVS erred.  This Title also authorizes the DHS and the Social Security Administration (“SSA”) to establish regulatory requirements for employers who receive “No-Match” letters, and removes the current statutory provisions that bar SSA from cooperating with or providing tax-related information to DHS.

4.         Temporary Worker (“Y”) Visa Classification:

Title IV of S. 1348 would have created a new “Y” nonimmigrant visa classification that is designed to replace the current H-2A and H-2B programs.  According to the proposed statute, this new visa classification cannot become effective until the DHS certifies that certain border security and enforcement measures mandated by Titles I-III have been implemented.

An  Y nonimmigrant would have been entitled to work for any employer who could demonstrate that it: (a) could not locate any qualified U.S. worker for the job; (b) would pay the prevailing wage for the position; (c) would provide the same working conditions as it gives to U.S. workers; and (d) would comply with all U.S. labor laws.  Y workers would be allowed to work for up to six years in two year increments but would have to leave the country for at least one year in between each two year work segment.  Originally, S. 1348 proposed up to 400,000 Y visas annually but recent amendments would have reduced this allotment to 200,000. 

5.         Nonimmigrant Visa Reform:

Subtitle C of Title IV addressed specific issues in nonimmigrant visa reform.  The first area was the “F” nonimmigrant visa for academic students.  This would have extended the period of post-curricular practical training from 12 to 24 months and created a new “F-4” student visa that would assist those pursuing advanced degrees in the fields of math, engineering, technology or the physical sciences.   

Subtitle C also would have implemented changes to the current H-1B nonimmigrant classification.  It would limit the definition of a “Specialty Occupation” to exclude aliens who qualify based on experience.  It would have expanded the H-1B quota to 115,000 for fiscal 2008 (which begins on October 1, 2007) and allowed the DHS to increase that number to 180,000 depending on the volume of H-1B applications received.  Before filing an H-1B petition under this provision, employers would have to demonstrate that it had recruited unsuccessfully to find a qualified U.S. worker and that the H-1B worker would not displace a U.S. worker.  The six year limit on H-1B workers could be extended for “merit-based” adjustment applicants but the present one and three year protections for H-1B workers in AC21 would be eliminated.

Finally, this legislation would have imposed substantial limitations on the approval of L-1 intracompany transfer visas for those seeking to set up new businesses in the United States. 

6.         The Conrad Program:

S. 1348 would have made the Conrad 30 Program permanent, and would have allowed certain underserved states that use up all 30 waiver slots to get an additional 20 slots if certain highly underserved rural states (that have substantial difficulty recruiting Conrad doctors) receive a guaranteed minimum number of doctors under the program.

7.         Green Card Reform:

S. 1348 would have substantially restructured the pattern of immigration to this country.  It would have raised the quotas on both family- and employment-based immigration to clear up the present backlogs.  Once this was achieved, however, it would sharply reduce the quotas for family-based immigration and would have eliminated many of the family-based immigration categories.  It also would have replaced the current employment-based preference scheme with a merit-based point system that would prioritize immigration based on factors such as the occupation of the applicant, the type of employment s/he has had, the educational level, and the need for the applicant’s skill as defined by the DOL.  The present Diversity Lottery Program would be eliminated.  Overall, however, S. 1348 would have reduced the total number of immigrants once the quota backlogs were eliminated.

8.         Legalization:

S. 1348 would have created a legalization program that allows undocumented workers to gain lawful status.  It would have established a “Z” nonimmigrant visa category for those currently here illegally, and provided them with a mechanism for securing permanent residence once the existing quota backlogs for permanent residence are eliminated. 

As soon as CIR would be enacted, it would allowed illegal aliens to apply for Z visa status if they: (a) have resided here continuously since January 1, 2007; (b) are admissible to the United States; and (c) are working or have met specific work requirements in agriculture.  Spouses, children and elderly parents would be able to obtain derivative Z visas if they also had been here continuously since January 1, 2007, and the children were under 18 when they apply.  Individuals who were inadmissible due to prior immigration or criminal violations, who cannot establish good moral character, or who entered or attempted to enter the United States illegally on or after January 1, 2007 would not have been eligible for the Z visa. 

Applicants for Z visas would be required to pay processing costs (up to $1,500 per application), a penalty of $1,000 (principal only), a state impact fee of $500 and a $500 penalty fee for each derivative.  Z status would have been granted for four years initially, and would accord applicants work authorization.  Z status could have been extended indefinitely if certain conditions were met.  One of these conditions would require the principal Z applicant and all dependents (over age 16) to remain gainfully employed.

Z nonimmigrants would have been eligible to apply for permanent residence if they filed the application at the U.S. consulate in their country of origin (the “touchback requirement”).  The application period would have begun as soon as the current backlog in permanent residence applications was eliminated.  Applicants would have had to undergo a health examination and pay a $4,000 penalty.  This would be in addition to the fees required for the Z status.  

9.         Permanent Residence for Long-Term Child Residents:

Finally, S. 1348 would have provided children brought to the United States while under 16 with a mechanism to obtain permanent residence if they: (a) had maintained a continuous residence here since January 1, 2007; (b) were under 30 when they apply; (c) had a high school education (or the equivalent); and (d) had not been absent from the United States for more than 365 days.

The prospects for CIR were uncertain.  The situation was extremely fluid and many of the provisions outlined here changes, some significantly, during the course of the legislative process.   On June 15, 2007, the bipartisan group of Senate reached an agreement to revive the CIR Bill and return it to the Senate Floor for a final round of debate at the end of June. The Senators voted on a negotiated package of 20-24 amendments before proceeding with a vote on final passage. On June 28, 2007, Cloture failed overwhelmingly by a vote of 46/53. The proponents of the anti-immigration movement achieved great success in having their voice heard by the media, Congress, and the American public. However some good could come out of this.  Standalone immigration benefits were stalled for the past two years pending the disposition of the CIR initiative. Now that CIR is not longer an option, standalone benefits are back on the table. Many expect a number of immigration benefits provisions to move forward, probably including AgJOBS and DREAM which both received overwhelming support in the Senate.