How H-1B Employers Can Prepare for a DOL Audit

Employers who hire H-1B workers must comply with strict regulations set by the U.S. Department of Labor (DOL). The Wage and Hour Division (WHD) enforces these rules, ensuring that employers meet wage requirements, maintain accurate documentation, and follow fair labor practices. Failure to comply can result in fines, back wage payments, and even disqualification from the H-1B program.

This guide outlines why H-1B audits occur, the key documents employers must maintain, and best practices to ensure compliance with federal regulations.

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Why H-1B Audits Happen

The DOL conducts audits and investigations under the H-1B program when one of the following circumstances occurs:

1. Employee or Third-Party Complaint – An H-1B worker, a U.S. worker, or any other party files a complaint alleging a violation.
2. Credible Information from a Reliable Source – The DOL may initiate an investigation if it receives trustworthy information indicating non-compliance with labor condition application (LCA) requirements.
3. History of Willful Violations – Employers who have previously committed serious violations or willfully misrepresented material facts in an LCA may be subject to random investigations.
4. Reasonable Cause for Investigation – If the Secretary of Labor has reason to believe an employer is violating H-1B regulations, an investigation may be certified.

If an audit or investigation finds violations, consequences can include civil penalties, back wage payments, and debarment from the H-1B program.

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Key Documents Employers Must Maintain

H-1B employers are required to maintain a Public Access File (PAF) and have it readily available within one working day of filing the LCA. This file must contain:

1. A Copy of the Certified LCA (Form ETA 9035 or ETA 9035E) – This document, certified by the DOL, includes key employment terms.
2. Rate of Pay for the H-1B Worker – Employers must provide evidence that they are paying the wage listed in the LCA.
3. Summary of the Actual Wage System – A document explaining how wages for the H-1B position were determined within the company.
4. Prevailing Wage Documentation – Employers must provide the prevailing wage source and confirm that they meet the required wage level.
5. Proof of Employee Notification – Documentation demonstrating that U.S. workers were informed of the H-1B application, such as a notice posted at the workplace.
6. Summary of Benefits – A comparison of benefits provided to H-1B workers and similarly employed U.S. workers.
7. List of Entities Considered a “Single Employer” – If applicable, a list of any affiliated entities included under the employer’s scope.
8. Successor Employer Documentation – In cases of company mergers or acquisitions, documents showing that the new entity has assumed responsibility for existing H-1B employees.

Additional Requirements for H-1B-Dependent or Willful Violator Employers

H-1B-dependent employers or those classified as willful violators must also maintain:

• A list of “exempt” H-1B nonimmigrant workers who meet the exemption criteria.
• A summary of recruitment methods used when hiring any “non-exempt” H-1B workers, demonstrating efforts to recruit U.S. workers before hiring H-1B employees.

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Best Practices to Prepare for an H-1B Audit

Conduct Regular Internal Audits

Employers should periodically review all H-1B-related records to confirm they align with DOL requirements. Internal audits help identify and correct compliance issues before a government audit occurs.

Ensure Payroll and Wage Compliance

Employers must pay H-1B employees at least the wage listed in the LCA. Payroll records should clearly document payments to ensure transparency. Underpayment can lead to penalties, including back wages and fines.

Train HR and Legal Teams

Human resources and legal staff should be well-versed in H-1B regulations, record-keeping requirements, and the audit process. Providing training can help avoid common compliance mistakes.

Prepare for Potential Site Visits

Government agencies, including the DOL and U.S. Citizenship and Immigration Services (USCIS), may conduct unannounced site visits to verify that H-1B employees are working at the approved location and performing duties consistent with the LCA. Employers should ensure that job locations and descriptions match what was submitted to the government.

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Consequences of Non-Compliance

If an employer is found non-compliant during an audit or investigation, the DOL may impose one or more of the following penalties:

• Civil Money Penalties – Employers may be fined for each violation, with amounts varying based on the severity of non-compliance.
• Back Wages – Employers must compensate affected workers for any unpaid wages resulting from underpayment or misclassification.
• Debarment from the H-1B Program – Employers who commit serious or repeated violations may be barred from participating in the H-1B program for at least one year.
• Legal Challenges – Employers have the right to request a hearing before an Administrative Law Judge (ALJ) if they dispute the findings of an investigation. A request for review by the Department of Labor’s Administrative Review Board can also be made within 30 days of the ALJ’s decision.

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Final Tips for Employers

• Stay proactive. Conduct routine reviews of all H-1B-related records and policies to ensure compliance.
• Maintain detailed records. Organize and securely store all required documents, making them easily accessible in case of an audit.
• Seek professional guidance. Immigration attorneys and compliance consultants can help employers navigate complex H-1B regulations and avoid costly mistakes.

By following these best practices, employers can minimize the risk of DOL audits and ensure their continued participation in the H-1B program.

If your company needs assistance with H-1B compliance, consult with an immigration attorney to review your policies and documentation.

Schedule a Consultation with an Immigration Lawyer

• Fact Sheet #62U: What is the Wage and Hour Division’s enforcement authority under the H-1B program?
• Fact Sheet #62F: What records must an H-1B employer make available to the public?

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