New labor regs relax requirements for employers

Barely three months after they took effect, the new alien labor rules and regulations have been amended to ease requirements concerning the financial solvency of employers.

Currently, an employer must be determined by the Department of Labor to be financially solvent to be entitled to hire an alien worker.

The modification, which took effect on Oct. 18, allows an insolvent employer to renew the contract of a nonresident worker, on the condition that the employer does not owe the worker any compensation for the previous year.

The amended provision reads: “An employer must be determined to be financially solvent to be entitled to employ a nonresident worker, except that the Department of Labor may permit an insolvent employer to renew a nonresident worker so long as that employer’s payroll obligations for the previous year have been fully met.”

Pursuant to the adopted emergency amendment, hearing officer Jerry Cody allowed an insolvent employer to continue employing an alien worker.

In an Oct. 21 administrative order, Cody reversed the Labor director’s decision to deny the permit renewal application submitted by Paradi Enterprises Inc. for worker Ko Sang Jo.

During the hearing, Paradi’s corporate secretary admitted that the business has experienced difficult financial times. However, he maintained that all the workers’ wages were paid in full over the past year.

Cody instructed the department to resume processing the permit application. Nevertheless, the hearing officer ordered Paradi to submit a second 3-month surety bond to cover the employment of Ko as operations manager.

According to labor rules, employers are determined solvent based on the actual annual expenses of the employer in hiring an alien worker. Expenses include a guaranteed basic minimum wage and the ability to pay the worker for hours worked, room and board, food, medical expenses, health insurance when applicable, transportation and other employer expenses.

The labor department adopted the amendment on an emergency basis, or without the usual 30-day notice, noting that it is in public interest to implement the amended regulation as soon as possible.

The department said in a public notice that under the current regulations, employers who are not “financially solvent” as defined in the rules are not able to retain and renew alien workers, even though they are able to make their payroll obligations.

“Dozens of CNMI employers—and hundreds of nonresident workers—are or will be affected by this inflexible requirement,” a portion of the public notice read. “The Department of Labor is concerned that the CNMI’s businesses—and nonresident workers—will be severely harmed unless the Department of Labor is able to grant renewals to businesses which are able to pay [and are paying] their nonresident workers, even if those businesses are not financially solvent.”