Employers must sometimes terminate an employee whom they have sponsored for H-1B nonimmigrant status prior to the end of the period of time requested on the H-1B petition.
Such a termination is allowed under both the USCIS and Department of Labor regulations governing the employment of H-1B nonimmigrants. Recently, however, the Department of Labor’s Administrative Review Board held that an employer must pay the required salary to a terminated worker after the date of termination, until the employer can prove that it notified USCIS of the H-1B’s termination.
By way of background, regulations of the USCIS require an H-1B employer to notify 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 change or termination to the USCIS office that approved the petition. There is, however, no sanction provided by USCIS for failing to make timely notification of an H-1B worker’s termination.
Separately, 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 continue to receive their normal wages or salary during the entire validity of the H-1B status, except during certain personal leaves of absence. The requirement to pay wages or salary only ceases once there is a “bona fide” termination of employment.
The DOL’s regulations state the obligation to pay an employee only until a “bona fide” termination occurs; they go on to note the obligation to inform USCIS of an H-1B employee’s termination, but do not expressly state that the obligation to pay the salary continues until USCIS is notified of the termination. In many cases, DOL’s enforcement position has been that any evidence of a “bona fide” termination, such as written notice to the employee, will be sufficient to end the employer’s wage obligation.
In a recent decision, Amtel v. Yongmahapakorn, ARB Case No. 04-087, the Administrative Review Board (the highest administrative tribunal within the Department of Labor) interpreted the regulation as imposing an affirmative obligation on employers to pay the salary of a terminated H-1B nonimmigrant until the employer notifies USCIS of the employee’s termination.
On one hand, employers can be comforted by the ARB’s holding that the Department of Labor is limited to reviewing whether or not a termination had occurred, and not whether the termination was for “good cause.” The employee argued that her termination was not “bona fide,” as her employer had not followed the progressive discipline program set forth in its employee handbook. The ARB disagreed, holding that “an employer need not establish a valid basis or good cause for an employee’s termination to effect a ‘bona fide termination’ under the INA’s H-1B provisions.”
On the other hand, however, employers should be concerned that the ARB interpreted the requirement of a “bona fide termination” in the DOL’s regulations as incorporating the USCIS notification requirement. The ARB disagreed with the position of the Administrator of the DOL’s own Wage and Hour Division, and held that the DOL regulation, when considered together with comments in the Federal Register accompanying its publication, means that “to ultimately effectuate a ‘bona fide termination’ under the INA, an employer must notify the INS [currently, USCIS] that it has terminated the employment relationship with the H-1B nonimmigrant employee and provide the employee with payment for transportation home.”
Based on this interpretation, the ARB compelled Amtel to pay Ms. Yongmahapakorn’s salary for the seventeen month period between her actual termination date and the ending date of her H-1B petition.
It remains to be seen whether the Administrator of the Wage and Hour Division will continue its past practice of relying on any proof of a “bona fide termination” as ending an employer’s obligation to pay an H-1B nonimmigrant’s salary. Because of the ARB’s decision, however, employers will be well-advised to review their procedures for terminating H-1B employees to ensure that they can take steps to notify USCIS immediately of the termination of H-1B nonimmigrants and thus end their obligation to pay the salary of the terminated H-1B.
For former employees where the USCIS has not been notified, we recommend such notification take place immediately. At this point, we do not recommend that employers take affirmative steps to make payments to employees who were terminated but for whom no USCIS notification was sent, however, as it is not clear what the Wage and Hour Division’s enforcement position will be, and as we believe the ARB’s interpretation of the regulation is subject to challenge.
If you have questions regarding the contents of this Client Alert, please contact any of our attorneys.