## Facts

- Industrial Holographics, Inc. (Industrial) manufactured machinery used to make rubber tires and sought to hire an export manager in Michigan.
- Industrial filed an application for permanent labor certification to employ Roger K. Yu, an alien, in the export manager position.
- Under Department of Labor (DOL) regulations in 20 C.F.R. Part 656, including 20 C.F.R. § 656.21, an employer seeking certification had to test the U.S. labor market through specified recruitment steps (including state employment service and newspaper advertising), post notice internally, and offer the job at the “prevailing wage” and “prevailing working conditions.”
- The Michigan Employment Security Commission (MESC), acting within the regulatory scheme, determined the prevailing wage for the export manager position to be $1,666 per month, based on wage information gathered by contacting five Michigan employers.
- Industrial’s initial recruitment materials listed a salary of $1,000 per month, which was below the MESC prevailing wage determination.
- The DOL denied the application due to the below-prevailing-wage advertisement.
- Industrial attempted to correct the problem by recruiting again at $1,666 per month, but did not complete all of the § 656.21 steps; in particular, it did not post the job internally at its facility.
- The DOL again denied labor certification. An administrative law judge (ALJ) affirmed the denial on administrative review.
- Industrial sought judicial review in federal district court, which granted summary judgment for the Secretary of Labor, and Industrial appealed to the Seventh Circuit.

## Issues

1. Whether the Secretary of Labor had authority under the Immigration and Nationality Act (INA) to require employers to recruit under § 656.21 and to advertise positions at the prevailing wage and prevailing working conditions as prerequisites to labor certification.
2. Whether the DOL’s reliance on the MESC prevailing wage determination (including the method used to calculate it) and the resulting denial of certification were arbitrary, capricious, or otherwise unlawful under administrative law review standards.
3. Whether Industrial’s later attempt to recruit at the prevailing wage required certification despite its failure to complete all required recruitment measures, including internal posting.

## Decision

- The Seventh Circuit affirmed the district court’s summary judgment for the Secretary of Labor.
- The court held that the Secretary acted within the authority delegated by the INA in requiring recruitment steps and a prevailing-wage job offer as part of the labor certification process.
- The court concluded that the prevailing wage figure set by the MESC, based on a survey of Michigan employers, was a reasonable application of the regulatory method and was not arbitrary or capricious.
- Because Industrial did not recruit in the manner required by § 656.21—most notably by failing to post the job internally during its attempted cure—the DOL’s denial of certification was a lawful application of the regulations.

## Legal Principles

- The INA permits the Secretary of Labor to implement regulations designed to ensure that employing an alien will not adversely affect the wages and working conditions of U.S. workers.
- DOL regulations may require employers seeking labor certification to offer and advertise the job at the prevailing wage and under prevailing working conditions for the area of intended employment.
- The labor certification system may require specific recruitment steps (including state employment service listing, newspaper advertising, internal posting, and documentation) as conditions for certification.
- Courts review DOL labor certification determinations under a deferential administrative law standard and will uphold the agency’s action when the agency’s decision-making process is reasonable and supported by the record.
- An employer’s partial efforts to correct a deficiency do not require certification when the employer still fails to complete required recruitment measures in the regulatory scheme.

## Conclusion

The Seventh Circuit upheld the denial of Industrial’s labor certification application for an alien export manager because the Secretary could require employers to recruit under § 656.21 and to advertise at the prevailing wage, the MESC’s prevailing wage determination was reasonably derived, and Industrial’s failure to complete required recruitment steps—especially internal posting—provided a lawful basis for denial under arbitrary-and-capricious review.


Industrial Holographics, Inc. v. Donovan, 722 F. 2d 1362 (1983)