USDOL v. Fargo VA Medical Center, 2002-LCA-13 (ALJ Mar. 27, 2003)

U.S. Department of Labor

Office of Administrative Law Judges 800 K Street, NW, Suite 400-N Washington, DC 20001-8002

Date issued: March 27, 2003

CASE NO.: 2002-LCA-13

In the Matter of:

ADMINISTRATOR, WAGE AND HOUR DIVISION,
U.S. DEPARTMENT OF LABOR,
    Prosecuting Party,

v.

FARGO VA MEDICAL CENTER,
    Respondent.

   This action arises under section 212(n) of the Immigration and Nationality Act ("INA"), 8 U.S.C. §1182(n), as amended, and the regulations at 20 C.F.R. 655, Subparts H and I. Both parties have agreed by stipulation that only legal issues remain in the case and jointly request that a decision be made based on the existing record.

   The U.S. Department of Veterans Affairs Medical Center in Fargo, North Dakota ("Respondent") is a participant in the H-1B program, in which employers can temporarily secure and employ non-immigrants to fill specialized jobs in the United States. See 8 U.S.C. §1182(n)(1)(A). The employer must file a labor condition application ("LCA") with and receive certification from the U.S. Department of Labor ("DOL") before the Bureau of Citizenship and Immigration Services ("BCIS") may approve an H-1B visa petition. See 8 U.S.C. §1101(a)(15)(H)(i)(B). The employer is required to pay an H-1B non-immigrant at least the required wage, defined as the higher of the actual wage or the local prevailing wage. See 8 U.S.C. §1182(n)(1)(A).

   On January 23, 2001 the Wage and Hour Administration of the DOL initiated an investigation of all H-1B LCAs filed by Respondent. This investigation was prompted by a complaint made against Respondent alleging the failure to pay an H-1B non-immigrant the required wage. The applicable prevailing wage rates for the H-1B non-immigrants were determined by the DOL Employment and Training Administration ("ETA"). Respondent appealed this determination and the ETA denied this appeal, upon which the case was referred to the Office of Administrative Law Judges ("OALJ"). On January 23, 2002, the undersigned affirmed the ETA's prevailing wage determination. See Fargo Veterans Affairs Medical Center v. Employment and Training Administration, 2001-LCA-31 (ALJ Jan. 23, 2002). The Administrator then issued a determination letter on March 20, 2002, finding that Respondent failed to pay the applicable prevailing wage in violation of 20 C.F.R. §655.731. Respondent appealed this determination and each party filed a motion for summary judgment.

   The undersigned is in receipt of Administrator's Exhibits A-X and has reviewed said Exhibits. As Respondent did not object to any of the Administrator's Exhibits, they will be made part of the record. The parties also submitted Stipulations 1-59, all of which are fully incorporated herein.

   Respondent employed ten non-immigrant physicians under the H-1B program, paying them between $101,788 and $139,927. (Stipulations 2, 20). The wages for each physician varied depending on that physician's qualifications, experience, and area of specialization. Respondent calculated the rates of pay based on pay scales established for employees of the U.S. Veterans Health Administration ("VHA") at 38 U.S.C. §7404. (Stip. 24a). The ETA determined that the prevailing wage varied between $124,280 and $165,000. (Stip. 19). The parties have stipulated that the difference between the actual wages paid and the prevailing wages for the ten physicians is $212,499.14. (Stips. 22, 59).

   Respondent argues that, as an executive agency of the United States, it does not qualify as an employer within the meaning of 20 C.F.R. Part 655 and is thus exempt from the prevailing wage requirements enunciated in the LCA regulations. Respondent claims that the DOL does not have jurisdiction to review the salary determinations of the VHA and that requiring it to pay the prevailing wage would force it to distinguish between non-immigrants and U.S. citizens. The Administrator argues that by filing the LCA on behalf of the non-immigrant, Respondent acknowledged its status as the employer of the non-immigrant. The Administrator further asserts that the statutory provisions establishing a pay scale for VHA employees do not exempt Respondent from complying with the H-1B prevailing wage requirements.

   The H-1B program gives employers the opportunity to employ on a temporary basis non-immigrant aliens in specialty occupations in the United States. 8 U.S.C. §1101(a)(15); 20 C.F.R. §655.700(c)(1). There are a limited number of H-1B visas available and an H-1B visa holder has a maximum six year period of admission. 8 U.S.C. §1184(g). An intending employer of an H-1B non-immigrant must file an LCA with the DOL and obtain certification before the BCIS will approve the visa petition. 8 U.S.C. §1101(a)(15)(H)(i)(B). Guidelines for filing the LCA are set forth in 20 C.F.R. Part 655. The employer must document the number of non-immigrants it seeks to employ, the occupational classification, the prevailing wage rate, and the source of this determination, as well as the date of the period of employment. 20 C.F.R. Part 655.

   The Secretary has promulgated regulations which provide detailed guidance to the employer regarding the determination, payment, and documentation of the required wages. 20 C.F.R. §655.731; Administrator, Wage and Hour Division, U.S. Department of Labor v. Native Technologies, Inc., 1996-LCA-2 (ARB May 28, 1999). The required wage rate is

the rate of pay which is the higher of: (1) the actual wage for the specific employment in question; or (2) the prevailing wage rate (determined as of the time of filing the application ) for the occupation in which the H-1B non-immigrant is to be employed in the geographic area of intended employment.

20 C.F.R. §655.715. The actual wage is defined as

the wage rate paid by the employer to all individuals with experience and qualifications similar to the H-1B non-immigrant's experience and qualifications for the specific employment in question at the place of employment.

Id. The local prevailing wage can be determined by an SESA (State Employment Security Agency), an independent authoritative source, or other legitimate sources of data. 20 C.F.R. §655.731(a)(2). The H-1B non-immigrant must be paid the higher of the prevailing wage or the actual wage. 20 C.F.R. §656.40.

   The remedies for violations of the statute or regulations include payment of back wages to H-1B non-immigrants who were underpaid, notification of the Attorney General for debarment of the employer from future employment of aliens, civil money penalties, and further administrative relief as the Administrator deems appropriate. Id.; 20 C.F.R. §655.810. In this case, the Administrator is seeking the payment of back wages in the amount of $212,499.14 for the period ending February 16, 2002, and any additional back wages from the period after February 16, 2002.

   Twenty-nine C.F.R. §18.40 and the Federal Rules of Civil Procedure, Rule 56 permit the entry of a motion for summary decision if the evidence (pleadings, affidavits, material obtained by discovery, or matters officially noticed) shows that there is no genuine issue as to any material fact and that the movant is entitled to summary decision as a matter of law. A fact is material if proof of such would have the effect of establishing or refuting one of the essential elements of a cause of action or defense asserted by one of the parties. See Matsushita Elec. Indus. Co., Ltd., v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).

   In deciding a motion for summary judgment, the ALJ must consider all of the materials submitted by both parties, drawing all reasonable inferences in the light most favorable to the non-moving party. See Administrator, U.S. Department of Labor, Wage and Hour Division v. Dallas Veterans Affairs Medical Center, 1998-LCA-3 (ALJ June 19, 2001); F.R.C.P. 56(c).

   When Respondent filed LCAs on behalf of the non-immigrant physicians, it acknowledged its status as an employer under the H-1B regulations. Respondent, however, asserts that it is not an employer within the meaning of the regulations. The crux of Respondent's argument rests on the theory that it does not qualify as an employer under the regulations because it is an agency of the United States and as such, is exempt from the prevailing wage requirements of the statute. Respondent cites the definition of employer from 20 C.F.R. § 655.715, "a person, firm, corporation, contractor, or other association or organization in the United States." 20 C.F.R. § 655.715. It then argues that as an executive department of the United States, the Department of Veterans Affairs ("DVA") is excluded from this definition.

   This semantic distinction does not specifically exempt executive departments from coverage under the regulations. The terms ‘in' and ‘of' are not mutually exclusive. Although Respondent argues that the DVA, as a creation of Congress, does not fall under the 20 C.F.R. § 655.715 definition of employer, it is not specifically excluded from this definition either. The DVA is in fact an organization in the United States. Its status as an executive department of the United States does not exclude it from this category.

   In a comparable decision, it was determined that the Dallas Veterans' Affairs Medical Center was an employer under the same regulations. See Administrator, Wage and Hour Division, U.S. Department of Labor v. Dallas Veterans Affairs Medical Center, 1998-LCA-3 (ALJ June 19, 2001). The basic facts of this case are strikingly similar: Dallas VAMC employed an H-1B physician and then failed to pay that physician the prevailing wage. Although Dallas VAMC argued that it was not an employer under the H-1B regulations, the existence of an employer-employee relationship was acknowledged by both parties. In that case, the judge held that:

the mere fact that Respondent is a government agency does not preclude it from being an employer under the H-1B regulations. Neither the regulations nor the amendments contain any prohibition against government agencies being employers.

Just as Dallas VAMC is not excluded from this definition of employer, neither is Respondent.

   Respondent also argues that it is inherently different from other employers under the H-1B regulations. Specifically, Respondent believes that its status as a creation of Congress distinguishes it from other employers under the regulations. Respondent claims that it differs from other hospitals in that it only serves a select group of the general population, it does not compete with other physicians or hospitals for patients, and it does not share physicians with other hospitals. Regardless of these differences, Respondent is still covered under the 20 C.F.R. § 655.715 employer definition. Respondent actually shares many characteristics with other hospital-employers. Respondent does, in fact, employ physicians to practice medicine at their facility and pays their salaries. Respondent cannot be excluded from the definition of employer based on differences in the nature of the services provided.

   In addition, Respondent cannot hold itself out as the employer of the non-immigrant physicians for the purposes of filing the LCA and then deny this status when paying wages below the required wage. The ARB addressed a similar issue recently, in an Immigration Nursing Relief Act ("INRA") case, holding that an entity which files an H-1A petition is a facility because only facilities can file such petitions on behalf of their employees and attest to such status. See U.S. Department of Labor, Administrator, Wage and Hour Division, Employment Standards Administration v. Alden Management Services, Inc., 1996-ARN-3 (ARB Aug. 30, 2002). In Alden, the respondent, a nursing provider, employed a number of foreign nurses under the H-1A visa program. Alden filed Health Care Facility Attestations with the DOL, asserting that it was the employer of the foreign nurses. The relationship was such that Alden employed the nurses and then hired out their services to other health care facilities. Alden failed to pay the nurses the prevailing wage and later denied that it was a facility under the INRA, claiming that this arrangement did not fit the definition of facility. The ARB asserted that by submitting the attestation to ETA, Alden "accepted the designation of facility and incurred the consequences thereof." Id. Further, because Alden secured the benefits of the H-1B program by claiming facility status on the attestation, the ARB determined that it was estopped from taking a contrary position in the enforcement.

   In this case, Respondent filed the LCA, asserting that it was the employer of the non-immigrant physicians. By filing the LCA, Respondent declares itself to be the employer of the non-immigrant on whose behalf the LCA is filed. If Respondent chooses to take advantage of the H-1B program to employ non-immigrant physicians, it must also be subject to the prevailing wage requirements, just as other H-1B employers. Respondent is not entitled to reap the benefits of the H-1B program without shouldering the burden of compliance with the requirements of that program. It cannot utilize certain H-1B regulations while at the same time claim exemptions from others. Accordingly, Respondent is an employer under the regulations.

   An H-1B employer must pay the non-immigrant employee either the actual wage or the prevailing wage, whichever is higher. See 20 C.F.R. § 655.731. As an H-1B employer, Respondent must comply with this wage requirement. It is undisputed that Respondent did not pay the prevailing wage as determined by the ETA and affirmed by the ALJ. See Stips. 19-20. The parties have stipulated that the difference between the prevailing wage and the wage paid is $212,499.14. See Stips. 22, 59. Respondent claims that even if it is the employer of the H-1B physicians under the regulations, it is exempt from these regulations due to the Federal wage schedule to which it subscribes. The Board of Alien Labor Certification Appeals (BALCA) has held that the H-1B regulations "do not provide an exception, either express or implied, for a Federal wage schedule." See Hunter Holmes McGuire Veterans Affairs Medical Center, 1994-INA-210 (ALJ Oct. 7, 1996) (en banc). Further, BALCA stated that the permanent labor certification regulations do not permit consideration of a separate Federal wage schedule when determining the prevailing wage. See id. As the undersigned finds BALCA decisions to be persuasive, Respondent is not exempt from the permanent labor certification regulations due to the Federal wage schedule.

   Respondent argues that the DOL approved the calculation of the wage to be paid on the LCA when it accepted the petition. However, the DOL's approval of the LCA is not an endorsement of the calculation of the prevailing wage. See 20 C.F.R. § 655.749(c); Fargo Veterans Affairs Medical Center v. Employment and Training Administration, 2001-LCA-13 (ALJ Jan. 23, 2002). The acceptance of the LCA does not indicate that the LCA wage attestation satisfies the prevailing wage requirement. Id.

   Respondent asserts that the ETA's calculation of the prevailing wage was erroneous, as it should have used a different definition of the area of intended employment. This issue, however, has already been decided, and the ETA's calculation of the prevailing wage has been upheld. See Fargo, 2001-LCA-13.

   Respondent contests the jurisdiction of the Department of Labor to review DVA wage determinations, pointing to a statute that purports to prohibit this type of review by any other agency. See 38 U.S.C. § 7422. However, the statute Respondent points to actually deals with collective bargaining. Specifically, 38 U.S.C. § 7422(d)(3) states that only the Secretary of the DVA can review whether an issue concerns employee compensation such that it is not covered by collective bargaining. This is not an issue in this case. In fact, the Department of Labor is not reviewing Respondent's compensation determinations, but, rather, is determining whether Respondent complied with the H-1B regulations to which it voluntarily subjected itself. Therefore, 38 U.S.C. § 7422 is inapplicable with respect to this proceeding.

   In addition, when Respondent filed the LCAs on behalf of the non-immigrant physicians, it declared itself to be the employer of these physicians. By taking advantage of this program, Respondent has subjected itself to review of the prevailing wage. The Administrator, Wage and Hour Division, is charged with investigation and determination of the prevailing wage and the ALJ is authorized to review these determinations. See 20 C.F.R. §§ 655.800(a), 655.805(a)(2), 655.820. As discussed above, Respondent is not exempt from and cannot opt-out of certain regulations if they choose to employ H-1B non-immigrants. Therefore, DOL has the proper jurisdiction to review the prevailing wage determinations and the wages paid to H-1B non-immigrants and to enforce these determinations.

   Respondent argues that if it pays the H-1B physicians the prevailing wage, it would be forced to violate federal law. Respondent states that as the prevailing wage is higher than the base statutory wage, requiring compliance with the prevailing wage would force it to pay the H-1B physicians a higher wage than the U.S. citizen physicians. Respondent believes that this would be discrimination with respect to compensation on the basis of national origin and would violate the civil rights of its U.S. citizen physicians. The Administrator asserts that since the Respondent could use special pay increases to raise the wages of the U.S. citizen physicians, all physicians could be paid a similar rate without respect to national origin. Further, DOL notes that the DVA payment statute encourages the payment of rates comparable to those paid in the private sector and authorizes special pay increases for this purpose.

   The requirement that Respondent pay the H-1B physicians the prevailing wage does not force Respondent to violate federal law. Respondent voluntarily agreed to submit to the prevailing wage requirements when it filed the LCA applications. Respondent is not being forced to violate any laws, as participation in the H-1B program is completely voluntary. Respondent must only comply with the requirements of the program it chose to utilize.

   Further, the DVA payment scheme allows for payment of a range of salaries depending on a number of factors. See 38 U.S.C. § 7433. Specifically, salaries can be increased depending on locality, area of specialization, qualifications, or difficulty finding an employee to fill the position. Id. None of these special increases are based on national origin, but are available to all employees. The purpose of this sliding scale payment scheme is to help account for the difference in pay between VA physicians and physicians in private practice, allowing adjustments to aid the VA in recruitment and retention of qualified physicians. See Exh. U. Under this payment scheme, each physician could be paid the prevailing wage. In fact, it is documented that Respondent paid certain H-1B physicians varying amounts of specialty and locality pay. See Exhs. L-1 - L-10. Respondent was authorized to pay amounts in excess of those paid, such that physician's salaries would be comparable to doctors in private practice in the Fargo, ND area. See Exhs. L-1 - L-10. All physicians employed by Respondent could be paid wages equivalent to the prevailing wage through the use of these pay increases. In this manner, Respondent can comply with the prevailing wage requirements while not distinguishing between physicians of different national origin.

   IT IS HEREBY ORDERED that back wages are due to the ten non-immigrant physicians in the amount of $212,499.14.

       JOHN M. VITTONE
       Chief Administrative Law Judge

NOTICE OF APPEAL RIGHTS: Pursuant to 20 C.F.R. § 655.845, any party dissatisfied with this Decision and Order may appeal it to the Administrative Review Board, United States Department of Labor, Room S-4309, Frances Perkins Building, 200 Constitution Avenue, NW, Washington, DC 20210, by filing a petition to review this Decision and Order. The petition for review must be received by the Administrative Review Board within 30 calendar days of the date of the Decision and Order. Copies of the petition shall be served on all parties and on the administrative law judge.