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Our company must terminate several employees, including some in H-1B status. How do I make sure that we comply with the immigration laws in doing so?

Answer (by Stephen W. Yale-Loehr):

There are few black and white answers in this area. The Immigration and Naturalization Service (INS) and the Department of Labor (DOL), the two agencies responsible for administering the H-1B category, have not issued joint regulations to answer your question. Until the two agencies harmonize their views, you should take steps that are reasonable under the circumstances and consistent with existing statutory law, regulations, agency policy memoranda and case law in this area. The following list of potential actions does not include all possible strategies. Moreover, the suggestions below discuss only terminations, not temporary layoffs or mandatory vacations, which raise additional legal issues. Nor does this answer discuss whether you can terminate U.S. employees instead of H-1B employees. You should also consult an employment lawyer to make sure that any suggestions comport with state and federal anti-discrimination and wage and hour law.

This much is known: The INS takes the position that the status of an H-1B alien ends with termination of the sponsoring company's employment. Contrary to popular myth, there is no grace period for H-1B aliens after the termination.

You may be able to help out H-1B employees whom you plan to terminate by delaying the effective termination date. For example, if a typical severance package is six weeks at full pay, you can put the employee in "on-call" status for those six weeks instead of paying a severance package. That may allow them to remain in H-1B status until the end of the six-week period. This helps the employee gain time to deal with his or her immigration issues without your company having to do anything extra for them. This approach should be used cautiously, however. If the worker is not truly "on call," i.e., engaged to be waiting to perform work, an employment relationship may not truly exist, and the payment made to the worker may be considered severance pay rather than compensation.

According to the DOL, you have a duty to continue to pay the H-1B worker the H-1B "required wage" (i.e., the prevailing or actual wage, whichever is higher), until there is a "bona fide" termination of the employment relationship. See 65 Fed. Reg. 80,110 (Dec. 20, 2000) (new DOL H-1B LCA regulations); 20 C.F.R. 655.731(c)(7). The preamble to the DOL regulations (but not the actual rule) suggests that a bona fide termination occurs only when the employer notifies the INS of the termination, the H-1B petition is cancelled, and the return air fare obligation is fulfilled. Id. at 80,171 (supplementary information).

The DOL's requirement in the preamble to the regulations for a bona fide termination is not expressly required by the Immigration and Nationality Act (INA). It also flies in the face of the recent H-1B portability provision enacted by Congress last fall as part of the American Competitiveness in the Twenty-First Century Act (AC21). Under section 105 of AC21, an H-1B nonimmigrant can switch jobs to a new H-1B employer upon the filing of a new H-1B petition. To qualify for H-1B portability, the H-1B worker must be in status when the second H-1B petition is filed. However, if you, the first employer, follow the DOL's advice and ask the INS to terminate the original H-1B petition, that may directly (or by the INS' response) put your former employee out of status and thereby undermine his or her ability to use section 105 to start working for a second employer.

INS regulations require you to notify the INS of any changes in the terms and conditions of an H-1B's employment. 8 C.F.R. 214.2(h)(11). But that does not require you to ask the INS to revoke the H-1B petition. You can merely ask the INS to note the change in its records.

INS regulations also require you to pay your ex-H-1B employee's return transportation air fare if he or she has been dismissed from employment before the end of his or her authorized period of admission. 8 C.F.R. 214.2(h)(4)(iii)(E). You can tell the employee that he or she may use your company travel account to book a single one-way ticket to his or her "last place of foreign residence" for travel on the last day of employment. If your records do not reflect the last foreign residence, the home country is an acceptable substitute. The return transportation obligation under INA 214(c)(5)(A) makes the employer "liable" only for "reasonable costs of return transportation." The statute does not expressly impose an actual obligation to pay return transportation. Moreover, your company's return transportation obligation is only to the H-1B employee, not to his or her spouse or children. Your company has no obligation to ensure that the terminated H-1B employee actually leaves the United States. However, if your company handles the return transportation obligation, be sure to maintain documentation to show your manner of compliance.

Once properly terminated, the former H-1B alien's ability to remain in the United States depends on other available visa options. You do not have a duty under the immigration laws to find other visa options for the ex-employee. But you may want to be helpful to maintain a good relationship with the former employee or to minimize potential damages for any possible tort or contract claims the employee might try to assert.

If no other visa petition is filed, the terminated H-1B alien becomes out of status and thereby theoretically deportable. Moreover, if the individual remains in the United States after the expiration date on his or her I-94 card or the date the INS determines the individual to be out of status, unlawful presence will start accruing. Under current law, a short period of unlawful presence only requires an alien to depart the United States before obtaining a new visa status and reentering. A period of unlawful presence that exceeds 180 days can result in severe immigration penalties.

You may want to consult with an employment lawyer to draft a general separation agreement or release of claims to cover any employment law issues that may relate to termination. You may also want to draft a letter to the H-1B employee to give him or her on, or preferably before, the last day of employment stating that the H-1B status ends with the last day of employment and that he or she will be out of status as of that date, unless the employee pursues other options for changing or extending visa status. Your letter should also summarize your company's manner of satisfying its return transportation obligation.

Steve Yale-Loehr
True, Walsh & Miller

For a previous answer concerning H-1B terminations from an employee's perspective, see,0724-Answer.shtm

This Q & A exchange is part of a 3-part seminar series on H-1Bs at ILW.COM. A distinctive element of this series is the interactivity with the speakers. Apart from the Q & As during the phone seminar, participants can also pose questions such as the one above to the speakers by email.

For more information, or to sign up online, click here
For more information, or to sign up by mail/fax, click here

Disclaimer: The foregoing is general information provided to the public on a subject of great interest to U.S. employers and H-1B workers. It is intended merely as a general review of a complex and confusing subject for which there are very few clear and reliable answers. The information is not intended as legal advice and may not be relied on as such. By providing to the public the general information below, no attorney-client relationship is created. The legal outcome in a given case will completely depend on all of the relevant facts in a given case and thus will vary from case to case. For legal advice and representation, the readers are cautioned to consult a qualified attorney who practices immigration law.

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