At the hearing, the parties indicated that they had reached an agreement as to certain facts:

1. Mr. Robert Blake was employed by the Respondent for the period from September 11, 1999 until February 12, 2000.

2. Blake received in wages for that period a total of $4,936.21.

3. Respondent filed a Labor Condition Application with the U.S. Department of Labor, ETA on or about February 24, 1999.

4. Respondent also filed a petition with the Immigration and Naturalization Service on April 1, 1999, which was approved on May 4, 1999.

(Tr. 8-9).

   In the LCA, Respondent attested that (1) the H-1B workers would be paid the higher of the wage paid to other similarly qualified workers or the prevailing wage for the occupation in the area of employment; (2) the employment of the H-1B nonimmigrants would not adversely affect the working conditions of similarly employed workers in the area of employment; (3) there was no strike, lockout or work stoppage in the course of a labor dispute at the time of the filing of the application, but Respondent would notify ETA if such occurred; and (4) a copy of the application would be provided to the H-1B nonimmigrants and, as there was no bargaining representative, posted for 10 days in at least two conspicuous locations where H-1B immigrants would be employed. (C2; see also R20). The LCA was signed by Respondent's principal, Shalendar Moman. (C2). The LCA indicates that it was approved on March 3, 1999, that it was to be in effect from May 1, 1999 until September 30, 2002, and that the employment location was Winter Garden, Florida. (C2). The LCA also indicates a prevailing wage rate of $730.00 per week but states that the rate of pay was to be $923.00 per week. (C2).

(R8). The response from Moman and his wife, Manju, of February 3, 1999 suggested that it would be "a good idea" for them to have a written agreement outlining "what

we expect and our short term and long term objectives." (R9). The response from the Blakes outlined what was needed for the H-1B visa application, based upon advice from First Point International. (R10). Subsequently Moman corresponded by mail and E-mail with Helen Williams at First Point International concerning the visa application and further corresponded with Blake. (R11 to R20).

Testimony of Shalley Moman

(Tr. 15). When asked whether he had made other arrangements with Blake (i.e., instead of the $48,000 annual salary) prior to the April 1, 1999 filing, he denied having done so, and he indicated that in April 1999, he intended to pay Blake the $48,000 salary. (Tr. 19). He explained that he filed the Petition with INS for the H-1B visa because Blake realized he could not become a partner in his business at that time, but he was advised that "down the road maybe,. . . in a couple of years" he could then become a partner. (Tr. 24). He further explained that the $30,000 "was for an opportunity clause for [Blake] to have an ability to make more money through profits of the business," and he denied that the money was being paid to purchase the H-1B visa. (Tr. 24, 63, 72). However, Moman admitted that he and Blake decided to change

the agreement after the application was approved and that he did not advise INS or the Department of Labor of the change. (Tr. 23, 25-26). He explained that he did not consider it his responsibility to notify anyone:

Q. Who did you inform, sir, that you were changing the package that you submitted to INS?

A. I didn't inform anybody because I wasn't aware that I had to do anything like that. I was not the one who did all this paperwork. I was just, you know, a signatory.

(Tr. 26).

   Moman testified that the June 3, 1999 agreement quoted above, appearing in C7 and R21, was the final agreement between the parties and superseded the agreement to pay $48,000.00. (Tr. 46-49). He testified that he received the final agreement back from Blake on June 25, 1999. (Tr. 48).

   Moman indicated that Blake actually came over to work the first week of September, 1999, even though he had been approved to come over in May 1999, for personal reasons. (Tr. 48). Blake resigned by letter of February 12, 2000; he was not fired or terminated. (Tr. 52-54; R24, Exhibit B)). Moman asserts that he would have had cause to fire Blake because he was incompetent and had no initiative, he could not do what he was supposed to do or said he could do, there were complaints from customers, and Respondent lost customers as a result. (Tr. 54). Moman suggested that Blake failed to earn the expected wages because "he just did not try." (Tr. 54). He admitted that Blake arrived at work on time and was at the office when he was supposed to be. (Tr. 54).

(Tr. 57).

   Moman disputed the proposed assessed penalty because he did not think that he did anything wrong. (Tr. 58). He testified that he did not intentionally mislead INS as to what he intended to pay Blake. (Tr. 55). He was unaware that he was required to place notices on bulletin boards or keep a copy of the prevailing wage request form until it was mentioned by Mr. Zastrow, the investigator. (Tr. 56-57). He claims that he always tried to fully comply with the Department of Labor's requests. (Tr. 57).

Testimony of Robert Blake

   The second violation was based upon the failure to post LCAs in a conspicuous place, based upon Zastrow's interview of two employees who had worked for Respondent briefly. No civil money penalty was assessed. (Tr. 122-23).

   The third violation was misrepresenting a material fact on the Labor Condition Application. When questioned, Zastrow explained the reason for citing that particular violation:

A. Again, the chronology of the events as to what happened in terms of petitioning indicating that this is what I will be paying, and then failure to go ahead and pay leads me to conclude that was a willful failure.

* * * *

Q. Did you make a determination, sir, as to whether the Respondent intended to pay the amount of money that was listed in the H1B petition?

A. Well, it was clear to me from the chronology of events that he had no intention to pay the wages that were stated in the LCA.

Q. Did you conclude what the intentions of the parties were?

A. Well, the intention of Mr. Moman appeared to be that there was no intention to pay the wages. With regard to the agreements and things of that nature that were going on, quite frankly, I really didn't care what kind of contract they were attempting to enter into. I was just measuring the status of compliance against what was required.

(Tr. 123-24). A penalty of $3,750.00 was assessed based upon 75% of the maximum penalty of $5,000.00 per violation based upon the same rationale as for failure to pay the required wages. (Tr. 124-25).

   The fourth violation was based upon the failure to maintain certain documents required by the regulations, and specifically documentation that would establish a prevailing wage rate. No civil money penalty was assessed. The documents were requested but Respondent's counsel advised that they did not exist. (Tr. 125-26).

Failure to Pay Required Wages

   Investigator Zastrow added an additional amount of unpaid wages based upon the $30,000.00 paid by Blake at the beginning of his employment, because he deemed the amount to be an unauthorized deduction from wages for business expenses. I disagree. I observed the demeanor of the parties at the hearing, and while neither Moman nor Blake was particularly credible as a witness, I did believe their denial of the Administrator's suggestion that this money was paid for the purchase of an H-1B visa. Both Moman and Blake testified that the money was paid pursuant to a voluntary agreement, although their accounts differed as to what the terms of the agreement were. Moman contends that it was a "good will" payment for the opportunity to buy into his business while Blake contends that it was a capital contribution. There has been no showing that the money was intended for business expenses, such as tools and equipment or travel expenses, and the regulations do not address the status of capital contributions or options agreements. Thus, regardless of who is right, I find that the payment was under a separate agreement and was not related to the wages required to be paid under the LCA. Accordingly, I do not find the payment of the $30,000.00 to constitute an unauthorized deduction within the meaning of the regulation. Thus, the back wages due will be limited to $11,488.79.

   The remaining question is what, if any, penalties should be assessed based upon this violation. Under amended section 212(n)(2)(C) of the Act, penalties up to $5,000.00 may be assessed for a willful failure to meet a condition set forth in paragraph (n)(1) (which includes, in paragraph (n)(1)(A)(i), a requirement that the employer is offering and will offer at least the actual wage paid to similar employees or the prevailing wage.) The regulations in effect at the time the violations occurred (appearing in section 655.810(b)) limited the penalties that could be assessed for a violation to ,000.00 per violation and excluded violations of section 655.805(a)(6) (relating to failure to pay back wages which is not "willful"). The statute was amended prior to the time that the violations occurred, increasing the previous maximum penalty of ,000.00 per violation to a maximum of $5,000.00 for certain violations but retaining the ,000.00 maximum for other violations, primarily those which are not willful. For example, as discussed below, a willful misrepresentation results in a maximum penalty of $5,000.00 while a misrepresentation of fact not deemed to be willful results in a maximum penalty of ,000.00. Under the December 2000 amendment to the regulations, section 655.810(b) implements these statutory changes and further sets forth how penalties may be assessed. As Zastrow indicated, there are essentially seven factors that should be considered under the old version of the regulations (in what was then section 655.810(b)), and I note that these factors also appear in the new regulation (now appearing in 655.810(c)).

   I essentially agree with Zastrow's determination that the violation was willful and his determination that there are only two mitigating factors (no previous history of violations and only one worker affected). However, even though there are only two mitigating factors, the lack of prior violations and the involvement of only one employee are, in my estimation, the most significant factors in assessing a penalty and are as important as the other five factors. Accordingly, I find that the penalty should be limited to $2,500.00 (50 percent of the current maximum of $5,000.00 for willful failure to pay the required wages), together with the back wages in the amount of $11,488.79, discussed above.

Failure to Post

   Having carefully considered the documents and testimony set forth above, I find that Respondent misrepresented a material fact in the application. I also find that the violation was willful, in that the facts set forth above do not reflect that Moman ever intended to pay the stated wage of $48,000.00 per year to Blake (although he may well have assumed that Blake would be earning at least that much based upon his share of the profits). While Moman was not a particularly credible witness, I believed his statement to the effect that he relied upon Blake's consultants, who prepared the application. Nevertheless, Moman admitted that he read the application prior to signing it, and his explanation that he was a mere "signatory" and therefore did not consider himself to have filed a labor condition application is ludicrous. Moreover, Moman's failure to educate himself concerning the program requirements prior to signing and submitting the LCA shows recklessness on his part. No other visa was obtained, so the parties knew or should have known that it was necessary for them to comply with the H-1B visa requirements. I also find that Moman's testimony that he fully intended to pay Blake the stated wage rate of $48,000.00 per year when the LCA was filed on April 1, 1999, but that the figure was superseded by the June 3, 1999 agreement between him and Blake, is simply not credible when viewed in the context of the E-mails that went back and forth between them. Any discussion of salary terms is curiously absent from any of the E-mail communications between the parties, which speak in terms of self employment for Blake, and, in fact, at least one of the communications references a "no work, no money" agreement. The misrepresentations may have resulted from a lack of understanding of the program requirements by Moman. Nevertheless, I am not persuaded by the spin on events placed by either Moman or Blake at this point in time and I find that there was a violation of this provision. However, for the same reason that I limited the penalty with respect to the failure to pay the required wage, I find that based upon the two mitigating factors (no previous history of violations and only one worker affected), the penalty for this violation should also be limited to $2,500.00 (50 percent of the current maximum of $5,000.00 for willful misrepresentation.)

Failure to Retain Documentation

IT IS HEREBY ORDERED that the Administrator's Determination is AFFIRMED AS MODIFIED, and

   IT IS FURTHER ORDERED that Respondent shall pay back wages in the amount of $11,488.79, to be paid to nonimmigrant worker Robert P. Blake, and shall pay to the Administrator, Wage and Hour Division, a civil money penalty in the amount of $5,000.00.

      PAMELA LAKES WOOD
      Administrative Law Judge

Washington, D.C.

NOTICE: In accordance with Departmental regulations, the Administrator or any interested party desiring review of this Decision and Order may petition for such review by the Secretary, in accordance with the procedure set forth in 20 C.F.R. § 655.845. A petition for review must be timely filed with the Administrative Review Board, U.S. Department of Labor, 200 Constitution Avenue, NW, Washington, DC 20210. See Secretary's Order 2-96, 61 Fed. Reg. 19978 (May 3, 1996); Final Rule, 61 Fed. Reg. 19982 (May 3, 1996) (delegating enforcement functions of Secretary under pertinent statute and regulations to Administrative Review Board.) To be timely filed, a petition for review must be filed within thirty (30) days of the date of this Decision and Order. See 20 C.F.R. § 655.845.