United States: Potential Litigation Regarding When ACWIA Fee Is Required To Be Paid In H-1B Petition Filings

The American Competitiveness and Workforce Improvement Act (ACWIA) was signed into law on October 21, 1998, and contained several provisions affecting the employment of H-1B workers. The law increased the annual cap on new H-1B visas issued each year, and required U.S. employers to make several attestations regarding wages and benefits offered to the H-1B worker, as well as increased penalties for Labor Condition Application (LCA) violations.  ACWIA also required employers to pay a special education and training fee in addition to the normal H-1B petition filing fee in certain circumstances.  The funds collected from this special education and training fee are used by the U.S. Department of Labor (DOL) to train U.S. workers. It is this special education or training fee (or ACWIA fee as it has come to be known) that is a point of controversy, and may be litigated in the future with respect to when it is required to be paid by a sponsoring H-1B employer.

Under the law, an H-1B employer (with certain exceptions) that employs 26 or more workers, and is filing an initial H-1B petition for a foreign national, is required to pay a special education and training fee (or ACWIA fee) of $1,500.00 (or $750.00 if the H-1B employer employs 25 or fewer workers).  Section 214(c)(9) states the following:

1. initially to grant an alien nonimmigrant status described in Section 101(a)(15)(H)(i(b);
2. to extend the stay of an alien having such status (unless the employer previously obtained an extension for such alien); or
3. To obtain authorization for an alien having such status to change employers

The H-1B and H-1B1 Data Collection and Filing Fee Exemption Supplement of the Petition for Nonimmigrant Worker (Form I-129) on Pages 21 and 22, provides a series of questions the employer is required to answer in order for the U.S. Citizenship and Immigration Services (USCIS) to determine if the ACWIA fee is applicable.  This supplement  has a question that states the following:

A "Yes" response to this question avoids the sponsoring employer from having to pay the ACWIA fee again.  Sponsoring employers that initially file a "change of employer" petition, unlike sponsoring employers that file a petition for new employment or concurrent employment, may request an extension of stay in their "change of employer" petition filing.  As a result, based on how the above question is phrased on The H-1B and H-1B1 Data Collection and Filing Fee Exemption Supplement, a sponsoring employer that files a "change of employer" petition and includes an extension of stay request in the petition,  and then files a subsequent petition in the future to extend the H-1B status of the worker, would not be required to pay the ACWIA fee again, as compared to a sponsoring employer that filed an initial petition for new employment or concurrent employment without an extension of stay request.  Consequently, the issue is whether Section 214(c)(9) of the INA and the question on the H-1B and H-1B1 Data Collection and Filing Fee Exemption should be interpreted in a manner to require a sponsoring employer that initially files a "change of employer" petition with an extension of stay request, to pay the ACWIA fee a second time when filing a subsequent petition for that H-1B worker with an extension of stay request. 

USCIS has not been clear in its interpretation, and/or consistent in its processing of H-1B petitions with respect to when the ACWIA fee needs to be paid a second time by a sponsoring employer.  As  result, some sponsoring employers who filed a change of employer petition with an extension of stay request, and the file a subsequent petition to extend the stay of the foreign national have answered the above question with a "Yes" response, and have had their H-1B petitions rejected, because the ACWIA fee was not included in the subsequent petition filing.  Other sponsoring employers that filed similar "change of employer" petitions and then filed subsequent petitions to extend the stay of the H-1B worker, and that did not include the ACWIA fee, had their H-1B petitions accepted for processing.  In other cases, USCIS even returned the check covering the ACWIA fee when it was included by some employers (who initially filed "change of employer" petitions with extension of stay requests) and then filed subsequent petitions with extension of stay requests.

As a result of this inconsistent treatment by USCIS, there are reports of some employers possibly pursuing litigation, if 1) it filed an H-1B "change of employer" petition with an extension of status request, and had a subsequent petition for that H-1B worker requesting an extension of stay rejected, because of failure to include the ACWIA fee; or 2) it filed an H-1B "change of employer" petition with an extension of stay request, and later filed a subsequent petition for that H-1B worker requesting an extension of stay, and included the ACWIA filing fee, but the petition was processed without the ACWIA fee being refunded.  Since the amount of money requested by the USCIS in connection with the ACWIA fee is rather significant ($1,500.00, or $750 if employ 25 or fewer workers), resolving this issue is important for H-1B employers from a cost perspective.

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