Avoiding The Abyss: H-1B Strategies When Facing Reductions in Force (Part III)
III. TIMING ISSUES AND STRATEGIES FOR MAINTAINING THE TERMINATED WORKER'S LAWFUL NONIMMIGRANT STATUS
In addition to advising the H-1B employer regarding its obligations upon termination of an H-1B employee, practitioners must also consider the fate of the terminated employee and advise adequately regarding the individual's options (as well as those of dependent family members, if any), while recommending appropriate actions for maintenance of status. Even where the practitioner's main client relationship is with the employer, the H-1B nonimmigrant is often under the assumption that the attorney who assisted in obtaining his or her H-1B status has an obligation to consider his or her interests--and often, the employee is correct in making such an assumption. These situations raise difficult and complex ethical issues and must be treated with extreme care. Whether the attorney has endeavored to arrange for sole representation of the employer or agreed to dual representation of the employer and the H-1B employee, the attorney must adequately consider and, perhaps facilitate, measures that take into consideration the status issues of the H-1B employee.30
A. Is there a "grace period"?
Current H-1B statutory provisions and regulations do not expressly provide for a "grace period"--a period of time allowed for the alien to seek change of H-1B employer or of nonimmigrant status--after termination of H-1B employment. Case law deciding questions of maintenance of status also fail to address the issue of how much time--if any--is allowed for an H-1B nonimmigrant to take one of the above actions.31 Some INS officers and immigration practitioners refer to the "10-day rule," which purportedly allows the nonimmigrant to file for new employment or status within 10 days of terminating employment. However, no such "10-day rule" exists in statute or regulation. H-1B regulations provide that a beneficiary of an H-1B petition "shall be admitted to the United States for the validity period of the petition, plus a period of up to 10 days before the validity period begins and 10 days after the validity period ends."32 Given the lack of regulatory guidance on the issue, however, sources within the INS have occasionally unofficially indicated that periods of 10 to 30 days are reasonable after termination of H-1B employment to apply for a change of H-1B employer or of nonimmigrant status. Other government sources have indicated that they follow a "reasonableness" standard on a case-by-case basis.
On March 16, 2001, Wired News published a story on H-1B nonimmigrants' eligibility to seek new H-1B employment after termination.33 An INS official was quoted as saying that the Service is "going to let things slide" for terminated H-1B workers, and "allow them to switch jobs without leaving the country, even if they have been unemployed for a while."34 The INS publicly repudiated this report and communicated to the immigration Bar through the American Immigration Lawyers Association (AILA) that it has not changed its long-held view that H-1B nonimmigrants who remain in the United States after termination of H-1B employment without changing status are considered to be in violation of their status.35 According to AILA InfoNet, the INS stated that "it will continue its past policy of reviewing such situations on a case-by-case basis to determine whether to exercise discretion" to grant an extension or a change of status, noting that "the length of the individual's presence in the U.S. under the H-1B admission is one factor in such exercise of discretion." 36
There is some hope for guidance on this much-debated issue in the near future, as the INS has recently announced its intention to include a provision affording a grace period for H-1B nonimmigrants in its proposed regulations implementing AC21. In a June 19, 2001 policy memorandum discussing AC21 and procedures for handling cases affected by the new statute, the INS Headquarters stated that it is planning to "propose a rule that would afford H-1B beneficiaries, who are no longer working for the initial H-1B employer, some reasonable period of time such as 60 days after leaving the initial H-1B employer to begin working for a new H-1B petitioning employer under the portability provisions."37 The memorandum cautions, however, that such a grace period does not currently exist, and even if the INS includes a grace period provision in its proposed rule implementing AC21, it would not be effective until it is published as a final rule.38 Thus, until it is promulgated as a final regulation, H-1B nonimmigrants must not rely on the prospect of a future grace period in assessing their options.
Meanwhile, given the lack of regulatory guidance and uncertainty in INS policy, the H-1B nonimmigrant must consider his or her options immediately upon receiving notice of termination and take action before official termination of employment or as soon as possible thereafter. The individual's options include: (a) arranging for a prospective H-1B employer to file a petition on his or her behalf; (b) filing an application to change to another nonimmigrant status for which he or she is eligible; or (c) arranging for his or her (and any family members') departure from the United States. The longer the delay in taking corrective action, the greater the risk that the INS will consider the individual to have fallen out of status.
B. When does the employment relationship "terminate"?
It is not always easy to determine when the employment relationship has been ended. In the case of reduction in force or a layoff, employees may be provided with a severance package that contains sufficient indicia of a continued employment relationship, such that the H-1B worker may have additional time to consider his or her options and take appropriate action.
In a letter responding to an attorney inquiry, the Chief of INS Business and Trade Services Branch stated that "[a]n H-1B nonimmigrant alien is admitted to the United States for the sole purpose of providing services to his or her United States employer. Once the H-1B nonimmigrant alien's services for the petitioning United States employer are terminated, the alien is no longer in a valid nonimmigrant status."39 Accordingly, the letter continued, an H-1B nonimmigrant terminated pursuant to the company's reduction in force would not be maintaining valid H-1B status once the employer terminates their service, "regardless of any arrangements for severance pay."40 Thus, the INS position is that severance pay alone is not a sufficient indication of continued employment relationship.
Nevertheless, some severance packages may exhibit sufficient indicia of an employer-employee relationship so that notice of termination of employment need not be sent until the effective end date of the severance package. In a February 2, 2000 letter discussing maintenance of H-1B status during an extended medical leave, the Acting Director, INS Business and Trade Services Branch stated that "[c]urrent Service policy is that an H-1B nonimmigrant alien is maintaining H-1B status as long as the employer-employee relationship exists between the petitioner and the alien. The employer-employee relationship continues to exist when there is an identifiable tie between the employer and the alien."41
If the severance package consists solely of a lump-sum payment or payments of a designated monetary amount, as described in Harry Joe's letter,42 the INS view is that employment relationship has ended. However, some employers may offer severance programs that continue significant employer-employee relationships throughout the severance period. They may include regular paychecks, insurance, benefits, and 401(k) deductions and contributions on the employee's behalf, bind the employee to a non-competition and/or other restrictive clause throughout the severance period, or subject the employee to be recalled to work. Such arrangements would seem to constitute "identifiable ties" between the employer and the H-1B employee.
For example, if the employer and the H-1B nonimmigrant entered into an agreement as part of the severance program to keep the H-1B nonimmigrant as an "on-call" employee, requiring the employee to remain available to return to work upon the employer's request, such restrictions on the H-1B nonimmigrant's freedom of employment may constitute sufficient continuation of the employment relationship. This interpretation of the employment relationship would be consistent with the principle behind the DOL's "no-benching" obligation under ACWIA, as long as the employee continues to receive his or her H-1B required wages and benefits throughout the "severance" period.
Continued maintenance of nonimmigrant status during a severance period is consistent with the core purpose of severance programs. Severance programs are meant to provide employees--who served and made valuable contributions to the company--time to consider their options and locate new employment while being paid wages, receiving benefits, and--in some cases--being bound by the same obligations and restrictions of employment. Severance programs are intended to provide time for an employee, U.S. or foreign, to decide what to do and where to go. It would be reasonable to allow an H-1B nonimmigrant the same amount of time provided by its employer to U.S. workers to seek new employment, apply for a change of status, or return to his or her home country.
The reader should bear in mind that this is an unsettled area of law, for which there is no official INS guidance. Given the lack of regulatory guidance and uncertainty in INS policy, to the extent the H-1B nonimmigrant does not secure a new H-1B employer and is not prepared to return to his or her home country immediately upon termination of services, the most conservative approach would be to file for an application to change to another status immediately.
When an H-1B nonimmigrant contemplates change to another nonimmigrant status, perhaps the most common choice is B-2 visitor status. Of course, the H-1B nonimmigrant must meet the eligibility requirements for B-2 status. To be eligible for B-2 status, the nonimmigrant must have an unrelinquished foreign residence abroad to which he or she will return at the end of his or her temporary stay in the United States.43 Thus, if the individual plans to return to his or her home country but requires additional time to wrap up his or her personal affairs in preparation, such intention would be consistent with this requirement. The nonimmigrant must also show that he or she has sufficient funds to support him- or herself financially during the remaining temporary stay without engaging in unauthorized employment.44 Thus, B-2 status during a severance period with increments of employment would not be viable; however, as a practical matter, an application for change of status would not be adjudicated for months, pending beyond the duration of many severance programs.
Practitioners must be cautious to avoid misrepresentation in assisting and/or advising the alien in seeking change of status, as any misrepresentation may not only adversely affect the alien's immigration future, but may also expose the attorney to civil and criminal penalties.45
© Copyright 2001 Paparelli & Partners LLP. Published with permission.
30An attorney's dual representation of an H-1B employer and its employee extends the attorney's fiduciary duty obligations to each client (the employer and the employee), including an obligation not to engage in practice adversely affecting the interests of either party. Model Rules of Professional Conduct, Rule 1.7 (1983). Practitioners must be mindful that they may have established an attorney-client relationship with a party--even without an express contract--where the party relied on legal advice given by the attorney or otherwise reasonably believed that such a relationship exists. For a discussion of attorney-client relationship implied from conduct, including relevant case law, see ABA/BNA, Lawyers' Manual on Professional Conduct §31:103. For discussions of ethical issues in dual representation, see also B. Hake, "G-28 Notices of Appearance and the Client-Lawyer Relationship," 72 Interpreter Releases 757 (June 5, 1995); A. Paparelli, C. Haight & B. Hake, "Avoiding or Accepting Risks in H-1B/LCA Practice: Part II," 92-12 Immigration Briefings (Dec. 1992). Moreover, even where the attorney has specifically undertaken sole representation of one party only, the attorney may still have legal exposures to nonclients under the relevant rules of professional responsibility. See Lawyers' Manual on Professional Conduct, supra §301:601. The extent of legal exposure for malpractice can be very severe, as seen in a recent judgment awarded to an alien worker against an immigration attorney in the amount of $365,000. Saraswati v. Wildes, No. GIC742835 (Sup. Ct. San Diego County, Feb. 15, 2001). Although the case did not involve an H-1B worker, it involved similar circumstance of dual representation of an employer and its employee for employment-based immigrant visa processing and the ensuing adjustment of status filing on behalf of the employee. According to the facts of the case as reported, the sponsoring employer terminated the employee while the adjustment of status application was pending, at which time the law firm notified the INS of the termination, resulting in the revocation of the pending applications and causing the employee to fall out of lawful status. Of the $365,000 verdict, $300,000 was for emotional distress.
31 See, e.g., Matter of Lee, 11 I&N Dec. 601 (Comm. 1966). Lee was a musician who had entered the United States in H-B status with a group of 36 musicians to perform in New York. After the group disbanded, Lee moved to Los Angeles where he had been living for two months before filing for change of nonimmigrant status to that of a visitor. The court denied his application for change of status, stating that "[b]y ceasing his temporary employment as an entertainer the applicant terminated his lawful nonimmigrant status…." Although the court may have determined that an alien in Lee's circumstances--who took no action for two months following termination of H-1B employment--would be deemed out of status, it did not address the issue of whether any period would be allowed for an alien to file for a change of nonimmigrant status. In another matter involving an F-1 student who had allegedly violated his nonimmigrant status, the court stated that, in the case of a nonimmigrant who "has been admitted for a fixed period, within that period his stay is not unlawful unless by his own conduct he violates one of the conditions of his admission." Matter of Siffre, 14 I&N Dec. 444 (Comm. 1973) (emphasis added). It is arguable that, in the case of an H-1B nonimmigrant who is terminated as part of the employer's reduction in force, the alien's purported violation of H-1B status is not by his or her "own conduct."
32 8 CFR §214.2(h)(13)(i)(A).
33 "New Life for Fired H-1B Workers," Wired News, Mar. 16, 2001.
35 INS communication was distributed via AILA InfoNet on March 21, 2001.
37 INS Central Office Memo, HQ 70/6.2.8 (June 19, 2001), reprinted in 78 Interpreter Releases 1108, at 1112 (July 2, 2001). On June 21, 2001, at the annual AILA conference in Boston, Massachusetts, Efren Hernandez, Acting Director, INS Business and Trade Services suggested that although the Service has not made a final decision as to what it will propose as a "reasonable period," there is a good possibility it will be 60 days.
38 "It is important to note that such a proposed rule would not, of course, take effect until it has been published as a final rule, after notice and comment, and any revisions. This prospective statement of policy …shall not be utilized as a standard of adjudication in cases involving portability issues, unless and until promulgation of a final rule implementing AC21 §105 with such an interpretation." Id.
39 Letter from Thomas W. Simmons, Chief, INS Business and Trade Services Branch to Harry J. Joe (no date), reprinted in 76 Interpreter Releases 387 (Mar. 8, 1999).
40 Id. The facts described to Mr. Simmons involved H-1B and L-1 workers whose employment would be terminated on March 1, 1999, but who would receive a severance benefit including regular compensation, insurance, and benefits for a 60-day period. Mr. Joe had asked whether those employees would be maintaining lawful nonimmigrant status through that 60-day period.
41 Letter from Efren Hernandez, Acting Director, INS Business and Trade Services to Bernard P. Wolfsdorf (Feb. 2, 2000), reprinted in 77 Interpreter Releases 252 (Feb. 28, 2000) (emphasis added).
42 See supra notes 37-38.
43 INA §101(a)(15)(B), 8 USC §1101(a)(15)(B); 22 CFR §41.31(a)(1); 9 U.S. Dep't of State, Foreign Affairs Manual, Note 2 to 22 CFR §41.31.
4422 CFR §41.31(a)(2); 9 FAM §41.31, Note 2.1. See also INS Operations Instruction 214.2(b) ("The Service does not require that an applicant for admission have with him or her funds to maintain a 6-month stay, but the applicant must demonstrate that he/she has access to sufficient resources.").
45 INA §274C(a)(5), 8 USC §1324c(a)(5), 8 CFR §270.3.
About The Author
Yoshiko I. Robertson is an associate at Paparelli & Partners LLP in Irvine, California. Ms. Robertson received her Bachelor's degree from the University of California, Santa Barbara, and her J.D. from Loyola Law School, Los Angeles. Ms. Robertson practices in all areas of employment- and business-based immigration law, with strong focus on H-1B and labor certification matters. Ms. Robertson has authored or co-authored several articles on H-1B related issues.
The author thanks Angelo A. Paparelli, partner at Paparelli & Partners LLP, for his valuable comments and insights, and Bobby C. Chung, associate at Paparelli & Partners LLP, for his helpful research on selected topics.
Angelo A. Paparelli (firstname.lastname@example.org) has been practicing business-sponsored immigration law for over 20 years, and is the managing partner of Paparelli & Partners LLP in Irvine, California. He is a nationally recognized speaker, published author and leading expert on cutting-edge business-related immigration issues, including the immigration consequences of mergers, acquisitions, reorganizations and other business changes, consular visa practice, audits of employers' compliance with immigration and labor regulations, and employment-based work visas. Mr. Paparelli is certified as a Specialist in Immigration and Nationality Law by the State Bar of California, Board of Legal Specialization.