When Layoffs Affect Foreign Nationals

By Maryanne Kline

The current economic crisis affects companies of all sizes and in every industry. But high-tech giants such as Microsoft, IBM, Cisco, and AT&T face a special set of problems because their reductions in force may include many foreign national visa holders.

Human Resources staff is busy enough with separation planning and implementation, but it is important to keep in mind some of the unique issues that must be addressed when corporate downsizing and layoffs affect foreign national employees.

Nonimmigrant Visas and the Consequences of Employment Termination
Being laid off is difficult for any employee, but for foreign nationals in the U.S., the impact can be enormous, since their very ability to stay in the United States is often dependent on the employment they just lost. When the employment upon which the visa approval was granted ends, the employee’s visa status immediately terminates, and even a severance payout over time does not keep the employee “in status.” Impractical as it is, there is no grace period in the case of a layoff, and the employee falls out of status as soon the employment (i.e. rendering of services for remuneration) ends. This consequence occurs in the case of all of the most common nonimmigrant visa categories, including H-1B, L-1, and TN.

Because the consequences of layoffs to nonimmigrant visa holders are both extreme and immediate, companies must be sensitive to the attendant anxieties. Providing effected employees with situation-specific information can help ease the blow. It is also good practice to urge these employees to seek the advice of immigration counsel who can help them understand the options that may be available to them.

Employee Options
A nonimmigrant visa holder facing termination may have a variety of options depending on the employee’s visa category and specific circumstances:

  • Leave the United States. This is the most obvious, but not necessarily the only, option. While there is no grace period allowing the employee to stay in the U.S. after the employment ends, as a practical matter, it is virtually impossible for visa holders to leave the U.S. on the day of their termination. A reasonable period of time to make preparations to return abroad is not uncommon and is usually not problematic. However, a more conservative—and safer—approach may be for the employee to request a change of status to B-2 (Visitor) for a period of time during which to wrap up affairs in the United States.

  • Change status to a dependent visa classification. For those whose spouses maintain independent visa status, the laid off employee has the option to request a change of status to the dependent category of the spouse. Depending on the category, this dependent classification may or may not allow for a grant of employment authorization, but at a minimum, it will allow the employee to remain in the U.S. with his or her spouse.

  • Obtain new employment…and new visa sponsorship. For H-1B employees who have not yet used their allowed six years in H-1B status, a new employer may file its own H-1B petition on behalf of the employee. As long as the new petition is filed while the employee is still maintaining lawful status (i.e. before the termination), the employee may transition to the new employer without departing the United States. Under a 2000 law change allowing for H-1B “portability,” the H-1B employee may begin working for the new employer upon filing, rather than needing to wait for the new H-1B petition to be approved. As a practical matter, U.S. Citizenship and Immigration Services (USCIS) will often exercise favorable discretion and approve an H-1B “transfer” petition filed after the termination—and thus after the employee falls out of status—as long as the new petition is filed within a reasonable time, typically 30 days or less. Similarly, TNs may move to new employers but only after receiving new TN approval. L-1 visa holders may have a more difficult time changing employers since their L-1 status is predicated on the corporate relationship between the U.S. employer and the former employer abroad. For L-1 visa holders to change employers, they would need to qualify, and be approved, for a different visa category.

Employees with Pending Employer-Sponsored “Green Card” Cases
Employees in the process of obtaining employer-sponsored permanent residence or “green card” status, if terminated prior to reaching a certain stage in the process, may need to start the green card process all over again with a new employer. However, if a Labor Certification Application has been approved or remains pending, and if it was filed more than one year before the employee reaches the six-year limit on H-1B status, this Labor Certification may serve as the basis for H-1B extensions beyond the usual six-year limit, even after the employee has moved on to a new employer.

Employer Obligations Regarding Termination of H-1B Employees
In the case of H-1B employees, the terminating employer has specific affirmative obligations when terminating H-1B visa holders prior to the expiration of their H-1B status:

  • Employers are required to notify U.S. Citizenship and Immigration Services (USCIS) of the termination, and it is usually advisable to also withdraw the Labor Condition Application (LCA) that was certified by the Department of Labor (DOL) as a prerequisite to filing the H-1B petition.

  • For H-1B employees the employer must pay the reasonable cost of transportation to return the employee to his or her last country of residence. It is a good practice to include information about how this will be handled in the H-1B employee’s separation package. Not only does this allow the employer to establish a mechanism for complying with the requirement, but it also documents that the offer was made in the event that the employee does not depart the United States on termination.

If a complaint is pursued with the DOL against the employer, failure of either of these obligations can result in a determination that the employer has not effected a bona fide termination and trigger the obligation to pay back wages.

Immigration-related consequences of changed circumstances vary from case to case and often involve complicated issues, so immigration counsel should be consulted for situation-specific guidance. However, maintaining an awareness of these common issues and obligations will help HR managers manage and implement necessary layoffs with reduced exposure to liability and decreased anxiety on the part of affected foreign national employees.

Author Bio:
Maryanne Kline is an associate in the Immigration Department at Sullivan & Worcester, LLP.

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