IndiaPost.com - DOL Rule against substitutions takes effect

The Department of Labor's (DOL) final rule to "enhance program integrity and reduce the incentives and opportunities for fraud and abuse related to the permanent employment of aliens in the United States" takes effect on July 16. See 72 Fed. Reg. 27,903-27,947 (May 17). The provisions apply to permanent labor certification applications and approved certifications filed under both the Program Electronic Review Management (PERM) program regulation, effective March 28, 2005, and previous regulations implementing the permanent labor certification program.

The rule's major provisions include:

A prohibition on the substitution of beneficiaries. Effective July 16, this prohibition will apply to all pending permanent labor certification applications and to approved permanent labor certifications. The prohibition does not affect substitutions approved by the DOL or Department of Homeland Security (DHS) before the effective date. It also does not affect substitution requests in progress as of the rule's effective date. The final rule also prohibits the sale, barter, and purchase of labor certification applications and approved labor certifications.

The USCIS announced that it will accept substitution requests it receives until Monday, July 16. Rationale: The rule notes that the DOL for years has allowed employers to substitute a beneficiary named on a pending or approved labor certification with another prospective employee. Historically, this substitution practice was permitted as an accommodation to US employers because of the length of time it took to obtain a permanent labor certification or receive approval of the 1-140. Ongoing concerns about fraud and abuse have been heightened, the DOL said, by a number of recent criminal prosecutions by the Department of Justice (DOJ) as well as/recommendations from the DOJ and the DOL's Office of Inspector General, and public comments concerning fraud received in response to the May 6, 2002, PERM notice of proposed rulemaking.

One attorney filed approximately 2,700 fraudulent applications with DOL for fees of up to $20,000 per application. Many of these applications were filed for the sole purpose of later being sold to workers who would be substituted for named beneficiaries on final approved labor certifications. One commenter asked that the rule be clarified to state that the prohibition against the sale, barter or purchase of labor certification applications does not apply to transfer stemming from legitimate corporate restructuring activities such as mergers, acquisitions, or spin offs.

The DOL said it did not intend this provision to govern corporate restructuring or internal corporate accounting and finance practices that exist independently of the permanent labor certification program. The DOL has determined that further clarification on this question is not necessary.

The DOL said its premise is that substitution in general is no longer needed, both because the new, automated system has significantly reduced processing time and because the backlog of permanent labor certification applications filed before March 28, 2005, will be eliminated by September 30. The DOL, noting that the labor market changes rapidly, maintained that it is consistent with the DOL's obligation to protect the jobs, wages, and working conditions of US workers to require that there be another labor market test whenever the job opportunity effectively changes through the unavailability of the original worker.

The DOL said it understands concerns that, as a result of this rule, H-1B non-immigrants who, after five years of employment, are not yet the beneficiary of a permanent labor certification application might not be permitted by U.S. Citizenship and Immigration Services to further extend their H-1B status prior to obtaining permanent residence. Continuing substitution as an accommodation to "this small group of individuals, a group whose numbers and participation in the program are both speculative, is disproportionate to the adverse consequences of continuing the substitution practice," the DOL said.

The agency also noted that some commenters have suggested that because the American Competitiveness in the 21st Century Act (AC21) increased the portability of H-1B visas, allowing such non-immigrants to change employers, substitution by these foreign workers should continue to be allowed. The DOL, however, said it sees no reason to permit one type of nonimmigrant to continue benefiting over other non-immigrants from the practice of substitution. Substitution has been a distinct benefit to employers and applicants in allowing them to retain an earlier priority date and apply the results of a completed labor market test.

The DOL said it plans to work with the DOJ and DHS to explore appropriate circumstances under which substitution could be reinstated. "We anticipate that there may come a time when all affected agencies are satisfied that there are sufficient anti-fraud protections to alleviate the concerns motivating this rule," the DOL noted. A 180-dav validity period for approved labor certifications. Employers will have 180 calendar days within which to file an approved permanent labor certification in support of an Immigrant Petition for Alien Worker (Form 1-140).

All permanent labor certifications approved on or after the effective date will expire 180 calendar days after certification, unless filed before expiration in support of a Form 1-140 petition with DHS. Likewise, all certifications approved before the final rule's effective date will expire 180 calendar days after the effective date unless filed in support of a Form 1-140 petition with DHS before the expiration date. Rationale: The DOL had considered making the validity period only 45 days, but determined that 180 calendar days provided additional time to accommodate possible delays while maintaining the integrity of the labor market test and the security of the labor certification.

The DOL noted that requiring a retest of the market after the passage of 180 days is consistent with its mandate to protect the constantly shifting U.S. labor market. Some commenters contended that the DOL's argument that a certification grows stale with the passage of time is disingenuous, given the extremely long processing times and resultant staleness of at least some information in applications submitted years earlier.

The DOL noted, however, that the final rule addresses the question of validity post-certification. "While questions of wages and recruitment are adjudicated on an individual basis as applications come up for review in our Backlog Processing Centers-independent of how long each of those applications has been pending-the Department must determine how long it will stand behind those certifications once issued, and when it is appropriate to once again test the market," the DOL said, noting again that processing times and backlogs have been greatly reduced by PERM streamlining and the online system.

(to be continued)