Avoiding The Abyss: H-1B Strategies When Facing Reductions in Force (Finale)
The recent weakening of the economy, particularly in the high-technology sector, is causing many companies across the country to downsize and restructure their workforces to gain efficiency and maintain profitability. "Reductions in force" and "layoffs" are becoming commonplace in an industry that--until recently--could not hire enough skilled professionals.1 Given the large concentration of H-1B workers in the high-technology sector, immigration practitioners today must be prepared to advise corporate clients preparing for reductions in force as well as H-1B nonimmigrants whose jobs have been or may be eliminated.
This article will discuss some of the common issues that arise in connection with termination of H-1B employment, including:
II. EMPLOYER'S OBLIGATIONS UPON TERMINATION OF AN H-1B EMPLOYEE
A. Costs of Return Transportation Abroad
The Immigration and Nationality Act of 1952 (hereinafter INA) provides that where an H-1B worker "is dismissed from employment by the employer before the end of the period of authorized admission, the employer shall be liable for the reasonable costs of return transportation of the alien abroad."2 The regulation confirms that voluntary termination of employment by the H-1B nonimmigrant prior to the expiration of petition validity does not constitute "dismissal" within the meaning of the provision.3 The provision allows an H-1B nonimmigrant who believes the employer has not complied with the provision to "advise the Service Center which adjudicated the petition in writing" and that the complaint "will be retained in the file relating to the petition."4
Congress has not defined the scope of "reasonable cost of return transportation" in the statute or legislative history. Advisory letters from the INS on the subject have only referred to the costs of transporting the principal H-1B beneficiary to his or her last country of residence, without any mention of the costs of transporting the individual's personal property or family members.5 Although the exact scope of the employer's responsibility is unclear, a plain reading of the Act and regulations suggest that the employer's obligation is limited to reasonable costs of air or ground transportation to return the H-1B nonimmigrant physically to his or her last place of residence abroad, but does not include more extensive relocation costs, such as transportation of family members or of personal property.
The INS has confirmed that the agency disclaims any active role in the determination or enforcement of the employer's liability for an H-1B nonimmigrant's return transportation. Although an aggrieved H-1B nonimmigrant may file a complaint with the INS under the regulations, the Service acknowledges that it is not "provided with any means to determine the validity of the complaint, nor with any authority to investigate the complaint or to mediate or compel a resolution," and that it has no active role in determination and enforcement of liability.6 The Preamble to INS regulations also confirms the lack of a penalty provision for employers violating the statutory requirement.7
Although the Preamble warns that "the Service may consider the fact that an employer has not complied with this provision when adjudicating future nonimmigrant visa petitions,"8 the General Counsel's office has stated that "it is unlikely that the Service could deny a later petition on the basis of the petitioner's failure to pay a prior employee's return transportation costs, in the absence of some statute or regulation authorizing this action."9 Accordingly, the INS concluded that any liability an employer may incur would be to the H-1B nonimmigrant, rather than to the Service or some other agency, and that the INS has no role in the determination or enforcement of this liability.10 Therefore, it appears that a discharged H-1B nonimmigrant would be required to file a civil law suit (or a request for arbitration if the employment agreement committed the parties to arbitrate disputes) in order to enforce the employer's obligation to pay for the cost of his or her return transportation, and the scope of "costs of return transportation" would be for the court or the arbitrator to decide.
The obligation to pay for cost of return transportation abroad is triggered only in the event the H-1B nonimmigrant actually decides to return home. Although the H-1B employer must offer to pay for such transportation cost, if the H-1B nonimmigrant refuses to depart the United States, the employer cannot force the individual to leave. This raises additional questions. If the alien remained in the United States for some period of time and then decided to return home, is the employer still under obligation to pay for the transportation costs? Is there a specific procedure for compliance, such as purchase of a "use-it-or-lose-it" airline ticket that the alien cannot cash in or exchange? In a May 20, 1999 advisory letter, Thomas W. Simmons, Chief, INS Business and Trade Services Branch, declined to advise on this issue, indicating that "[t]he Service views the return transportation provision as a private contractual issue between the petitioner and the beneficiary" and that the Service has not developed policies on the issue.11 However, the regulatory language, which binds "any employer whose offer of employment became the basis for an alien obtaining or continuing H-1B status" to pay for return transportation costs,12 is not inconsistent with a view that the obligation may remain with the employer after the H-1B nonimmigrant moves on to new employment or status in the United States.13 This provision also suggests that where there are multiple H-1B employers, each employer may be jointly and severally liable for the cost of return transportation abroad.
Employers must also bear in mind that payment for return transportation abroad is an essential component of evidencing bona fide termination of employment, according to the Department of Labor (hereinafter "DOL" or "the Department"). This is important in the context of the "no-benching" obligation imposed upon employers by the American Competitiveness and Workforce Improvement Act of 1998.14 In the Preamble to the Interim Final Rule implementing ACWIA, the DOL noted that it "would not likely consider it to be a bona fide termination…unless INS has been notified that the relationship has been terminated pursuant to 8 CFR 241.2 (h)(11)(i)(A) and the petition canceled, and the employee has been provided with payment for transportation home where required by section 214(E)(5)(A) of the INA and INS regulations at 8 CFR 214.2(h)(4)(iii)(E)."15
The DOL's authority to determine what constitutes bona fide termination of H-1B workers is questionable, however, given that H-1B employment authorization and maintenance of status issues--including determination of when H-1B employment is terminated--are properly within the jurisdiction of the INS. Although the Department has the authority to determine whether employers are paying their H-1B workers the required H-1B wages during the period of their INS-authorized employment, it is not within its jurisdiction to decide the duration of such employment. Nevertheless, in order to avoid a potential benching claim where the H-1B nonimmigrant decides to remain in the United States after termination, the wise employer would have in writing an offer made to the H-1B nonimmigrant to pay for reasonable costs of transportation abroad, and obtain the nonimmigrant's acknowledgment that such offer was received and--where appropriate--waived.16
B. Notification to the INS
INS regulations impose an obligation for an H-1B employer to notify the INS "immediately" of "any changes in the terms and conditions of employment of a beneficiary which may affect [H-1B] eligibility."17 The provision also requires that if the employer no longer employs the H-1B nonimmigrant, the employer "shall send a letter explaining the change(s) to the director who approved the petition."18 The regulations further require the Service to respond with a notice of intent to revoke the H-1B petition if the "beneficiary is no longer employed by the petitioner in the capacity specified in the petition."19 Although the regulation requires immediate written notification when there is a change in the terms of employment, it does not expressly impose any penalty for a failure to make prompt notification.
The INS requirement for notification predates the passage of the American Competitiveness in the 21st Century Act (AC21).20 AC21 created the concept of "H-1B portability,"21 which reflects a legislative intent to allow greater mobility of H-1B workers. Congress was concerned that H-1B workers' inability to transfer to new H-1B employers until the time-consuming LCA and H-1B petition adjudication were completed would create opportunities for exploitation of H-1B nonimmigrants by the employer.22 Thus, one could argue that AC21 has expressed a public policy to allow for free and unimpeded transfer of H-1B workers. The INS requirement for notification of H-1B termination that would result in the agency's revocation of the underlying petition may be seen as inconsistent with the public policy behind AC21.
The notification requirement also pre-dates the DOL's Interim Final Rule implementing ACWIA, which created a "no-benching" requirement.23 The "no-benching" provision requires employers to pay the H-1B nonimmigrant the required H-1B wage rate even while the worker is inactive, or "benched," unless the nonproductive status is at the voluntary request of the H-1B worker, or the obligation to pay the wage is ended by a bona fide termination of the employment relationship.24 As discussed in the above section on costs of return transportation abroad, the DOL indicated in the ACWIA Interim Final Rules that the employer must have satisfied the regulatory requirement regarding notification of termination for the Department to consider it a bona fide termination.25 In a DOL "stakeholders" meeting held on January 16, 2001, a DOL Employment Standards Administration (ESA) representative verbally opined that it would consider revocation of the H-1B petition as "one indication" of the official termination of H-1B employment relationship, but that "failure to revoke may not be entirely dispositive" of whether termination of employment has really occurred.26 The DOL concluded that "the real issue is whether it is clear to the employee that the employment relationship has been severed. In this regard, a termination letter from the HR Director is the best evidence."27 However, the Department has yet to issue a written clarification of its position, other than what has been published in the Preamble to its ACWIA regulations. 28
The current INS regulation requiring employers to notify the Service of H-1B termination creates tension between the employer and the employee, and raises conflict of interest concerns for immigration practitioners. As discussed above, the expression of congressional intent to allow greater freedom of movement for H-1B workers suggest that the INS should consider a policy that clarifies what would be a reasonable period of time for an H-1B worker to maintain status between employment. In addition to public policy considerations, there are also fundamental equity and fairness concerns where employers are required to "pull the rug out" from under the H-1B employee. To be sure, the INS may desire an employer's notice of a termination as a means to monitor and maintain accurate count of H-1B visa numbers each fiscal year. It does not follow, however, that the Service must immediately revoke the approved H-1B petition. An H-1B visa number has already been allocated to that alien, and he or she retains the statutory privilege of "porting" that number to another H-1B employer under AC21. If there were a reasonable time period for retention of lawful status after the employer notifies the INS of employment termination, the alien would not be harmed and lawful status would not be impaired. Perhaps the INS will discern the important public policy that led to the creation of the portability principle, as well as fundamental considerations of equity and fairness.
In the meantime, given that INS notification is mandated by regulation, employers should be advised to comply with the requirement and notify the Service upon termination of an H-1B employee. However, employers should also be informed of the serious consequences revocation of the H-1B petition may have on the H-1B nonimmigrant. Employers may wish to inform the H-1B nonimmigrant that they are required to notify the INS of employment termination and that they intend to comply with this requirement, so that the nonimmigrant is made aware of the likely consequences. It would be helpful for the H-1B nonimmigrant to be provided this information before the employer takes such action, although employment law and business concerns may make advance notice impossible. The INS typically issues responses to notices of termination of H-1B employment within approximately 30 to 45 days. By regulation, the Service is required to issue a notice of intent to revoke and an opportunity to respond.29 However, the INS has sometimes revoked the approved petition without first issuing a notice of intent. Thus, employers may wish to reference in their notification letters the operative regulation and specifically request the procedure mandated by regulation. This process may also provide the H-1B nonimmigrant additional time to take appropriate action to avoid unlawful status by invoking the H-1B portability provision through another employer, filing a nonfrivolous application to change to another nonimmigrant status, or leaving the United States.
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
Immigration practice in the H-1B area has never been easy, but in good economic times, the goals of the parties concerned--the employer and the alien--are both positive and--generally--aligned. Although practitioners must always be mindful of difficult and delicate issues that arise upon termination of H-1B employment, the recent softening of the economy makes them more prevalent. It is always important for us as immigration practitioners to evaluate our duties and obligations to clients and be prepared to advise them adequately and timely regarding issues surrounding termination of H-1B employment.
© Copyright 2001 Paparelli & Partners LLP. Published with permission.
1 Despite the softening in some sectors, the industry still faces a critical shortage of qualified high-tech professionals, according to the Information Technology Association of America. See Laurie J. Flynn, "For Workers in Technology Despite Cuts," N.Y. Times, Apr. 2, 2001, at C8.
2Pub. L. No. 82-414, 66 Stat. 163 (codified as amended at 8 USC §§1101 et seq.) §214(c)(5)(A), 8 USC §1184(c)(5)(A), 8 CFR §214.2(h)(4)(iii)(E). The regulation specifies that the term "abroad" refers to "the alien's last place of foreign residence." 8 CFR §214.2(h)(4)(iii)(E). The Preamble to the regulation notes that the term was specifically defined to clarify that employers may not simply provide bus fare to Canada or Mexico to comply with the requirement. 56 Fed. Reg. 61113 (Dec. 2, 1991).
38 CFR §214.2(h)(4)(iii)(E) ("If the beneficiary voluntarily terminates his or her employment prior to the expiration of the validity of the petition, the alien has not been dismissed."). The Preamble to the regulation also states that the term "dismissed" "requires some action by the employer." 56 Fed. Reg. 61113 (Dec. 2, 1991). 48 CFR §214.2(h)(4)(iii)(E).
5See, e.g., Letter from James M. Bailey, then Director, Northern Service Center, to Paul Parsons (Mar. 8, 1993), reprinted in 70 Interpreter Releases 1185-86 (Sept. 3, 1993) ("the provision of law pertaining to the return transportation cost of any H-1B alien terminated prior to the expiration of nonimmigrant status should be the responsibility of all H-1B employers" (emphasis added)).
6 Gen. Couns. Op. 92-44 (Aug. 17, 1992). Jacquelyn A. Bednarz, Chief, Nonimmigrant Branch, INS Office of Adjudication, has acknowledged that the INS does not actively enforce the return transportation requirement, following the guidance from the General Counsel's office. See 70 Interpreter Releases 1172 (Sept. 3, 1993).
756 Fed. Reg. 61113 (Dec. 2, 1991).
8Id. See also Letter from James M. Bailey to Paul Parsons, supra note 5, which states that "the Service will compile information on employers who do not comply with the provision relating to the return transportation. In the event numerous complaints are received about a particular employer, the Service may refer the case for further investigation." 9Gen. Couns. Op. 92-44, supra note 6.
11Letter from Thomas W. Simmons, Chief, INS Business and Trade Services Branch to Robert A. Klipstein (May 20, 1999), reprinted in 70 Interpreter Releases 1140 (July 26, 1999).
128 CFR §214.2(h)(4)(iii)(E).
13The statute, however, only imposes "liability" for the costs of return transportation; it does not require actual payment of costs. Thus, if the employer makes an arrangement for a travel agency to provide a "use-it-or-lose-it" airline ticket that would expire after a reasonable period of time, the employer could argue that the liability for the costs of return transportation has been discharged by the tender of a ticket. If the alien declines to use the ticket within the time specified, the court or an arbitrator may find that the employer had satisfied its obligation for return transportation costs.
14Pub. L. No. 105-277, 112 Stat. 2681 (div. C, title IV) (hereinafter ACWIA). The "no-benching" provision prohibits employers from placing H-1B employees in "nonproductive status" without pay after commencement of employment. 65 Fed. Reg. 80218 (Dec. 20, 2000). The "no-benching" obligation is not triggered, however, where (1) the nonproductive status is at the voluntary request of the H-1B worker, or (2) the obligation to pay the H-1B wage rate is ended by a "bona fide termination of the employment relationship." Id. at 80219.
1565 Fed. Reg. 80171 (Dec. 20, 2000).
16 Note, however, that waivers of or releases from the statutory obligation may be unenforceable as contrary to public policy. For a discussion of enforceability of such waiver or release, as well as of H-1B employers' liability for return transportation cost generally, see R. Banta, "The H-1B Return Transportation Requirement-Protections and Procedures for Employers," 2 Immigration & Nationality Law Handbook 75 (1995-96 ed.). 17 8 CFR §214.2(h)(11)(i)(A).
198 CFR § 214.2(h)(11)(iii)(A)(1).
20Pub. L. No. 106-313 (hereinafter AC21).
21AC21 §105(a) (adding INA §214(m)).
22S. Rep. No. 106-260, 106th Cong., 2d Sess., 22-23 (2000) ("[the provision] responds to concerns raised about the potential for exploitation of H-1B visa holders as a result of a specific employer's control over the employee's legal status."). For a thorough analysis of AC21's H-1B portability provision, see A. Paparelli & J. Lee, "'A Moveable Feast': New and Old Portability Under AC21 §105," 6 Bender's Immigr. Bull. 126 (Feb. 1, 2001).
23See supra note 14.
25See supra text accompanying note 15.
26 Remarks made at the H-1B/LCA Stakeholders' Meeting on January 16, 2001, summary provided by Eleanor Pelta, Chair, DOL/ETA Liaison Committee, via AILA InfoNet.
27Id. Note, however, that in response to a comment that employers often wish to delay notifying the INS of termination in order to allow the H-1B nonimmigrant an opportunity to have a prospective H-1B employer file a new petition on his or her behalf, the DOL-ESA responded that such practice is "dangerous," and "may open an employer to back pay liability." Id.
28See supra note 15.
298 CFR §214.2(h)(11)(i)(B) provides: "[t]he notice of intent to revoke shall contain a detailed statement of the grounds for the revocation and the time period allowed for the petitioner's rebuttal. The petitioner may submit evidence in rebuttal within 30 days of receipt of the notice. The director shall consider all relevant evidence presented in deciding whether to revoke the petition in whole or in part." 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.