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  • Matthew Kolodziej

Tech Industry Layoffs and Immigration Compliance

Recent instability in the tech industry has employers considering layoffs, unpaid leave, or reductions in hours of employees, including foreign nationals with visas. To remain in compliance with immigration laws and respect their employees’ rights and needs, employers must consider the requirements of various visas while counseling their employees on their options. This helps employers reduce costs and legal liability, while retaining essential employees and workforce continuity when possible. With proper planning, harm to the enterprise’s competitiveness can be reduced and goodwill maintained.


Procedures for Layoffs of the Foreign Workforce


Most foreign workers, who are not lawful permanent residents (“green card” holders), will lose their legal immigration status as soon as they lose their job with the employer who sponsored their visa. For employees whose visa includes a Labor Condition Application (LCA) that guarantees certain wages and working conditions, including workers on H-1B, H-1B1, and E-3 visas, layoffs must include the following steps to be valid: 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must be notified of the termination, the immigration service must be notified of the termination, the LCA must be withdrawn, and the employee must be offered the reasonable costs for transportation home. For O-1 visa holders, the employee must also be offered payment for transportation home and the immigration service must be notified. If these steps are not followed, the employer may be liable for back pay.


Transferring a Visa to a New Employer


After termination, most work visas (E-1, E-2, E-3, H1B, H1B1, L-1, O-1, TN) provide a 60-day grace period after the layoff (or until their I-94 expires, whichever is sooner) during which the employee may change to another status, or renew and extend their work visa if they find another employer to sponsor them. H-1B workers may change employer sponsors within this 60-day period without having to leave the U.S. if their new employer files an H-1B application within the 60-day period. They may begin working for the new employer upon the filing of the petition. Other visa categories allow less flexibility. O-1 visa holders may change employers within the grace period but cannot work until the petition is approved. L-1 visas are for managers or highly specialized workers who have worked for a foreign affiliate of the U.S. company, and therefore generally cannot be “transferred”.


Layoffs and Employee Green Card Processes


A layoff will also usually terminate a pending employment-based green card process for the laid-off employee. A pending green card process (often sponsored through the “PERM” or labor certification process) generally cannot be “transferred” to a new U.S. employer, unless it has reached an advanced stage in the process. Layoffs may also complicate the employer’s ongoing green card cases for their remaining foreign employees. The PERM process requires the employer to show they cannot find workers for the foreign national’s job; if there have been layoffs of employees in similar roles, the employer may be required to offer the foreign national’s job to the laid off employees. Ongoing green card cases should be discussed with a lawyer in case of layoffs.


Unpaid Leave and Wage Obligations for Foreign Workers


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


Unemployment insurance and Foreign Workers


Generally, foreign national employees on work visas are not eligible for unemployment benefits when they are laid off because most localities require that the employee be immediately available for work to qualify. In addition, if they do not have lawful permanent residence (a “green card”) or other permanent work authorization independent of their employer, they lose their legal status as soon as they are terminated by the employer sponsoring their visa. In any case, most foreign nationals must have an employer sponsor them first, before they can obtain work authorization, and usually only have a 60-day grace period after a layoff before they must either leave the U.S. or transfer their visa 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, by changing a full-time employee to part-time.


Changes in Working Conditions and Visa Amendments


In addition to wage obligations, normally, the essential nature of the foreign national’s employment should continue to qualify for their particular visa category. For example, O-1 visas are for workers of extraordinary ability, and the O-1 visa employee should continue to work in the area of expertise. L-1A visa employees are for executives or managers, and an L-1A employee cannot be demoted into a non-managerial job. H-1B employees, as noted above, must work at the location specified in the LCA and continue to work in a specialty occupation requiring their experience and/or education at the wage specified in the LCA.


Reorganizations and Transfers of Foreign Workers to other Entities


As explained above, foreign workers with visas usually must continue to work for their sponsoring employer. They cannot normally be transferred to another U.S. entity, even if that entity is affiliated with the visa sponsor, without filing an amended petition with the U.S. immigration service. Exceptions may be made for H-1B workers whose sponsoring employer has been acquired by another company, or for L-1 visa workers employed by a large company with an approved “blanket” L-1. If the U.S. employer has affiliates abroad, the foreign national employee may be transferred to the foreign affiliate and later transferred back when needed using the L-1 visa, as long as all other L-1 visa requirements are met.


Conclusion: Planning for Layoffs to Reduce Disruption and Legal Risks


Employers should discuss their foreign workforce with their attorneys to reduce disruptions and to maintain continuity of their workforce. Give foreign employees as much notice as possible of layoffs and reorganizations. Consider offering consultations with an immigration attorney to affected employees, as this can maintain goodwill and reduce costs if the employee can stay in the U.S., instead of asking the employer to pay for return to the home country. Explore other visa and working arrangements that may allow the employee to stay in legal status. If the U.S. employer has a foreign affiliate, the employee may be transferred abroad and then returned to the U.S. when needed. Be familiar with the requirements of the employee’s visa category, and whether they have other immigration procedures pending, such as a green card application, which may be affected by the layoff or employment change. By discussing the employee’s situation and options with a lawyer, the employer may be able to improve the employee’s immigration situation to avoid costs for both employer and employee.


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