Must I Pay Unlicensed H-1B Workers?

A client of mine recently asked me an interesting question. This client recruits Physical Therapists, although the lesson applies to all licensed occupations. They are getting ready for their H-1B hires to enter the US in October. But they have a question about when they need to pay these workers, many of whom have not yet received their licenses.

First a little background. The National Physical Therapy Exam (NPTE) is not offered overseas. Accordingly, all PTs must enter the US in order to sit for the licensing exam. The USCIS often approves unlicensed PTs for H-1B visa status, and there is ample Guidance to support these decisions.

My client’s approved PTs must then come into the US, sit for the NPTE, and then obtain their state license. Once they obtain the state license, they can begin their PT work.

The problem is that this plan bumps up against the Department of Labor’s rules on salaries to H-1B workers. 20 CFR 731(c)(6) and (7) say that H-1B workers must be paid their salaries within 30 days of entering the US. This may be problematic because it is rare that the worker enters the US, sits for the exam, and is granted the license in just 30 days.

Subsections (c)(6) and (7) also says that worker must be paid once s/he “enters into employment,” which includes “reporting for orientation” and “studying for licensing examinations”.

There are a few solutions to this dilemma, although none of them are ideal from the employer or employee’s perspective (my experience is that the H-1B workers would be willing to sacrifice all or some of their pay while waiting for the results of their licensing exam):

One solution that is in compliance with (6) and (7) is to make sure that the PT is fully ready to take the licensing exam when the PT enters the US so that you can use the full 30 day period before entering the employee into employment. If at all possible, training, and orientation should be done outside the US.

Another solution is to bring the H-1B worker into the US to take the licensing exam, and then immediately cycled back out of the US while waiting for the remainder of the licensing process. H-1B workers who aren’t in the US aren’t subject to (6) and (7).

A last strategy is initially to file the workers for part-time or hourly H-1B status. This doesn’t obviate the need to pay the wages, but can reduce the salary obligation.