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I-9, ICE and H-1 Audits - Are You Ready? - International Law Office

International Law Office

Immigration - USA

I-9, ICE and H-1 Audits - Are You Ready?

January 15 2010

Introduction
Worksite Audits: Frequently Asked Questions
Checklists for USCIS Worksite Enforcement
Some Types of Employer Are Investigated More Often than Others


Introduction

This update outlines the steps that industry can take to avoid a continuation of problems with US regulatory agencies. It describes practical procedures and industry best practices that firms can quickly put in place to lessen compliance risks associated with US immigration programmes. Included in this update are:

  • a set of frequently asked questions for firms confronting several types of agency audit and worksite inspection and enforcement visit;
  • an outline of industry best practices for compliance with US Citizenship and Immigration Services (USCIS), Immigration and Customs Enforcement (ICE) and Department of Labour site inspections and file audits, and a discussion of the fraud indicators and red flags that government agencies use to profile firms for enforcement activities; and
  • steps that firms can take to reduce their risk exposure now, including checklists to prepare for USCIS site inspections, along with the 'big picture' of how industry can most effectively work with government agencies.

Worksite Audits: Frequently Asked Questions

H-1B audits and site visits
Will I be audited by a government agency if I file a H-1B petition?
The answer to this question depends on a number of potential risk factors, such as:

  • the size of the company;
  • how long it has been operating in the United States;
  • how many H-1B and other non-immigrant workers it employs;
  • the type of work it undertakes; and
  • more specific risk characteristics such as outsourcing to client sites and any past history of compliance issues or violations.

These factors are examined in detail below. It is likely that at some point the company will be visited by inspectors from one of several federal agencies that have jurisdiction over subject-matter areas, including I-9 compliance, H-1B petitions and related labour condition attestations (LCAs), on each of which the company must now keep separate files. ICE, the enforcement arm of USCIS, recently announced that it will be carrying out 1,000 I-9 inspections(1) in addition to the 526 it announced earlier in 2009. Meanwhile, USCIS intends to increase its H-1B site audits to 25,000 - a fivefold increase in inspections by its Fraud Detection and National Security (FDNS) division that started in July 2009.(2) The Department of Labour has been conducting LCA and Permanent Electronic Review Management (PERM) file inspections for years and reportedly eventually wishes to audit all LCA filers.

Will the inspectors notify me in advance that they will be conducting a site visit?
Sometimes they do, but often H-1B auditors show up without prior notice. The inspectors may come to a company's head office where records are kept or may visit employee worksites. In either case, on-site managers, reception staff and employees must be trained in advance as to how to deal with them. If a company does not already have procedures in place, it needs a compliance self-audit - particularly if it has H-1B workers assigned at client sites.

New information about FDNS audits
A USCIS-FDNS official recently confirmed that three types of H-1B site visit are being conducted at present:

  • The Risk Assessment Programme fraud study - this joint USCIS and ICE programme audits all types of benefit programme, including those that are family and employment based. Applications and petitions are chosen at random, usually on a post-approval basis, for site visits as part of a programme to design profiles of potential fraud.
  • Targeted site visits - these audits are directed at businesses where fraud is suspected and involve a visit by inspectors to ask questions and inspect and photograph workplaces. Advance notice, including notice to counsel, should be provided.
  • Administrative site visits - these audits currently involve H-1B and R-1 (religious worker) petitions. They are generally conducted by private sector contractors with limited knowledge of immigration law, who may appear without prior notice. For H-1B site visits, the contractors have a worksheet with a list of specific questions, primarily focusing on whether:
    • the petitioner is a legitimate business enterprise with actual facilities and employees;
    • the employer knows that it filed the petition; and
    • the beneficiary is doing the work and receiving the wage indicated on the petition.

Of particular note to H-1B employers is the need to keep accurate, current administrative records of the location, salary and job duties of all non-immigrant and even lawful permanent resident employees on the payroll, and to have an administrator designated and prepared to answer questions. If the company is willing to receive FDNS auditors, it is equally important that non-US workers receive training on the FDNS interview process, as interviews with the beneficiary are also a core part of the audit and the process focuses on substantial discrepancies in information received from the company and its employees. In the alternative, FDNS auditors may be directed to the company's attorney.

H-1B administrative visits are usually done on a post-adjudication basis and the agency claims these are randomly selected. Each employer may receive different visits for different sites.

Government audits and site visits: rules of engagement
Do I have to cooperate with US government auditors and allow them onto my business premises?
You should, but the degree of cooperation and access shown will depend on which agency sends them and whether they hold warrants, administrative subpoenas or just come bearing business cards. There are three agencies and three basic inspection types:

  • I-9 inspections are generally conducted by ICE, which may come bearing warrants;
  • LCA file inspections are the jurisdiction of the Department of Labour, which may issue administrative subpoenas to inspect some specific types of document, but otherwise cannot conduct searches or involuntary questioning of individuals; and
  • H-1B audits are carried out by USCIS-FDNS, but this is not a law enforcement agency and it does not have the power to issue subpoenas, demand production of documents or engage in any sort of involuntary questioning.

These distinctions and how companies deal with them should be worked out in advance with qualified immigration counsel who have expertise in worksite inspections and compliance issues.

Do I need to separate my LCA public access files from H-1B inspection files?
You should. The Department of Labour auditor will give a company an administrative letter demanding a look at its LCA public inspection files and several categories of documentation must be in there - complete, accurate and up to date - or the company can be fined or worse. By contrast, USCIS-FDNS auditors have no law enforcement powers and cannot compel a company or H-1B workers to allow them on the premises or to provide them with documents. Nonetheless, they should be received in a courteous and professional manner. USCIS has no legal jurisdiction over wage and hour provisions related to LCA compliance. However, as it does and will inform the Department of Labour and ICE of any observed violations, access, documents and interviews must be carefully controlled. Decisions such as the production of specific documents made available to auditors and who may be interviewed by FDNS, or any other matters related to the H-1B petition, are protocols that must be developed in advance with a lawyer rather than improvised.

Does anyone need to talk to government inspectors during site visits?
Unless inspectors have a search warrant or warrant for arrest, a company need not allow them on its property, barring exigent circumstances. Even a badge as a law enforcement officer and a properly executed search warrant does not give an inspector the power to compel any person - whether US citizen or non-immigrant - to provide any information or cooperate with a search, other than the general requirement to provide a personal identity document to a police officer who is engaged in an investigation of a suspected crime.

Under the Fifth Amendment to the Constitution, no one may be compelled to speak to a law enforcement officer and everyone has the right to have an attorney present during questioning. If inspectors want to interview persons on the premises, no one is required to speak to them or respond to questions. However, persons who are material to a suspected crime may be detained and involuntarily removed to another location for further questioning.

What is the difference between a search and seizure warrant and an administrative subpoena?
A search and seizure warrant is issued by a judge and authorizes law enforcement agents to enter a structure, vessel or vehicle forcibly to arrest specific persons or seize records or other materials or contraband identified as being, or being associated with, the proceeds of a crime.

In contrast, a subpoena duces tecum is issued to compel testimony or the production of documents related to an ongoing investigation.(3) There are also several other types of subpoena:

  • an administrative subpoena(4) issued by an officer of an agency;
  • a subpoena issued by an administrative law judge; and
  • a Federal Bureau of Investigation national security letter, which demands production of telephone and other records related to intelligence and counter-terrorism investigations.

None of these subpoena categories authorize forcible entry to search and seize documents or persons.(5) Instead, they are types of demand letter for the appearance of a person or delivery of materials of interest or testimony to an investigation.(6) The subpoena states a place, time and date when the person or documents must appear and authorizes the issuer to examine them at the location stated.

Warrants and subpoenas can be challenged in court; however, in practice, only some subpoenas allow for advance notice to the target, which would allow the intended receipient to go to court to contest the order in advance of its execution. The Department of Labour will usually issue a letter one week in advance of an intended LCA file audit and the law requires the H-1B employer to "make and provide" a compliance file. In addition, access to LCA public inspection files should be provided to "any interested party" within one day of request. No specified penalty is attached to failure to provide such files to parties other than Department of Labour inspectors, but an interested party may make a complaint to the department, triggering an audit and subpoenas.(7) However, refusal to provide access to public inspection files to Department of Labour or ICE inspectors may result in a finding of non-compliance and the imposition of administrative sanctions.

ICE investigators have also been known to arrive unannounced and demand access to conduct I-9 audits, which can turn into a general demand for company records and a survey of employees, if management grants access. However, ICE regulations state that employers should be given three days' advance notice before an audit of I-9 files and employers can and should insist on that time to prepare for an inspection. ICE, which has partially overlapping jurisdiction with the Department of Labour over compliance matters related to hiring non-US persons, may also issue a subpoena for I-9 forms and "any and all books, lists, payroll records, and personnel records for each employee hired after November 6, 1986".

An ICE field officer has the general power to issue a subpoena under 8 USC §287.4(8) to compel a witness who may be required to appear and testify and to produce designated books, papers or documents. In addition, an administrative subpoena is specifically authorized under the enabling section for I-9 enforcement.(9)

While three days' advance notice is normally given, in "unusual circumstances" ICE may issue an immediate demand for production of I-9 documents. However, such a subpoena is not self-enforcing and may be contested before the US district court with jurisdiction. In matters of employer sanctions, an administrative subpoena may be issued demanding an employer to provide relevant employment documentation immediately, including:

  • for employees hired within the past three years, their names, dates of birth, Social Security numbers, date of hire and date of termination (if applicable);
  • all Social Security Administration employer correction requests and requests for employee information received;
  • all payroll records for the previous three-year period;
  • all employee time cards for the past week; and
  • all Forms I-9 for the previous three years.

An administrative subpoena is issued on Form I-138, 07-01-83 (8 USC §299.1 - prescribed forms) and may be accompanied by a criminal warrant or issued alone. However, unless ICE produces a signed warrant, the employer may still refuse access to facilities, records and persons.

Furthermore, if after being subpoenaed the employer refuses access to files or cooperation, ICE may seek court enforcement of subpoenas that are not complied with. Refusal or delay in producing I-9 records may be deemed to be an administrative violation of retention requirements, an infraction that may be punished by fines or penalties.(10) Otherwise, however, ICE administrative subpoenas are not self-enforcing(11) and the agency must apply through the US attorney to a federal magistrate for an enforcement order.(12) Violation of a court order to produce documents subpoenaed may result in a contempt citation by the judge, who may impose a fine or jail time. Finally, refusal to grant access subsequent to a subpoena may lead ICE to request the US attorney for a search and seizure warrant. Warrants must specify the records or persons sought and do not provide carte blanche access to all areas of a plant or office or a power to compel testimony from any person.

How is a H-1B employer audit different from an ICE worksite enforcement?
While USCIS and ICE are both part of the Department of Homeland Security, the two agencies have different missions. USCIS was set up to administer processing of immigration benefits (eg, the adjudication of H-1B, L-1 and other non-immigrant and immigrant visa petitions). ICE, on the other hand, is a law enforcement agency charged with investigating immigration-related crimes committed by groups and individuals.

USCIS cannot arrest people. In fact, it does not even have authority to subpoena, fine or penalize anyone administratively. It has no statutory jurisdiction over LCA wage and hour compliance, which is reserved by law to the Department of Labour Wage and Hour Division. The sole power of USCIS is to deny a petition or revoke one that has already been granted. Otherwise, it can only refer a company or an individual to ICE or the Department of Labour for follow-on investigation and potential prosecution. It is up to those agencies to impose any administrative penalties or to refer a case for prosecution to the US attorney. Alternatively, they may infrequently turn over a case to a state or local prosecutor.

Thus, a worksite audit by USCIS-FDNS is not a 'raid' or enforcement action - it is merely an extension of the examinations process. An ICE worksite raid is very different in approach and consequence. ICE can arrest a company manager or employee if an officer determines that the manager or employee has violated any federal criminal law. ICE can also arrest anyone for obstructing its investigation or refusing to follow lawful commands of law enforcement officers during an ICE raid pursuant to a warrant.

What is the difference between an arrest and being held as a material witness?
Anyone placed under arrest by ICE is given a Miranda warning (ie, advised that he or she has the right to counsel before making a statement to the officer). The law regarding requirements for Miranda warnings and the right to counsel for persons held on material witness warrants is not as clear and consistent. Material witnesses may be detained pursuant to a warrant if a judge is convinced that their testimony is essential in order to make a case against others, but the witness is uncooperative and deemed to pose a flight risk. The witness may be held "for a reasonable period of time until the deposition of the witness can be taken".(13) Material witnesses may be held for the entire period that a grand jury is in session, which may last for months. Non-immigrants who are threatened with being held as material witnesses for an indeterminate period or with being placed in removal proceedings are easy targets for intimidation by investigators, and they too need to understand their rights and duties under the law.

What authority does an FDNS auditor, a Department of Labour inspector or an ICE officer have to interview or detain persons during worksite inspections?
FDNS inspectors have no more authority to compel interviews than any other private person. Most FDNS auditors are employees of private contractors. The FDNS is a division of USCIS, which is not a law enforcement agency, even though it is part of the Department of Homeland Security. By contrast, ICE is a law enforcement agency, and many ICE officers have the power of arrest and may interview people if they believe they have cause to arrest or detain them as a material witness regarding a crime. On the other hand, the employer and employees' cooperation with FDNS is "entirely voluntary", according to the USCIS general counsel.

Although FDNS auditors have reportedly told companies that they may not contact counsel, USCIS has acknowledged that was improper and neither managers nor company employees are legally obligated to follow instructions issued by USCIS or its contract employees. Of course, failure to cooperate with FDNS can have adverse consequences for a company, so responses to USCIS auditors must be professional in tone and as cooperative as legal counsel will allow. ICE workplace raids carried out with warrants by law enforcement officers present a different and potentially far more serious situation. In any case, an employer should immediately attempt to contact his or her lawyer upon the arrival of any government inspector or a law enforcement officer. The degree of cooperation and assistance shown to government auditors during workplace inspections or investigators is situational and needs to be planned with the aid of legal counsel.

Do I have to give FDNS a copy of the LCA public access file or I-9 file?
This is a decision that the company should make with counsel after a thorough self-audit of its LCA, H-1B and I-9 files. The Department of Labour has sole jurisdiction to enforce the wage and hour provisions contained in LCA files.(14) The regulatory authority of USCIS and ICE over LCA matters is limited to determining whether the LCA submitted "corresponds with the petition". Otherwise, Department of Homeland Security enforcement of LCA provisions is restricted to ensuring that H-1B dependent employers and wilful violators carry out their obligations to recruit US workers and do not displace US workers as part of their LCA attestation requirements.(15)

However, all H-1B employers must maintain an LCA public access file, the contents of which "shall be available for public inspection".(16) This file should contain:

  • a copy of the signed and certified LCA;
  • documentation of the salary;
  • an explanation of how the actual wage was determined;
  • documentation or description of the basis for the prevailing wage;
  • documentation that the LCA was posted for the required notification period notifying employees of the LCA filing (or, if in a unionized workplace, that the union was notified), and that a copy was provided to the H-1B employee; and
  • required under the American Competitiveness and Workforce Improvement Act, documentation indicating whether the employer is 'H-1B dependent' as defined in the act and, if so, documentation of additional recruitment and non-lay-off provisions made on the LCA.

While there is no specified penalty for refusal to grant access to the public inspection file to any agency other than the Department of Labour (ICE may also have a partially overlapping interest in these materials), this action may have significant adverse consequences. In particular, failure to cooperate with FDNS may lead to complications and delays in the adjudication of pending petitions filed with USCIS. Nonetheless, the LCA file and I-9 file should be kept separate from any H-1B file materials that the employer selects to hand over to an FDNS auditor.

An employer need not give FDNS full access to the contents of the LCA file, I-9 file or any other materials. However, refusal to do so if requested is likely to result in a site investigation by the Department of Labour and ICE. Officers of those agencies may issue subpoenas for production of specific documents related to these files, but otherwise have limited powers of search and seizure and no authority to question or detain persons who do not want to talk to them. Without a warrant, ICE may not ordinarily detain or carry out arrests during inspections.

All companies should audit, correct, update and separate their own compliance files and work with specialized counsel to put in place protocols for handling inspections by various agencies.

May I correct and backdate I-9 files?
It is unlawful to backdate an I-9 form. It is also unlawful for an employer to allow any employee to work for more than three days without a complete, accurate I-9 signed by the employee and employer on file. The dilemma is that if an employer completes a new I-9 today, using the current form and today's date, and ICE carries out an inspection of any time in the next three years, the company is potentially in violation for any error, omission or material misrepresentation.

Some companies, upon discovering that they have defective I-9 files, have been known to change I-9 forms and backdate the amendments or transfer information onto the updated form, destroying or altering the old form. Do not do this. The manager who signs this backdated document is falsifying a federal document and company records. Instead, create a new, accurate I-9 form to supplement the old I-9 form, which must be maintained on file for three years after the date of first hire or for one year after the employee is separated, whichever is later.(17) The potential penalty for falsification of records is usually far more severe than for technical violation of I-9 requirements

Red flags and triggers for audits
How does the Department of Labour decide to do LCA audits and what is the range of its investigative powers?

An LCA investigation is initiated for "reasonable cause" pursuant to a complaint of a violation within the previous 12 months received from a "known, credible" party, or as the result of information obtained through another lawful Department of Labour investigation. This has been interpreted to mean that the department may proceed to carry out LCA audits on the basis of profiling; furthermore, the agency has reportedly indicated that it desires to audit all employers that have filed LCAs.(18) However, this may not be consistent with current law. The department may not initiate an LCA investigation on its own or as the result of information received from the employer by the department or USCIS as part of a H-1B application, but there is no requirement that the triggering complaint be received from an aggrieved party.(19)

The Wage and Hour Division inspection of documents is restricted to the contents of an LCA file. The Department of Labour will investigate H-1B employers for various reasons, including:

  • material misrepresentations;
  • failure to pay the required wage;(20)
  • failure to provide notice of the filing of the LCA;
  • violations of other terms of the LCA, such as hiring of H-1B workers during strikes and lock-outs or failure to recruit US workers by H-1B dependent employers;
  • payments of costs by parties other than the LCA filer; and
  • errors in or omission of required documentation in the public access file.

As for any other worker, the Department of Labour has the authority to inspect for safe, healthy and lawful conditions of work by H-1B employees and to ensure the actual payment of wages for work performed. The department and ICE often jointly investigate suspected cases of 'benching' and reassignment of H-1B workers to sites other than those listed on LCAs, which is treated as criminal fraud, and recent prosecutions have focused on illegal practices such as paying wage levels inappropriate to the actual place of employment.

H-1B dependent employers and financial institutions that accept Troubled Asset Relief Programme funds are also subject to special requirements for documenting the outside posting of the position and efforts to recruit qualified US workers.

The Seventh Circuit Court of Appeals has held that there is no time limit for enforcement actions of wilful violations of LCA requirements, and that retroactive enforcement is lawful. Back-pay awards and fines have reached into the millions of dollars.

The Department of Labour may carry out investigations, but these are usually conducted in conjunction with a federal documents and benefits fraud taskforce because of the limited scope of the department's investigative authority under current law. The determination of a Department of Labour audit and any penalties assessed (including back wages, fines and disbarment from the LCA programme, which also prevents the company from the H-1B, L-1, O-1 and PERM programmes for up to three years) may be appealed to a Department of Labour administrative law judge, the Administrative Review Board and then the federal courts.

Companies found to have engaged in wilful violations or misrepresentations are subject to random audits by the department for a period of five years after such finding.

Procedures for handling interviews, the location and timing of those conversations and the presence of a manager or attorney and any recording of the FDNS, ICE or Department of Labour inspection by the company are matters that need to be worked out in advance with counsel as a part of a set compliance and risk management protocol.

What is the Department of Labour looking for in a PERM audit?
Audits of PERM applications, particularly for positions in the IT industry, have become commonplace. An audit of a firm's PERM filing is conducted after the Department of Labour detects impropriety in any particular case or series of applications received from the same employer. The normal procedure is that files and all documentation must be delivered to the department by the employer or attorney within 30 days of issuance of an audit notice. Failure to produce the required documentation, or receipt of evidence indicating impropriety or fraud, will result in denial of the application and potential field investigation by the department, potentially involving a multi-agency investigation by a document and benefits fraud Taskforce. Withdrawal of the application does not halt the audit and may be taken as a red flag of potential fraud. Other potential red flags include:

  • a proprietary interest in the sponsoring firm by the beneficiary;
  • recently established firms;
  • labour certifications for positions that are inconsistent with the claimed line of business;
  • multiple filings by smaller companies;
  • jobs portrayed as in-house jobs that are actually outsourced to client sites;
  • positions that are newly created within the same organization; and
  • PERM filings within six months of layoffs of US workers in similar positions in the same geographical area.

Many of these red-flag triggers are built into the online form, which will trigger an automatic audit.

Checklist for PERM audit file
PERM audits require production of supporting documents; therefore, the following must be maintained and kept current in the PERM audit file for five years:

  • a copy of the certified LCA (ETA FORM 9089);
  • proof of permanent, full-time employment;
  • notice to the bargaining representative (if applicable);
  • documentation of the job-posting notice;
  • proof of the job order placement;
  • documentation regarding a bona fide job opportunity (if applicable);
  • prevailing wage documentation;
  • recruitment documentation consisting of the following (three alternative recruitment sources must be utilized in addition to the two required print advertisements in a major metropolitan newspaper or professional journal within six months of the date of submission):
    • print advertisements;
    • job fairs;
    • employer's website;
    • job search website (other than the employer's);
    • on-campus recruiting;
    • trade or professional organization journals or newspapers or other means of distribution;
    • private employment firms;
    • an employee referral programme with incentives;
    • university campus placement offices;
    • advertisements in local and ethnic newspapers; and
    • radio and television advertisements;
  • a recruitment report signed by the employer, describing the recruitment steps undertaken and the results, the number of hires and, if applicable, the number of US workers rejected, categorized by the lawful job-related reasons for such rejections;
  • resumés, job applications and job applicant records;
  • notice and attempt to re-hire laid-off US workers in the same area of employment during the six months prior to filing the PERM (if applicable);
  • business necessity documentation;
  • education and experience requirements; and
  • evidence of the employer's existence and actual business operations.

The employer must maintain an up-to-date, accurate audit file for each PERM applicant for a period of five years. This raises the possibility that the Department of Labour may move to revoke approved labour certifications during that period, even after the beneficiary is adjusted. Presumably such delayed actions will occur only if there is specific evidence of fraud.

May I prevent government inspectors from conducting a search of the premises or interview of employees?
That depends on whether ICE or another law enforcement agent produces a search warrant or administrative subpoena. In addition to the power to execute search warrants, ICE may issue administrative subpoenas to inspect I-9 files; ICE agents generally review I-9 forms, company payroll records, W-2 reports and other documents. They check whether the employer has documented its employees' identity and work authorization. As part of this review, ICE will also ascertain whether any counterfeit documents were provided. Obstruction of an administrative subpoena or a warrant, or alteration or destruction of documents to evade compliance, is a serious crime.

ICE also acts as the lead enforcement agency for leads developed by FDNS and the Department of Labour, and any other investigative agency which may have obtained evidence of benefits or document fraud, use of false documents or misrepresentation of material facts, such as terms of employment, in petitions and applications. Persons are rarely arrested on the spot during compliance audits and agencies do not usually treat paperwork violations as criminal unless the purpose was clearly to falsify the record or evade legal requirements. Administrative penalties, such as petition revocations, disbarments or fines levied by administrative judges, are far more common in cases of wilful violations of eligibility rules or even pattern and practice violations. As the element of intent is difficult to prove, almost all criminal prosecutions in the criminal context are reserved for the clearest cases of fraud or systematic falsification or destruction of documents.

If ICE develops probable cause to believe a crime has been committed, it may request the US attorney to obtain warrants to search a specific business premises from a federal magistrate or state judge. A suspect can be arrested during a worksite enforcement action either as the planned result of a grand jury indictment or a judge's bench order, or if an ICE officer determines on the spot that there is probable cause to believe that person has violated a federal criminal statute. A search warrant will state the purpose of any intrusive search, as well as the types of document or material to be seized, where in the premises these materials are believed to be located and the identity of any persons suspected of carrying out or being accessories to a crime.(21)

Generally, persons who are not named in an arrest or search and seizure warrant, not among those directly involved in the suspected crime or not material witnesses(22) may walk away from investigators and refuse to be interviewed. However, if ICE or the border patrol believes that a person is in the United States under unlawful immigration status, that person may be detained pending a status hearing before an immigration judge. A manager may not interfere with the interview of potential witnesses or detainees by law enforcement officers. Again, these are issues that need to be carefully checked in advance with a qualified immigration attorney who also has expertise in workplace enforcement and search and seizure matters.

Checklists for USCIS Worksite Enforcement

FDNS worksite audits are part of a major programme of compliance enforcement and promise to be the focus of expanding workplace inspections by several federal agencies, including USCIS, ICE and the Department of Labour. USCIS has termed this programme the Administrative Site Visit and Verification Programme. The stated purpose is to verify that the information provided in H-1B petitions conforms with actual employer practice. The agency has hired a large number of private contractors to conduct thousands of site visits to augment the enforcement efforts of ICE officers. According to the ICE announcement of stepped-up I-9 enforcement in November 2009, companies that have a potential impact on critical infrastructure (eg, computer networks, telecommunications and public utilities) or national security are the target of this new, stepped-up enforcement activity. That means that IT companies, in particular, should expect to be audited.

These inspections are being called 'surprise audit visits' and they extend to all US worksites of companies that sponsor H-1B and L-1 visa holders, including client sites. The FDNS assessors may visit the workplace unannounced or with very short prior notice. Typically, they ask a battery of questions of non-immigrant workers, administrative personnel and supervisors. Any significant compliance issues detected may result in a follow-up field investigation by ICE or the Wage and Hour Division.

In addition to checking the accuracy of statements made in H-1B and L-1 petitions for workers at the workplace, USCIS contractors also request inspection of payroll records and documents for the H-1B employees. Companies must keep files as part of the I-9, E-Verify and LCA compliance processes. It is now recommended that they also create separate H-1B or L-1 petition files for inspection purposes. The suggested contents are listed below.

FDNS checklist one: preparations for FDNS compliance audit
Companies that use the H-1B and L-1 programmes, particularly heavy users, H-1B-dependent firms and companies that fit the FDNS articulable fraud criteria, should expect site visits and now need to prepare protocols as follows:

  • The company's compliance officer must sit down with qualified immigration counsel and establish a plan of action to manage risks associated with unannounced document audits and worksite inspections and interviews.
  • The company and counsel should audit relevant records for completeness and accuracy, if this has not been done recently.
  • Procedures for reception need to be established along with contingency planning and training for potentially affected managers and supervisors.
  • The company's human resources department and reception staff must be brought into the planning process and made aware of the possibility of unannounced audits and possible questioning of managers and staff at all locations where non-immigrant workers may be deployed.
  • Planning must include consultations with third-party clients if any H-1B or L-1B workers are assigned off-site, along with similar training for reception staff and site managers at every worksite location.
  • Advance protocols should be developed to keep inspectors without warrants in reception areas until the company's compliance officer, attorney and/or human resources manager arrives. Movement and access may be restricted.
  • All H-1B inspection files should be organized and kept separately from I-9 and LCA files. Companies may choose to keep these records readily accessible or at their attorney's office. The advantage of the former approach is that in the event of a site visit, the requested file may be quickly and easily retrieved for convenient inspection. If H-1B files are not routinely kept at the particular worksite, the investigator will likely ask for a follow-up meeting to review the petition documents.
  • The inspector may be directed to counsel, who should always be alerted immediately upon the appearance of auditors.
  • H-1B inspection files should contain the required documents for the H-1B petition. This material somewhat overlaps the contents of a typical LCA public inspection file and expert advice should be sought regarding the documents that should be produced and the level of accommodation and access given upon appearance of FDNS inspectors who are likely be contractors without warrants or subpoenas.

What are FDNS auditors looking for?
An agency spokesperson stated recently that the primary purpose of FDNS worksite audits is to confirm that the petition was indeed filed by the employer (and was not filed fraudulently by a third party using company information) and that accurate and complete information was provided on the petition.

Areas of inquiry normally include the work address, any additional worksites, the number of non-immigrant employees, the wages of the H-1B beneficiaries, the job duties that each non-immigrant worker performs and evidence that (i) the employee is qualified for the position, and (ii) the beneficiary is indeed performing duties related to those indicated in petitions. This reinforces the need for the prompt and accurate filing of amended petitions or LCAs in the event of changed work assignments or conditions of work.

In addition to checking the accuracy of statements made in H-1B and L-1 petitions for workers at the workplace, USCIS contractors also request inspection of payroll records and documents for the non-immigrant employees.

Companies must keep files as part of the I-9, E-Verify and LCA compliance processes. It is recommended that they now also create separate H-1B or L-1 petition files for inspection purposes. The suggested contents are listed below.

FDNS checklist two: contents of FDNS H-1B inspection file
The company's FDNS compliance file should include a copy of the I-129 petition and all attachments and exhibits - including the certified LCA - as originally submitted to USCIS, along with any amended petitions and subsequent LCAs.

Copies of non-immigrant worker tax documents (eg, quarterly withholdings, W-2 forms) are commonly requested by FDNS auditors. These are documents that must be submitted with petition renewals to establish eligibility for non-immigrant extensions of stay or change of status, a copy of which should be kept in the FDNS compliance file and produced for auditors.

Other documents bearing on the beneficiary's eligibility and maintenance of lawful non-immigrant status that would normally be provided as part of an I-129 extension should also be kept and freely produced as part of the FDNS compliance file. These may include a copy of previous approval notices, current passport face page, visas, current I-94 card, educational documents and evaluations and translations.

Documentation of conditions of employment and the continued specialty nature of work should also be kept and produced, as with an extension application. These may include a detailed current job description, a record and itinerary of any off-site assignments and whatever further documentation of work that a previous file audit has confirmed is proper and relevant for consideration by USCIS. It is essential that such ancillary documents that may be privileged, such as end-user client contracts, be thoroughly examined by counsel prior to being placed in the FDNS compliance file for examination by USCIS.

Why is it important that the LCA file be kept separate from the FDNS audit file?
USCIS does not have statutory jurisdiction over direct enforcement of wage and hour provisions related to LCA compliance,(23) and it lacks authority to impose civil or criminal fines for violations of the terms and conditions of the H-1B petitions. USCIS employees and contractors have no statutory law enforcement authority and may not enter workplaces without permission. Nonetheless, USCIS shares information gained from these visits with ICE, which can pursue a full criminal investigation into suspected fraud or immigration violations. The data collected by FDNS may also be shared with other federal agencies. The FDNS auditor essentially acts as a surrogate in common for these other agencies; however, not all agencies are entitled to the same documents.

Perhaps the most sensitive materials that FDNS auditors may demand are proprietary and confidential details of contractual agreements with third parties. The USCIS general counsel has indicated that she is aware of this privacy issue and urges interested parties to bring such matters to the attention of her office. INS Zoom users should develop a company policy on such matters (eg, redaction and alternative documentation), and urge USCIS to work with industry and trade groups to adopt reasonable accommodations and solutions to privacy issues.

Another issue of particular concern to INS Zoom users is the requirement that H-1B-dependent firms recruit and offer positions to US workers, along with the restrictions on certification of LCAs for companies that have experienced lay-offs. Determination of whether these provisions apply and interpretations of the relevant law and regulations can be extremely technical and complex issues that are best considered by the agency with statutory jurisdiction over such matters, the Department of Labour. Due to a wrinkle in statutory construction, ICE actually has investigative authority in this area, a restriction imposed by Congress in an effort to limit Department of Labour investigative powers over H-1B. Therefore, it is suggested that it is inappropriate to turn over such records to FDNS, as this is not an area of adjudication that is ordinarily decided by USCIS. However, the degree of access granted to FDNS is an individual decision that ultimately must be made by a company with the assistance of immigration counsel.

Investigatory and enforcement authority over H-1B is divided by law and this runs headlong into FDNS self-assumed powers of broad information collection and dissemination. Civil and monetary penalties may be imposed by the Department of Labour, which may further disbar employers from the LCA programme for those found to be wilful violators or for material misrepresentation, effectively banning that company from the H-1B and L-1B, O and P programmes for up to three years. USCIS has the power to revoke the approval of H-1B or L-1 petitions if the employer or employee is found to have violated the terms or conditions of the petition, or if statements in the petition are found to be inaccurate. The Department of State routinely reviews FDNS records and may deny visas and also return approved petitions to USCIS for revocation on the same grounds upon its own determination of fraud or ineligibility.

The formal mechanism for joint investigations is the document and benefits fraud taskforce, which since 2006 has been the mechanism by which USCIS and ICE combine investigative resources with traditional partner agencies, the Department of State, the Bureau of Diplomatic Security and the Department of Labour, the Office of Labour Racketeering and Fraud Investigations and US attorneys offices around the country.

Some Types of Employer Are Investigated More Often than Others

Certain types of employer automatically get close review by USCIS, ICE and the consul. Any H-1B or L-1B petition that suggests the possibility that the beneficiary is going to be assigned to client sites automatically elicits a demand for:

  • extensive documentation that the petitioner is not a 'job shop';
  • details about who will control the employment of its workers at all times; and
  • copies of potentially sensitive documents, such as third-party contracts.

Behind all this is the presumption that H-1B outsourcing is fraud. FDNS uses a H-1B referral sheet list that lists 21 indicators of articulable fraud (for further details please see "Details Emerge about H-1B Worksite Audits").

For further information on this topic please contact Rami D Fakhoury at Fakhoury Law Group PC by telephone (+1 248 643 4900), fax (+1 248 643 4907) or email (rami@employmentimmigration.com).

Endnotes

(1) See "ICE Assistant Secretary John Morton announces 1,000 new workplace audits to hold employers accountable for their hiring practice" (November 19 2009), www.ice.gov/pi/nr/0911/091119washingtondc2.htm.

(2) See Patrick Thibodeau, Computerworld, "Feds Plan 25,000 on-site inspections" (November 17 2009), www.computerworld.com/s/article/9141047/Feds_plan_25_000_on_site_H_1B_inspections?taxonomyId=19.

(3) Rule 45 of the Federal Rules of Civil Procedure specifies the nature, form and procedures of subpoenas issued by federal courts - see www.law.cornell.edu/rules/frcp/Rule45.htm.

(4) For Department of Justice guidelines for issuance of administrative subpoenas for computers - see www.cybercrime.gov/ssmanual/01ssma.html.

(5) See 464 US 408 Donovan v Lone Steer Inc, Syllabus:

"Held: The subpoena duces tecum did not violate the Fourth Amendment. Oklahoma Press Publishing Co. v. Walling, 327 U.S. 186, 66 S.Ct. 494, 90 L.Ed. 614, controlling. An entry into the public lobby of a motel and restaurant for the purpose of serving an administrative subpoena is not the sort of governmental act that is forbidden by that Amendment. Here, the subpoena itself did not authorize either entry or inspection of appellee's premises but merely directed appellee to produce certain wage and hour records, and no nonconsensual entry into areas not open to the public was made. Marshall v. Barlow's, Inc., 436 U.S. 307, 98 S.Ct. 1816, 56 L.Ed.2d 305, and Camara v. Municipal Court, 387 U.S. 523, 87 S.Ct. 1727, 18 L.Ed.2d 930, distinguished. While a subpoenaed employer, in an action in federal district court, may question the reasonableness of a subpoena before suffering any penalties for refusing to comply with it, the available defenses do not include the right to insist upon a judicial warrant as a condition precedent to a valid subpoena. Pp. 413-416."

(6) See Congressional Research Service, Administrative Subpoenas and National Security Letters in Criminal and Foreign Intelligence Investigations (April 15 2005) - www.fas.org/sgp/crs/natsec/RL32880.pdf.

(7) See Department of Labour/ETA authority to issue subpoenas as part of investigative actions, 20CFR636.636.7 - Subpoenas, www.dol.gov/dol/allcfr/ETA/Title_20/Part_636/20CFR636.7.htm.

(8) CFR § 287.4 Subpoena, 8 CFR § 287.4 Subpoena. Title 8 - Aliens and Nationality. Title 8: Aliens and Nationality PART 287—FIELD OFFICERS; POWERS AND DUTIES, http://law.justia.com/us/cfr/title08/8-1.0.1.2.57.0.1.4.html.

(9) See INA §274A(e)(2)(C), 8 USC §1324a (e)(2)(C); see also memo from INS General Counsel Paul Virtue, GC HQCOU 90/15-P (December 21 1998): an administrative subpoena may demand immediate production of the documents requested, providing less than three business days' notice. "The Service is not required by law to provide three days notice of Form I-9 inspection when it exercises its subpoena authority. However, serving a subpoena that provides an employer with less than three days for compliance would only be justified by unusual circumstances."

(10) Administrative penalties for refusal to comply may not be assessed while the reasonableness of the search is being reviewed. See See v City of Seattle, 387 US 541 (1967).

(11) While subpoenas issued by a federal court may be issued for foreign persons abroad, administrative subpoenas have also been held to lack extraterritorial effect. See In the Matter of an Application to Enforce an Administrative Subpoena of the COMMODITY FUTURES TRADING COMMISSION v Naji Robert NAHAS, Appellant. US Court of Appeals for the District of Columbia Circuit, July 6 1984, 738 F 2d 487; 238 US App DC 93, www.altlaw.org/v1/cases/415521.

(12) See generally Federal Rules of Civil Procedure - Rule 45 (LII 2007 ed).

(13) Material witness warrant authority was codified many years ago. The recent incarnation of the statute, 18 USC 3144, was enacted in 1984. If detained or arrested as a material witness, that witness still has certain and numerous important rights (eg, to be represented by an attorney). If the witness cannot afford an attorney, under 18 USC 3006(a) an attorney is appointed for the witness. In addition, the witness has the right, through his or her attorney, to challenge that detention under the authority of the Bail Reform Act, 18 USC 3142.

(14) See Ron Klasko, "Employer Violations and the Impact on the Employee's H-1B Status", www.klaskolaw.com/articles.php?action=view&id=120.

(15) See 20 CFR 655.705(a) and (b), "What federal agencies are involved in the H-IB programme and what are the responsibilities of those agencies and of employers?", www.dol.gov/dol/allcfr/title_20/Part_655/20CFR655.705.htm.

(16) See 20 CFR 655.705(c)(2) - ibid.

(17) See Form I-9, Employment Eligibility Verification www.uscis.gov/files/form/i-9.pdf.

(18) See Meetsh V Patel, www.h1bvisalawyerblog.com/2008/06/maintaining_an_h1b_audit_publi.html.

(19) See INA Section 212(n); 8 USC 1182(n)(2)(G), www.dol.gov/whd/regs/statutes/0003.iana.htm.

(20) See, for example, Depar Administrative Review Board decision on this issue. In Rajan v International Business Solutions, Ltd 03-104 (ARB 8/31/04) the board discusses benching in the context of the LCA, the validity of a beneficiary's employment start and end dates and payment of H-1B fees by a H-1B beneficiary.,

(21) See Federal Rules of Criminal Procedure, Rule 41, Search and Seizure, www.law.cornell.edu/rules/frcrmp/Rule41.htm.

(22) As follows:

"No material witness may be detained because of inability to comply with any condition of release if the testimony of such witness can adequately be secured by deposition, and if further detention is not necessary to prevent a failure of justice. Release of a material witness may be delayed for a reasonable period of time until the deposition of the witness can be taken pursuant to the Federal Rules of Criminal Procedure."

See prepared statement of Gregory T Nojeim, acting director of the Washington Legislative Office, ACLU, 21–396 PDF, (May 26 2005), Material Witness Provisions of the Criminal Code and the Implementation of the USA PATRIOT Act, Hearings Before the US House of Representatives, Committee on Judiciary, http://commdocs.house.gov/committees/judiciary/hju21396.000/hju21396_0f.htm.

(23) See 20CFR655 Subpart H - Labour Condition Applications and Requirements, "What federal agencies are involved in the H-1B programme, and what are their authorities?", www.dol.gov/dol/allcfr/title_20/Part_655/Subpart_H.htm.


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