How to Handle H-1B Layoffs

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Layoffs can mean tough times for H-1B workers because there is a limited time to find a new employer to file a new H-1B petition.  From 1990 until January 16, 2017 there was no grace period for H-1B workers to find new employment or even to sell or otherwise dispose of personal property and depart the United States.  Their status ended at 12:01 am the day following the last day of empoyment.  New regulations that took effect january 17, 2017 provide a 60 day grace period after employment is terminated.  This allows workers 60 days after the last day of employment to find a new employer to file a new H-1B petition, or for the employee to file an application to change status, or to depart the United States without violating status.  A one day gap in status may mean that the foreign national must leave the United States to allow USCIS to reinstate his status upon reentry. When employment ends, there is a 60 day grace period until H-1B status ends and then the employee must depart the United States immediately.  H-1B workers who ignore the rules may face difficulty returning to the United States, or even deportation.  Employers who ignore the rules may face steep fines and penalties.  Let's review the options available to make the best of an unpleasant situation.

There were rumors for decades that there was a grace period for H-1B workers following a layoff.  But there was no grace period for H-1B workers who were laid off, quit or were fired before the end of their authorized period of stay.  Some of the confusion comes from a regulation that allows a 10 day grace period for H-1B workers who remain working in the United States in H-1B status until the last day of H-1B validity shown on the I-94 card.  8 CFR 214.2(h)(13)(i)(A).  But that section only applies in that one situation of work until the last day of authorized stay.  As noted above, this change with a new regulation effective January 17, 2017 that permits a 60 day grace period of lawful status without work authorization following the last day of employment.

H-1B workers are in valid status so long as they are working, or being paid on payroll for work at a rate equal to the rate listed in the H-1B petition.  Once the employee stops working, or is removed from payroll, the H-1B worker is out of status starting 60 days after the last day of work unless the worker has some other concurrent status, for example a pending I-485 application.

The Employer’s Duty to Notify USCIS Upon Termination of H-1B Employment

Unfortunately, the employer bears a duty to notify USCIS immediately upon the termination of an H-1B worker’s employment.  8 CFR 214.2(h)(11).  The US Department of Labor has clarified that the employer may be subject to penalties for failing to notify USCIS.  While the company certainly does not want to take any action that will needlessly prejudice the employee’s interests, the fact is that the employer is bound by law and subject to penalties unless it notifies USCIS of the termination of an H-1B worker’s employment.

An employer that fails to notify USCIS of the termination of H-1B employment may face an ongoing duty to pay the H-1B worker full wages after the employment is terminated and until USCIS is notified.  It appears possible that an employer could be held liable for months or years of back pay covering a period after the H-1B worker was terminated and until the company notifies USCIS of the termination.  Amtel v. Yongmahapakorn, USDOL Administrative Review Board, 2006.  See also, Matter of Rung, 2004-LCA-006 (AAO Sept. 26,2006) [AAO found that an employee was not terminated properly for purposes of cutting off back pay until the LCA was withdrawn, the employer notified USCIS of the termination of H-1B status and the employer provided the employee with payment or a ticket home.]

Unemployment Benefits

Generally H-1B workers are ineligible for unemployment benefits.  This is because most states require a worker to be available and ready to work to receive unemployment benefits.  H-1B workers are not available and ready to work unless an employer files an H-1B petition for them.  And no employer has an obligation to hire an H-1B worker or file an H-1B petition for a foreign worker.  Additionally, because there is no grace period, H-1B workers are deemed out of status starting the day after their employment is terminated, absent, of course, the H-1B worker having some concurrent status like a pending application to adjust status, or having timely changed status.  Because an H-1B worker who remains in the United States after employment is terminated is generally illegally present in the United States, that worker is not ready and able to work, and is arguably ineligible to move to another H-1B employer.  Gaps in status usually require the H-1B worker to depart the United States and apply for a new visa abroad before starting work for another H-1B employer, subject to some exceptions.

Maintaining Status and the Three and Ten Year Bars

A foreign national who remains in the United States for six months or longer beyond his authorized period of stay is subject to a three year bar to reentering the United States.  A foreign national who remains in the United States for one year or longer beyond his authorized period of stay is subject to a ten year bar to reentering the United States.  The authorized period of stay ends on the expiration date of the I-94 card, or upon USCIS issuing a notice ending the status, whichever comes first.  The period of time that counts toward the bar is known as “unlawful presence” and it is not the same as merely being out of status.  Unlawful presence accrues when the authorized status expires, or when USCIS revokes, or cancels it.  Unlawful presence does not accrue merely from status violations (however, the immigration authorities may impose other, less severe penalties for status violations even though they are not unlawful presence).

The three and ten year bars impose serious penalties that are difficult to repair.  If a foreign national subjects herself to a bar, it is possible in some circumstances to apply for a waiver, but it is usually difficult, unlikely, and available only in limited situations.

H-1B Portability and Finding New Employment

H-1B workers can sometimes begin work with a new employer without waiting for an H‑1B petition to be approved.  The requirements for an H-1B worker to start work at a new employer before USCIS issues the H-1B approval are:

  1. The worker was lawfully admitted to the United States;
  2. The worker has previously held H-1B status;
  3. The new employer filed a non-frivolous H-1B petition before the end of the worker’s authorized period of stay; and
  4. The worker did not work without authorization since his last lawful admission to the United States

“Filed” is generally defined as when USCIS receives the petition with the proper fee and all forms signed.  To avoid working without authorization, it is sometimes wise to wait to begin work until USCIS deposits the filing fee check or until the new employer receives an H-1B receipt.  This is because sometimes USCIS will reject cases.  The rules do not seem to prohibit H-1B workers from portability even if the worker is in a different status than H-1B (e.g. F-1, or B-2) when the new H-1B petition is filed.

Return Transportation to the Home Country

The employer's return transportation responsibility under 8 CFR 214.2(h)(4)(iii)(E) requires the employer to pay “reasonable” costs of transportation to the H-1B worker’s “last place of foreign residence.”  It does not require that the employer pay travel costs for the employee’s spouse and children.  The penalties for failure to pay are unclear.  USCIS has neither enforced the regulation nor proposed regulations to clarify it.  For a discussion of enforcement authority, see 70 Interp. Rel. 1171, Sept. 3, 1993. 

USCIS has said that the transportation requirement is a "private contractual issue between the petitioner and the beneficiary" (See, letter from Thomas Simmons, Chief of INS Business and Trade Services Branch, 76 Interp. Rel. No. 28, Appdx. II).  When a terminated employee secures new employment, it appears that the employer’s responsibility for transportation ceases.

Other Status and Alternatives

An H-1B worker facing layoff may apply to change status to another temporary category, but the application must be received by USCIS before the H-1B worker’s current status expires.  It is possible for an H-1B worker to change to F-1 status to study if admitted to an F-1 approved program.  It is possible for an H-1B worker to apply to change of status to B‑2 to allow for travel in the United States to engage in tourism before returning home.  Other types of status may be possible depending on the employee’s individual situation.

USCIS must receive an application to change status on or before the employee’s last day of work.  Once the employee is out of status, USCIS will almost certainly deny an application to change status.  USCIS has authority to approve late filed change of status applications, but they rarely do so except in cases where the applicant’s failure was due to no fault of his own (for example, hospitalization, fraud where the worker hired an attorney to file a change of status application and the attorney failed to).

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