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U.S. Department of Labor
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Administrative
Review Board
200 Constitution
Avenue, N.W.
Washington, D.C.
20210
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ARB CASE NO.
03-060
ALJ CASE NO.
02-LCA-24
DATE: July 30,
2004
In the Matter of:
ADMINISTRATOR,
WAGE AND HOUR DIVISION, UNITED STATES DEPARTMENT OF LABOR,
PLAINTIFF,
v.
NOVINVEST,
LLC,
BEFORE: THE
ADMINISTRATIVE REVIEW BOARD
Appearances:
For
Prosecuting Party Administrator, Wage and Hour Division:
Lois R. Zuckerman, Esq., Paul L. Frieden, Esq., Steven
J. Mandel, Esq., U.S.
Department of Labor, Washington, D.C.
For
Respondent, Novinvest, LLC:
Ed Hyken, Atlanta,
Georgia
FINAL DECISION AND ORDER
This case arises under the
Immigration and Nationality Act, as amended (INA), 8 U.S.C.A. §§ 1101-1537
(West 1999 & Supp. 2004), and regulations at 20 C.F.R. Part 655 (2003).
Novinvest LLC (Novinvest) petitions for review of a Decision and Order (D.
& O.) issued by the Administrative Law Judge (ALJ) on January 21, 2003.
Novinvest is a corporation that engages in computer consulting and employs
nonimmigrant alien computer programmer analysts. The ALJ found that Novinvest
was liable for back wages to nonimmigrant workers, including an
"investment fee" imposed against three of these workers. We modify
the decision of the ALJ as explained below.
Jurisdiction and Standard of Review
The Administrative Review
Board (ARB) has jurisdiction to review the ALJ's decision under 8 U.S.C.A. §
1182(n)(2), and 20 C.F.R. § 655.845. See Secretary's
Order No. 1-2002, 67 Fed. Reg. 64,272 (Oct. 17, 2002) (delegating to the ARB
the Secretary's authority to review cases arising under, inter alia, the INA).
[Page 2]
Under the Administrative
Procedure Act, the Board, as the designee of the Secretary of Labor, acts with
"all the powers [the Secretary] would have in making the initial decision
. . . ." 5 U.S.C.A. § 557(b) (West 1996), quoted in Goldstein v. Ebasco Constructors, Inc., 1986-ERA-36,
slip op. at 19 (Sec'y Apr. 7, 1992). The Board engages in de novo review of the
ALJ's decision. Yano Enterprises, Inc. v.
Administrator, ARB No. 01-050, ALJ No. 2001-LCA-0001, slip op. at 3
(ARB Sept. 26, 2001); Administrator v.
Jackson,ARB No. 00-068, ALJ No. 1999-LCA-0004, slip op. at 3 (ARB Apr.
30, 2001). See generally Mattes v. U.S.
Dep't of Agriculture, 721 F.2d 1125, 1128-1130 (7th Cir. 1983)
(rejecting argument that higher level administrative official was bound by
ALJ's decision); McCann v. Califano, 621
F.2d 829, 831 (6th Cir. 1980), and cases cited therein (sustaining rejection of
ALJ's decision by higher level administrative review body).
Regulatory Framework
The INA permits employers to
employ nonimmigrant alien workers in specialty occupations in the United
States. 8 U.S.C.A. § 1101(a)(15)(H)(i)(b) (H-1B nonimmigrants). Specialty
occupations are occupations that require "theoretical and practical
application of a body of highly specialized knowledge, and . . . attainment of
a bachelor's or higher degree in the specific specialty (or its equivalent) as
a minimum for entry into the occupation in the United States." 8 U.S.C.A.
§ 1184(i)(1). In order to be eligible for employment in the United States,
these workers must receive H-1B visas from the State Department upon approval
by the Immigration and Naturalization Service. 20 C.F.R. § 655.705(b). The
employer concomitantly must obtain certification from the United States
Department of Labor after filing a Labor Condition Application (LCA). 8
U.S.C.A. § 1182(n). The LCA must stipulate the wage levels and working
conditions for the H-1B employees. 8 U.S.C.A. § 1182(n)(1); 20 C.F.R. §§
655.731, 655.732. Deductions from wages expressly not authorized under the regulations include "a
penalty paid by the H-1B nonimmigrant for ceasing employment with the employer
prior to a date agreed to by the nonimmigrant and the employer." 20 C.F.R.
§ 655.731(c)(10)(i). See generally D.
& O. at 12-15, 20-21.
Issue
Did the ALJ correctly
determine that Novinvest is liable for the $5,000 deduction from the salaries
of its H-1B nonimmigrant employees and must compensate each worker for judgment
amounts assessed?
Background
The ALJ has set forth the facts
of the case in detail (D. & O. at 2-12), and we will not revisit them in
their entirety. We limit our focus to the issue upon which Novinvest petitions
for review. See Novinvest LLC
Petition to Review the Decision and Order dated February 18, 2003; 20 C.F.R. §
655.845(b)(3) and (4) (petition for ARB review must specify issues giving rise
to petition and state specific reasons why petitioning party believes ALJ decision
is in error).
[Page 3]
Novinvest
provides computer specialists "on a project basis to client
companies." Prosecuting Party's Exhibit (PX) 5 at 1. Novinvest employed
H-1B nonimmigrant "specialists" after it filed an LCA with the
Department of Labor and after the Department of State, upon approval of the
Immigration and Naturalization Service, issued the employees H-1B visas. The
employees at issue for our purposes are Philip Peshin, Alex Koloskov, and Igor
Viazovoi.1
Pursuant to an employment
agreement, Novinvest required each of its employees to assume liability for a
$5,000 investment fee. Captioned "Relocation Assistance," this
provision of the agreement stated:
The Company invests considerable time, effort and
financial resources in organizing, assisting and transitioning the Employee to
life in the US. The value of the Company's up-front investment (in order to
hire, process and train Employee) is estimated as USD 5,000 (five thousand) per
Employee. This investment is considered an interest-free loan from the Company
to the Employee starting on the day employee arrives in the US. Every month,
1/12 (one twelfth) of the amount is forgiven by the Company, so that at the end
of the Employee's first year with the Company the entire amount is forgiven. If
the Employee leaves the Company's employment, for any reason, before the end of
one year, or is terminated, the remaining balance becomes due, and the Employee
must reimburse the Company.
PX 5 at 5. The employees never actually received
$5,000, and Novinvest was unable to document expenditures of $5,000 for each
employee. D. & O. at 5-6 (Stipulation No. 20, Finding of Fact No. 4). All
three employees resigned from Novinvest prior to their one-year anniversary
date.
After a hearing,
the ALJ found that the $5,000 investment fee constituted an impermissible early
termination penalty and that Novinvest violated its wage obligations under the
INA and implementing regulations by charging the H-1B workers the $5,000
penalty.2 D.
& O. at 19-22; 20 C.F.R. § 655.731(c)(10)(i); 20 C.F.R. §655.731(c)(11).
The ALJ found Novinvest liable for the following amounts in compensation for
the penalty: Peshin was due $5,000, Koloskov was due $2,347.52, and Viazovoi
was due $1666.67. D. & O. at 22.
Novinvest had secured state
court judgments against the respective employees, which included the $5,000
investment fee. D. & O. at 7-9 (Findings of Fact Nos. 7, 16, 21). The
judgments against Peshin, Koloskov, and Viazovoi totaled $8,789.45, $2,347.52,
and $1,666.66, respectively. Peshin paid none of his judgment, Koloskov paid
$1,200 of his judgment, and Viazovoi paid $55 of his judgment. Id.
Discussion
In its petition for review,
Novinvest argues that the ALJ erred in calculating the amounts owed to the
three employees. First, according to Novinvest, the ALJ arbitrarily attributed
the amounts awarded in the judgments against Koloskov and Viazovoi exclusively
to the impermissible penalty when Novinvest presumably had asserted other
claims. As evidence, Novinvest cites the $8,683.38 claim against Koloskov for
which it received an award of only $2,347.52 and the $8,487.00 claim against
Viazovoi for which it received an award of only $1,666.66. Second, according to
Novinvest, "the amounts assessed to Novinvest should not exceed the
amounts actually paid by the three individuals toward the satisfaction of
Novinvest's judgments." Petition at 1. In other words, Peshin should
receive nothing, Koloskov should receive $1,200, and Viazovoi should receive
$55.
[Page 4]
The INA and its implementing
regulations expressly prohibit early termination penalties. Specifically, it is
a violation of the INA
for an employer who has filed an application
under this subsection to require an H-1B nonimmigrant to pay a penalty for
ceasing employment with the employer prior to a date agreed to by the
nonimmigrant and the employer. The Secretary shall determine whether a required
payment is a penalty (and not liquidated damages) pursuant to relevant State
law.
8 U.S.C.A. § 1182(n)(2)(C)(vi)(I). See 20 C.F.R. § 655.731(c)(10)(i)
("[a] deduction from or reduction in the payment of the required wage is
not authorized (and therefore is prohibited)" for purposes of "[a]
penalty paid by the H-1B nonimmigrant for ceasing employment with the employer
prior to a date agreed to by the nonimmigrant and the employer"). The ALJ
found that Novinvest violated the INA when it assessed the "investment
fee" penalties (D. & O. at 19-22), and Novinvest has not appealed this
aspect of the ALJ's decision. We find, therefore, that Novinvest is not
entitled to recover from the nonimmigrants any of
the $5,000 investment fees. We disagree with the ALJ, however, with respect to
the back wage calculations. The ALJ determined that Novinvest owed each of the
workers the full amount of the judgments assessed. We find instead that
Novinvest is required to refund to Peshin, Koloskov, and Viazovoi monies
actually paid by them as compensation for the investment fee penalty. Any fees
or costs associated with collection of monies pursuant to that provision also
must be refunded. We note that the Secretary is authorized to impose
administrative remedies, including civil money penalties, for willful failure
to meet a condition of an attestation or a willful misrepresentation of
material fact in an attestation. See 8
U.S.C.A. § 1182(n)(2)(C); 20 C.F.R. § 655.810. Therefore, Noinvest may be
subject to additional action by the Secretary if it engages in further efforts
to obtain penalty provision funds.
Conclusion
Noinvest is not entitled to
recover any amounts under the "Relocation Assistance" provision of
its contracts with the H-1B nonimmigrant employees. The decision of the ALJ
hereby is MODIFIED to order
repayment of amounts paid by the nonimmigrants to Novinvest pursuant to the
"Relocation Assistance" provision of the employment agreement,
including any fees or costs in connection therewith.
SO
ORDERED.
JUDITH S. BOGGS
Administrative Appeals Judge
OLIVER M. TRANSUE
Administrative Appeals Judge
[ENDNOTES]
1 These H-1B nonimmigrants, in addition
to another nonimmigrant, Igor Politykin, arrived in the United States between
March 2000 and April 2001. They arrived prepared to work, but Novinvest
"benched" them and refused to pay them in violation of the INA. See 8 U.S.C.A. § 1182(n)(1)(A); 8
U.S.C.A. § 1182(n)(2)(C)(vii); 20 C.F.R. § 655.731(c)(7)(i) (if the H-1B
nonimmigrant is not performing work and is nonproductive due to a decision by
the employer (e.g., due
to lack of work) the employer is required to pay him at the wage listed in the
LCA). After an investigation, the Administrator determined that Novinvest owed
these employees back wages for benching periods during the course of
employment. The ALJ upheld the Administrator's determination as well as the
back wage calculations. D. & O. at 15-17. Novinvest did not appeal these
findings.
2 The Administrator's determination
letter did not allege specifically that the "investment fee"
requirement violated the INA, stating merely that Novinvest had "failed to
pay wages as required." PX 29 at 1. The Administrator subsequently moved
to conform the determination letter to the evidence to include allegations
pertaining to the investment fee. Hearing Transcript at 129-131. The ALJ
granted the motion, finding the early termination penalty issue properly before
him. D. & O. at 18-19. Novinvest did not appeal this finding.
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