Reminder: Effective July 16, 2007, Employers Must Pay All Costs for Preparing, Filing, and Obtaining Labor Certification

On May 17, the Department of Labor (DOL) published a final rule on substitutions and other labor certification issues that will become effective on July 16, 2007. Labor certification, sometimes known as “PERM,” is the first stage of most employment-based green card cases and involves a test of the local labor market.

The new rule requires employers to pay all costs for preparing, filing, and obtaining labor certification. Employers will no longer be permitted to transfer to the foreign national beneficiary any of the employer’s costs associated with preparing and filing an application for labor certification.

As stated in The Federal Register, the DOL rule “makes it clear that employers who submit applications for permanent labor certification do so with the full understanding that the costs they incur for the preparation and filing of the application and obtaining permanent labor certification are to be exclusively borne by the employer. Thus, the Final Rule prohibits an employer from receiving payment of any kind as an incentive or inducement to file, or in reimbursement of the costs of preparation or filing of, an application for labor certification, including covering the costs of the employer’s attorneys’ fees, except as specifically provided for certain third-party payments. The Final Rule also prohibits an employer filing an application for labor certification from reducing the wages, salary, or benefits of an alien named on the application for any expense related to the preparation and filing of the application. This prohibition includes the payment by the alien of costs (for recruitment or other activities in furtherance of the labor certification) as well as the employer’s attorneys’ fees.”

How This Affects You

Agreements between employers and employees for recovery of green card expenses will need to be modified to comply with the rule that employees cannot pay any of the costs associated with the preparation and filing of the labor certification application. In addition, employers might consider refraining from the enforcement of any existing agreements until the implications of this regulation are better understood.

Employers of H-1B workers should note that under previously existing policy, the costs associated with filing for H-1B nonimmigrant classification are viewed by the DOL as the employer’s obligation.

Morgan, Lewis & Bockius will continue to monitor this process and will update you with any new information. If you have any questions about any of the issues raised in this Morgan Lewis Resources Immigration Alert, please contact:

Eleanor Pelta
202.739.5050
epelta@morganlewis.com

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