Bigger Fines for Labor Law Violations May Be ‘Purely Hypothetical’

Businesses fear exclusion from government visa programs

Allen Smith, J.D. By Allen Smith, J.D. January 16, 2018
Bigger Fines for Labor Law Violations May Be ‘Purely Hypothetical’

​While the U.S. Department of Labor (DOL) increased by 2 percent its maximum penalties for labor law violations, effective Jan. 2, the DOL rarely applies these maximums. The greater risk is for employers that rely on foreign labor. They could be blocked from participation in visa programs, immigration attorneys say.

The increased maximum penalty for willfully replacing American employees with H-1B visa workers--which rose to $52,641 from $51,588--"is purely hypothetical," said Mary Pivec, an attorney with Pivec & Associates in Woodbridge, Va. She knows of no case where the DOL determined that an employer had willfully replaced a U.S. worker with an H-1B worker. H-1B visas are for professional occupations requiring at least a bachelor's degree or graduate degree.

Abuse of the H-1B program has been alleged in private lawsuits, such as against the University of California, San Francisco. However, a widely publicized lawsuit brought against Disney contractor HCL America, alleging abuse of the H-1B program, was thrown out in 2016.

The DOL often penalizes employers that seek visas for violations of notice/posting, record-keeping and wage payment obligations, Pivec said. Such employers' failure to fulfill the notice/posting requirements also may result in the DOL blocking them from participating in visa programs, she noted.

[SHRM members-only how-to guide: How to Sponsor an Individual for an H-1B Visa]

If the DOL bans an employer dependent on foreign labor from recruiting foreign talent, the company could fold, said Kevin Lashus, an attorney with FisherBroyles in Austin, Texas.

Immigration Penalties

DOL penalties nevertheless sting. The fines for the unlawful rejection of a U.S. worker in favor of an H-2A and H-2B employee are now over $16,000 per violation, Lashus noted. He predicted that the potential fines assessed this year for violating rules applying to H-2B visas would eclipse any potential fines for H-1B visas.

H-2A visas are for temporary agricultural positions. The H-2B visa program allows employers to bring foreign nationals to the United States to fill temporary, low-skilled nonagricultural jobs, primarily in landscaping, forestry, hospitality and recreation.

The DOL has increasingly focused on comparing wages paid to H-1B workers with other employees in similar roles, said Andrew Greenfield, an attorney at Fragomen in Washington, D.C. H-1B program rules prohibit employers from depressing U.S. wages by paying H-1B workers less than similarly situated employees, he noted.

Greenfield cautioned that employers "would be wise to ascertain the extent of any wage disparities between H-1B and similar employees so that they are prepared to defend such disparities during an investigation or adjust wages."

Reduction Factors for OSHA Penalties

The Occupational Safety and Health Administration (OSHA) also does not usually impose maximum penalties, according to Eric Conn, an attorney with Conn Maciel Carey in Washington, D.C.

The largest increases in OSHA penalties were for violations that already had the highest fines, such as for willful and repeat violations.

The penalty for such violations jumped by $2,587 to $129,336 from $126,749. In the last three years, the maximum fine for willful and repeat violations has nearly doubled, rising $60,000 to $129,336 from $70,000, Conn noted. In 2016, OSHA announced that its maximum penalties had not been raised since 1990 and increased the maximum fine for willful or repeated violations to $124,709 from $70,000 to make up for "long lost ground to inflation."

OSHA can apply numerous reduction factors before fines are assessed, Conn said. For example, small employers usually get a size discount. Employers with prior in-compliance OSHA inspections receive a good-history reduction. Businesses that cooperate with OSHA during inspections are credited for acting in good faith.

So, despite an increase in the maximum penalty for serious violations from 2015 through 2017 to $12,615 from $7,000, the average fine for such violations last year was just $3,600, Conn noted. The penalty for serious violations rose Jan. 2 to $12,934 for each violation.

He said that OSHA is much more likely to impose maximum penalties when it is citing large employers with a history of violations or when there has been a fatality.

Other DOL Penalties

Other DOL penalty increases included the following maximum fines:

  • $113,894, up from $111,616, per willful or repeated violation of child labor standards that causes the serious injury or death of a minor.
  • $20,521, up from $20,111, per violation of the Employee Polygraph Protection Act.
  • $1,964, up from $1,925, per repeated or willful violation of minimum wage and overtime requirements.
  • $169, up from $166, per willful violation of the Family and Medical Leave Act's posting requirement.

On Nov. 2, 2015, the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 was enacted to make penalties more effective, the DOL noted. The law requires agencies across the federal government to adjust their penalties for inflation not later than Jan. 15 of each year. 


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