Over the past few weeks, companies throughout the United States have noticed a sharp increase in audits of PERM labor certification applications. Most of the audits challenge the minimum education and experiential requirements set by employers when they recruit for a permanent position. Let us explain.

When we prepare a labor certification case, we look to the number of years of combined education and experience that the Department of Labor (DOL) considers “normal to the occupation.” The DOL maintains an online system (“O*NET”), which classifies virtually every occupational group in existence and then assigns a “job zone” code to it. These codes translate into a formula that allows for a maximum number of years of education and experience. So, for example, a job zone “4” allows for no more than a Bachelor’s degree and two years of experience. In contrast, a job zone “5 “ allows for a Master’s degree and up to six years of experience, or a Bachelor’s and up to eight years of experience.

When DOL re-engineered the job classifications several years ago, many professional and managerial jobs were downgraded to job zone 4. A senior advertising account manager, for example, is classified as a job zone 4 occupation, the same as an entry level assistant account executive position. Similarly, most computer science positions have also been downgraded to job zone 4.

What difference does all of this mean to you? If your normal hiring requirement for a position is a Bachelor’s degree and five years of experience, but the DOL classifies that position as job zone 4, you will have to make a choice. Either you can file the PERM application using your normal criteria, and likely face an audit for exceeding what the DOL claims is “normal” for the job; or you can “downgrade” the position by lowering the requirements.

Many employers will choose to stay with their normal, bona fide hiring requirements. Not only will they do that because they are adamant about maintaining high standards at their companies, but also because they know that ultimately, the difference will have a great impact on how quickly an employee may become a lawful permanent resident of the United States. That’s because jobs that require less than a Bachelor’s degree and five years of experience, or less than a Master’s degree, fall into the far more backlogged “EB-3” immigrant preference category, rather than the much faster EB-2 advanced degree professional category. The difference between the two classifications is dramatic, with an additional wait of five or more years in the EB-3, rather than the EB-2, category.

For the first two and a half years of PERM, the DOL generally accepted an employer’s formulation of job requirements, whether they exceeded the “normal” requirements, or not. But, in the past few weeks all of this has changed, and it’s becoming more and more apparent that the DOL has decided to put its resources into audits, both those that challenge employer requirements and those that are simply random. With only 30 days to respond, an employer must document all of its recruitment efforts and results for a random audit, and, in the case of a pointed audit, it must also establish the “business necessity” reasons why its requirements exceed job zone maximums.

What’s the practical import of an audit? Delays and more legal and administrative work. An audit might delay the approval of a case by as much as 10 or 11 months. And a rebuttal must show that the hiring requirements are necessary to perform the duties of the position and are consistent with your hiring requirements for other employees similarly situated.

More News on Social Security No-Match Letters

Just two months ago we advised you that the Department of Homeland Security (DHS) had finalized new regulations targeting employers who ignore “no-match” notices issued by either the Social Security Administration (SSA) or DHS. These “no-match” notices advise that a combination of a worker’s name and social security account number do not match SSA records. On October 10, 2007, a federal district court in California granted a preliminary injunction in AFL-CIO v. Chertoff, preventing DHS from implementing this rule. Unless a higher court reverses the decision, the regulations will not go into effect. Instead of appealing the decision, DHS might choose to rewrite the regulations in a way that would meet the court’s objections to the original rule. If DHS chooses to engage in “revised rulemaking,” this would likely not be completed until after a new Administration is in place following the 2008 elections.

What is the significance of the “no-match” court ruling?

The court’s ruling does not prohibit SSA from moving ahead with a no-match letter mailing to employers for tax purposes, just as it has done for the last decade, and we expect the letters to be sent in the coming months. The ruling does, however, bar SSA from linking that mailing to the now enjoined “constructive knowledge” 90 day enforcement scheme. Please refer to our Client Alert of August 16, 2007, for an explanation of the constructive knowledge rule.

May an employer ignore these no-match letters?

As we discussed in our August 16, 2007, Client Alert, employers are subject to civil and criminal penalties when they are found to have either “actual” or “constructive” knowledge that an employee is not authorized to work in the United States. Even without the benefit of the blocked regulations, DHS will continue to take the position that the receipt of a no-match letter is a factor to be considered in determining whether an employer acquired constructive knowledge that it has been employing an unauthorized person. In its decision granting the preliminary injunction, the court acknowledged that a no-match letter can sometimes trigger constructive knowledge, depending on the circumstances.

It would be a prudent step for employers to now conduct their own internal I-9 audits to be certain that every employee has a properly completed I-9 form and appears to be work-authorized. We also recommend that employers who receive no-match letters inquire further into the matter. This can include checking its own records to see if it misspelled a worker’s name or recorded the social security number incorrectly, asking the employee for an explanation, and asking him to contact SSA to correct the agency’s records. In cases where an employee is unwilling or unsuccessful in correcting the records, you should consult with us to discuss the matter further.

Immigration Legislative Developments and the Specter of New Filing Fees

Immigration reform legislation has failed in Congress once again this year, with no relief in sight for increasing the very inadequate H-1B quota or the backlogged employment-based permanent residence quotas. Misstatements and misperceptions about H-1Bs have become the order of the day, and it is difficult for advocates of increased H-1B numbers, like Bill Gates and NYC Mayor Michael Bloomberg, to get much positive attention. In fact, the debate seems to be going backward with recent Senate action calling for an additional H-1B filing fee of $3500.

On October 25, 2007, the Senate approved by a voice vote the Grassley-Sanders amendment (H.Admt. 3396) to H.R. 3043. This amendment would add yet another filing fee for each H-1B petition, this one for a whopping $3500. (The additional fee would be only $1750 for employers with not more than 25 employees, and public hospitals would be exempt, but universities, both public and private, and research institutions, would be subject to the full fee.) The moneys raised by this fee would be used to create college and graduate level scholarships for worthy U.S. citizens and permanent residents in the fields of math, computer science, engineering, and health care.

The goal of offering $15,000 per year scholarships to some U.S. students is, of course, a worthy endeavor, but one questions both the fairness and efficacy of financing this nationwide program on the backs of H-1B employers. These employers are already paying $2320 in base H-1B filing fees (plus another $1000 for 15 day Premium Processing service) for each H-1B professional.

American businesses using the H-1B program to augment their work forces with the best and brightest foreign nationals should not have to bear the burden of curing the ailments of the U.S. educational system. We note that this new “scholarship” fee comes on top of other fees imposed just a few years ago, to the tune of $1500 for each filing to train and educate U.S. workers, and another fee of $500 to fight fraud. The problem of a shortage of qualified, talented, skilled U.S. professionals in a wide variety of fields is deep rooted and will require a national commitment far in excess of the modest sums that will be raised from this new fee. A cynic might wonder whether the fee is more of a penalty, meant to discourage the use of the H-1B program, rather than a real attempt to fix the U.S. educational system.

We will keep you up to the minute on what happens with this legislation, as well as with other legislative proposals.

The H-1B Filing Season Will Soon Be Here

As you probably know, the next allotment of H-1B visas will become effective on October 1, 2008. Filings will begin on April 1, 2008, and we expect the 65,000 quota to be fully subscribed on that first day, just as it was in 2007. The extra 20,000 H-1Bs allotted to U.S. advanced degree holders was exhausted in a few weeks in April 2007, and we expect those to go quickly in April 2008 as well.