Termination of Foreign Workers: Obligations & Consequences for H-1B Employers

The present condition of the U.S. economy has forced companies to reduce their workforces and undergo restructuring, mergers, and layoffs. As employers experience such adjustments in staff, particular consideration should be given to the termination of foreign workers. It is critical for employers to understand their obligations as well as the consequences for their foreign employees.

What are the Employer Obligations?

The termination of foreign national workers must comply with regulations established by the Department of Labor (DOL) and U.S. Citizenship and Immigration Services (USCIS). Employers of foreign workers should be familiar with their duties and obligations under the law.

The H-1B visa is one of the most commonly used nonimmigrant visas. When H-1B employees are terminated, employers must comply with two important regulations, including mandatory notification to USCIS of the termination, and the offer of return transportation to the employee. Employers should take action immediately upon termination in order to avoid potential penalties or claims against them. Employers should note that although compliance with these two regulations is required, immigration regulations do not provide for sanctions to enforce the provisions against non-compliant employers. The Department of Labor however, can enforce the payment of wages, including back wages for time an employee was not paid while the H-1B and Labor Condition application remain valid.

• Must I Notify the USCIS?
  
  Immigration regulations require an H-1B employer to notify USCIS of “any material change in the terms and conditions of employment” affecting an H-1B employee. A termination would certainly qualify as a material change in the employment relationship, thus requiring the employer to provide USCIS with notification. The employer can satisfy this requirement by sending written notice of the termination to the USCIS office that approved the petition. The addresses for each Service Center can be found on the USCIS website at www.uscis.gov. Following receipt of the notice of termination, USCIS will respond with a notice confirming the revocation of the employee’s H-1B petition. This can take several months. Employers should retain these notices as part of the employee’s Public Access file. This revocation may pose problems to terminated H-1B employees who remain in the United States to seek other employment.
  

• What does the Department of Labor Have to do with it?
  
  In addition to USCIS notification, it is recommended that the employer withdraw the Labor Condition Application that was certified by the DOL and filed with the H-1B petition. This does not relieve the company of the requirement to notify the USCIS. DOL regulations require the employer to pay the H-1B employee’s wages until notice of a “bona fide” termination is provided to USCIS. In enforcing this regulation, the DOL has taken the position that any evidence of a “bona fide” termination, including a written notice to the employee terminating the employment relationship, is sufficient to end the employer’s wage obligation. However, a recent decision by the DOL’s Administrative Review Board held that an employer’s obligation to pay the offered salary continues through the date the employer provides USCIS with notice of the termination. Employers who do not satisfy the two requirements run the risk of being held liable to provide back-pay and/or front-pay to the employee through the expiration date of the H-1B period of stay.
  

• You Have to Pay for Return Airfare for the Employee
  
  If an employer terminates an H-1B employee before the end of that employee’s period of authorized stay, the employer is liable for the “reasonable costs” of return transportation to the employee’s last country of residence. Immigration statutes and regulations suggest that the employer’s liability is limited to the reasonable cost of physically returning the H-1B employee to the home country, and does not extend to the employee’s family or dependents. More importantly, the liability does not extend to H-1B employees who voluntarily end their employment. A first class ticket to their country of choice is not required.
  
  As with the previous regulations, USCIS lacks the statutory and regulatory mechanism to enforce this obligation. However, it is regarded as a private contractual matter that may be pursued individually by the H-1B worker. Should the terminated H-1B employee elect to remain in the U.S., the statute does not obligate employers to provide costs of return transportation. Yet the DOL considers the payment of these costs to be a normal incident of a “bona fide termination.” As a safeguard, employers may wish to provide terminated H-1B employees with a sum approximating the reasonable cost of return transportation and obtain a written release from the employee. Alternatively, an employer may provide the employee with a return ticket within a reasonable period after the termination date. The latter option would evidence the employer’s good faith effort to satisfy regulatory obligations. All offers should be made in writing. Again, employers should retain proof (inside the Public Access File) of offering the terminated employee the reasonable cost of return transportation home as part of its records of compliance with regulations.
  

• What About Re-Hired Employees?
  
  Important implications exist for the H-1B employee who is terminated and then subsequently rehired. An employer may need to rehire an employee when the initial termination was caused by clerical error or other individual circumstances. USCIS takes the position that an H-1B petition is valid until revoked. Thus, a terminated H-1B employee whose petition has not been revoked may immediately return to work for the same employer without filing a new H-1B petition. In contrast, the DOL’s position is that failing to file a new petition suggests that no “bona fide” termination occurred, thus making the employer liable for wages covering the entire period between “termination” and “rehire.” Again, employers should maintain careful records of terminations in the event that the DOL questions the timing of the termination.

Consequences & Options for the Employee

The immediate consequence to the terminated H-1B employee is the loss of legal immigration status in the United States. This is because the H-1B classification is employer-specific and employment is only authorized with the approved employer. Consequently, as of the termination date, the employee is no longer considered to be in lawful immigration status.

• No Grace Period
  
  There is no “grace period” for the terminated employee or his or her family and current dependents. Although the USCIS has proposed a 60-day grace period during which an H-1B worker may seek new employment, that proposal has not been approved. USCIS policy is that periods during which an H-1B employee receives severance payments or remains on the employer’s payroll without reporting to work are not considered periods of valid status for an H-1B nonimmigrant. There may be room for challenging this position.
  

• Available Options
  
  The options available to terminated H-1B employees are to immediately find a new employer to sponsor them, obtain a different status, or depart the United States. Technically, H-1B employees who remain in the U.S. after termination without changing status are in violation of their status and thus are not allowed to change, amend, or extend their status. However, USCIS may exercise discretion, on a case-by-case basis, in deciding whether to approve a request to change, amend, or extend the status of an out-of-status nonimmigrant. If the out-of-status period is very short (10 days or less), then a request to change, amend, or extend status will usually be approved. Terminated H-1B employees should consider changing to B-2 (tourist status) to wrap up personal affairs after the loss of their jobs.
  

• Porting to a New Employer
  
  Portability rules allow an individual in H-1B status to begin working with a new H-1B employer as soon as the new employer files a petition with the USCIS to reflect the new employment. The new petition must be “non-frivolous” and it must be filed before the “date of expiration of the period of stay.” USCIS has not clarified exactly when the expiration of the period of stay occurs. Notably, the same language has been interpreted in other contexts to refer to the expiration date on the individual’s I-94 form and not when the individual falls out of status.
  

• Terminated Employees with Pending I-485 Applications
  
  Careful consideration should be given to terminated foreign national employees who have a pending employment-based I-485 Application for Adjustment of Status (AOS). The consequences of the termination can be detrimental, depending on whether the termination occurred when the I-485 application had been pending for more than 180 days, or for 180 days or less, and whether or not the underlying I-140 petition is pending or approved.
  
  Generally, terminated H-1B employees with a pending I-485 application can port, or change employers, without invalidating their I-140 petition or having their I-485 application rejected, provided that:
  

  • the new position is in the same or similar occupation, and

  • the I-485 application has been pending for more than 180 days.
    

But if the termination or change of jobs occurs when the I-485 application has been pending 180 days or less, then the underlying I-140 and I-485 applications will be denied. Employers should also consider whether the underlying I-140 petition is pending or has been approved. With an appeal, there is a strong possibility that something could go wrong. When faced with such scenarios, employers should immediately contact their immigration attorney to assess the options, obligations, and resulting consequences.

Compliance with immigration law is a complicated but important requirement for companies hiring foreign workers. Employers may be subject to lawsuits initiated by terminated employees rendered out-of-status as a result of the company’s failure to properly terminate the employee and submit the necessary documentation to USCIS and the DOL. A thorough understanding of relevant laws and diligent follow-through with terminated employees is essential to reducing a company’s exposure to liability.