H-1B Dependent Employer

If your company hires a high share of H-1B workers, you may be an H-1B dependent employer, and that status changes what you have to do every time you file. The label is not a penalty. It is a statutory test the U.S. Department of Labor applies based on your workforce size and how many H-1B workers you employ.

Get the count wrong and you can miss attestations that carry civil penalties. The wage figure that can lift those extra duties, $60,000, has not changed since the rule took effect in 2000. This guide walks through the test, the thresholds, the math, and the obligations that follow.

What is an H-1B dependent employer?

An H-1B dependent employer is a company whose H-1B workforce is large enough, relative to its total workforce, to trigger extra obligations under the H-1B program. If a large share of your workforce holds H-1B status, this is the test you are measured against.

The status comes from the American Competitiveness and Workforce Improvement Act (ACWIA) of 1998 and lives in 20 CFR 655.736. It was meant to discourage using the H-1B visa to replace U.S. workers with lower-cost labor.

When you cross the line, three additional attestation obligations attach to your Labor Condition Application (LCA). The DOL’s Wage and Hour Division enforces them through the attestations you sign, and a finding of noncompliance can bring back pay and civil money penalties. You should know your status before you file, because the LCA itself asks you to declare it.

When you must determine your dependency status

You check your H-1B dependency status at three filing moments, not on a fixed annual date. The Department of Labor ties the determination to specific filings rather than to your calendar year.

You make the determination when you file any of the following:

• A Labor Condition Application: Every LCA on Form ETA-9035 asks whether you are dependent or a willful violator.
• An H-1B petition based on an LCA: When you file Form I-129, the Petition for a Nonimmigrant Worker, with USCIS (U.S. Citizenship and Immigration Services).
• A request for an extension of H-1B status: An extension for an H-1B worker based on an LCA triggers the same check.

If your status is readily apparent, you do not need a formal calculation. A company with five employees and no H-1B workers, or a 4,000-person firm with three H-1B staff, is plainly non-dependent.

Corporate changes can force a fresh look, though. A reorganization, an acquisition, or a wave of H-1B hiring can move you across a threshold, so reassess at the next filing rather than relying on a stale count.

How the dependency thresholds work

Your status turns on the ratio of H-1B nonimmigrant workers to your full-time equivalent workforce, and the test scales with company size. Smaller employers can hold more H-1B workers in absolute terms before the ratio matters, while larger employers are measured purely on percentage.

The three statutory thresholds are set out in Fact Sheet #62C from the DOL:

The 15 percent rule is the one most large employers watch. Once you pass 50 full-time equivalent employees, the absolute counts fall away and the test becomes a straight percentage of your total workforce.

The two figures are measured differently. The H-1B head count is a simple tally of every H-1B worker, full-time and part-time alike. Your total workforce is measured in full-time equivalent employees, with part-time employees converted into fractions rather than counted as whole heads.

Which H-1B workers count: exempt vs. non-exempt

Every H-1B worker you employ counts toward your dependency calculation, even the ones who are exempt from the extra obligations. This trips up employers who assume an exempt worker is invisible to the test. The exemption affects which attestations apply, not whether the worker counts toward dependency.

An exempt H-1B nonimmigrant is one who meets either of two conditions under 20 CFR 655.737:

• Earns at least $60,000 a year: The worker must actually receive wages of at least $60,000, paid in cash, free and clear. Employer-paid benefits like health insurance cannot be counted, and the figure cannot be prorated for part-time schedules.
• Holds a qualifying degree: The worker has a master’s degree or higher, or its foreign equivalent, in a specialty related to the job. Work experience cannot substitute for the master’s degree.

Here is the part that matters for your math. If you are dependent but every H-1B worker on a given filing is exempt, that filing carries no extra obligations. The exempt-only LCA is the practical escape hatch, yet those exempt workers still count when you calculate whether you are dependent in the first place.

How to calculate dependency status step by step

You calculate your status by comparing the number of H-1B workers to your full-time equivalent workforce. The DOL does not prescribe one rigid formula, but the logic is consistent.

1. Build your U.S. workforce set. Include everyone employed in the United States: U.S. workers (citizens, lawful permanent residents, and other authorized workers) plus all H-1B workers. Genuine independent contractors who are not employees fall outside the set.
2. Convert the workforce into FTEs. Count full-time staff as whole numbers and convert part-time employees into fractions, using a reasonable and consistent method, to reach your total full-time equivalent employees.
3. Determine your H-1B head count. Count every H-1B worker as one, full-time or part-time, so part-time H-1B staff are not discounted here.
4. Apply the threshold for your size. Match your total to the correct band and compare your count or percentage against it.

A 40-person firm with 13 H-1B workers is dependent. A 200-FTE company sits at 14 percent with 28 H-1B workers and is not, but crosses 15 percent at 32 and is.

Snap-shot test vs. full calculation

You do not always need the full calculation. When your status is borderline, the Department of Labor lets you run a quick screen, the snap-shot test, before committing to the detailed math.

It compares your total H-1B workers against your entire workforce, including those H-1B workers. The result tells you whether to go further:

• For a small employer: If the test shows you are dependent, you must then run the full calculation to confirm.
• For a large employer: If the result exceeds 15 percent of your workforce, you must run the full calculation.

If the screen clears you comfortably, you can stop there. Whichever path you take, keep the worksheet. The agency expects you to show how you reached your conclusion if the Wage and Hour Division asks.

The “single employer” rule for grouped entities

If your business is part of a corporate family, you may have to count across entities rather than per company. The DOL borrows the “single employer” definition from the Internal Revenue Code (IRC) to decide when related companies are treated as one for the test.

A controlled group of corporations under the IRC, including a parent-subsidiary controlled group or a combined group, is aggregated and tested as a single employer. You cannot split an H-1B-heavy subsidiary off from a larger parent to dodge the threshold.

There is a narrow practical break. If every entity in the single employer has readily apparent non-dependent status, the Wage and Hour Division will not penalize you for skipping the test. Still document the grouping, because an aggrieved party can challenge a missing test even when the agency would not.

How Lighthouse supports your H-1B compliance

Once you know you are dependent, every petition becomes a checklist of wage, recruitment, and timing details to track. Lighthouse prepares H-1B petitions and Labor Condition Applications for startups and tech companies, with cases prepared in under three weeks rather than the months traditional firms often take.

For companies with 25 or more employees, the Plus plan adds compliance support, consolidated billing, and long-term immigration programming. Your status determinations, filings, and recordkeeping stay coordinated instead of scattered across petitions, which is where dependent-employer mistakes usually start. Start your employer immigration evaluation today.

The additional attestation obligations

If you are dependent and filing for any non-exempt H-1B worker, three additional obligations attach to your LCA. These sit on top of the wage, working-condition, notice, and no-strike attestations that every H-1B employer makes.

The three obligation areas are:

• Recruitment of U.S. workers: Take good-faith steps to recruit U.S. workers before hiring the H-1B worker, and offer the job to any U.S. applicant who is equally or better qualified.
• Non-displacement in your own workforce: Do not lay off an essentially equivalent U.S. worker within 90 days before or after you file the H-1B petition.
• Non-displacement at a secondary worksite: Before placing an H-1B worker at another employer’s site, inquire whether that employer has displaced or intends to displace U.S. workers.

These obligations fall away for any LCA used only for exempt H-1B nonimmigrants. If your filing mixes exempt and non-exempt workers, they apply to the whole filing.

Recruitment of U.S. workers

Your recruitment obligation requires real effort, not a paper formality. Before you file for a non-exempt H-1B worker, you must take good-faith steps to recruit U.S. workers for the role, using methods that meet industry-wide standards for the occupation.

Your offered compensation to U.S. recruits must be at least as high as what you offer the H-1B worker, which itself must meet the higher of the actual wage or the prevailing wage for the specialty occupation. You must then offer the job to any U.S. applicant who is equally or better qualified than the H-1B worker.

Keep records of every step: the methods used, where and when you advertised, the applicants you received, and your reasons for hiring decisions. A good-faith effort you cannot document is hard to defend in an audit.

Non-displacement of U.S. workers

Your non-displacement duty protects U.S. workers around the time you file. As a dependent employer, you are barred from displacing them, both directly and at a client site, within a defined window.

Direct displacement covers your own workforce. You cannot lay off a U.S. worker from a job essentially equivalent to the H-1B role within the period beginning 90 days before and ending 90 days after you file the petition. “Essentially equivalent” looks at duties, qualifications, and the area of employment, not job titles.

Secondary displacement covers placements at another employer’s worksite, which is common for staffing firms and service providers.

Before you place an H-1B beneficiary at a client site where there are signs of an employment relationship with that client, you must make a bona fide inquiry into whether the client has displaced or intends to displace similarly employed U.S. workers in the same window. The rules appear in 20 CFR 655.738.

The inquiry has teeth. Even if you ask and get assurances, you can still be found in violation if the client in fact displaces a U.S. worker during the window. You also cannot ignore information you already have, such as news of layoffs at the client.

To document a secondary placement, the DOL accepts a written assurance from the client, a contemporaneous memo to the file recording an oral assurance, or a non-displacement clause in your contract. Retain whichever you use, with names and dates, so you are ready for inspection.

Recordkeeping and the public access file

Your documentation does the talking in an audit, so build the files as you file. Dependent employers carry recordkeeping duties beyond those of a standard H-1B employer, split between the public access file and the broader inspection file.

Your public access file adds dependency-specific items to the standard documentation. When a filing covers only exempt H-1B nonimmigrants, include a list identifying those workers. You also include a summary of the recruitment methods and time frames you used, and, if you grouped entities, a list of the companies in your single employer.

For inspection, keep the evidence behind your compliance: your calculation worksheets, recruitment records, direct and secondary non-displacement documentation, and payroll records for H-1B workers and others in the same occupation. Retain the recruiting and non-displacement records for the periods the regulations require, and treat them as living files rather than something to assemble after a complaint lands.

H-1B dependent employer vs. willful violator

You can be subject to the same extra obligations through a different door. A willful violator carries the identical recruitment and non-displacement attestations, but the trigger and the stakes differ.

The overlapping obligations are why some articles blur the two. When you read general guidance, check which status it describes: such an employer faces the duties regardless of how few H-1B workers it employs, while a dependent employer can shed them by filing only for exempt workers.

Putting it together

Your dependency status is a number you can calculate before you ever sign a filing, and the obligations that follow are concrete and documentable.

Run the test at each filing, decide early whether you are filing for exempt or non-exempt workers, and build your recruitment and non-displacement records in real time. Treated as routine, this is manageable; treated as an afterthought, it is where penalties come from.

Make dependency status a routine step, not an afterthought

You run the dependency test at every LCA, petition, and extension, and the recruitment and non-displacement records behind it are easiest to defend when you build them in real time. Get the count or the paperwork wrong and the attestations you signed are what an audit measures you against.

Lighthouse prepares H-1B petitions and Labor Condition Applications for startups and tech companies, with attorney review on every case and cases ready in under three weeks. If USCIS issues a request for evidence, Lighthouse responds at no additional charge, so your status determinations, filings, and recordkeeping stay coordinated instead of scattered across petitions.

Start your free employer immigration evaluation.

This article is informational and is not legal advice.

Frequently asked questions on H-1B dependent employers

What is the definition of an H-1B dependent employer?

An H-1B dependent employer is one whose H-1B workers make up a large enough share of its full-time equivalent workforce to trigger extra LCA obligations. The thresholds, set in 20 CFR 655.736, scale by company size.

What are the dependency thresholds?

You are dependent if you have 25 or fewer FTEs and 8 or more H-1B workers, 26 to 50 and 13 or more, or 51 or more with 15 percent or more of the workforce in H-1B status.

Do exempt H-1B workers count in the dependency calculation?

Yes. Every H-1B worker counts, including exempt ones. Exempt status changes which obligations apply to a given filing, not whether the worker counts toward the dependency threshold.

How do you calculate full-time equivalents for the dependency test?

Count full-time staff as whole numbers and convert part-time employees into fractions of a full-time worker using a reasonable, consistent method. The sum is your full-time equivalent workforce, the denominator of the dependency ratio.

Can an employer use a snap-shot test instead of a full calculation?

The snap-shot test is a screening step, not a replacement. If it shows a small employer is dependent, or a large employer above 15 percent, you must then run the full calculation. If it clears you comfortably, you can stop there.

When do we need to re-check dependency status?

Check at every LCA, H-1B petition (Form I-129), and extension of H-1B status. Corporate changes such as a reorganization, acquisition, or a surge in hiring can move you across a threshold, so reassess at the next filing.

How do secondary displacement rules work for client site placements?

Before placing an H-1B worker at a client site with signs of an employment relationship, you must inquire whether the client has displaced or will displace similarly employed U.S. workers within 90 days before or after the placement. You can still be liable if the client actually displaces a worker.

What should an H-1B dependent employer include in its public access file?

The standard documentation plus dependency-specific additions: a recruitment-methods summary, an entity list if you used the single-employer definition, and, for exempt-only filings, a list identifying those exempt workers.

What documentation proves recruitment and non-displacement compliance?

For recruitment, keep records of your methods, advertising, applicants, and hiring decisions. For non-displacement, keep records of U.S. workers who left in the protected window, offers of similar employment, your secondary-employer inquiries, and payroll records for affected occupations.