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  • Matthew Kolodziej

Tech Industry Layoffs and Options for Foreign National Employees

Recent instability in the tech industry has created uncertainty for skilled foreign workers in the United States. Many tech workers have H-1B visas, which are for skilled professionals. These jobs are subject to compliance requirements specified in the Labor Condition Application (LCA) filed with their applications, and employers and employees must understand the compliance requirements and their options when layoffs occur. With proper planning, employees can maintain their status in the U.S.


Options for Laid Off H-1B Employees and Others with Work Visas


Most foreign workers, who are not lawful permanent residents (“green card” holders), will lose their immigration status as soon as they lose their job with the employer who sponsored their visa. However, most work visas (E-1, E-2, E-3, H1B, H1B1, L-1, O-1, TN) allow a 60-day grace period after the layoff (or until their I-94 expires, whichever is shorter) during which the employee may change to another status or extend their work visa if they find another employer to sponsor them. H-1B workers may change employers within this 60-day period without having to leave the U.S. if their new employer files an H-1B application during the 60-day period. The employee may begin working for the new H-1B employer upon filing. Other visa categories allow less flexibility. O-1 visas, for individuals of extraordinary ability, can be transferred to a new employer if the petition is filed during the grace period, but the employee generally cannot start working until the petition is approved. L-1 visas are for managers or highly specialized workers who have worked for a foreign affiliate of their company, and generally cannot be “transferred” to another employer.


Options for Laid Off Workers with Pending Green Card Applications


A pending green card process generally cannot be “transferred” to a new U.S. employer, unless it has reached an advanced stage in the process. Most employers sponsor employees for green cards though “PERM” or labor certification, a three-step process that may take years, especially for nationalities with long backlogs (China and India). If the first and second steps in the process (the PERM and the I-140 petition) have been approved, the employee’s place in line for the green card, which is called the “priority date,” will be preserved when the employee changes employers. However, the new employer will still have to start the process over again. If the employer is laying off an employee whose green card has reached the second stage (the I-140 petition), the employee may prefer that the I-140 petition not be withdrawn to preserve their priority date. If the third and final step in the process, called the adjustment of status application, has already been filed and has been pending for at least 180 days, the whole process may be transferred to the new employer with little cost, as long as the job is the same or similar.


Employer Compliance when Laying Off Foreign Workers with Visas


Special procedures need to be followed when terminating foreign workers with visas. Note that for employees whose visa includes a Labor Condition Application (LCA), which guarantees certain wages and working conditions, including workers on H-1B and E-3 visas, several steps must take place upon termination: the employee must be notified of the termination, the immigration service must be notified of the termination, the LCA must be withdrawn, and the employee must be offered reasonable payment for transportation home. For O-1 employees, the immigration service must also be notified of termination and payment for transportation home must be offered. If these steps are not followed, the employer may be liable for back pay.


Unpaid Leave and Wage Obligations for H-1B Workers


As noted above, most foreign employees on work visas, including H-1B workers, lose their legal status in the United States upon termination of employment by the sponsoring employer. Employees with work visas may take unpaid leave in specific situations if it is the employee’s decision and permitted under applicable laws. However, H-1B workers who are subject to the LCA wage requirements mentioned above may not be placed on unpaid leave (furloughed) by the employer due to a lack of work. This is called “benching” and is specifically prohibited for H-1B workers. But, the H-1B employees may choose to take unpaid leave at their request for reasons unrelated to the employment (family leave, illness, injury, maternity leave), as long as such unpaid leave is permitted pursuant to the employer’s benefit plan and applicable laws (FMLA, Americans with Disabilities Act).


Unemployment insurance and H-1B Workers


Unemployment insurance is a benefit that is administered by the states and generally requires that the unemployed individual be immediately willing and available to work. Generally, as explained above, foreign nationals must have an employer sponsor them for a work visa, such as an H-1B, before they can obtain work authorization, and are therefore not usually considered immediately available to work. This generally means that H-1B workers who have been laid off are not eligible for unemployment. In any case, as explained above, H-1B workers only have a 60-day grace period during which they may stay in the U.S. after a layoff, unless they timely apply to change status, adjust status, or transfer their H-1B to a new employer.


Reductions in Wages and Hours via Visa Amendments


For employees in visa categories subject to LCA wage requirements, such as H-1B workers, the employer cannot pay the worker less than specified in the LCA and in the corresponding visa petition. This means that if the employee will receive a pay cut that lowers the wage below the wage in the LCA, an amended petition may need to be filed with the U.S. immigration service (USCIS) and a new LCA posted at the work location. This also applies if the employer wants to reduce the hours of the H-1B worker to less than permitted by the LCA.


Conclusion: Planning for Layoffs for Foreign Workers


Discuss a layoff with your immigration attorney as soon as possible. To help reduce disruption and liability, and to preserve the continuity of their workforce, employers should give foreign employees as much notice as possible and consider offering them consultations with an attorney. This may maintain goodwill and reduce costs if the employees can stay in the U.S., instead of having the employer pay for their return trip home. Explore other working arrangements that may allow employees to stay in legal status or avoid being laid off. Employers may also want to consider transferring employees abroad, as visa and LCA requirements do not apply to employees outside the U.S. Discuss other immigration processes that are pending, such as a green card, that may be affected by a layoff. By discussing the employee’s situation and options with a lawyer, the disruption caused by the layoff may be reduced.


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Contact marketing@jiaesq.com for more information or to seek permission to reproduce content. This blog is intended for general information purposes only. It does not constitute legal advice. The reader should consult with knowledgeable legal counsel to determine how applicable laws apply to specific facts and situations. Blog posts are based on the most current information at the time they are written. Since it is possible that the laws or other circumstances may have changed since publication, please call us to discuss any action you may be considering as a result of reading this blog.

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