ALEUTIAN CAPITAL PARTNERS, LLC, Plaintiff-Appellant, –v.– EUGENE SCALIA, sued in his official capacity, SECRETARY, UNITED STATES DEPARTMENT OF LABOR, UNITED STATES DEPARTMENT OF LABOR, WAGE AND HOUR DIVISION, UNITED STATES DEPARTMENT OF LABOR EMPLOYMENT STANDARDS ADMINISTRATION, UNITED STATES DEPARTMENT OF LABOR, ADMINISTRATOR, UNITED STATES DEPARTMENT OF LABOR EMPLOYMENT STANDARDS ADMINISTRATION WAGE AND HOUR DIVISION UNITED STATES DEPARTMENT OF LABOR
No. 17-3810
United States Court of Appeals For the Second Circuit
September 22, 2020
August Term, 2018 (Argued: February 6, 2019)
B e f o r e :
POOLER, LOHIER, and CARNEY, Circuit Judges.
Aleutian Capital Partners, LLC (“Aleutian“) appeals from the September 29, 2017 judgment of the United States District Court for the Southern District of New York (Ramos, J.), affirming a decision by the Administrative Review Board (“ARB“) of the United States Department of Labor (“DOL“) concluding that Aleutian violated certain statutory and regulatory requirements governing the H-1B temporary foreign worker program (the “H-1B Program” or the “Program“), and ordering Aleutian to pay back wages to two Program workers. Aleutian challenges this order, arguing that it actually paid one of the workers the amount that he was owed during the term of his employment and that any underpayment in the first year fell outside the applicable statute of limitations. As to the second employee, Aleutian argues that DOL was not authorized to investigate the terms of her employment in the first place because she did not herself file a complaint with DOL, and the only complaint that was filed did not allege any H-1B Program violations specifically as to her employment. We reject both challenges.
AFFIRMED.
CHRISTOPHER C. HEISENBERG, Hinckley & Heisenberg LLP, New York, N.Y. (Michael T. Stolper, The Stolper Group, P.A., New York, N.Y., on the brief), for Plaintiff-Appellant.
BENJAMIN H. TORRANCE, Assistant United States Attorney (Natasha W. Teleanu, Assistant United States Attorney, on the brief), for Audrey Strauss, Acting United States Attorney for the Southern District of New York, New York, N.Y., for Defendants-Appellees.
Aleutian Capital Partners, LLC (“Aleutian“) appeals from the September 29, 2017 judgment of the United States District Court for the Southern District of New York (Ramos, J.) affirming a decision by the Administrative Review Board (“ARB“) of the United States Department of Labor (“DOL“). In that decision, ARB ordered Aleutian, a private equity investment group in New York, to pay back wages to an employee and a former employee, both of whom it had hired under the H-1B temporary foreign worker program (the “H-1B Program” or the “Program“).
This appeal arises from a 2013 complaint filed with DOL by one such H-1B employee—Shakir Gangjee (“Gangjee“)—who alleged that Aleutian violated Program standards by underpaying him for several months of his approximately one-and-a-half year period of employment there, from August 2011 through December 2012. The ensuing DOL investigation showed that the monthly salary payments Gangjee received during that period frequently fell below the amount he was due under H-1B Program standards but, because Aleutian overpaid Gangjee in other months, the end result was that Gangjee received in total compensation for 2012 somewhat more than what the Program required.1 DOL nonetheless determined that applicable regulations called for Aleutian to pay Gangjee back wages for each of the months in which it failed to remit in wages the full amount due, regardless of any bonuses or overpayments that it made in other months. See App‘x 37-38 (citing
Aleutian challenges this interpretation of the relevant statute and regulations, arguing that because by the end of the year it paid Gangjee the wage specified in its H-1B Program application—in fact, it paid Gangjee more than that wage—DOL cannot order it to pay any back wages at all. This argument failed in the agency proceedings and in the District Court, and we now affirm the District Court‘s judgment. Agency regulations duly promulgated under the statute unambiguously require H-1B employers to make wage payments in “prorated installments,” “no less often than monthly.”
Additionally, during its investigation of Gangjee‘s complaint, DOL requested that Aleutian provide wage documentation as to any other H-1B Program worker that it had employed since January 15, 2012. In response, Aleutian produced records corresponding to its employment of Minh-Thuong Horn (“Horn“), its one other H-1B employee, whom Aleutian hired in 2010 and whose employment with the company ended in early January 2013. Reviewing these records, the agency discovered that Aleutian underpaid Horn for her work in the month of December 2012, and so ordered the company to pay her back wages for that month.
On appeal, Aleutian contests the agency‘s authority to investigate its employment of Horn, who had not herself filed a complaint. Aleutian urges us to impose limits on DOL‘s investigatory authority by holding that DOL‘s investigation into an H-1B Program complaint may not exceed the specific allegations of misconduct made in that complaint—which would mean that the agency stepped beyond the bounds of its authority when it investigated Aleutian‘s employment not only of Gangjee, but also of Horn. We decline to adopt the proposed restriction. Rather, we affirm DOL‘s authority to investigate Aleutian‘s compliance with the H-1B Program‘s wage requirement as to Horn, as well as to
BACKGROUND
I. Legal Framework
The
Our focus here lies primarily on those statutory and regulatory provisions that establish the amount of wages an H-1B Program employee is due and when those wages must be paid. As to the amount, an employer seeking to hire under the H-1B Program must commit, in a Labor Condition Application (“LCA“) filed with DOL, to paying the prospective employee at the “required wage rate.”
Also important for our purposes is the fact that the statute creates an initial presumption of an application‘s acceptability: So long as DOL does not find that an LCA is “incomplete or obviously inaccurate,” it must certify the LCA within seven days of receipt.
Should the Secretary find that an employer failed to meet a specified condition or made a material misrepresentation in its LCA, section 1182(n)(2) authorizes the Secretary to impose administrative remedies. Thus, as relevant here, “[u]pon determining that an employer has failed to pay wages” at the wage level specified in the LCA, the agency “shall assess and oversee the payment of back wages” to the affected H-1B Program employee in an amount “equal to the difference between the amount that should have been paid and the amount that actually was paid.”
We evaluate Aleutian‘s arguments against this legal landscape.
II. Factual Background3
Aleutian is a private equity investment group established in 2003 and operating in the State of New York. Beginning in 2010, and continuing through 2013, Aleutian employed two H-1B Program employees: Horn and Gangjee.
Horn was Aleutian‘s first H-1B Program employee: In March 2010, Aleutian submitted an LCA to support hiring her as a market research analyst. In that LCA, Aleutian represented that it would pay Horn an annual salary of $42,453—an amount that it represented as the prevailing wage for market research analysts. Although for the vast majority of her tenure, Aleutian compensated Horn monthly and at the duly prorated amount of $3,537.75, in December 2012, the company paid her only $350. (It also made a $250.73 contribution to her healthcare plan in that month.) Then, on January 2, 2013, Aleutian terminated Horn‘s employment.
In August 2011, Aleutian submitted a second LCA, designed to secure Gangjee‘s employment as a financial analyst. It represented in the LCA that the prevailing wage for financial analysts was $62,566, but committed to paying Gangjee an annual salary of $65,000, meaning his prorated gross monthly wages should have been $5,416.67. Executives at Aleutian orally outlined to Gangjee a different agreement, however, under which Gangjee‘s actual monthly compensation amounted to the sum of $3,000 in “base pay” plus a “bonus” totaling 3% of Aleutian‘s gross revenues for the month. In other words, if Aleutian received no revenue in a given month, Gangjee received no “bonus” component of his pay and would be paid only $3,000, well
For the 17 months that Gangjee worked for Aleutian, he was paid the amounts that we set out in the margin.4 As is apparent, some total monthly payments fell well below the LCA pro rata amount; others exceeded it. Gangjee‘s total annual compensation for 2012 was $57,509.
III. Procedural Background
On January 14, 2013, Gangjee filed a complaint with DOL, alleging that Aleutian generally “failed to pay nonimmigrant worker(s) the higher of the prevailing or actual wage,” and specifically with respect to him that, from August 6, 2011, to December 31, 2012, it failed to pay his wages as required by the H-1B Program. App‘x 35 (internal quotation marks omitted).5 Based on the complaint‘s allegations, DOL concluded that there was reasonable cause to believe that the described violations had occurred, and therefore launched an investigation. In the course of that investigation, the agency requested from Aleutian the H-1B Program documents and payroll records for all H-1B Program workers that
On January 9, 2014, almost one year later, the agency issued a notice of determination. The notice first observed that the prorated monthly installment for Gangjee‘s prevailing wage rate of $62,566 (as identified in Aleutian‘s LCA) was $5,213.82—meaning that for every month in which Gangjee was owed full wages, he was due $5,213.82. It then calculated the amount that Gangjee was actually owed for 2012, taking into account Gangjee‘s use of vacation or sick days (usage that reduced sums due to Gangjee for August and September 2012). The agency concluded that, after these modifications, Gangjee was due a total salary in 2012 of $49,370.99—an amount significantly less than the $57,509 that Aleutian actually paid Gangjee in that year.
But the agency also found that Aleutian underpaid Gangjee for each of four months in 2011 and six months in 2012.6 It calculated the deficit—i.e., the difference between the pro rata amount of $5,213.82 and the amount Aleutian actually paid to Gangjee—for each of those months and concluded that Aleutian owed him $22,713.31 for the accumulated monthly underpayments. It gave Aleutian no credit for overpayments made in any other months, notably including the two months (August and September 2012) in which it paid Gangjee when it owed him no salary.
Aleutian appealed the decision to an Administrative Law Judge (“ALJ“), urging that an employer‘s statutory “required wage obligation” under the H-1B Program should be calculated on an annual, rather than monthly, basis, and contending also that DOL lacked jurisdiction to order payment of back wages to Gangjee for 2011, and to Horn, at all. On July 9, 2014, the ALJ granted the agency‘s motion for summary decision and directed Aleutian to pay the full amount of back wages as calculated by the agency. The ALJ concluded that Aleutian was required to pay Gangjee and Horn at least one-twelfth of their annual certified salaries every month and that the failure to do so in a given month could not be excused by paying bonuses in other months. The ALJ further determined that no time bar precluded the agency from investigating the terms of Gangjee‘s employment with Aleutian more than one year before Gangjee filed his complaint. Finally, the ALJ rejected Aleutian‘s argument that Gangjee‘s complaint provided insufficient cause for the agency to investigate Aleutian‘s compliance with the H-1B Program as to Horn‘s employment, even in the absence of a complaint filed by Horn.
Aleutian next sought review of the ALJ‘s decision by the three-member ARB; the ARB affirmed the ALJ‘s order in its entirety.7 With regard to the agency‘s authority to investigate Horn‘s employment, the ARB declined to follow an Eighth Circuit decision relied on by Aleutian as a basis for limiting the agency‘s investigation in response to an aggrieved party‘s complaint to the allegations in that complaint. See Greater Missouri Medical Pro-Care Providers, Inc. v. Perez, 812 F.3d 1132, 1138-41 (8th Cir. 2015).
One ARB member (Corchado, J.) dissented in part as to the monthly payment
In June 2016, Aleutian sued DOL in federal district court, asserting claims under the
Aleutian timely appealed.
DISCUSSION
The APA requires reviewing courts to “hold unlawful and set aside agency action, findings, and conclusions found to be,” among other things, “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law,” or “in excess of statutory jurisdiction, authority, or limitations.”
The Chevron framework recognizes that “ambiguities in statutes within an agency‘s jurisdiction to administer are delegations of authority to the agency to fill the statutory gap in reasonable fashion.” Nat‘l Cable & Telecomms. Ass‘n v. Brand X Internet Servs., 545 U.S. 967, 980 (2005) (”Brand X“).8 In interpreting such a statute, Chevron thus requires that we first determine “whether the statute is ambiguous or silent on the specific question at issue.” Woods v. START Treatment & Recovery Ctrs., Inc., 864 F.3d 158, 168 (2d Cir. 2017). If we conclude that the statute is ambiguous or silent then, so long as “the implementing agency‘s construction is reasonable,” we will “accept the agency‘s construction of the statute, even if the agency‘s reading differs from what [we] believe[] is the best statutory interpretation.” Brand X, 545 U.S. at 980.
I. The H-1B Program‘s “Required Wage Obligation”
Aleutian maintains that the
As we have explained, and as the parties do not dispute, the Chevron framework governs our analysis. Accordingly, we observe at step one that the
Step two requires a closer examination of these regulations. The key criteria established by them, at least for our purposes, are that H-1B Program employees’ wages must be paid “cash in hand, free and clear, when due.”
Aleutian counters with the policy argument that this application is “unsound” because it “precludes an employer from self-remedying any deficiencies by restoring those wages to the employee.” Appellant‘s Br. at 12. That employers of H-1B Program workers cannot “self-remedy” their failure to pay their employees on time without incurring a penalty from DOL, however, is precisely the aim of the regulatory scheme: The point is to require monthly payments of a certain level, not one annual payment—certainly a reasonable requirement from the employee‘s point of view and sensible from both immigration and labor law perspectives.
Indeed, a primary goal of U.S. non-immigrant foreign worker programs like the H-1B Program is to ensure that “the employment of the foreign worker in the job opportunity will not adversely affect the wages or working conditions of similarly employed U.S. workers.”
[A]s long as Aleutian cumulatively paid at least 1/12th in January, 2/12ths in February, 3/12ths in March, etc., it would comply with the requirement that no less than 1/12[th] be paid throughout the year. If Aleutian had cumulatively paid only 5/12ths of the LCA obligation by the end of June, it would have violated the protection offered by the pro rata requirement. I agree with Aleutian that the Administrator is penalizing Aleutian for paying more than was required in the first quarter of the year.
App‘x 40. The argument has some intuitive force: If, for example, Aleutian paid Gangjee his entire annual wage for 2012 on January 1 of that year, it may seem odd that the statute would nevertheless allow Gangjee to recover back wages for the subsequent eleven months.
The monthly payment requirement, however, provides strong support for the inference that the regulatory scheme intends to provide consistent, predictable payment for H-1B Program employees and penalize inconsistency, even in the event that overpayments are made in advance. Payments must be made ”no less often than monthly.”
The District Court applied Auer deference to conclude that the ARB‘s determination that “each pay period must be viewed separately, and that no credit can be given for overpayments in certain months” was a reasonable interpretation of the DOL‘s own regulations. App‘x 24 (discussing Auer v. Robbins, 519 U.S. 452, 461 (1997)). As the Supreme Court recently clarified in Kisor v. Wilkie, however, a court should apply Auer deference only after having exhausted all of the “traditional tools of construction” to determine that a rule or regulation is “genuinely ambiguous.” 139 S. Ct. 2400, 2416 (2019). Having considered the “text, structure, history, and purpose,” id. at 2424, of the H-1B Program regulations at issue—those “traditional tools of construction“—we are of the view that section 655.731(c)(4) is not ambiguous, and Auer deference is not called for. The plain text of the regulation requires wages to be paid on time (“when due“), and “no less often than monthly,” “in prorated installments.”
II. The Permissible Scope of the Agency‘s Investigation and Payment Order
Aleutian also argues that DOL acted outside its statutory authority when it investigated and ordered payments regarding Gangjee‘s employment in 2011 and Horn‘s in December 2012. According to Aleutian, the one-year statute of limitations set forth in
A. Gangjee‘s Compensation for 2011
Because Gangjee filed his complaint on January 14, 2013, Aleutian argues, DOL‘s statutory authority allowed it to investigate underpayment and authorize back wages only as far back as January 14, 2012. We are not persuaded.
The
Section 655.806(a)(5) thus squarely addresses and allows DOL to award back wages for Aleutian‘s underpayment of Gangjee in 2011. We think it reflects a reasonable interpretation of DOL‘s statutory directive to adopt the position that, where an investigation into a timely filed complaint reveals that an employer‘s failure to conform to an LCA has resulted in a pattern of underpayment that extends earlier than the statute of limitations cut-off, DOL may assess back wages that remedy the full scope of that failure. See Brand X, 545 U.S. at 980.
Finally, relying on the Eighth Circuit‘s decision in Greater Missouri Medical Pro-Care Providers, Inc. v. Perez, 812 F.3d 1132 (8th Cir. 2015), Aleutian submits that
Although, as we noted, the
The scope of DOL‘s investigatory authority presents a question of first impression in our Circuit but, in its 2015 decision in Greater Missouri, the Eighth Circuit opined on the question. See 812 F.3d at 1138-41. In that case, an H-1B Program employee filed an “aggrieved party” complaint against her employer alleging several H-1B Program violations. Id. at 1134. The DOL investigator found “reasonable cause” to investigate only the allegation that the employer sought to recover a fee after the H-1B Program employee‘s early termination of her employment contract. Id. Based on this single alleged violation, however, the investigator—purportedly “[i]n accordance with the DOL‘s standard practice for all H-1B investigations“—“initiated a full investigation under the H-1B provisions of the [INA] . . . to see if there were [any Program] violations [as] to any employee.” Id. (emphasis added). As part of this full investigation, DOL requested—without any temporal or other limitation—all the employer‘s “H-1B documents and records, including LCAs for all of [the employer]‘s H-1B employees,” of which there were at least 45. Id. at 1134; see id. at 1135. After reviewing these records, the Secretary ultimately awarded back pay to 45 employees for three different violations of H-1B Program requirements.
Attempting to justify the apparently unlimited scope of the investigation, the Secretary took the position that the “finding of reasonable cause to investigate just one allegation by an aggrieved party automatically justifies a comprehensive investigation of the employer as a whole . . . [and its] compliance . . . in general.” Id. at 1137. The DOL investigator in charge of the investigation further offered that it was “standard practice” for DOL “to conduct a full investigation every time the DOL does an investigation of any sort under H[-1B].” Id. at 1138.
The Eighth Circuit rejected this far-reaching interpretation of DOL‘s jurisdiction. It held that the plain language of section 1182(n)(2)(A) does not “authorize
The government contends, and we agree, that Aleutian overreads Greater Missouri. Once a complaint that warrants investigation is filed (i.e., one that is timely and that sets forth factual allegations sufficient to provide “reasonable cause to believe” that a violation has occurred,
The Administrator, either pursuant to a complaint or otherwise, shall conduct such investigations as may be appropriate and, in connection therewith, enter and inspect such places and such records (and make transcriptions or copies thereof), question such persons and gather such information as deemed necessary by the Administrator to determine compliance regarding the matters which are the subject of the investigation.
Section 655.800 thus claims for DOL broad discretion to gather the information that it “deem[s] necessary” to determine an employer‘s “compliance regarding the matters which are the subject of the investigation.” Doing so may require determining whether an employer subject to an aggrieved-party complaint has also applied an unlawful practice to other Program employees. That interpretation is consonant with the authorizing INA provision, which grants DOL the authority to “establish a process” for conducting investigations.
As the dissenting ARB member wrote, concurring in the majority‘s decision not to adopt a broad reading of Greater Missouri, the limitations set forth in section 1182(n)(2)(A) exist “to prevent arbitrary or improper targeting of H-1B employers.” App‘x 41. Once a timely and potentially meritorious complaint alleging violations of the LCA wage obligation has been filed, it is reasonable—and not arbitrary or improper—for DOL to seek information from the employer to ensure that it
Our conclusion affirming DOL‘s authority to investigate Aleutian‘s treatment of Horn does not conflict with the Eighth Circuit‘s analysis in Greater Missouri. The Greater Missouri court declared that DOL can investigate the employer‘s “specific misconduct as alleged in the complaint.” 812 F.3d at 1138. Where the “specific misconduct” alleged in a complaint is that the employer is using a wage payment practice that is impermissible under the H-1B Program, then an investigation into that “specific misconduct” would in our view reasonably include payroll information about the employer‘s one other H-1B Program employee, to determine whether the impermissible practice is being applied to her as well.
Indeed, in Greater Missouri the Eighth Circuit rejected an especially expansive interpretation of the Secretary‘s investigatory authority that the government does not advance here. As noted above, the Secretary took the position in that case that it could conduct a “full investigation every time the DOL does an investigation of any sort under H-1B, to determine if any violations exist under H-1B and to see if there are violations to any employee during the relevant time period.” Id. The government asserts no such sweeping investigative authority here. We therefore conclude that, where a complaint gives the Secretary “reasonable cause to believe” that an employer has failed to meet its obligations under the H-1B Program in a particular manner,
Here, the record does not indicate that the agency undertook an “open-ended investigation of the employer and its general compliance without regard to the actual allegations” in the complaint, as the Eighth Circuit charged in Greater Missouri. 812 F.3d at 1138. Rather, the agency inquired to see whether Aleutian‘s alleged failure to satisfy the required wage obligation extended beyond Gangjee to the one other H-1B Program worker employed in the same time frame. We assume outer limits on the agency‘s investigatory authority. But, on these facts, we can comfortably conclude that the investigation undertaken by DOL falls well within those bounds.
CONCLUSION
We have considered, and reject, Aleutian‘s other arguments. The judgment of the District Court is AFFIRMED.
Notes
| Month/Year | Total Paid | Month/Year | Total Paid |
|---|---|---|---|
| August 2011 | $1,875 | May 2012 | $9,456 |
| September 2011 | $1,649 | June 2012 | $3,060 |
| October 2011 | $2,649 | July 2012 | $3,060 |
| November 2011 | $2,649 | August 2012 | $3,600 |
| December 2011 | $9,822 | September 2012 | $3,060 |
| January 2012 | $5,711 | October 2012 | $3,060 |
| February 2012 | $10,266 | November 2012 | $3,060 |
| March 2012 | $5,285 | December 2012 | $3,780 |
| April 2012 | $4,111 |