Employer Proclaims He Profits from H-1B Workers

By David North on December 4, 2011

When employers testify to Congress about why they hire H-1B workers, they routinely say that it is because of a labor shortage in the high-tech fields; they never admit that they like the artificially low wages that are a hallmark of the program.

But when one major H-1B employer testified before an Administrative Law Judge, there was a different answer. The employer claimed a $1,000-a-month profit, per worker, from hiring the H-1Bs.

Why would one employer ruin the argument of his fellow H-1B exploiters? Well, there may be unity among employers, generally, but in this case the private financial interests of this firm must have outweighed any concerns it may have had for H-1B employers as a fraternity.

The case was both complicated and convoluted.

A provider of physical therapy services, Greater Missouri Medical Pro-Care Providers, Inc. (GMMPCPI), had been charged by the U.S. Department of Labor's Wage and Hour Division with five different violations regarding financial arrangements with H-1B physical therapists, all from the Philippines.

Wage and Hour said that the employer had: (1) not paid salaries to 41 of these workers for several months after their arrival in America, as they studied to qualify for the physical therapist license in Missouri; (2) inappropriately confiscated the final paychecks from four of them; (3) deducted moneys from its workers to pay certain H-1B expenses that are supposed to be borne by the employer; and (4) failed to pay cumulative interest to the workers on the sums involved in the first three counts.

During the period between arrival and the passage of the license test the workers had been housed in company-provided apartments and given $50 a week "for their groceries". Actual salaries did not start until the day that the test was passed.

The employer appealed the Wage and Hour decision to an ALJ, Alice M. Craft, and she ruled in favor of DoL on the four counts noted above, but she excluded one worker from the group of 41.

The fifth count, in which she ruled for the employer, dealt with another GMMPCPI practice in which the firm had levied substantial financial penalties on departing H-1B workers who left the employer before the end of a two-year contract. These penalties were both written into the contracts and were, apparently, OK under Missouri state law.

The employer's lawyer told the judge that it had significant up-front costs incurred in bringing in the H-1B workers, and that if the workers left their corporation prematurely the company would suffer losses.

But how much should the penalty be?

It was at this point GMMPCPI left the employers' club in the lurch by arguing that they made a $1,000-a-month profit from each H-1B worker, and they should be compensated for those lost profits in the penalties laid on the departing workers. Here's how Judge Craft described the situation on pages 11 and 12 of her decision:

Each of the [worker-employer] agreements also contains a provision that requires an H-1B employee to pay damages to GMMPCPI for early [self-] termination of employment. . . [a] factor considered by GMMPCPI were the costs incurred in bringing the H-1B employees to the United States and the expected profits from their employment . . . Regarding expected profits, he [the employer] testified that damages reflect the expected profit, which he estimated at $1,000 per month beginning in 2004. . .

These penalties imposed in the contracts were $10,000 for resigning in the first six months of the contract, $7,000 in the next six months, $4,000 in the following six months, and $3,000 in the final six months. (That the loss of profits, at the argued level, would not be met by these penalties was a nuance unexplained in the decision.)

Since the judge allowed the practice of imposing these penalties, we have no data on the total significance of them to these workers.

On the other hand, she calculated, to the penny, the back wages owed to the 40 workers, amounting to $346,794.27. There was also $16,444.23 in other awards to the workers, all plus interest (the extent of which was not spelled out in the decision.). The dollar totals just noted were not in the text of the decisions, but we tallied them from individual amounts in that document.

After reading ALJ decisions for years, I must say that this 97-page document was a model of clarity, if not brevity. In addition, as with all DoL decisions, and none of those made by the comparable DHS body, the Administrative Appeals Office, there was no redacting of names. DoL told us in this document the name of the judge, the names of all the lawyers, and of the corporation, and of all of the 40-odd workers. Writing such a long and detailed document, which largely, but not completely, favored the workers must have been a chore and a challenge.

The Interpreter Releases article on the decision (p. 2600 of the October 31 issue), however, was both typically bland and in this case incomplete, while also reflecting lazy reporting. (IR is the well-established trade paper of the immigration bar.)

In its article the central fact of an H-1B employer proclaiming a profit from his dealings with the alien worker program is not mentioned. As to the extent of the costs to the erring company, they are reported in an IR headline as "Thousands of Dollars in Back Pay" and not otherwise mentioned.

Well, I suppose you could argue that a financial setback of more than a third of a million dollars could be characterized as "thousands of dollars."

(Another aspect of this decision will be discussed in a subsequent blog.)