All US-based companies including IT companies and staffing companies who employ and depute workers on H-1B visas have to file H-1B Labour Condition Application (LCA) with the US department of labour (DOL) and get it approved to meet working conditions and the wage requirements, according to the new US rule issued by the office of foreign labour certification on January 15th, 2021.
Following the final rule that the US Department of Homeland Security (DHS) signed on January 14th, 2021, that changes the “Employer-employee relationship” for H-1B employees and end clients, the US DOL issued a guidance note that the secondary employers or clients will also have to meet H-1B filing for Labour Condition Applications and H-1B applications, that was only the responsibility of the primary employers before.
The new guidance will cause a higher administrative burden along with high costs for the clients and it will come into effect from July 14th, which is 180 days from the issuance of the new rule. Even though the primary sponsor has filed an H-1B petition, if an H-1B employee works for an end client or secondary employer, the new rule demands the end client also to file a separate H-1B LCA.
Wage obligations are also affected by the introduction of this new rule. If the H-1B minimum wage requirement in the LCA filed by the secondary employer is higher than the one filed by the primary employer, the LCA wage will be set as same as the secondary employer’s filing in order to meet the wage obligation of both the end client and the primary employer.
Similarly, if the vacation days benefit at the secondary employer is higher than the primary employer, the H-1B worker will receive a paid vacation as same as the one set by the secondary employer so that the vacation benefit obligation is met.
The US Department of Labor said that new guidance is consistent with the H-1B statute and rules and is also more appropriate as per the changes made by the US Citizenship and Immigration Services (USCIS).
India is set to ask the newly elected president, Joe Biden to revoke this rule that can have negative effects on most tech companies.