H1B Benefit Fraud & Compliance Assessment Signals Changes
Posted Oct 24, 2008
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The U.S. Citizenship and Immigration Services (USCIS) recently released a report entitled H1B Benefit Fraud & Compliance Assessment (PDF 175KB). This report was prepared by the USCIS's National Security and Records Verification Directorate (NSRV) and its subcomponent, the Office of Fraud Detection and National Security (FDNS). The report offers insights into rates and types of fraud and technical violations in the H1B program. Its purpose is to identify areas of potential change needed to address vulnerabilities in the H1B program.
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This information is provided to apprise MurthyDotCom and MurthyBulletin readers of the likelihood of modifications to the H1B program. We at the Murthy Law Firm remain strongly in support of the need for and the value of the H1B program, which supplies a needed, educated workforce to U.S. employers of all sizes, particularly in technical fields. The program contains numerous provisions that are intended to protect U.S. workers. As is often the case in the business world, however, there are always some who attempt to ignore the rules. With the H1B program, this is sometimes simply the result of carelessness or ignorance, but it is sometimes intentional.
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Background : Fraud Detection
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USCIS established the NSRV in February 2006, in part to enhance the integrity of the U.S. immigration system. NSRV investigates allegations of immigration-related fraud and supports a strategic fraud detection program in partnership with the enforcement and intelligence communities. The FDNS is a division within the NSRV, responsible for identifying and investigating fraud in immigration applications and petitions. A description (PDF 931KB) of the NSRV is available on the USCIS WebSite.
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The USCIS, through the FDNS, operates a Benefit Fraud and Compliance Assessment (BFCA) program. Its purpose is to evaluate the integrity of immigration benefits programs, including the H1B program. This involves conducting a purely random sampling of pending and completed cases. The results of the BFCA are meant to serve as a basis for proposed changes.
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Fraud Assessment Procedures : Site Visits Effective
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FDNS's Immigration Officers (IOs) verify information supplied by petitioners or applicants as part of the normal USCIS filing system. These IOs conduct site inspections inside the U.S. and use overseas resources to verify qualifications. Eighty percent of the fraud or technical violations found were uncovered during employer or worksite visits. The logical conclusion is that site visits are an effective means of fraud detection, and that future fraud detection methods will utilize site visits to a significant degree.
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FDNS Referrals to ICE for Prosecution
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If a BFCA reveals that a petitioner or beneficiary has committed fraud, FDNS will refer the case to Immigration and Customs Enforcement (ICE) for consideration of formal criminal investigation and prosecution. If ICE declines to investigate, FDNS forwards the case with its findings to USCIS. The USCIS can then either deny or revoke the case, as appropriate. If the foreign national beneficiary is inside the U.S., s/he may be placed into removal (formerly deportation) proceedings, if appropriate. A record of the fraud will be kept in the FDNS Data System, so that this information can be compared to other applications or petitions.
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Random Sample Included only Beneficiaries in the U.S.
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The FDNS selected a random sample of 246 cases from a group of H1B petitions filed between October 1, 2005 and March 31, 2006, on behalf of foreign national beneficiaries who were within the United States. The sample was limited to H1B cases with beneficiaries in the U.S., so that key issues of payment of wages, location of employment, and performance of stated job duties could be reviewed. FDNS conducted initial reviews of the Labor Condition Applications (LCAs) and H1B petitions and conducted employer site visits. The site visits were intended to verify details about the employer, employee, and the nature of the employment.
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Fraud vs. Technical Violations
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For purposes of the BFCA, fraud is defined as a willful misrepresentation, falsification, or omission of a material fact. Technical violations, essentially, are errors, omissions, and failures to comply that are not within the fraud definition.
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Examples of items that were categorized as technical violations include instances of employers requiring H1B workers to pay filing fees that are designated by regulation to be the obligation of the employer, as well as the deduction of other H1B-related fees from employees' wages, and, thereby, reducing the wages of these H1B workers to levels below the LCA wage requirement. Other technical violations included general failure by employers to pay beneficiaries at least the prevailing wage for the occupations within their particular geographic locations as listed on the LCAs, employment of H1B workers in geographic locations not covered by valid LCAs, and the benching of H1B employees. The fact that these were characterized as technical violations does not mean that, if found to be intentional, they could not fall under the definition of fraud.
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Misrepresentations Found
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BFCA found misrepresentations in LCAs and H1B petitions that included nonexistent business locations, false educational and/or experience documentation, and instances of H1B workers performing duties significantly different from those described in their H1B petitions. Some cases reviewed included multiple indications of fraud and/or technical violations.
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Key Statistical Findings
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Out of the 246 H1B petitions sampled, 51 petitions were confirmed to involve either fraud or technical violation/s. By percentage, 13.4 percent of these cases involved fraud (33 cases) and 7.3 percent of these cases involved one or more technical violations (18 cases), for a combined violation rate of 20.7 percent. Cases that involved fraud and technical violations and also rose to the level of a material misrepresentation were included in the BFCA fraud category only.
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Most Common Violations
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The most common violations of the H1B program included H1B beneficiaries working at locations not listed in the H1B petition or LCA (55 percent of cases with violations); H1B workers not receiving the required prevailing wage (27 percent of cases with violations) including underpayment of wages, improper deductions, and benching; and violations involving shell businesses or the lack of bona fide job offers (14 percent of cases with violations). This latter category covers instances where site visits revealed nonexistent business locations, locations too small to support the number of sponsored employees, or lack of evidence that the employers intended for the H1B workers to fill the jobs described in the H1B petitions.
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USCIS Expected to Make Procedural Changes to H1B Program
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Based on BFCA findings, the USCIS is making procedural changes to the H1B program that will be released in the future. The need for H1B employers to be careful and scrupulous in their practices cannot be over emphasized. According to the study, almost 80 percent of the time there are no violations. The remaining employers (and/or the beneficiaries, in the case of fraudulent education or experience) are split between those committing fraud and those with technical violations. Technical violations can be addressed through better legal guidance, establishment of proper monitoring, and otherwise simply having a better appreciation for the importance of attending to the many legal nuances that govern the H1B program.
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Fraud is a separate matter. Employers can improve their verification of worker education and experience, presuming that these employers are not involved in the fraud. Employers engaging in intentional violations must recognize that they are subject to a new era of enforcement and tracking. Practices that may have gone undetected in the past are now the subject of investigation and enforcement. Foreign national beneficiaries are also vulnerable in this process. It is necessary to carefully consider the nature and ethics of one's employer. There are status problems created if an employer's H1B extension requests are denied, or if an approved petition is revoked.
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Murthy Law Firm Conclusions and Recommendations
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The H1B trend is toward increasing enforcement and stricter standards for approval. Employers that rely upon H1B workers need to be cognizant of this trend and need to clearly place themselves with the majority of companies that do comply. We at the Murthy Law Firm reiterate our recommendation to conduct an internal audit, and to take action to address any problem areas. It is reasonable to assume that immigration restrictionists will use the information in the USCIS's assessment to attempt to put all H1B workers and their employers in a negative light. While fraud and noncompliance is certainly a serious problem, however, it should be noted that the report reveals that the vast majority of companies and H1B filings are clean. The problems lie in a noticeable minority that is tainting an otherwise positive and worthwhile program. Our attorneys at the Murthy Law Firm can help companies to comply with the H1B program requirements. Employers that rely on H1B workers jeopardize their businesses if they do not invest the time and money to ensure they run their operations in a clean and organized manner with respect to H1B matters.