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H-1B Issues to Consider in a Downturn Economy


The Employment and Labor Law Alert

January 25, 2002

In the recent down-turn economy, many companies are turning to layoffs as a strategy for dealing with their economic woes. If aliens with H-1B visas are among the layoff pool, there are a number of issues that a company needs to consider in dealing with these non-immigrants. In particular, the employer needs to be aware that:

  • The employer has liability for return transportation costs abroad of the alien.
  • The employer has an obligation to notify the Immigration and Naturalization Service (“INS”) of the termination.
  • There are timing issues and strategies available to assist the H-1B alien with maintaining lawful status.
  • Return Transportation Costs

    Under the Immigration and Nationality Act of 1952 (“INA”), an employer who dismisses an H-1B worker from employment before the end of the period of authorized admission is liable for the reasonable costs of return transportation of the alien. The regulations implementing this provision state that the term “abroad” refers to the “alien’s last place of foreign residence.” 8 C.F.R. §214.1(h)(4)(iii)(E).

    The regulations do not define reasonable costs of return transportation, thus it is unclear whether the employer’s responsibility covers the transportation costs of the H-1B alien alone, or whether it extends to the alien’s family and personal property. A reasonable interpretation of the regulation is that the employer’s obligation is limited to the reasonable cost of air or ground transportation to return the H-1B alien to last residence abroad. Many companies simply provide a check in the amount of the travel costs to the country of origin, even though this obligation is only triggered in the event the H-1B non-immigrant actually decides to go home. Since many H-1B aliens are successful in finding other work in the United States after being terminated, the return transportation provision may not be triggered.

    INS does not take any active role in either the determination or enforcement of the employer’s responsibility for return transportation costs, taking the position that any such dispute is a matter of private contract between the H-1B employer and the H-1B employee. However, employers should note that payment of return transportation abroad is a key component to evidence bona fide termination of employment in defense of a “benching” claim by the Department of Labor (“DOL”). The American Competitiveness and Work Force Improvement Act of 1998 (“ACWIA”) created a “no-benching” requirement which obligates an employer to pay the required H-1B wage to the alien even while the worker is inactive or “benched” unless the inactive status is voluntarily requested by the alien, or there has been a bona fide termination of employment. In the context of the “no benching obligation,” the DOL will not consider termination to be a bona fide termination unless INS has been notified that the relationship has been terminated, the H-1B petition has been canceled, and the employee has been provided with payment for transportation home where required.

    Notification To The INS

    Under INS regulations, an employer of H-1B non-immigrants is required to notify the INS “immediately” of any changes in the terms and conditions of employment which may affect H-1B eligibility. 8 C.F.R. § 214.2(h)(11)(i)(A). Specifically, the provision requires that the employer send a letter explaining changes if the H-1B non-immigrant is no longer employed. The INS then responds with a notice of intent to revoke the H-1B petition. There is no express penalty for failure to make “immediate” notification. Thus, some employers have accommodated H-1B non-immigrants by delaying the notification to INS until the alien is able to apply for or change to a different status. This is crucial to the non-immigrant who is required to maintain lawful status.

    Timing Issues Technically, when an H-1B employee is terminated, his or her status ends at that point. However, with the passage of the American Competitiveness in the Twenty-First Century Act, (“AC 21”), Congress created “portability” of the H-1B visa. What portability means is that instead of waiting until a new H-1B petition is approved for a new employer, the H-1B alien may begin working for the new employer as soon as the H-1B petition is filed by the new employer. Current INS regulations do not provide for any “grace period” to an H-1B employee who has been terminated. Thus, the H-1B employee has a choice of obtaining new H-1B employment, changing to visitor status or some other status, or leaving the country immediately. Some employers, recognizing the burden on their terminated H-1B employees, hold off on filing the notice of termination with INS to give the terminated H-1B employee a period within which to settle their affairs. Moreover, even where the notice of termination has been filed, INS will typically treat the employee as though he or she has maintained their lawful status, as long as the terminated employee is able to submit an application for a different status or a new employer has filed a petition for the H-1B alien before the termination notice is acted upon.

    Although INS recognizes that a lot of H-1B employees are faced with layoffs and uncertainty about their immigration status, thus far, it has not taken any steps to clarify this very unsettled area of the law. The best an employer can do in terminating such employees is to discuss the issue openly with the employee and do what is possible to help the employee maintain his or her lawful status. In some situations this may entail holding off on sending INS a notice of termination of employment. Another strategy is that in the notification letter, the employer may wish to specifically reference the regulation that requires INS to issue a notice of intent to revoke prior to actually performing the revocation. Although the regulation 8 C.F.R. § 214.2(h)(11)(i)(B) requires the INS to issue a notice of intent to revoke containing a detailed statement of the grounds for revocation and the time period allowed for the petitioner’s rebuttal, usually thirty (30) days, in many cases, INS simply revokes the approved petition without first issuing such a notice. By specifically referencing the section and requesting the notice of intent, an employer can buy more time for the employee to settle their affairs after the termination.

    Hiring New H-1B’s

    The timing considerations that affect the terminated alien employee and the employer from the layoff perspective also affect an employer who considers hiring an alien laid-off from an H-1B position with another employer. Because the regulations do not provide for any “grace period” between H-1B jobs, it is unclear whether the portability provisions of AC 21 may be used by the new employer. The less time that has elapsed between the termination and the prospective hire, the more likely that portability would apply. Critical to determining if the portability provisions may be used is whether:

  • the prospective employee has maintained lawful status.
  • the prospective position is in good faith an approvable H-1B position.
  • the employee has not worked unlawfully for any other employer.
  • Because the applicability of portability in a layoff situation is such a gray area, a prospective employer should find out whether the previous employer filed a notice to withdraw the previous H-1B petition and if so, when; whether the employee has been employed by anyone else other than his authorized employer; and how much time has elapsed since the termination. In view of the fact that, if portability is not allowed, the H-1B employment commenced under the portability provisions by the new petitioning employer could be deemed unlawful by INS, the safest way to handle such petitions is to use “premium processing” at the applicable service center and wait until the petition has been approvied by INS before permitting the new H-1B employee to begin work. Although premium processing requires payment of an additional $1,000, it takes place within a maximum of fifteen (15) calendar days, avoids the issue of whether portability was properly invoked and in some cases, can be accomplished before the INS acts on the termination notice filed by the previous employer.

    In sum, when dealing with H-1B employees, whether in a layoff situation or in hiring a an H-1B employee who has been laid off by another employer, it is critical to assess the effects of the layoff on the status of the terminated alien.