A variety of U.S. work visas require employers to pay a certain salary to foreign workers whom they employ in the United States. But one employer was recently surprised by an appeals court ruling that it was required to continue to pay that salary even after the worker returned to his home country and began working for the employer from there – and even after he had stopped working for the employer altogether.
E-3 visa, Labor Condition Application
The E-3 has many requirements similar to those that apply to H-1B visas, except that an individual can apply for an E-3 visa abroad, and then enter the United States in E-3 status, without a petition from the employer. However, the employer still must file and get certified a Labor Condition Application from the U.S. Department of Labor. The LCA requires that the employer pay the specified wage, which cannot be less than the prevailing wage.
Majid Varess worked in E-3 status in the United States and abroad as a sports reporter for the employer, Persian Broadcast Service Global, Inc., a Farsi language television station in Southern California. The employer obtained LCA certification for Mr. Varess twice: once in 2011 (for a salary of $45,000), and again in 2013 (for a salary of $60,000). The 2013 LCA expired on September 12, 2015.
It was undisputed that Persian never paid Mr. Varess the wages required under either of his LCAs. Finally, in July 2014, while he was working abroad for Persian, Mr. Varess complained to Persian’s Chief Operating Officer about his wages (or the lack thereof). The COO responded that Persian “could no longer afford to pay him.” Although Mr. Varess stopped performing any work for Persian after July 14, 2014, he contended that he did not interpret the COO’s message as a “notice of termination.”
After a series of hearings, an appeal, and a remand, Mr. Varess was awarded $183,794 in back wages, plus interest, through September 12, 2015, the date that his second and last LCA expired. This award was affirmed by a federal district court, and Persian appealed to the U.S. Court of Appeals for the Ninth Circuit. In a decision issued on August 1, the Ninth Circuit panel found in Mr. Varess’s favor.
Discussion
According to the court’s decision, there are only two exemptions from the general rule that an E-3 worker must be paid the wage in the LCA for the entire period that the LCA is in effect:
- The employee is nonproductive for personal reasons, such as vacation, family leave, or health reasons.
- There was a bona fide termination of employment before the expiration of the LCA period.
In this case, the first exception did not apply because Mr. Varess continued working for Persian until July 14, 2014, and was presumably available to work afterward. The second exception did not apply because Persian conceded that no termination of employment had occurred.
Persian’s back pay liability stemmed from its failure to pay the required wages specified in the LCA. The covered period of liability included time spent while the employee was working abroad, as well as the period when he was not working for Persian at all, probably without having a valid E-3 visa or ever having extended his E-3 status in the United States.
The Court’s opinion highlights the exposure that an employer faces when the wages specified in the LCA are not paid.
Lessons for employers
The message of the Court’s opinion is clear. The wages in the certified LCA must be paid for the entire period of the LCA unless one of the two exemptions applies.
To end the obligation to pay LCA wages to E-3 employees, the employer must clearly terminate the employee’s employment. The termination should be in writing, and the employer should obtain (and retain) proof that the employee received the notice. Although this may be enough for termination of the wage obligation, it is probably also advisable for the employer to withdraw the LCA. This is also recommended for employees in H-1B status.
Where a petition is filed in the E-3 or H-1B category, employers are also required to notify the U.S. Citizenship and Immigration Services of the termination of employment, as well as any time there is a material change in the terms and conditions of the employee’s employment.