On Dec 17 2018 by H. Ronald Klasko
Termination of H-1B Employees
This update will explore the major issues involved in the termination of H-1B employees. Terminations, whether for performance or for lack of work, present special challenges to H-1B employers and to the terminated H-1B worker. These challenges, including employer obligations to terminated H-1B employees, are discussed below.
H-1B Employer Obligations
USCIS Notification of Termination
- Regulations require an H-1B employer to notify United States Citizenship and Immigration Services (“USCIS”) “immediately” of “any material changes in the terms and conditions of employment” affecting an H-1B employee. USCIS policy is that a termination is such a “material change.” Employers may satisfy this notification obligation by sending a letter explaining the termination to the USCIS office that approved the petition.
- After receipt of a letter from an H-1B employer indicating that the H-1B employee is no longer employed by the employer, USCIS will respond with a notice revoking that employee’s H-1B petition.
- Employers should be aware that there is no sanction provided in the USCIS regulations for failing to make timely notification of an H-1B worker’s termination (but see the discussion of DOL implications below).
- The eventual revocation of the H-1B petition may cause a dilemma for an H-1B employee, who may have remained in the United States to seek other employment, as discussed below. A new regulation promulgated in January 2017 provides for a grace period of up to 60 days for certain H-1B workers who are terminated. This grace period has removed some of the issues that H-1B workers previously faced following an unexpected termination; however, depending on the specific facts of a case, issues may still present.
- Employers should consider informing terminated employees of the employer’s obligation to notify USCIS of the termination and of the eventual revocation of the employee’s H-1B petition that will result.
- Employers should retain records of compliance with this obligation.
Department of Labor Implications
- Employers should be aware that the Department of Labor (“DOL”) has issued regulations preventing the “benching” of H-1B workers—that is, underpaying or not paying an employee who is not engaged on a matter that will produce revenue for the employer. These regulations impose a requirement that employees in nonproductive status or otherwise temporarily laid off “due to the decision of the employer” continue to receive their normal wages. This requirement ceases once there is a “bona fide termination” of employment. Because of this requirement, employers should never suspend an H-1B employee without pay, even if their progressive discipline system provides for such a sanction.
- A “bona fide termination” of an H-1B worker generally requires the employer to notify both the H-1B worker and the USCIS in writing of the termination, and to offer to pay the H-1B worker for the reasonable costs of return transportation abroad. If an employer fails to fulfill these requirements, the employer may be found liable by the DOL for back wages through the date on which the employer’s H-1B approval expires.
- A 2014 decision of the DOL’s Administrative Review Board held that a “bona fide termination” can also occur and end the employer’s liability for H-1B wages in cases where a terminated employee subsequently secures a new job with a new authorized H-1B employer. More specifically, the Board ruled that a bona fide termination of employment can occur and end back wage liability for an employer that proves it (1) expressly notified an H-1B employee that it terminated the H-1B employment, and (2) the H-1B employee subsequently secures USCIS’s approval for a “change of employer” or “new employer” H-1B petition. Notwithstanding this ruling, H-1B employers should continue to abide by USCIS notification requirements and offer return transportation expenses. Even if an employer is certain that this rule applies, notice to USCIS is recommended to document the employer’s bona fide termination.
- While USCIS’s position is that an H-1B petition is valid until revoked, so that a terminated H-1B employee whose petition has not been revoked could later begin work for the same employer immediately without filing a new H-1B petition, the DOL’s position is that failing to file a new petition means that no “bona fide termination” occurred, such that the employer may still be obligated to pay the required wage for the entire period between the date of purported “termination” and the date of “re-hire.”
- Employers should maintain careful records of an H-1B employee’s termination, and immediately notify USCIS of the termination, in the event that the DOL questions when the employee actually was terminated.
Liability for Reasonable Costs of Return Transportation
- 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 for the employee to his or her last country of residence.
- Immigration statutes and regulations suggest that the employer’s liability is limited to the reasonable costs of physically returning the H-1B employee abroad and does not extend to the cost of relocating family members or property.
- Employers should be aware that the statute does not impose an obligation to provide the payment of return transportation costs to an employee who elects not to depart the United States; however, the DOL considers the payment of these costs to be a normal incident of a “bona fide termination,” such that failure to satisfy this obligation could result in the continued obligation to pay H-1B wages. Note, however, that for H-1B workers who successfully port to a new H-1B employer following their termination, the DOL may not require payment of transportation expenses to end liability for the employee’s wages.
- If a terminated H-1B employee believes that an employer is not complying with the obligation to provide return transportation costs, he or she may file a complaint with USCIS. USCIS policy regarding enforcement of this obligation, however, is unclear, and USCIS lacks statutory authority and a regulatory mechanism to enforce this obligation.
- A terminated employee may also seek to enforce the employer’s obligation in state court; however, it is unclear whether such a suit could succeed.
- To avoid continuing wage liability, employers may wish to provide terminated H-1B employees with a sum approximating the employee’s reasonable return costs and obtain a written release from the employee. Alternatively, the employer may be able to satisfy the return transportation requirement by offering to provide a ticket for the employee within a reasonable period after the date of termination through the employer’s travel agent. This approach would provide evidence that the employer made a good-faith effort to satisfy its obligation, while avoiding a windfall to an employee who elects to remain in the United States. At a minimum, employers should make a written offer to pay a terminated employee’s reasonable return costs and should provide the employee with a reasonable deadline to accept (e.g., within 60 days of the effective date of termination).
- Employers should retain records of compliance with this obligation.
Consequences for the H-1B Employee
Grace Period for H-1B Workers Following Termination
- The Final Rule on High Skilled Workers that went into effect on January 17, 2017 provides H-1B workers with a grace period of up to 60 consecutive days – or until the expiration date of their current I-94, whichever period is sooner – following the loss of employment, during which they can remain lawfully in the United States and seek sponsorship by a new employer.
- Under the plain language of the new rule, H-1B workers who voluntarily leave their H-1B employer may also take advantage of the 60-day grace period provisions.
- A worker may use the grace period only once for each validity period. For instance, if an H-1B worker loses their job and then uses the grace period to transfer to another H-1B employer, they may still be eligible for another 60-day grace period should they lose that job. Unused days in the first grace period cannot be carried over into a subsequent grace period.
- USCIS policy continues to be that periods during which an H-1B employee receives severance payments or remains on the employer’s payroll without reporting for work are not periods of valid status for an H-1B nonimmigrant.
- Terminated H-1B workers should be aware that employment is not permitted during the grace period. An H-1B worker may, however, work for a new employer as soon as a petition has been filed under the portability provisions, as discussed below.
- H-1B workers should also be aware that USCIS has the discretion to deny or shorten a grace period if there are violations of status such as unauthorized employment, fraud, or criminal convictions.
Taking Advantage of the Portability Rules
- The H-1B portability rules allow H-1B workers to begin work for a new H-1B employer as soon as the new employer files with USCIS a non-frivolous petition to employ the worker in H-1B status, provided that certain conditions are met. One condition is that the beneficiary of the petition hold valid status at the time of filing.
- Prior to the implementation of the 60-day grace period, in most situations, an H- 1B worker who was terminated would fall out of status immediately, making it very difficult for a terminated employee to coordinate the filing of a new petition by a new employer. With limited exceptions, under the previous policy, most H-1B workers who were terminated had to depart the United States immediately.
- The new 60-day grace period provides H-1B workers with a window of opportunity to take advantage of the portability rules, as terminated employees are considered to be maintaining status during the 60-day period for the purposes of filing for a change or extension of status.
There are many issues to consider regarding the termination of H-1B employees. This Update is a general treatment of these issues and challenges. Each individual termination will present unique circumstances that may require more detailed analysis. As individual terminations are carried out, both employers and employees should keep these general issues and challenges in mind and should consult with immigration counsel for an individual determination of their options.
The material contained in this article does not constitute direct legal advice and is for informational purposes only. An attorney-client relationship is not presumed or intended by receipt or review of this presentation. The information provided should never replace informed counsel when specific immigration-related guidance is needed.
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This article originally appeared on www.klaskolaw.com on July 8, 2008. It has been updated to reflect current immigration policy.