Department of Labor Orders Globaltek to Pay Back Wages for H-1B Violations

The U.S. Department of Labor orders Globaltek to pay back wages to employees after an investigation caught the company scamming the H-1B process. Globaltek hired foreign workers and had their H-1B applications approved at one rate, but paid a much lower rate on arrival, the Department of Labor claims. The Department of Homeland Security suspects fraud is a factor in as many as 20,000 H-1B applications filed annually.

The U.S Department of Labor cracked down on an application development company in New Jersey, ordering it to pay $271,000 in back wages to employees and saying the company had scammed the H-1B visa application process and cheated its employees.

A 10-month investigation by the DOL found Globaltek had hired foreign workers, mostly from South Asia, and obtained H-1B visas based on one wage but paid a much lower wage on arrival, a DOL spokesperson said. Globaltek underpaid workers between $500 and $25,000 between January of 2006 and January 2008, she said.

The H-1B visa process is designed to ensure that foreigners admitted to this country to work high-tech jobs will be paid the same wage rates that are paid to U.S. workers for the same types of work. H-1B applications are filed by employers, who must include descriptions of the work to be done and the wages it will pay.

Abuse and misplaced anger

Enforcing H-1B provisions is vital in order to protect the workers in question and to "ensure that American workers are not undercut by employers underpaying temporary foreign workers," Joseph Petrecca, director of the Wage and Hour Division's Northern New Jersey District Office, said in a statement announcing the DOL enforcement. Calls to Globaltek requesting a comment were not returned.

Employers frequently abuse the system, however, with fraudulent descriptions of the work to be done and inflated salary figures, according to according to Ron Hira, assistant professor of public policy at Rochester Institute of Technology and co-author of "Outsourcing America."

"There are a lot of legal loopholes that allow employers to not pay the prevailing wage," Hira said. "It's a misconception that they have to test the labor market in their area to establish the prevailing wage, for example, or search for a U.S. worker before they bring in one from overseas."

An audit of H-1B applications released earlier in October suggests that one in five H-1B visas are either fraudulent or contain technical violations. The audit was done at the request of H-1B critic Sen. Chuck Grassley (R-Iowa) and released as the H-1B BFCA Benefit Fraud & Compliance Assessment from the Office of Fraud Detection and National Security, which is part of the USCIS (U.S. Bureau of Citizenship and Immigration Services). USCIS is part of the Department of Homeland Security.

Click here to read more about the USCIS investigation of H-1B abuse.

Based on the percentages in the 246 applications analyzed during the audit, as many as 20,000 H-1B visa petitions filed between October 2005 and April 2006 could be fraudulent or seriously flawed, the report estimated.

Though the numbers are alarming, the anger H-1B visa abuse generates is often misdirected toward high-tech workers who use them to come to the United States, Hira said. "If we had reform in the system it would help the guest workers," he said. "They wouldn't live in fear and they wouldn't be exploited as often. There are plenty of cases of their being underpaid and exploited."