Dealing with H-1B Employees in a Downsized Marketplace

You’ve spent all the money necessary to sponsor H-1B candidates to work in your company, and now you’re faced with laying them off. What are the implications? How much time does the individual have to remain in the country without employment? Is the intellectual capital you’ve just developed immediately being shipped out of the country? What are the company’s responsibilities? What are the employee’s rights? If an employee is on severance, does the INS still consider them employed for immigration purposes? When the H1-B employee is rehired by another company or back into your company, what happens to the time accrued towards gaining permanent resident status (green card)? If you’ve paid once to sponsor the employee, do you have to pay again? Is it considered an H1-B transfer? The complexities associated with hiring and terminating H-1B employees seem to be as confusing to the INS as they are to employers and the H-1B employees. Thousands of companies are reliant on the technical talent provided by H-1B employees. In times of economic uncertainty and the massive layoffs experienced over the last year, these employers are challenged with providing the fairest opportunity for all affected employees to seek new employment while working within unclear guidelines. To understand the complexities of immigration issues such as this, I spoke with an expert on the subject, Yoshiko Robertson, an attorney at Paparelli & Partners LLP, an immigration law firm based in Irvine, California. In 2001, Robertson authored a very interesting paper on the topic titled, “Avoiding The Abyss: H-1B Strategies When Facing a Reduction in Force” (the paper is available through the Paparelli & Partners website at All of the specific statutory references to the information provided in the remainder of this article are cited in Robertson’s paper. As is typical with many issues related to the INS, there are few clear-cut regulations. Actual practices seem to be determined on a case-by-case basis and are often dependent upon the interpretation of the leadership at the local INS service center. Employer’s Obligation To Notify the INS According to INS regulations, an employer is obligated to notify the INS “immediately” of “any changes in the terms and conditions of employment of a beneficiary which may affect H-1B eligibility.” But while the regulation requires immediate notification, it does not expressly impose any penalties for failure to make prompt notification. Because there are no definitive rules and regulations, nor are there any stated penalties for not notifying the INS promptly, employers are often pressured with a challenge. Do they notify the INS immediately as stated in the regulations, resulting in a high probability that the employee will be required to return to their home country? Or, do they delay notification in the hopes that employee, whose service they valued highly, finds a new employer to sponsor their H-1B visa? Does the Severance Period Count? One of the big questions companies and H-1B candidates are asking relates to the severance period. If a laid-off employee is receiving a severance package which includes regular pay and benefits, are they still considered an employee by INS standards? Once again, this is murky territory for the INS and subject to interpretation. In general, the INS position is that severance pay alone is not sufficient indication of a continued employment relationship. There has to be sufficient evidence that an identifiable tie between the employer and the alien exists. Here Robertson argues that H-1B employees should be allowed to continue to live in the U.S. under their current status during the severance period. “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 non-immigrant 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.” How Long Can a Laid-Off H-1B Employee Remain in the U.S.? Yet again, this is another issue where the current regulations are up for interpretation. Unofficial INS reports have ranged from 10 to 30 days from the date of termination. Other reports show that local service centers seem to reviewing each incident on a case-by-case basis. Such nebulous interpretation can create a significant amount of stress for laid-off H-1B workers and their families. Individuals who have legally followed all of the immigration policies to date are now up in the air as to how long they can legally seek new employment within the U.S. Those who are fortunate enough to live near forgiving service centers tend to have more time, while others risk having to leave the country before a reasonable job search can even begin. In June of 2001 a policy memorandum proposed 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.” To date, this provision has not yet been approved. Upon Obtaining a New Job, Does the Authorization Period Begin Over Again? Under an H-1B sponsorship there are three phases to the status adjustment process: 1) Labor Certification, 2) Immigrant Visa (I-140), and 3) Adjustment of Status. If an H-1B employee is in either of the first two phases of the process when they are terminated from their job, they must begin the entire process over again with a new employer, often losing up to one and a half years of time in the immigration process. If the person has already filed for the third phase, “Adjustment of Status,” and they are already over 180 days into the Adjustment of Status process, they do not have to start the immigration process over again. The individual is free to move between companies with out any time penalties to the immigration process. Employer’s Obligation to Provide Return Transportation Costs The Immigration and Nationality Act of 1952 states that when an employee is dismissed through no fault of their own, prior to receiving authorized admission, the employer is liable for reasonable costs of return transportation to their last country of residence. Congress has not clearly stated what “reasonable costs of return” actually means, but it has been interpreted to mean transportation of only the individual and does not pertain to the individual’s personal property or immediate family members. I am really not sure how many companies have actually fulfilled this obligation, nor do I know how many H-1B employees are aware that this regulation exists. The truth is, the INS clearly admits that there is little being done to enforce this regulation, nor are there any stated penalties for employers who do not fulfill this obligation. The INS claims that they have no authority to investigate this type of complaint against an H-1B employer, nor do they have any authority to mediate a resolution. Basically, Congress created a statute that is unenforceable by its creators, leaving it to a matter of “moral obligation” by the employer to adhere to the regulation. The only means of enforcement by the H-1B employee is through a civil lawsuit. Summary Not surprisingly, INS regulations regarding laid-off H-1B employees are unclear and subject to individual interpretation. Before announcing a layoff, companies should contact the local INS offices to understand their specific interpretation of the guidelines. Armed with knowledge of the perspective of the individual service centers, companies may have the opportunity to structure severance packages in such a way that they can help maximize the amount of time the H-1B employee has to seek new employment before being required to return to their home country. Unfortunately, without clear-cut regulations, H-1B employees working for the same companies at similar stages of their immigration status may be subject to very different timetables depending on their geographic location. To protect yourselves and the rights of your employees, it is most important to consult with legal experts on immigration regulations, prior to announcing a layoff. These parties are most up to date on changes in regulations and can provide valuable guidance on developing the most advantageous plan for the employer and the affected H-1B employee.

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Karen Osofsky ( is a co-founder of, an e-recruiting consulting firm that provides outsourced recruiting solutions to rapidly growing companies and new ventures. The firm provides a broad range of recruiting consulting, sourcing, screening, and strategy development services to help companies manage the front-end recruiting process. Tiburon Group is a Certified AIRS Solutions Partner.