Imagine working diligently to ensure that your club is always legally compliant. You have spent time speaking to your attorney, researching best practices in the club industry, and even looking into the rules and regulations yourself. Then, you receive notice from the government that what you did was illegal and you are now being punished for something that you were told was correct and proper. Can this happen?
In the world of seasonal visas, the answer is “yes”—at least for one federal judge in South Carolina. After the Aug. 4, 2015 court ruling in Moodie v. Kiawah Island Inn Company, LLC, it is clear that a club’s past actions surrounding the H-2B seasonal visa, even those where it thought it was acting in compliance, can be viewed as violations of the law.
First, some background
The H-2B seasonal visa is available for up to 9 months in duration and can be applied for annually. The visa validity period matches the club’s busiest seasonal period, allowing clubs to bring in employees to help handle peak-load business needs. For example, a club in Florida would likely petition for an H-2B seasonal visa that runs from October through April, when it has an influx of business. The H-2B visa program serves as a lifeline for many clubs that struggle fruitlessly to find seasonal U.S. workers who meet their standards.
Until April 2015, when the U.S. government completely overhauled the H-2B legal framework for future H-2B petitions, many rules of the H-2B visa process were left undefined. Therefore, much of the H-2B rules resulted from litigation and court decisions. When rules are left to courts, though, they can vary by geographic area and even be inconsistent within an area. This resulted in unpredictable interpretations of the law and left employers guessing and hoping that they were remaining compliant with the law. One such employer was Kiawah Island Inn Company.
On Aug. 4, 2015, in Moodie v. Kiawah Island Inn Company, LLC, the United States District Court for the District of South Carolina ruled that Kiawah Island Inn Company was noncompliant in its H-2B visa petitions, largely relying on legal precedent relating to the H-2A agricultural visa laws. Importantly, while the titles “H-2B” and “H-2A” look similar, these visas are governed by separate and distinct regulations.
Basing its ruling on an interpretation of the U.S. Fair Labor Standards Act relating to this separate set of regulations (i.e., H-2A), the court found that certain visa-related expenses such as employees’ inbound travel and visa application costs were “primarily for the benefit and convenience of the employer.” For this reason, the court held that the employer, rather than the employee, should pay.
Significantly, the new H-2B visa regulations, issued in April 2015, have provided black-and-white guidance regarding this very issue, mandating that employers pay H-2B visa-related costs. However, prior to the April 2015 regulations, during the time period for which Kiawah Island Inn Company was held noncompliant, there was no guidance on these topics. In other words, the court in Kiawah Island Inn Company held that although the pre-2015 H-2B regulations contained no rules requiring clubs to pay these visa-related costs, employers could be held liable for non-payment, looking back years into the past.
What’s next for this case?
First, this court ruling only applies to the District of South Carolina. If appealed, it could have a broader application, but for now, if your club is outside of the District of South Carolina, this decision does not apply to you in a strict, legal sense. Furthermore, in its ruling, the court acknowledged that the H-2B visa regulations were silent on these issues. Based on this omission, the court basing its ruling on non-H-2B-related case law, and the resulting controversy surrounding the decision, it is likely that the ruling will be appealed.
However, the court’s ruling is primarily based on an interpretation of the Fair Labor Standards Act, which is federal law. Therefore, although Kiawah Island Inn Company only applies in the District of South Carolina, there is a chance that the U.S. Department of Labor (DOL) could take the court’s stance with respect to previously-filed H-2B applications nationwide. This could potentially affect your club through a DOL audit, which may be conducted randomly or due to a report of noncompliance.
What should my club do?
Although it is uncertain whether DOL will give any weight to the Kiawah Island Inn Company ruling, based on the new H-2B regulations and this new court case, it seems that the government is trending more and more toward viewing visa-related expenses as the employer’s burden to bear. Therefore, the only way to ensure that your club is compliant is to review past filings to see if an argument could be made against your club that employees were incurring costs that were for the “benefit and convenience” of the club. If you then determine that your club did charge employees for business-related costs, you may want to discuss how best to handle this issue with an immigration and labor attorney.
Most importantly, clubs should ensure that they are complying with the new H-2B visa regulations, which were written in an effort to avoid situations like Kiawah in which courts write the law. While a time machine does not yet exist to go back in time to fix prior H-2B visa petition mistakes, you can take the steps necessary to be sure that your club is following all of the rules (and there are many) that arose out of the new April 2015 H-2B visa regulations. One major aspect of the new regulations is the amount of the fine for noncompliance—$10,000 USD per violation. Therefore, it is worth the effort to comply to the new H-2B visa regulations to avoid such costly fines and adhere to the numerous guidelines that the government has issued. Under the new regulations, issues such as the ones in Moodie v. Kiawah Island Inn Company, LLC are made clear and ignorance can no longer be a defense.
Keith A. Pabian is an immigration attorney at Pabian Law, LLC. He represents private clubs and resorts across the nation in visa and immigration matters. He can be reached at [email protected] or 617-939-9444. This article was prepared for educational purposed only.