Eaton Peabody

The Department of Labor published a final rule in the May 17, 2007 Federal Register, affecting permanent labor certification (“PERM”) applications. A copy of the final rule is attached. The rule constitutes a major change in the labor certification program.

Highlights

Effective July 16, 2007, some highlights of the new rule include:

Attorneys fee's and costs. The new rule requires employers to pay the attorneys’ fees and costs associated with the preparation and filing of PERM applications on foreign workers’ behalf.

(b) An employer must not seek or receive payment of any kind for any activity related to obtaining permanent labor certification, including payment of the employer's attorneys' fees, whether as an incentive or inducement to filing, or as a reimbursement for costs incurred in preparing or filing a permanent labor certification application, except when work to be performed by the alien in connection with the job opportunity would benefit or accrue to the person or entity making the payment, based on that person's or entity's established business relationship with the employer. An alien may pay his or her own costs in connection with a labor certification, including attorneys' fees for representation of the alien, except that where the same attorney represents both the alien and the employer, such costs shall be borne by the employer. For purposes of this paragraph (b), payment includes, but is not limited to, monetary payments; wage concessions, including deductions from wages, salary, or benefits; kickbacks, bribes, or tributes; in kind payments; and free labor.

Substitution prohibited. Employers will no longer be able to substitute aliens on approved PERM applications.

Time limit on validity. In essence, the new rule renders PERM applications invalid after 180 days if the employer does not file an I-140 immigrant petition based on the certified PERM application. The proposed rule limited the validity period to 45 days, so the final rule is an improvement over that. However, there is currently no “expiration date” for certified PERM applications. Employers should note that the new rule applies to all PERM applications. This means employers, if they have not already done so, will have 180 days from July 16, 2007 to file I-140 immigrant petitions with PERM applications certified before that date.

Existing anti-fraud provisions are also enhanced by the new rule.

Some practical implications

The primary practical implication of the new rule is forcing employers who want to sponsor aliens for permanent residence to pay the legal fees and other costs associated with the labor certification process, much like the current requirement under the H-1B program. This part of the process is generally the most complicated, time consuming, and expensive part of the employment-based green card process. Special, detailed advertising is required as part of the process, further increasing cost. Given the rule’s effective date of July 16, 2007, in situations where the alien is paying for the process, employers would want to file before that date if possible.

Some employers, as a practice, pay for the PERM  process already.  However, many employers, while willing to sponsor, do not currently pay for the process. They either share this burden with the sponsored employee or the sponsored employee pays. Given employers’ existing concerns with having sponsored employees leave employment, paying for the process may deter employers from sponsoring altogether. Liquidated damages clauses in employment agreements, designed to deter an employee’s early departure, are primarily useful as a general deterrent, and enforcement can be difficult and inefficient. Also, employers also need to be careful of implementing such clauses for workers who currently hold H-1B status. Although there is no obligation for employers to sponsor foreign workers, if employers decide not to sponsor, they may place themselves at a competitive disadvantage with other companies in terms of recruitment and retention.

Another concern with the new rule is the 180-day validity period. The DOL originally proposed an unworkable 45-day validity period. Accordingly, six months is better than that. Regardless, employers must be careful to calendar this date once a PERM application has been approved. It is generally advisable to file an I-140 immigrant petition shortly after PERM approval so that the new rule does not become an issue.

Finally, employers should be sure to review their documentation in support of PERM applications to make sure they are in compliance in the event of an audit.

We submitted public comment on the proposed rule when the comment period was open. DOL received 489 comments in response to the proposed rule, most in opposition to some or all of its provisions. Between publication of the proposed and final version, the major revision was the increased validity period from 45 days to 180 days. The remainder of the proposed rule remained essentially intact.

If you have questions or would like additional information, please contact Matthew S. Raynes.

This alert is provided as general information, and is not a substitute for legal or other professional advice.