Can H-1B ‘Benching’ Lead to Criminal Indictment?

The short answer is yes. Benching H-1B workers can lead to a criminal visa fraud indictment. Employers who hire H-1B employees and fail to pay the wages indicated in the Labor Condition Application during a work stoppage may be violating the terms set forth in the Department of Labor regulations.  The practice of “benching” H-1B employees during a work stoppage is disallowed in the immigration regulations on wage obligations for H-1B employees.

U.S. businesses use the H-1B program to employ foreign workers in specialty occupations that require theoretical or technical expertise in specialized fields, such as scientists, engineers, or computer programmers. As part of the H-1B program, the Department of Homeland Security (DHS) and the Department of Labor (DOL) require U.S. employers to meet specific labor conditions to ensure that American workers are not adversely impacted, while the DOL’s Wage and Hour Division safeguards the treatment and compensation of H-1B workers.  U.S. employers are also required to list the actual and accurate work location on the Labor Certification.

Recent years have brought multiple investigations involving companies that sponsor primarily H-1B non -immigrants, or temporary workers in specialty occupations that require particular expertise. The companies that are the subject of the investigations have asserted that the foreign workers have been brought to the U.S. to fill existing vacancies. However, the companies allegedly have not always had jobs available for these workers, thereby placing them in non-pay status after they arrive in the United States. In some cases, the foreign workers have allegedly been placed in jobs and locations not previously certified by the Department of Labor, displacing qualified American workers and violating prevailing wage laws. The companies and foreign workers have allegedly submitted false statements and documents in support of their visa petitions. The false statements and documents were mailed or wired to state and federal agencies in support of the visa applications. The companies are now suspected of visa fraud, mail fraud, wire fraud, money laundering and conspiracy.

Take the case of Dibon Solutions, a technology consulting company in Texas, whose executives were arrested for visa fraud charges. According to the indictment, Dibon recruited foreign workers in India and sponsored them for H-1B visas to work at the firm’s headquarters, but required them to provide consulting services to third-party companies located elsewhere, and only paid them an hourly wage for the times they worked. “The conspirators earned a substantial profit margin when a consultant was assigned to a project and incurred few costs when a worker was without billable work,” the indictment read.

Vision Systems Group, a New Jersey corporation, with a branch office in Coon Rapids, Iowa, was also indicted in a ten count federal indictment that included one count of conspiracy, eight counts of mail fraud, and one count of ‘Notice of Forfeiture’ in the amount of $7,400,000.

Then there is the case of Nilesh Dasondi, CEO of a New Jersey software company called Cygate, who brought six tech workers from India on the promise of high-paying jobs. Once they got here, he told them to hit the streets and look for work elsewhere. But he also charged them to stay on Cygate’s payroll, so they could legally remain in the United States. Over the three years, the six of them paid him $504,000.

To realize the seriousness of these criminal investigations, if convicted, the maximum sentences for the above charges are:

• Conspiracy: 5 Years in Prison and a $250,000 fine
• Mail Fraud: 20 Years in Prison and a $250,000 fine
• Wire Fraud 20 Years in Prison and a $250,000 fine
• False Statement in Immigration Matter: 10 Years in Prison and a $250,000 fine

Below are steps that IT consulting business owners can take to avoid the mistakes of indicted IT companies:

1. When you sign a Labor Condition Application, you are attesting that the representations you have made therein are true and accurate. False representations can lead to criminal prosecution. It is important to document any third-party work locations when filing the LCA.
2. If the work location changes after a petition has been approved, you must file a new work location LCA as soon as possible.
3. You must pay your H-1B employees the pay rate submitted on the LCA and on the I-129 petition. H-1B employees must be paid an annual salary, even in times of no productivity. “Benching” is not allowed.

The consulting and staffing industry provides an important service to other businesses. This model allows businesses to obtain unique skills and knowledge in short supply and alleviate temporary shortages of U.S. professionals in specific occupations. The consulting industry unfortunately is viewed in a negative light when companies such as Dibon Solutions are found to have misrepresented the specifics of the job offer and employment relationship. Consulting companies should clearly articulate the actual work location, project details, and succession of contracts in any H-1B visa petition to avoid any potential liability for immigration fraud.