Understanding Bonus Payments and H1b Wage Regulations

1. Are Bonuses Considered Part of Regular Wages?

• Bonuses can be counted toward required wages, but they must meet specific regulatory conditions.
• Bonuses must be assured and paid on time to be counted toward the wage. It must be paid in regular prorated installments (e.g., bi-weekly or monthly).
• Employers cannot defer payments irregularly to meet wage obligations.
• Bonuses can be included in wages only if they are non-discretionary. If a bonus is discretionary (based on employer’s choice), it cannot count toward meeting the prevailing wage.
• Future bonuses can be credited if payment is assured and not conditional on factors like company profits. Once paid, bonuses must be Recorded as earnings and Reported for tax and FICA purposes.

2. Timing of Bonus Payments

• Wage regulations state that the required wage must be paid in cash, free and clear, when due.
• Bonuses can only be counted toward wages if they comply with timing requirements.
• A federal court case (Aleutian Capital Partners v. Hugler, 2017) confirmed that bonus payments must align with wage payment regulations.

3. Per Diem, Housing, and Food Allowances

• Payments designated as per diem, housing, or food allowancescan count toward wages if:
  • They benefit the worker.
  • They are taxable income to the worker.
• These payments do not count if:
  • They are not listed as taxable compensation.
  • They are primarily for the benefit of the employer.
• Case-by-case evaluation is done by WHD.

4. Compliance and Enforcement

• The WHD strictly enforces wage requirements.
• Employers must document wage structures to avoid penalties.
• Violations regarding wages, including improper use of bonuses or allowances, can lead to:
  • Back wage assessments.
  • Civil monetary penalties (CMPs).
  • Debarment from hiring H-1B workers.

Conclusion

• Bonuses can be used to satisfy wage requirements if properly structured and paid on time.
• Allowances like housing and food can count toward wages if taxable.
• Employers must maintain clear documentation to comply with wage laws and avoid penalties.
• Bonuses can be used to meet LCA wage requirements only if they are non-discretionary, pre-determined, and properly documented. Discretionary bonuses do not count toward the prevailing wage.

About the Author

Vasanth Vaidyanathan, Esq.

Administrator

Vasanth Vaidyanathan is an immigration attorney with over 20 years of experience focused exclusively on U.S. immigration and nationality law. He holds a LL.M. from California Western School of Law, San Deigo and advises individuals and businesses on employment and family-based immigration matters, including H-1B, PERM, EB categories, and adjustment of status. He has also been a featured speaker at immigration seminars across the U.S. To reach Vasanth visit: https://www.vnathan.com/

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