Immigration Compliance in Terminating H-1B Employees

We are frequently asked by our corporate clients what obligations an employer has when it terminates a foreign national employee who is an H-1B visa holder, and what options are available to the foreign national employee if he is terminated.  Employers can terminate an H-1B visa worker at any time without penalty as long as it complies with the required state law; however, this triggers some specific obligations for the employer.

The first obligation is that you need to offer to pay for the employee’s return transportation to his last country of residence abroad.  Employers agree and commit to this requirement as part of the initial H-1B petition. What this usually means is offering to purchase a one-way plane ticket for the employee to return to his home country. The employer does not need to pay for airfare for any H-4 dependent family members (e.g. spouse or children). The best course of action is to research the cost of a one-way ticket to your employee’s home country, document how you arrived at the cost (screen shot of flight itinerary) and give the employee a check for that amount. If USCIS were to audit the employer’s H-1B petition and inquire into whether you offered to pay for the employee’s return transportation, this documentation would serve as bullet proof of compliance.

The second obligation you need to act upon is to notify USCIS of the termination and withdraw your H-1B petition. As long as the H-1B petition remains in effect, you must pay the employee his wages, even if he no longer works for you. When securing H-1B status for a prospective employee, an employer must file an LCA in which it, among other things, represents that it will pay the employee the prevailing wage or actual wage for the position, whichever is higher, and that it will continue to pay this wage for the duration of the H-1B status. Under the H-1B regulations, the DOL has developed a concept called a “bona fide” termination to ascertain when an employee’s H-1B status actually ends. According to a series of cases, an employer effectuates a “bona fide” termination by: (1) notifying the employee of the termination as required by contract or state law, (2) providing notice of the termination to the USCIS, and (3) paying the H-1B employee’s reasonable transportation costs home as required by both the LCA and H-1B petition. Under the DOL’s “bona fide” termination rule, an employer remains liable for the LCA wages until it completes all three steps.

As you are preparing for the termination, something to consider is the impact upon the employee’s immigration status. If the employee does not wish to return to his home country but instead wants to work for another company in the U.S., perhaps you can delay the termination and revocation of the H-1B petition until his new employer has filed its H-1B petition. This would allow your employee to maintain lawful immigration status and remain in the United States for the moment. In this scenario, you also could document that you have offered to pay the return transportation costs, but that he refused it, because he has found a new employer to sponsor him for H-1B status.

Employers should be aware that if a terminated H-1B employee believes that an employer is not complying with this obligation he or she may file a complaint with the Department of Labor, who can impose back wage liability on the employer. The DOL will check with USCIS to determine whether the H-1B petition remains in force. If it remains valid, the DOL will assess back wages from the time you terminated the employee until the date USCIS revokes the petition. If the annual salary you were paying your H-1B worker was $70,000, for example, and you do not revoke the H-1B petition for two years, the DOL will require you to pay the employee $140,000 for the two years.

Layoffs and terminations are difficult for all parties involved. Properly managed and documented, both the employer and employee can come through this situation fully protected and compliant with all federal immigration laws. Employers terminating foreign employees should also consider arranging for immigration counsel to advise foreign employees on the consequences of termination as one of the services provided to workers being terminated.