Terminating H-1B Employees Prior to Authorized Period of Stay

This article discusses the obligations and liabilities for the H-1B employer and employee in terminating H-1B employees prior to the end of the worker’s authorized period of stay.

H-1B specialty occupation workers are faced with the same volatile U.S. employment market as American workers. Due to recent reductions in the workforce, H-1B workers may be terminated prior to their authorized period of stay. Terminating the employer-employee relationship has consequences for both the employer and H-1B worker. The INA, H-1B regulations and USCIS policy guidance provide a framework for the obligations and liabilities on both the employer and H-1B worker in dealing with termination.

When the employer terminates an H-1B worker prior to the end of the authorized period of stay, the H-1B employer must pay “reasonable costs” of return transportation for the employee to their country of residence. The H-1B employer’s obligations include:

• Paying the cost of returning only the H-1B employee, not the entire family or personal property.
• There is no obligation to pay the return costs if the H-1B employee opts to stay in the U.S. (Note, the employee would be out-of-status and be remaining illegally. This issue is discussed below)
• The Employer may provide the H-1B employee an amount approximating the employee’s “reasonable costs” of travel and obtain a release of liability. The employer could comply with this regulation simply by purchasing an airline ticket through the employer’s travel agent to ensure the employee does not take the funds and remain in the U.S.
• Employers should always retain records of good faith efforts to comply with this requirement.

Upon terminating the H-1B employee there is an automatic “material change in the terms and conditions of employment.” The regulations require that material changes in H-1B employment be brought to the attention of USCIS. The employer’s obligation to notify USCIS is easily satisfied by the employer sending a letter to the service center that approved the H-1B petition advising of the H-1B worker’s termination. Upon receipt of this letter, USCIS will revoke the H-1B petition.

• H-1B employers should advise the employee of the revocation letter to allow the worker to leave the U.S. or seek an alternative visa category.
• There are no employer sanctions for failing to advise USCIS of the termination, but employers should be aware of “benching” issues and payment of nonproductive time (discussed below).
• H-1B employers should retain records of compliance with this obligation.

“Benching” is prohibited under Department of Labor (“DOL”) regulations. The DOL prohibits H-1B employers from not paying an employee who is temporarily placed on nonproductive time due to the conditions of employment, such as lack of work, lack of permit or studying for a licensing exam. The employer’s obligations in regards to “benching” and nonproductive time are as follows:

• No payment is required for nonproductive time due to reasons not related to employment such as the H-1B worker’s voluntary absence from work.
• Nonproductive time must be paid at the required wage rate for the occupation listed on the H-1B worker’s LCA.
• Payment for nonproductive time is not required after a bona fide termination of employment. The best evidence of such termination is the employer’s notification to the USCIS that (1) the employment is terminated, (2) the petition should be revoked, and (3) the employee has been provided “reasonable cost” of return transportation.

A “bona fide” termination of H-1B employment immediately ends the employee’s period of authorized stay. In other words, if an H-1B worker is terminated their status is also terminated and are not authorized to remain in the United States. As will be shown, if the worker wishes to remain in the United States, they must act quickly to have another H-1B employer petition the USCIS on their behalf or to immediately change to another nonimmigrant visa category. A terminated H-1B employee must be aware of the following:

• There is no status grace period for a terminated H-1B employee (as there is for other nonimmigrant visa categories such as the 60 F-1 grace period). Once terminated, the employee is out of status.
• H-1B employee’s receipt of severance payments or remaining on the employer’s payroll without working are considered valid periods of status.
• Being out of status affects the H-1B worker’s ability to change, amend or extend their status. USCIS may exercise discretion in approving such petition. If terminated from H-1B employment, immediately seek to change, extend or amend status as the longer the worker is out of status, the less likely USCIS will approve the petition.

The Portability rules under AC21 allow an H-1B employee to begin working for another H-1B petitioner immediately upon the filing of a non-frivolous H-1B petition with USCIS. The petition must be filed before the “date of expiration of the period of stay.” A major question in this regard is whether the date of expiration of the period of stay is the date on the H-1B employee’s I-94 or the date when the employee fails to remain in valid status (i.e., date of termination). There is no clear guidance on this issue. However, the USCIS has been narrowing the H-1B category for several years so it is not unreasonable to assume it will interpret the expiration date as being the date when status is no longer maintained. Again, it would be prudent for an H-1B employer wishing to terminate an H-1B employee to give that worker a reasonable time to find a new petitioning employer but there are no guarantees of such generosity.

The Law Firm of Shihab & Associates has over 15 years of experience in handling complex H-1B specialty occupation cases. Contact one of our experienced attorneys today to discuss your options under the H-1B visa category. Call the Law Firm of Shihab & Associates, Co., LPA at (888) 915-5057.