H-1B Wage Compliance, Benching, Unpaid Leave and the Cost of Getting It Wrong

By Chris Prescott | PSBP Law | April 29, 2026

Most companies that sponsor H-1B workers think of the Labor Condition Application (“LCA”) as a piece of paperwork. They sign it, post it, file it with USCIS, and move on. Then a former employee files a complaint, a competitor calls in a tip, or the Wage and Hour Division (“WHD”) opens a directed investigation and the company learns, painfully, that the LCA is a sworn federal attestation enforceable against the employer for years after the worker has come and gone. The agency does not need to prove intent to assess back wages. It does not need to litigate to get there. And in many cases, it does not need to be invited.

This article delves into the LCA “required wage” obligation, benching, unpaid leave, terminations that are not actually terminations, and a handful of related compliance traps.

1. The “Required Wage,” What You Actually Promised

When an employer signs the LCA on the Form ETA-9035, it attests, under penalty of perjury, that the H-1B worker will be paid the “required wage,” which is the higher of (a) the prevailing wage for the occupation in the area of intended employment or (b) the actual wage paid to other similarly employed workers at the worksite. See 20 C.F.R. § 655.731(a). The required wage is owed in cash, free and clear, paid no less often than monthly, and reported on a W-2.

These three points trip employers up most often:

“Free and clear” means free and clear. Deductions for visa fees, attorney’s fees on the H-1B petition, training repayment penalties, and other employer business expenses are not permitted to reduce the worker’s pay below the required wage. Pushing those costs onto the worker, even with a signed agreement, is itself a violation and exposes the employer to back wages, penalties, and refund liability.

Benefits equality is mandatory. H-1B workers must be offered the same fringe benefits, on the same terms, as similarly employed U.S. workers (this means health insurance, retirement, bonuses, stock, profit-sharing, etc.). Holding back the 401(k) match because “she’s on a visa” is not a creative cost-saving measure and is a direct violation.

The wage floor is the LCA wage, not the offer letter. If you certified $120,000 on the LCA and later cut the worker’s base salary to $105,000, you have not just breached the offer letter, you have breached a federal attestation. Every pay period from that point forward generates new back wages liability.

2. Benching: The Most Common and Most Expensive Mistake an Employer Can Make

“Benching” is the casual industry term for placing an H-1B worker on a non-productive payroll status, between projects, awaiting client placement, on extended training etc. For the avoidance of doubt benching a worker without pay is ILLEGAL.

Under the regulations an employer must pay the required wage for all non-productive time caused by the employer or by the worker’s lack of a permit or license needed to do the job. That includes lack of assigned work, lack of a client, studying for a license, or any other employer-side reason for the worker’s downtime. Whether the worker is at home, at the office, or on a beach somewhere is irrelevant. If the employment relationship exists and the cause of the downtime is on the employer’s side of the ledger, the wage continues to be payable.

There is a narrow exception for non-productive time at the worker’s voluntary request, for example an extended personal vacation, time to care for an ill relative, maternity or parental leave, or similar circumstances unrelated to employment. But “voluntary” is read narrowly. However, if an employer forces the worker to take “unpaid leave” because the current project has come to an end, that will not fall under this exception and is perhaps the most classic example of a worker being benched in violation of the regulations.

If a worker genuinely requests unpaid leave this needs to be well documented and should not coincide with the end of a project. Have the employee e-mail HR and specifically request unpaid leave and explain why the leave is required. Ensure that this unpaid leave is also available to US workers.

3. The “Bona Fide Termination” Trap

Many employers believe they have ended their wage obligation by saying “you’re terminated” and walking the worker out the door. However, until the employer effectuates a bona-fide termination, the wage obligation continues and employers can be ordered to pay back wages. To effectuate a bona-fide termination an employer must do three things:

Express termination to employee. The employer must clearly and unambiguously end the employment relationship by notifying the employee in writing.
Notice to USCIS. The employer must notify USCIS so that the H-1B petition can be revoked. Notifying the employee is not enough. If you do not write to the Service Center, you remain on the hook.
Return transportation. The employer must offer to pay the reasonable cost of return transportation to the worker’s last place of foreign residence. This requirement is excused when the worker chooses, voluntarily, not to depart, but the burden of proof is on the employer, and the offer should be documented in writing.

Miss any one of those three steps and the wage obligation continues to run. Employers that “soft-terminate” by simply removing a worker from payroll without USCIS notice routinely find themselves staring at six- and seven-figure back wage assessments.

4. Material Changes and the Simeio Solutions Ambush

In Matter of Simeio Solutions, LLC, 26 I&N Dec. 542 (AAO 2015), USCIS held that a change in the H-1B worker’s place of employment to a worksite outside the area of intended employment certified on the original LCA is a material change that requires a new LCA and an amended H-1B petition — filed before the worker reports to the new location.

Companies in distributed and consulting models violate this routinely. A worker is moved from the New York office to a client site in Charlotte. The recruiter says, “we’ll handle the paperwork later.” The “later” never comes, or comes after the worker has already been at the new site for ninety days. That is a material change worked without a certified LCA and the regulator treats it as a wage and condition violation, not just an immigration glitch.

Other changes that may be material and require an amendment include:

A change from full-time to part-time, or a substantial reduction in hours.
A change in job duties significant enough that the worker is no longer performing the specialty occupation certified.
A move to a different employer entity (a corporate restructuring, merger, or spin-out can trigger successor-in-interest issues).
A change in the wage rate downward, or a change in payment frequency that defeats the “no less often than monthly” rule.

5. The Public Access File

Within one working day of filing the LCA, the employer must assemble and make available for public examination a Public Access File (“PAF”) at the principal place of business or the place of employment. The PAF is not a courtesy and the absence of any required document is itself a substantive violation.

At a minimum, the PAF must contain:

A copy of the certified LCA.
Documentation of the wage rate paid to the H-1B worker.
An explanation of the system used to set the “actual wage” for similarly employed workers.
A copy of the prevailing wage determination or methodology used.
Documentation of the LCA posting (electronic or hard copy notice) to U.S. workers in the same occupation.
A summary of benefits offered to U.S. workers in the same occupation.
If H-1B-dependent or willful violator, additional non-displacement and recruitment documentation.

6. Penalties and back wages

DOL has authority to assess back wages covering the full period of non-compliance, which in benching or failed termination cases can run for months or even years. On top of that, civil monetary penalties may be imposed on a per-violation basis, along with potential debarment from the H-1B program for repeat or willful violations. In certain cases, employers may also be required to reimburse improperly shifted costs (such as attorney’s fees or filing fees) and correct benefits disparities. The numbers add up quickly, and once an investigation starts, the scope often expands beyond the initial issue that triggered it.

7. What to Do This Week

If you sponsor H-1B workers, treat this as a priority list.

Audit your files. For every active H-1B, confirm: (i) current worksite matches the certified LCA worksite; (ii) actual paid wage equals or exceeds the LCA wage; (iii) full-time/part-time designation matches the petition; (iv) job duties match the specialty occupation.
Pull every PAF. Confirm completeness. Do not back-date. If something is missing, document the gap and remediate going forward.
Identify benched or quasi-benched workers. Anyone on “leave without pay” who did not initiate the leave for personal reasons is a problem. Decide today whether to restart pay or execute a bona fide termination.
Re-paper your terminations. For every H-1B worker you have separated in the past three years, confirm that USCIS notification was sent and that return transportation was offered (or properly excepted). If not, the wage clock may still be running.
Train HR. “Unpaid leave,” “furlough,” “bench,” and “between projects” are payroll codes that must trigger a legal review for H-1B workers. Do not let payroll and HR resolve these by themselves.
Review fee allocation. Any H-1B-related employer cost (other than the optional premium-processing fee) charged back to the worker is a violation. Reimburse, document, and stop the practice.

Document benefits parity. Make sure H-1B workers are enrolled in the same plans, on the same terms, as their U.S. counterparts. Carve-outs by visa status are a violation in waiting.

Conclusion

Sponsoring H-1B workers is a privilege, not a right, and it comes with attestations the employer signed under penalty of perjury. The DOL enforces those attestations vigorously, and since the launch of Project Firewall, the number of audits has significantly increased.

Now is the time to assume that if there is a problem in your H-1B files, it will eventually be found. Audit your files and fix what you can fix, document what you cannot, and make sure your forward-looking practices are defensible. If you have questions regarding the above please reach out to Chris Prescott at cprescott@psbplaw.com.