bigstock-Passports-31148May 29, 2009

As the list of companies receiving TARP funds has exceeded 550 institutions across the country, human resource managers and company executives have made it unambiguous that they are concerned about H-1B compliance. Under the Employ American Workers Act, (EAWA) signed into law this year, TARP fund recipients will be treated as H-1B dependent employers when they hire foreign nationals on H-1B visa. This law does not include those employed by the TARP fund recipients on, or before February 16, 2009. The normal exemption for foreign nationals receiving a salary of $60,000 or higher, or having a relevant master’s degree is not available for companies receiving TARP money.

The reason that many of the 550 plus companies should be careful is twofold: The first challenge large employer’s face is compliance with the H-1B dependant attestations without utilizing an elaborate and expensive tracking system; the second is applicability of The False Claims Act on TARP funds recipients.

H-1B Dependent Requirements

H-1B dependent employers must make certain promises and must be able to demonstrate compliance if audited by the Department of Labor. TARP fund recipients who file H-1B petitions:

  • Must not displace similarly employed U.S. Workers within 90 days of fling the H-1B petition
  • Must not place the foreign national at another site where similar displacement occurs and must make a bona fide inquiry of such third party site displacement
  • Must take good faith steps to recruit U.S. workers at wages at least equal to the wage offered to the H-1B worker
  • Must offer the job to U.S. workers who apply if they are equally or better qualified.

Take Bank of America for example, a TARP fund recipient. With an employee base exceeding 176,000 and offices in the U.S. and 150 countries, this employer must have a policy system in place to confirm that H-1B hires are not displacing similarly employed U.S. workers within the driving distance of the work location of the H-1B worker. There are two components to the displacement rule. The first is “lay off” of U.S. worker(s), and the second is “essentially equivalent jobs.”

The later deals with comparing the laid off worker’s job duties and place of employment to the H-1B worker’s. If the H-1B worker will be working at a location other than the employer’s job site, they must also comply with similar secondary site displacement requirements. In addition, the employer must make a bona fide effort to recruit U.S. workers using industry-wide standards and must offer the job opportunity to equally or better qualified U.S. workers. Keeping in mind that the definition of “U.S. workers” encompasses a much larger pool than U.S. citizens, it also includes U.S. permanent residents and other categories of workers authorized to work in the U.S.

The False Claims Act Trap

Sen. Charles Grassley (R-Iowa), one of the most outspoken opponents of the H-1B program already suggested the use of the False Claims Act against TARP recipients for purported violations of the Reinvestment Act. The False Claims Act (“FCA”) provides, in pertinent part, that: Any person who knowingly presents to the U. S Government a false or fraudulent claim for payment or approval is liable for a civil penalty of not less than $5,000 and not more than $10,000, plus 3 times the amount of damages which the Government sustained.

The False Claims Act can certainly be applied for TARP recipients who were found to have violated the H-1B requirements. Currently the law requires CEOs and CFOs to provide written certification of compliance that they meet the requirements of the Reinvestment Act (including the TARP H-1B restriction) to receive government financial assistant. Publicly-traded entities are required to file this certification with the SEC. Private Companies are required to file the certification with the Secretary of the Treasury.


Given the high stakes involved, TARP fund recipients are rightfully cautious when filing H-1B petitions and must have all the procedural steps necessary to confirm full compliance. Such companies must adopt a written corporate compliance policy for H-1B filings. The requirements imposed on H-1B dependent employers were never intended to apply to such large corporations. It was designed for companies that have a propensity for hiring H-1B workers with 15 % or more of their workforce composed of non-exempt
H-1Bs. It was also intended to be punitive and to apply to willful violators of the H-1B program. In the pre-TARP requirements, a company, such as Bank of America, would have had to hire over 20,000 H-1B employees before it would be required to comply with the displacement restrictions currently imposed. The implementation of the H-1B TARP regulations is like fitting a square peg in a round hole. It can be done, but it requires a skilled tradesman.