Immigration Update

Robert Groban and the Immigration Law Group of Epstein Becker Green recently issued an alert that will be of interest to employers. Following are the main topic headings:

Read the full alert here.

OCAHO Provides a Roadmap for Reducing Fines for Form I-9 Violations

By Robert S. Groban, Jr., and Matthew S. Groban

The recent decision by the Chief Administrative Hearing Officer (“OCAHO”) in United States v. The Red Coach Rest., Inc., 10 OCAHO No. 1200 (2013)provides a roadmap for employers seeking to reduce fines sought by Immigration and Customs Enforcement (“ICE”) for Form I-9 violations. In Red Coach, the ICE complaint alleged that Red Coach: (1) failed to prepare Form I-9’s for nine employees within 3 days of their hire, and/or failed to present the forms to ICE upon request; and (2) failed to ensure proper completion of Form I-9’s for forty-one additional employees. The complaint requested penalties in the amount of $30,184.

The Administrative Law Judge (“ALJ”) reduced this penalty to $16,300 because the amount sought by ICE was too severe in proportion to Red Coach’s ability to pay, did not consider account of Red Coach’s history of no previous Form I-9 violations, and had no deterrent effect because Red Coach’s Form I-9’s now are handled by another company. In his decision, the ALJ noted that in determining the appropriate amount of civil penalties for Red Coach’s paperwork violations, he gave “due consideration … to the size of the employer, the good faith of the employer, the seriousness of the violation, whether or not the individual was an unauthorized alien, and the history of previous violations.”

The Red Coach decision reminds hospitality employers of the potentially severe fines that can arise out of any failure to properly complete the Form I-9 paperwork, and of the need to train staff on the Form I-9 process. It also provides avenues for reducing ICE fine determinations through appeals to OACHO based on the particular facts of the case.

Restaurant Sues Former Chef to Recover H-1B Visa Expenses When He Quits Before his Contract Expired

By: Robert S. Groban, Jr. and Matthew S. Groban

On June 28, 2013, a District of Columbia restaurant sued its former executive chef to recover the expenses incurred to secure his H-1B visa.  See Rasika West End LLC v. Tyagi, No. 13-0004426 (D.C. Super. Ct. filedJune 28, 2013). According to the complaint, the employer entered into a thirty-six (36) month contract with the H-1B employee, and claimed that it would take that long to recover, among other things, funds spent to secure the approved H-1B petition the employee needed to assume the position. The complaint further alleges that the restaurant was entitled to recover these expenses because the contract required the employee to pay them if he voluntarily left the employment before thirty-six (36) months elapsed. 

The U.S. Department of Labor regulations do not permit an H-1B employer to require a prospective employee to pay these H-1B expenses at the outset. These regulations appear to permit sponsoring employers to recoup these expenses as “liquidated” damages if the sponsored employee fails to live up to his or her employment commitment. The area is a complex one, however, so employers contemplating this type of recoupment need to consult experienced immigration counsel to be sure that the provisions they prepare are enforceable and do not adversely affect either the employment or H-1B relationship.

Government Shutdown and Its Threat to the Immigration Process

We recommend this recent client alert on Epstein Becker Green's website: "Special Immigration Alert: The Immigration Ripple Effect of a Government Shutdown," by Robert Groban, Jr., Pierre Georges Bonnefil, Patrick Brady, Jang Im, and Greta Ravitsky, our colleagues at Epstein Becker Green.

Following is an excerpt:

The looming prospect of a Government shutdown will have a significant impact on the immigration process. Activities of the U.S. Citizenship and Immigration Services (USCIS) will be largely unaffected because it is funded by the fees it collects. The shutdown, however, may affect the ability of applicants to secure the government information required to respond to Requests for Evidence.

Read the full client alert here.

Special Immigration Alert: New H-1B Nonimmigrant Visa Season Starts April 2, 2012

Remember that all new H-1B petitions must be filed on March 30, 2012, to ensure that they are counted toward the 2013 H-1B cap.

The annual H-1B season has arrived! The federal government is authorized by statute to approve only 65,000 new H-1B visas each fiscal year, plus an additional 20,000 H-1B visas set aside for applicants who have master's degrees from accredited American universities. The federal government's fiscal year begins on October 1, but the governing regulations permit employers to apply for new H-1B non-immigrant visas up to six months in advance. Hence, the filing date is March 30, 2012.

For the past three years, the H-1B cap has not been met on the first day. Prior to that, the government received substantially more H-1B petitions than the quota allowed and conducted a "lottery" to determine the cases selected. The format for this lottery has varied and has not been announced for this year. Generally, the U.S. Citizenship and Immigration Service ("USCIS") logs new H-1B petitions according to the date on which they arrive. When the projected volume exceeds the quota, USCIS conducts a random lottery for all H-1B petitions properly filed on the date the quota was reached.

To avoid H-1B cap problems, employers are encouraged to review their current employee rosters and potential new hires to identify possible H-1B candidates. Potential H-1B cap cases include F-1 students working on grants of Optional Practical Training ("OPT"), L-1B transferees in the green card process or who need the additional year here that the H-1B classification provides, or potential hires from cap-exempt organizations who will need new H-1B visas to work for "cap-subject" employers.

We cannot "guestimate" what the volume of H-1B petitions will be this year. We can say that the only way to ensure that your petitions are counted toward the 2013 H-1B cap is to file them on March 30, 2012, so they arrive at USCIS on April 2, 2012, and are included in a possible random lottery.

For more information, or if you have questions regarding how this might affect you, your employees, or your organization, please contact one of the following members of the Immigration Law Group at Epstein Becker Green: 

New York
Robert S. Groban, Jr.

New York
Pierre Georges Bonnefil

Patrick G. Brady

San Francisco
Jang Im

Greta Ravitsky

Immigration Update

By:  Robert S. Groban, Jr.

Many of our hospitality clients are revisiting immigration requirements to see if there are any advantages that they have overlooked. One overlooked advantage is the USCIS’s E-Verify system. Employers know that the IRCA requires them to satisfy the Form I-9 requirements.  Many have found this difficult to implement and have been the targets of worksite enforcement operations by U.S. Immigration and Customs Enforcement (“ICE”) that are costly to defend and often result in significant fines. Traditionally, many hospitality employers have looked at the E-Verify system as something to be avoided due to the time required to learn how to use it and the number of potential employees that the system would prevent them from hiring. 

With the expansion in the number of state laws requiring the use of E-Verify and the increasing risks to hospitality and other employers from expensive worksite enforcement actions, many hospitality organizations are revisiting whether it makes sense to use this system before being required by state or federal law to do so. At the same time, the Social Security Administration has resumed sending out “no match” letters when the name and Social Security number of an employee do not match. It can be time consuming to resolve these no-match situations.  Moreover, as we have reported in other Immigration Alerts, ICE views employers that fail to resolve no-match letters as candidates for enforcement actions.  Employers who use E-Verify generally do not receive no-match letters because the E-Verify system will kick out the no-matches at the outset, so the employee will not be hired. All these factors combine to suggest that hospitality employers may want to revisit their traditional aversion to E-Verify and re-evaluate whether it makes sense in the current regulatory environment to use it.

The government’s proposal to streamline the EB-5 program also may make that program attractive to those seeking to develop hotels or other hospitality facilities, for several reasons. First, the primary target of the EB-5 program may now be Chinese investors due to the severe backlogs in the immigration quotas for that country. From an immigration perspective, this makes the EB-5 program more attractive to potential wealthy Chinese investors. Second, hospitality facilities tend to be labor intensive as is the development process.  This makes them more attractive for satisfying the EB-5 employment requirements. Finally, the development of regional centers (“RCs”) makes the EB-5 program a more convenient vehicle than it has been in the past. These RCs are entities formed to attract and pool investments that qualify for EB-5 consideration. Utilization of an appropriate RC for a hotel development project may facilitate the financing necessary for the project.

Bay Area Restaurant Chain Owners Face Criminal Charges for Employing Illegal Aliens

By:  Robert S. Groban, Jr.

On December 6, 2010, the U.S. Attorney's Office in San Francisco announced that the owners of the El Balazo restaurant chain in the Bay Area had been charged in a 20-count criminal Information with tax fraud and harboring illegal aliens.  These charges arise out of a raid made by federal agents in May 2008 that resulted in the arrest of 64 illegal aliens at several of these restaurants.  The Information charges the owners with conspiracy to commit tax evasion, tax evasion, harboring illegal aliens for financial gain, and submitting false Social Security numbers for undocumented workers at the restaurants.  The defendants were arraigned on December 6, 2010 and each remain free on $100,000 bond.

According to the criminal Information, the defendants concealed the restaurants' daily register sales and then under-reported the income they generated.  The defendants also are charged with willfully employing at least 10 undocumented aliens by ignoring numerous "no match" letters they received from the Social Security Administration advising them about discrepancies between the employees' names and social security numbers.  Each defendant faces a substantial prison term as well as fines in excess of $250,000.

This is the latest in a growing trend of criminal prosecutions of restaurateurs for knowingly employing illegal aliens.  It underscores the importance for these and other organizations in the hospitality industry to manage their workforce risks by ensuring strict compliance with the Form I-9 and related requirements.  In this regard, the Department of Homeland Security has published a list of "Best Practices" in connection with its IMAGE program that can serve as a useful guide. 


Hospitality Immigration Alert

By:  Robert S. Groban, Jr.

Missouri Man Convicted in Scheme to Place Undocumented Workers in Hotels

On October 28, 2010, a Missouri man was convicted by the U.S. District Court in Missouri for his role in a racketeering scheme that involved placing undocumented workers at hotels in 14 states, including several hotels in the Kansas City, Missouri, area. United States v. Dougherty, No. 4:09-CR-00143 (W.D. Mo. Oct. 10, 2010). Beth Phillips, the U.S. Attorney for the Western District of Missouri, indicated that “Mr. Kristin Dougherty was found guilty of racketeering, participating in a Racketeering Influenced and Corrupt Organizations Act (‘RICO’) conspiracy and wire fraud.  He faces a possible sentence of up to 60 years in federal prison without parole, plus a fine up to $75,000.”

Ms. Phillips added that this was not an isolated criminal enterprise. The federal RICO indictment alleged . . .

an extensive and profitable criminal enterprise in which hundreds of illegal aliens were employed at hotels and other businesses across the country.  Participants in the scheme used false information to acquire fraudulent work visas for the illegal workers, many of whom were recruited with false promises related to the terms, conditions and nature of employment.  Once workers entered the United States, participants in the scheme kept control of the workers through threats of deportation and other adverse immigration consequences.

We have previously noted our concerns about hospitality employers that use the H-2B program to supplement seasonal staffing shortages. The Dougherty prosecution is another reminder of the serious consequences that can arise from fraudulent schemes or other unlawful activities in this area.

Fourth Circuit Court Approves Probation Term Barring Participant in H-2B Visa Scheme from HR Work

The recent decision by the U.S. Court of Appeals for the Fourth Circuit in United States v. Starkes, No. 09-5051 (4th Cir. Nov. 3, 2010)(unpublished), underscores the dangers inherent in the H-2B program. In Starkes, the Fourth Circuit upheld a special condition of probation for an HR manager, who was convicted as part of an H-2Bvisa fraud scheme, that barred her from working in any position that involved access to labor contracts.

The Starkes decision involved the former HR manager at a major hotel in Williamsburg, Virginia. In 2007, Ms. Starkes encountered a member of a criminal organization who asked her to submit fraudulent documentation for H-2B visas that overstated the number of temporary workers the hotel required. In exchange, Ms. Starkes received a $200 gift card and was promised 10 - 15 cents per man-hour for each H-2B employee who worked at the hotel. The government discovered the scheme before Ms. Starkes could profit from the illegal arrangement. Ms. Starkes pled guilty to one count of mail fraud for her participation, and was sentenced to three years' probation, with the special condition that she was prohibited from engaging in any aspect of the HR business or any similar occupation where she would have access to labor contracts.

The Starkes prosecution is part of a growing trend to ferret out fraud committed by management of hospitality employers involved in the H-2B worker program. Every hospitality employer that participates in the H-2B program would be well advised to review its policies and procedures for these employees to ensure that both the organization and its management are satisfying all legal requirements.

GAO Report on H-2B Program Portends Added Scrutiny for Hospitality Employers

By:      Robert S. Groban, Jr.


On November 2, 2010, the Government Accountability Office (GAO) released a Report on the H-2B nonimmigrant program (Report).   This Report examines fraud and abuse by examining 10 criminal prosecutions of recruiters and employers participating in the H-2B program. This program allows employers in the hospitality and other industries with a onetime occurrence, peak load, seasonal or intermittent employment needs to supplement their domestic workforce with foreign workers whenever U.S. workers cannot be located for the positions.

The Report found significant fraud and abuse of the H-2B program by both employers and recruiters in the prosecutions that were examined.   These illegal activities included: (a) failing to pay the legally required wage; (b) charging the foreign workers excessive fees; (c) facilitating the submission of fraudulent documentation to the government to fraudulently secure H-2B visa approvals; and (d) abusing the H-2B workers by confiscating their passports, failing to pay overtime, charging excessive amounts for rent and threatening to turn them into the authorities if they complained.

Several of the cases the GAO examined involved employers in the hospitality industry and the publication of this Report strongly suggests that this industry will remain in the investigative cross-hairs of Immigration Customs Enforcement (ICE), the agency within the Department of Homeland Security that is responsible for worksite enforcement. Already, ICE investigators are looking closely at employers and recruiters in the hospitality industry who deliberately misuse the H-2B program for a competitive advantage. At the same time, the Report notes that employers in the hospitality industry have provided false or misleading information to recruiters to assist in the procurement of new employees under the H-2B program.

This conclusion promises to add fuel to the investigative fire that threatens to consume the H-2B program. Organized labor objects to the H-2B program because they claim that it takes jobs from Americans and gives them to foreign workers. In this regard, Labor argues that hospitality employers inflate their needs for foreign labor and misrepresent their inability to locate qualified Americans to assist recruiters in securing H-2B workers. While we have not seen deliberate misconduct, we have observed lower level hospitality employees who do not understand the H-2B program and unwittingly provide inaccurate information at the behest of less than scrupulous recruiters.

The Report was issued immediately before the November election and thus was not available sufficiently prior to the change of control in Congress. Now that the Republicans control Congress, however, this Report could provide added impetus for ICE to more vigorously investigate the hospitality industry as the new Congress seeks to show the electorate that it is tough on immigration. So far, criminal prosecutions have been directed at the recruiters and hospitality employers to deliberately violated the law. We are concerned now that the Report will lead to more in depth investigations that will focus on the hospitality employees who either participated or who unwittingly supplied false or misleading information that supported the H-2B nonimmigrant applications. 

In the current anti-immigration environment, hospitality employers should take additional steps to manage the risks associated with continued use of the H-2Bp program. This might include developing and implementing more strenuous immigration policies, training staff about the H-2B program and advising staff about Form I-9 compliance and the various government agencies that are active in workforce compliance.


Hospitality Immigration Update

By:  Robert S. Groban, Jr.

U.S. Department of Labor Issues Proposed Rule on H-2B Wage Rates


On October 4, 2010, the Employment and Training Administration, U.S. Department of

Labor (“DOL”), issued a proposed rule that would require employers to pay H-2B and

American workers recruited in connection with an H-2B job application a “wage that meets

or exceeds the highest of: the prevailing wage, the federal minimum wage, the state minimum

wage or the local minimum wage.” The proposed rule was published on October 5, 2010, in

the Federal Register. Interested parties have 30 days to comment.


The H-2B program allows for the admission of 66,000 skilled or unskilled temporary guest

workers annually when qualified American workers are not available and the employment of

foreign workers will not adversely affect the wages and working conditions of similarly

employed Americans. The proposed rule was promulgated in response to the federal district

court decision in Comite de Apoyo a los Trabajadores Agricolas v. Solis, Civil Action No.

09-240 (E.D. Pa. Aug. 31, 2010), which held that the 2008 H-2B wage regulations issued by

the DOL violated the Administrative Procedure Act.


In its preamble to this proposed regulation, the DOL indicated that it has grown increasingly

concerned that the current method for calculating permissible H-2B wages does not

adequately reflect the wages necessary to ensure that American workers are not adversely

affected by the employment of H-2B workers. Under the DOL’s proposed rule, the prevailing

wage for H-2B workers would be based on the highest of three measures:


         1) Wages established under a collective bargaining agreement;

         2) A wage rate established under the Davis-Bacon Act or the Service Contract

Act for the occupation in the area of intended employment; or

         3) The mean wage rate established by the Occupational Employment Statistics

wage survey for that occupation in the area of intended employment.


The DOL added that the inclusion of Davis-Bacon Act or Service Contract Act wages would

protect U.S. worker wages by ensuring the prevailing wage determinations reflect the

“highest wage from the most accurate and diverse pool of government wage data available

with respect to a job classification and the area of intended employment.” Additionally, the

DOL indicated that the proposed rule would eliminate the current four-tier wage structure and

the use of private wage surveys, which the DOL feels often are “not relevant to the unskilled

positions generally involved in the H-2B program.”


Fifth Circuit Rules that Hotel Workers on H-2B Visas Are Not Entitled to

Recoup Visa Expenses Under FLSA


On October 1, 2010, the U.S. Court of Appeals for the Fifth Circuit decided Castellanos-

Contreras v. Decatur Hotels LLC, No. 07-30942 (5th Cir. Oct. 1, 2010)(en banc). In an 8-6

decision, the Fifth Circuit held that foreigners working as temporary guestworkers at New

Orleans hotels under the H-2B program are covered by the Fair Labor Standards Act

(“FLSA”), but that the FLSA does not require these employers to reimburse the workers for

recruitment, visa, and travel expenses in determining whether the employee is receiving the

FLSA-mandated minimum wage.


In reaching this conclusion, the Fifth Circuit declined to enforce retroactively a 2009 DOL

interpretive bulletin that indicated that the FLSA covers visa and travel expenses. The Fifth

Circuit noted that the DOL bulletin was issued in 2009, long after the events in question

occurred in 2005-2006, and found that it had to follow the general rule not to apply changes

in the law retroactively. In the Fifth Circuit’s decision, Judge Catharina Hayes wrote,

“Whatever deference may be due to the [DOL]'s informally promulgated bulletin in the

future, it does not itself in any way purport to apply retroactively. Accordingly, we decline to

apply it to the situation here.”


The Castellanos-Contreras case arose from an FLSA collective action filed by H-2B workers

hired by Decatur Hotels in New Orleans in 2005 after Hurricane Katrina. The H-2B workers'

hourly pay rates exceeded the federal minimum wage. The workers argued, however, that the

money they paid to obtain employment in the United States, including visa, transportation,

and recruitment costs, must be reduced from their pay when calculating whether Decatur was

actually paying them the minimum wage required by the FLSA. If this were not done, the

workers argued, it would have the effect of cutting their wages to less than the FLSAmandated

minimum wage for the relevant pay periods.


The DOL’s proposed rule on calculating wages for the H-2B guest worker program, coupled

with the Fifth Circuit’s decision in Castellanos-Contreras, should serve to remind employers

in industries that use temporary or seasonal H-2B guest workers, such as the recreational,

construction, and hospitality industries, that they must be careful about the wages they pay to

avoid what are clearly renewed efforts by the DOL to regulate wages and working conditions

in this area.