What are the Immigration-Related Consequences of Laying Off an H-1B Employee?

In the tough economic environment in which employers find themselves today, many businesses are looking to reductions in workforce or other means to cut costs. For companies that employ foreign nationals, certain measures inevitably impact the immigration processes of a company, as well as affecting the foreign national employee. This month’s article focuses on the impact of such workforce reductions on the H-1B employees. Next month’s article will address the impact of the reductions on the labor certification and immigrant petition process.

Of initial concern for many employers is what becomes of the H-1B employee if his or her employment is terminated? For an H-1B employee whose employment is terminated, he or she is considered to be out of status upon termination. At the time that a foreign national falls out of status, he or she is normally expected to depart the United States. There are some circumstances, however, in which such a foreign national may remain in the United States.

First, it is important to dispel a common myth about a "ten-day rule." Some people think that a 10-day "grace period" is given to new H-1B employees whenever employment is terminated. In fact, the law provides the 10 days of additional time only at the end of the validity period of the status as granted by the Immigration and Naturalization Service (INS), (now the Bureau of Citizenship and Immigration Services or BCIS), and as appears on the approval notice and/or I-94 Departure Record (given to every foreign national upon entering the U.S.). Incidentally, the employee may also enter the United States 10 days prior to commencement of employment.

Nonetheless, the BCIS has in the past generally provided a "reasonable period" for the filing of a petition to change to a new employer or to a different visa category when an H-1B employee is terminated. While this "reasonable period" has now almost disappeared under a more frequently utilized policy of "zero tolerance," it is still within the discretion of the BCIS to approve such an application for the foreign national and allow him to remain in the United States. Additionally, the BCIS had indicated in the past that a 60-day period MAY be considered a "reasonable period" for the filing of a new H-1B petition by a new employer for the foreign national. Beware, however, that this 60-day period is not an official regulation and serves as general guidance only current domestic conditions coupled with war in Iraq make it appear unlikely such a 60 period will be offered.

In some cases, a foreign national who is unable to find another employer may be eligible to apply for a change to a different status, such as student, tourist, or other classification. Doing so can be a rather complicated process because of the specific and stringent rules governing changing to certain categories, and to the particular requirements of the new classification that is requested. In either case, whether changing to a new classification or seeking a new H-1B petition with a new employer, an H-1B employee should review the specific circumstances of his or her case with a knowledgeable immigration attorney.

An employer that terminates an H-1B employee before the end of the validity period on the approved H-1B petition must pay the employee "the reasonable costs of return transportation" of the foreign national to return abroad. This "reasonable cost of return transportation" obligation does not apply in cases where the H-1B employee’s employment is terminated at the end of the validity period. Where an employer is terminating employment prior to the expiration of the validity period, many experienced immigration attorneys counsel their clients to provide an airline ticket for the employee to depart the United States, rather than providing the employee with a payment. In this way, the employer’s records can clearly show that return transportation costs were provided in accordance with regulations. In cases where the foreign national has found another position or does not choose to depart, we suggest the company have the foreign national sign a statement that verifies they have turned down the return transport offer.

Additionally, an employer MUST notify the BCIS of termination of the H-1B foreign national’s employment. Only when that notification is filed is the employee’s employment considered "terminated" according to U.S. Department of Labor (DOL) regulations. Where an H-1B’s employment is not considered to be "terminated," the employer is liable to pay the employee the required wage, as attested to in the H-1B petition until termination is established.

Further, an employer cannot "temporarily" terminate an H-1B employee’s employment, expecting to hire him or her again when work picks up. That type of situation is considered "benching" by the DOL. If a situation is considered a benching, the employer may be obligated to pay back wages and penalties. Thus, employers must document lay-offs very clearly in company records. Employment must be terminated and the Labor Condition application revoked.

When considering taking these measures, employers must be alert with respect to employment law issues, including the anti-discrimination provisions of Title VII and other state and federal laws. It is recommended that employers consult with employment law counsel. For example, employers must be careful about providing greater or additional benefits to H-1B employees, compared to what is provided to U.S. employees. Additionally, cutting salaries of U.S. workers, but not the salaries of H-1B workers may result in problems relating to treating H-1B employees more favorably than U.S. employees. The reverse is obviously true. There are strategies and issues to consider regarding the revocation of the actual H-1B petition.

In conclusion, before implementing a reduction in workforce, it is best to consult with your immigration and employment attorneys to develop an appropriate solution. Greenberg Traurig has a top team of such professionals located around the country to assist you.

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