H-1B Compliance Guide: Key DOL Rules Employers Often Miss

H-1B is perhaps the most common immigration matter employers encounter. Many employers, with good reason, view H-1B as a one-off proceeding leading up to the employment of the H-1B worker: identify the role, determine the worksite and salary, obtain the Labor Condition Application, establish that the position qualifies as a specialty occupation, and file the petition. This assumption is not entirely misplaced, but a lack of information on compliance following the approval is prevalent, a gap that could lead to inadvertent violations.

To provide guidance, the Department of Labor has issued a series of roughly 30 fact sheets addressing different aspects of H-1B compliance. What is striking about these fact sheets is not the complexity of the rules themselves (many are straightforward), but how operational they are. They may regulate payroll practices, work assignments, and documentation, the areas where employers tend not to think in immigration terms. In a regulatory landscape where H-1B policies continue to evolve, it’s a recommended practice to revisit these foundational requirements. A few more widely applicable ones will be listed in this article.

Guaranteed wage

The H-1B employer must pay its H-1B worker(s) at least the “required” wage which is the higher of the prevailing wage or the employer’s actual wage (in-house wage) for similarly employed workers. Many employers may have heard of the former, but the “actual wage” component can often be less appreciated. Actual wage is the rate paid by the employer to all individuals with experience and qualifications similar to the H-1B nonimmigrant’s experience and qualifications for the specific employment in question at the place of employment. In other words, it’s the company’s internal pay rate for comparable employees doing the same work. 

This is particularly important for setting the offered wage of core business roles where multiple employees perform substantially similar functions. In those settings, wage disparities, whether intentional or not, can raise compliance concerns if the H-1B worker is paid less than comparable U.S. workers, even when the rate is above the prevailing wage. As a practical matter, employers should document internal wage rates for comparable workers at the time of filing to ensure consistency and defensibility.

Wages in non-productive times

One of the most misunderstood aspects of H-1B compliance is that the wage obligation is not tied to productivity but to the employment relationship. If an employee is designated as full-time on the LCA, the employer is committing to pay a full-time wage, generally understood as 40 hours per week, and never less than 35, regardless of whether there is sufficient work to perform. If the position is designated as part-time, the employer must still pay for the number of hours specified on the Form I-129 (or within the approved range).

This becomes particularly important in project-based roles or early-stage companies where workload can fluctuate. The choice to pause pay during downtime, something that may be permissible for independent contractors or even certain U.S. workers depending on classification, is generally incompatible with H-1B rules.

Wage deductions

Employers often assume that if an employee agrees to certain deductions or cost-sharing arrangements, those agreements will be respected. Under the H-1B framework, that assumption is dangerous. The required wage must be paid “free and clear.” This principle shows up repeatedly across DOL guidance, including in the context of exempt worker compensation, where even benefits or indirect compensation cannot be counted toward required wage thresholds.

In practice, this means that many costs that might otherwise be negotiable, particularly those that benefit the employer, such as certain filing or business expenses, cannot be shifted to the employee if doing so would effectively reduce wages below the required level.

The challenge is that these arrangements often arise informally. A reimbursement here, a deduction there. Over time, they accumulate into a compliance problem that only becomes visible when audited. Employers should clearly delineate which costs are employer-stemmed and review any deduction or reimbursement practices to ensure they do not impact the required wage.

Worksite and place of employment

There are many scenarios where an employee ends up performing work at various locations. Companies may routinely move employees between offices, assign them to client sites, or shift them to hybrid or remote arrangements. Under the H-1B framework, however, they are more than operational decisions.

As a general rule, each “place of employment” must be covered by a valid LCA. The DOL’s guidance effectively walks employers through determining whether a new LCA is required. The challenge is that they are rarely integrated into workforce planning. By the time the issue is identified, the employee has often already relocated.

Not every instance of work performed at a different location triggers a new LCA. Certain short-term or incidental activities fall outside the definition of a “worksite.” For example, no new LCA is required where an H-1B worker travels temporarily for employee development (such as training) or to carry out the inherent duties of the role, if the presence is brief (generally no more than five consecutive workdays for frequent travel or ten for occasional travel) and job-driven. Classic examples include a software engineer traveling to troubleshoot client issues, a sales representative visiting customers within a territory, or a manager overseeing off-site personnel. 

Employers may also rely on the “short-term placement” provision, which allows temporary placement at a new worksite without filing a new LCA under specific conditions. The placement generally cannot exceed 30 workdays within a one-year period (with a possible extension up to 60 workdays if the employee maintains ties to the primary worksite, such as a dedicated workstation and residence near that location).

These distinctions matter even more today, where remote and flexible work have blurred the lines of where work actually happens. As a practical matter, employers should build location planning into their H-1B process before allowing remote work, reassignments, or client-site placements, so that each arrangement is reviewed against LCA coverage or applicable exceptions. Having that framework in place upfront helps prevent routine business decisions from turning into compliance issues later.

Recordkeeping

H-1B employers should maintain H-1 B-related records and be ready to provide them to the Wage and Hour Division upon request. The packet should include employee information (name, address, occupation, and social security account number) and payroll information (rate of pay, hours worked, gross pay, deductions, and net pay) for both H-1B and comparable workers, benefits documentation, the LCA and wage determinations, the method used to set the actual wage, proof of LCA notice compliance, and, where applicable, records reflecting corporate structural changes.

In many investigations, these records become the primary basis for assessing compliance. They are used to evaluate wage practices, internal consistency, and whether required procedures were followed. Employers should ensure that HR personnel are properly trained on H-1B-specific recordkeeping requirements and maintain these records in a centralized and organized manner, so they can be produced quickly and clearly demonstrate compliance.

What are H-1B “exempt workers”?

You may have heard about an “exempt” H-1B worker. An H-1B worker is considered exempt if they either earn at least $60,000 annually or hold a master’s degree or higher in a field related to the position. 

In practice, it is most relevant for H-1B-dependent employers and willful violators. An H-1B-dependent employer is one whose workforce includes a high proportion of H-1B workers, as defined by statute based on company size and headcount. A willful violator, by contrast, is an employer that has been found by a government agency to have willfully failed to comply with H-1B requirements or to have misrepresented a material fact, typically within the past five years. These employers are subject to heightened obligations when filing LCAs. They must make additional attestations, including that they have not displaced U.S. workers, have taken good faith steps to recruit U.S. workers, and have offered the position to any equally or better qualified U.S. applicant. These obligations can significantly increase the compliance burden.

When an employer subject to these heightened requirements hires only exempt H-1B workers under a given LCA, it is relieved from certain additional obligations, specifically those relating to non-displacement and recruitment of U.S. workers. In that sense, exempt workers function as a limited carve-out from otherwise more restrictive compliance requirements. Of course, it does not eliminate core H-1B requirements: employers must still comply with wage obligations, benefits parity, recordkeeping, and other standard rules. 

Investigation and enforcement

The H-1B program responsibilities are divided among various agencies. While lesser known, enforcement of H-1B rules concerning wages and job/worksite compliance is led by the Department of Labor’s Wage and Hour Division (WHD). While the WHD cannot initiate investigations arbitrarily, the statutory triggers are relatively broad, including complaints from aggrieved parties, credible information from third parties, prior findings of willful violations, or other circumstances giving the agency reasonable cause to believe noncompliance exists.

Once an investigation is opened, the WHD focuses on whether the employer has complied with the material terms of the LCA. This may include verifying that the H-1B worker was paid the required wage and that the work was performed at the locations covered by the LCA. If violations are found, the consequences can be significant and cumulative. The WHD may assess civil monetary penalties on a per-violation basis, order the payment of back wages, and impose other remedies depending on the nature and severity of the violation. In more serious cases, particularly those involving willful violations or patterns of noncompliance, employers may be debarred from participating in the H-1B program and other immigration programs for a period of at least one year. 

In response, employers may request a hearing before an administrative law judge (ALJ) within 15 days following a determination, and subsequent review by the Administrative Review Board is also possible within 30 days of the ALJ decision. However, these procedures are typically focused on reviewing the agency’s findings rather than curing underlying compliance gaps.

Because violations are not always readily identified or corrected, even an isolated issue can trigger an investigation that uncovers broader, previously undiscovered compliance problems. Employers should approach compliance with the expectation that their practices, particularly around wages, worksites, and documentation, may eventually be examined in detail. A well-structured compliance system not only reduces the likelihood of violations but also ensures that, if reviewed, the employer can clearly and credibly demonstrate adherence to the program’s requirements.

Ultimately, H-1B compliance is less about navigating complex legal standards and more about consistently aligning everyday business practices with regulatory expectations. Many of the issues highlighted above do not arise from deliberate noncompliance but from routine decisions made without considering their immigration implications. Taking a structured, proactive approach to wages, work locations, and documentation can significantly reduce risk and avoid issues that often only come to light during an investigation.

If you have questions about how the H-1B modernization rule affects your hiring or need help with a case, contact Cho Law LLC – we are here to help ensure you get it right.

Disclaimer: This article provides general information and should not be construed as legal advice. For guidance tailored to your specific circumstances, please consult with a qualified immigration attorney.