Macks USA, Inc v. United States Department of Labor

Background

Macks USA, Inc. sponsored Shaukakt Jalal for an H-1B position. Under the H-1B program, an employer generally must pay the required wage when the employee becomes available for work or comes under the employer’s control, including during periods when the employee is not working because the employer has not assigned work. The wage obligation generally continues through the period covered by the labor certification application unless a specified exception or a genuine termination applies.

The Department of Labor’s Wage and Hour Division investigated Jalal’s complaint and found that Macks and Mujeeb Rahman failed to pay required wages. The agency initially assessed a $2,500 civil penalty and determined that the plaintiffs owed $151,266.40 in back wages. After administrative proceedings, the administrative law judge ordered Macks and Rahman to pay an additional $113,515.60, for a total back-wage award of $147,781.44, plus interest. The administrative law judge also found that the violations were willful and barred Macks and Rahman from employing H-1B workers for two years.

The Administrative Review Board affirmed the administrative law judge’s decision in full. The plaintiffs then sought judicial review under the Administrative Procedure Act. The Labor Department defendants moved for summary judgment, asking the court to affirm the Board’s decision and dismiss the plaintiffs’ complaint.

Plaintiffs’ arguments

The plaintiffs argued that Jalal’s complaint was barred by the regulation requiring an aggrieved-party complaint to be filed within 12 months after the latest violation. They also argued that Jalal was unavailable or unwilling to work, that he had rejected work offered through Orabase, and that his short assignment with Community Health Systems interrupted any continuing wage violation. Finally, they argued that the Board incorrectly applied New York law in holding Rahman personally liable by piercing Macks’s corporate veil.

The plaintiffs separately argued that the administrative law judge violated their federal due-process rights by excluding evidence and witnesses that were not timely disclosed before the hearing.

Court’s analysis

The court held that the H-1B benching violation was continuing. Because Jalal filed his complaint within one year after his employment relationship with Macks ended, the agency could assess back wages for the full period covered by the labor certification application, including periods before the one-year filing window. The court also agreed that Jalal’s departure from Community Health Systems did not interrupt the violation because the evidence supported the finding that he left partly because of work-related conditions, including unexpected out-of-pocket travel expenses.

The court further held that payments made during Jalal’s short assignments did not satisfy the wage requirements because they were not properly documented in payroll records, reported to the Internal Revenue Service as wages, or accompanied by required tax withholdings. The court upheld the agency’s finding that Jalal was willing to work and relocate, noting evidence that he later relocated for assignments in Tennessee and Minnesota. It also upheld the finding that Macks had not shown that it offered Jalal the claimed Orabase position.

On personal liability, the court applied New York’s corporate-veil-piercing standard. The plaintiffs had conceded before the Board that Rahman completely dominated Macks. The court held that the Board reasonably found the second required element—a wrongful or unjust act causing injury—based on the unpaid wages, the failure to provide pay stubs or make required tax deductions, and the other H-1B violations. The court stated that an intent to commit fraud was not required under the standard applied here.

The court rejected the due-process challenge for two reasons. First, the plaintiffs had not raised it before the Board, so the court would not consider it for the first time on judicial review. Second, the court concluded that the administrative law judge gave the plaintiffs notice and a meaningful opportunity to present their case. The plaintiffs had received deadlines and warnings about the consequences of late submissions, and the administrative law judge ultimately allowed one combined exhibit into the record.

Disposition

The court granted the defendants’ motion for summary judgment and affirmed the Administrative Review Board’s decision. The court therefore left in place the $147,781.44 back-wage award, interest, the $2,500 civil penalty, the finding of willful violations, the two-year H-1B employment bar, and Rahman’s individual liability. The court directed the defendants to submit within 30 days a report calculating accrued prejudgment interest, including the daily interest amount that would accrue until judgment was entered, and directed the Clerk to close the summary-judgment motion.