The H-1B Series: Part 6 of 6 (Encore)
The final 3 articles in this series will address several especially challenging situations for H-1B petitioners.
A. Transfer Between Multiple Work Locations
One of the more technical aspects of the LCA and H-1B petition process which can cause problems for employers is its work location-specific nature. The LCA must state a geographic "intended area of employment," which has particular relevance, for example, in establishing the prevailing wage that the employer must pay. In turn, the H-1B petition must state the location, or locations, of employment, which must come within the locations stated on the LCA. The H-1B petition is then approved for work only on the terms described in the petition.
If the H-1B nonimmigrant works in a location that was not included on the LCA and H-1B petition, the INS may claim that he or she has failed to maintain status. The employer may then be considered to be employing the person in the location without authorization because it has not filed an LCA for the location and has not included a certified LCA for the location in its H-1B petition filing. The employer may even be accused of having made misrepresentations on the LCA or H-1B petition forms to the effect that it knew at the time of petition filing that the foreign national's work location would likely be different from that specified on the forms or that it failed to disclose that the position involved "roving" employment by its nature.
The location-specific system presents no problems where H-1B workers will be employed in only one location. It creates confusion, a bureaucratic burden, and legal risk, however, for employers who must transfer the foreign national between work locations during the worker's petition approval period. Many large companies have offices in various locations throughout the country, and may need to rotate personnel between offices. The problem is more acute for technical staffing and consulting companies, which regularly transfer personnel between client sites to fill project needs of varying duration. This employment is "roving" in nature because the ultimate work locations cannot reasonably be anticipated when the H-1B petition is filed. If the LCA and H-1B petition in these situations only specified one work location, the employer might be required to undergo a new LCA process and file an amended H-1B petition to report the change in location. With advance planning and use of the "multiple location" LCA strategy, however, the employer may draft H-1B petitions to allow for potential transfers and "roving" employment.
A petition that uses this strategy must specify the initial location where the person will work, or, if such locations are unknown, the permanent "home base" of employment, which is often the company headquarters, and then should state on the petition form or in the supporting letter that the position is subject to potential transfer to other sites based on business need. If the employer can identify the other sites in advance, it should list them. If it cannot do this, it should state that the other sites have not yet been selected, but are included within the locations identified on the LCA or LCAs submitted with the petition.
The petitioner should then submit a certified LCA wherein the first area of employment listed matches the initial location or "home base" stated on the H-1B petition. That LCA may then list a second area of employment as potential transfer location. The employer may submit additional LCAs, each of which lists two areas of employment.
Employers that file a high volume of H-1B petitions for "roving" positions use both the "multiple location" and "multiple position" LCA strategies. They typically look at the volume and potential initial work locations for H-1B petitions that they anticipate filing in the course of a year, and engage in strategic planning to obtain LCAs covering all potential areas of employment where H-1B nonimmigrants might be assigned and covering sufficient numbers of workers to meet their needs.
Due to a change in the LCA format, however, pursuing an advance "multiple location" LCA strategy is now more difficult. Formerly, any number of areas of employment could be listed on a supplemental addendum to one LCA, whereas now only two locations may be listed on a single LCA filing. This requires burdensome multiple LCA filings if an employer wishes to provide for its regional or nationwide placement needs in advance. The alternative strategy is to carefully monitor assignments of H-1B workers as they occur, and if there is no pre-existing LCA for the area, use "short-term placement" and/or a new LCA filing on a case-by-case basis.
The problem with this strategy is that when an H-1B worker is placed under a new LCA that the employer obtains after the H-1B petition was approved, INS has said that this constitutes a material change in the terms of employment requiring an amended I-129 petition to be filed. Most employers of "roving" personnel consider it impractical and burdensome to file an amended petition every time an H-1B worker changes location, in addition to filing the new LCA. The DOL has stated that it "recognizes that employers need clarity" on this point, and will consult with the INS and then provide coordinated interpretive guidance. If implemented, the proposal for a "national LCA" would also resolve this problem.
For additional discussion of "short term placement," "multiple location" strategies for roving employees and the "national LCA" proposal, please see the November 18, 2002 and November 25, 2002 articles in this series.
B. Where to File H-1B Petitions
The INS service center where the employer submits the H-1B petition is determined by the initial location of employment stated on the I-129 petition form and the LCA. For large employers with multiple, nationwide offices or technical staffing and for consulting companies with client locations throughout the country, petitions may be filed at any of the four service centers, depending on where the petitioner intends to employ the H-1B worker.
In 1998, the INS began briefly allowing large employers to submit a written request to a particular service center that it exercise "sole jurisdiction" over all that company's employment-based petition filings nationally, including H-1B petitions. The INS announced in late 2000, however, that it would no longer accept new companies into the program. INS will continue to honor the arrangement for companies previously accepted. For them it can provide strategic benefits, in providing for all H-1B petitions to be processed at one Service Center regardless of the location of employment.
C. Bench Time
Many technical staffing or consulting companies employ a business model whereby regular employees are only paid when they actually perform assigned work at a client site, and the employer can bill for their time. During periods when an employee is between client assignments or is otherwise not performing billable work, the company does not pay him or her. The company still considers itself to be the person's employer, and actively markets the person's skills to attempt to place him or her at another client site. When work for a new client begins, payment of salary resumes. These periods of unpaid status are referred to as "bench time," and typically do not last more than a few weeks. Client assignments vary in length from a few months to long-term placements lasting years. To compensate for the employee receiving no income during "bench time," the wage subsequently paid on client assignment is typically a higher hourly rate than the worker would earn as a regular salaried employee.
Historically, consulting and staffing companies have been high-volume users of the H-1B program. However, under the ACWIA statutory provisions for "nonproductive" status they are prohibited from nonpayment of wages during "bench time," and must then adopt another model for employment of H-1B personnel to comply with the INS program rules. The ACWIA provisions on nonproductive status were added in 1998 partly in response to the perceived widespread practice of consulting and staffing companies to bring foreign nationals to the U.S. and then not pay them for extended periods in "bench" status.
The most common, least risky employer action is to make such consulting positions regular salaried positions, with a guaranteed annual level of pay disbursed in regular weekly, biweekly, or monthly intervals. The LCA and H-1B petition would describe the position as a regular, full-time, salaried job, expressing the pay in annualized salary terms. Then the foreign national will receive a paycheck whether or not there is actual work at a client site.
Another strategy represents a cross between the hourly, no-pay-for-bench-time, and regular full-time salaried models for the position. In this third alternative, the employer styles the position as a flexible, part-time/full-time position subject to a range of hours to be worked during the week. The person is paid for full-time work or for any number of hours worked while he or she is on client assignment with the flexibility to have the work hours vary within the range specified. When the foreign national is in bench status, he or she is paid hourly at a level of part-time hours commensurate with "at least the average number of hours worked by the H-1B nonimmigrant." The LCA in this approach must designate "part-time" employment with the pay expressed in hourly terms. The H-1B petition similarly should describe the pay in hourly terms, and include the guaranteed minimum and upward range of hours. The ACWIA nonproductive status provisions expressly acknowledge the employer's option to designate a position as part-time on the LCA and H-1B petition and, in those instances, hold the employer's required wage obligation to pay wages at the level of "at last the average number of hours normally worked" and in no event below the minimum level of hours stated on the petition.
The next question, of course, is what level of hours is acceptable to list as the minimum in the part-time range. The statute and regulations do not specify a minimum number of hours that INS will accept on an H-1B petition. It will certainly not be acceptable to state zero hours as the minimum (using a range of "0 to 40" hours), however, because then there is no guaranteed minimum-level of pay and the employer is all but stating openly that the job opportunity consists of prohibited "speculative" employment. The level should be a minimum that represents sufficient pay to support the H-1B worker and any family members in the U.S. should the need for actual work hours and/or any subsequent bench pay based on the reduced average work hours fall below full time for a prolonged period. This minimum will be scrutinized by the U.S. consulate when the foreign national and his or her family apply for H-1B and H-4 visas, and the consular official will deny the visas if he or she feels the family could become "public charges" because the guaranteed minimum level of pay might cause them to fall below the poverty line. On balance, a reasonable minimum the author has used is 20 hours, for a range stated on the H-1B petition of "20 to 40 hours."
The employer must take care not to create an imbalance between what U.S. and H-1B workers may earn for equivalent work. If the employer creates a regular annual salary plan, for example, it should assign a value to the salary equivalent to what the normal employed consultant would earn in a year, taking into account an expected amount of bench time, with realistic discounts for any additional benefits or for the employer's risk in providing an income that is guaranteed. The employer should then offer the salary option to its U.S. workers as well.
Special Problems and Advanced Strategies Part 2
A. "Recapturing" Time and Other Strategies to Extend the Six-Year Maximum
A foreign national may remain only six years in the U.S. in H status, regardless of whether the foreign national has worked for different employers or held different positions or H classifications. Following the six years, the foreign national must spend at least one year outside the U.S. before being eligible for H status again. AC 21 and subsequent legislation created relief from the six-year limitation in certain circumstances for individuals who have made sufficient progress toward obtaining permanent residence. (For a discussion of this relief please see the December 9, 2002 article in this series.) Depending on the circumstances, employers often need advice on what options are available when the H-1B employee is reaching the six-year maximum.
When an H-1B nonimmigrant is not eligible for extension beyond six years under the AC 21 changes, one potential strategy is to attempt to "recapture" some of that time if the foreign national was physically outside the U.S. for any significant portions of the six-year period. This is based on the legal nature of the six-year limitation, which, by its terms, defines only actual time spent in the U.S. to be part of H-1B status time. If this strategy is possible, the employer and H-1B worker compute the time the worker spent outside the U.S. and then file a petition requesting extension of stay until a date that is six years later than the date the foreign national first entered the U.S. in H-1B status or was granted change of status to H-1B, plus the calculated "recapture" time.
According to INS, such recapture time must meet certain criteria. Most recently, the service centers have required time spent outside the U.S. to be "meaningfully interruptive" of the H-1B employment. Providing guidance on this concept, INS has stated that "if the foreign national maintains any relationship with the H-1B employer, he or she will be ineligible to recapture H-1B time." Under this standard, INS stated that (1) simple vacation time from the H-1B spent outside the U.S. would not be subject to recapture and (2) time spent on medical leave outside the U.S. might be subject to recapture if it is "significant." The decision as to recapture will be left subject to the discretion of the relevant INS service center director.
Because application of the "meaningfully interruptive" standard was left discretionary with individual INS offices, actual practice has been erratic. Indeed, on some occasions additional time has been granted to foreign nationals to make up for even short trips outside the U.S. Nevertheless, if a foreign national is approaching the end of his or her six-year maximum stay, an effort to recapture time spent outside the U.S. should be considered.
In filing a recapture application, the petitioning employer has the burden of proof. It is therefore important to present the request in the most favorable light and document each absence and its purpose. Typical documentation accompanying a request of this nature will include a high-quality copy of the passport clearly showing entry/exit stamps, plane tickets, payroll records of the employer indicating any sabbatical or leave, an affidavit from the foreign national or the employer describing the circumstances of any absence, and payroll records from any foreign employer or other documentation of activity abroad.
Many practitioners dispute the INS' basis for imposing the "meaningfully interruptive" standard on whether absences from the U.S. during the period of an H-1B petition "count" towards time that can be recaptured in a "final" extension of status, because it appears to directly contradict the relevant statute and regulations. Under the relevant section of the INA, the six-year limit applies to the actual "period of authorized admission" to the U.S. in H-1B status, not to the gross total period of H-1B petition approval. Under the corresponding regulation, the limit applies when the H-1B nonimmigrant "has spent six years in the United States" [author's emphasis] in H-1B status. It should be clear, the argument goes, that only time spent physically in the U.S. counts against the limit, so that any absence from the U.S., whatever the purpose, tolls running of time towards the limit until the person returns. The issue was recently litigated in federal district court in California, and the resulting opinion vindicated this more generous interpretation.
Another option for employers when a worker has used up the initial six-year H-1B status is to transfer the foreign national to an office or affiliate outside the U.S. for the required year. Then the individual may continue to work for the employer while completing the prerequisite to qualifying for an additional six years in H-1B status. An issue that then frequently arises is whether the individual can travel to the U.S. as a business visitor. Although the foreign national is not prohibited from making such trips on behalf of the new "foreign" employer, this cannot be used as a vehicle of convenience essentially to have the foreign national continue to work in the U.S. Such trips should be made only for bona fide, short-term temporary business visits.
A foreign national might also be near the six-year limit on H-1B stay but believe that an opportunity to apply for adjustment of status to permanent residence is imminent because a preference petition to classify him or her as eligible for permanent residence is pending or will shortly be ready to file, providing a basis to apply for adjustment, but the foreign national is not eligible for a seventh-year H-1B extension. In such a situation the person may make a tactical decision to "overstay" and wait in the U.S. to submit the application for adjustment of status. Under a special provision of the law governing applications for adjustment of status, a person who has been lawfully admitted to the U.S. may apply for adjustment of status to permanent residence in an employment-related category, notwithstanding having overstayed the period of admission or worked without authorization, so long as the period of overstay or unauthorized employment does not exceed 180 days. Under another special provision, if an underlying labor certification or preference petition was filed before April 30, 2001, and the person was present in the U.S. on December 21, 2000, he or she may apply for adjustment of status and be forgiven any overstay or unauthorized employment with payment of a $1,000 fine.
The employer will not be authorized to employ the foreign national during the overstay period, but as soon as the foreign national submits the application for adjustment of status, he or she will be able to apply for an "employment authorization document" (EAD) card granting a resumption of legal work authorization.
This "tactical overstay" strategy is very risky, and it is only recommended if the parties first consult with expert legal counsel. If there has been a miscalculation and the opportunity to apply for adjustment of status does not arise within the 180-day overstay period, the foreign national must then leave the U.S. and return to his or her home country to obtain any further visa, unless the foreign national decides to rely on Section 245(i). If the person leaves before 180 days have passed, he or she should be able to complete processing for permanent residence through the U.S. consulate in his or her country of last residence, or obtain another H-1B visa after one year has elapsed. If the person stays in the U.S. beyond the 180-day overstay period, he or she becomes subject to a three-year bar on reentering the U.S., or if the overstay exceeds one year, a ten-year bar.
B. Inadvertent Lapse of Status
There are a variety of different situations in which an H-1B employee or an H-4 family member may inadvertently fall out of status. Common examples include the following:
There are a variety of other scenarios that arise, with varying degrees of complexity. Selection of a proper strategy to rectify a problem depends on the particular circumstances. If the H-1B employee has inadvertently fallen out of status, he or she must be placed back into H-1B status retroactive to the date that he or she initially fell out of status. This is necessary to avoid both the H-1B employee's having worked without authorization and the employer's having improperly employed a person not authorized to work.
- An H-1B employee working for Company A has a new H-1B petition approved so that he or she may work for Company B. The H-1B employee then travels outside the U.S. and re-enters the country using a pre-existing H-1B visa obtained as a result of his H-1B employment with Company A, but the employee fails to present the Notice of Approval of his or her current H-1B employment with Company B at the time of entry. In such a situation, the H-1B employee would be re-admitted only for the remaining validity period of the old visa, even though he or she was eligible for re-admission for a longer period because of the new H-1B approval for Company B. The employee might be unaware that he or she has been admitted for a shorter period than the Company B approval, and his or her status might inadvertently lapse when the shorter period from the Company A approval expires.
- An H-1B employee working at Company A has a petition to amend/extend stay filed by Company B. The employee's family members are in valid H-4 status but, either because they do not believe that they need to extend their stay or Company B is unaware of the need to extend the stay of the family members, nothing is filed on their behalf. The authorized stay of the family members will therefore not be extended for a period coextensive with the Company B approval for the employee. When the date of the family members' original approval, coextensive with the Company A petition, expires, they may inadvertently overstay.
Under some circumstances, a simple problem can be addressed through a visit to the local INS district office or to the port of entry where the person was admitted, to request that the person's admission record be amended or re-annotated with a new date. In other situations, the petitioner may file an H-1B petition seeking "retroactive" extension of status for the foreign national. The INS has discretionary authority to forgive any "delay" in petition filing and approve a "late filed" or retroactive extension of H-1B status where the applicant can show that (1) the delay was due to "extraordinary circumstances beyond the control of the applicant or petitioner" and the INS "finds the delay commensurate with the circumstances"; (2) the foreign national has not otherwise violated his or her nonimmigrant status; (3) the foreign national remains a bona fide nonimmigrant; and (4) the foreign national is not the subject of deportation or removal proceedings.
If family members have overstayed, so that work authorization is not an issue, and the period of overstay has been 180 days or shorter, thus avoiding application of the three- or ten-year "unlawful presence" bar on re-entry to the U.S., a simple solution may be for the family members to leave the U.S. and return to the home country. The family members may then apply for new H-4 visas and re-enter the U.S. to obtain new periods of stay co-extensive with that of the principal H-1B nonimmigrant. Unfortunately, the overstay prevents the family members from obtaining visas in Mexico or Canada or from another third country but it normally has no further negative effect so long as the overstay period was less than 180 days, and the family members return to their home country to make new visa applications.
If the foreign national or family members have overstayed for more than 180 days, they should not leave the U.S. because they can then be barred from applying for visas or re-entering the U.S. (1) for three years if the "unlawful presence" was greater than 180 days but less than one year or (2) for ten years if the "unlawful presence" was greater than one year. In such a situation, the family member(s) should apply for a retroactive extension of stay, asking the INS to exercise its discretionary authority to grant relief, to link their status back to the point at which it initially lapsed. If such an application is granted, the family members will not be subject to a re-entry bar.
Obviously, favorable use of this discretionary authority by the INS can never be assumed. In practice, it has been the observation of the author that, in appropriate circumstances in the past, the INS has been willing to show reasonableness and flexibility in correcting problems of status lapse or late filing of a petition that were inadvertent or resulted from a good-faith misunderstanding of immigration procedures. In the post-9-11 environment, however, INS has indicated it will be showing "zero tolerance" for late-filed or out-of-status applications or petitions where the problem would have previously been overlooked a matter of discretion. It is still possible to make the "extraordinary circumstances" request for relief, but INS can be expected to hold those requests to a more convincing standard.
C. Anticipating the Annual H-1B Cap
With the potentially significant impact of the H-1B cap on the employer's ability to recruit and hire foreign nationals in H-1B status, it becomes increasingly important for the employer to implement an H-1B strategy that minimizes the risks of an H-1B cap problem.
Perhaps the single most important step that the employer can take is to proactively identify employees it hires in F-1 or J-1 practical training status who typically come to the employer with an employment authorization card issued by the INS good for one year, and then work with these employees to file petitions for change of status to H-1B early in the annual H-1B cap cycle. These employees frequently begin work during May, June, or July, after graduation from a U.S. academic program. In some recent years the cap has been reached long before that point in the year, so if the employer waits the full year of the employee's practical training before filing the H-1B petition it may be too late, and the person will be unable to obtain work authorization until the following October. To avoid these problems, employers should prepare and file H-1B petitions promptly after the employment "relationship" begins and obtain approval early in the INS fiscal year. Where appropriate, the employer can ask for an H-1B start date as late as six months after the date of filing, thereby using as much of the practical training period as possible before commencing the six-year H-1B status period.
Second, employers that recruit abroad should, to the extent possible, try to schedule such recruiting at a time that, if they find qualified, interested applicants, would leave the employer with time to prepare and file an H-1B petition that can be approved prior to the cap's being reached. Late summer or early fall are the best times. Spring and early summer are inadvisable, unless the employer is willing to wait until October 1 for the new employees to begin employment.
Finally, the potential impact of the H-1B cap each year makes it especially important that employers train recruiters to avoid making unrealistic promises of employment to foreign nationals who need a new H-1B visa approval to begin work.
The August 12, 2002 article in this series describes the recent history of the H-1B cap. The cap has not been a problem since AC 21 raised the annual limit to 195,000, but when the limit reverts to 65,000 for fiscal year 2004 this kind of strategic planning will once again assume critical importance.
Special Problems and Advanced Strategies Part 3
A. Mergers, Acquisitions, Relocations, and Other Corporate Changes
Corporate acquisitions, mergers, and other forms of corporate restructuring are increasingly common. It is important for an employer to know when, and to what extent, such a change in corporate ownership or structure requires any employer to take action with respect to employees in H-1B status. Such actions might include filing a new Labor Condition Application with the DOL. Recent changes in the law have clarified the employer's obligations following a corporate reorganization. New LCA and H-1B petition filings are not required if (1) the new employing entity is prepared to assume all the obligations, liabilities, and undertakings of the prior entity, including obligations arising in connection with existing LCA and H-1B filings, and (2) there are no material changes in the H-1B nonimmigrant's job.
For example, if an employer undergoes a "change in corporate structure" as the result of an "acquisition, merger, 'spin-off,' or other such action, the new employing entity need not file new LCAs for H-1B nonimmigrants transferring to it, regardless of whether there is a change in the federal Employer Identification Number (EIN), provided certain conditions are met:
(1) the new employing entity must maintain a list of the transferring H-1B personnel,
(2) the new employing entity must keep in a "public access file" a list of affected LCAs of the prior employer, a description of the new entity's "actual wage" system applicable to the H-1B workers, and the EIN of the new entity, and
(3) before employing any of the predecessor's H-1B personnel, the new employing entity must execute and place in the public access file a sworn statement by an authorized representative expressly acknowledging "assumption of all obligations, liabilities and undertakings arising from or under attestations made in each certified and still effective LCA filed by the predecessor entity." The statement must also contain an explicit agreement to abide by LCA regulations, maintain the statement in the public access file, and make it available to the public or DOL upon request.
Next, an amended H-1B petition is not required if the employer is "involved in a corporate restructuring, including but not limited to, a merger, acquisition, or consolidation, where a new corporate entity succeeds to the interests and obligations of the original petitioning employer and where the terms and conditions of employment remain the same but for the identity of the petitioner." The provision does not define what is needed to show that the new entity "succeeds to the interests and obligations of the original petitioning employer." Corporate restructurings can take many forms, ranging from straightforward stock transactions or divisional realignments to complex asset deals where the new entity may purchase only a limited bundle of goods, intellectual property, contractual rights, and other tangible or intangible property associated with a specific product line or business unit, and the prior entity continues in existence with its other operations. Pending further guidance from the INS, a reasonable interpretation is that the "interests and obligations" to which the new entity must succeed are simply those associated with actual employment of the H-1B nonimmigrant. Thus, where the new entity (1) will assume employment of the H-1B nonimmigrant and enjoy the benefit of his or her work and, (2) correspondingly, is prepared to assume liability for the salary and other obligations associated with the prior entity's LCA and H-1B petition, executing the necessary statement for the public file, the new entity may qualify as a successor and avoid filing new LCA and H-1B petitions.
Some corporate changes are not reorganizations -- the entity in existence after the changes occurs is the same entity as existed before the change. In such circumstances, "successor" action is not needed. An example is a corporate stock acquisition where one entity acquires all the stock of the H-1B employer without any change in its operations, structure, or EIN. In this situation there has not been a restructuring of the employing entity but merely a change in ownership. Another example is when a company changes its name. The INS does not consider a name change to be a material change that must be reported; the new name must simply be included in H-1B petitions filed for extension or amendment of status. To avoid confusion, however, a commonly recommended strategy is for future H-1B and other petition filings by the company to identify the employer as "[new name], formerly known as [old name]."
If, after a corporate restructuring, the employer need not file a new or amended LCA and H-1B petition, it is still sometimes advisable to do so. First, the new entity may be uncomfortable signing a legal document that assumes the potential liabilities of the predecessor under the H-1B program. Under the statement described above, which must be placed in the public access file, the successor is liable for any violation of LCA obligations committed by the prior entity, including, for example, the failure to pay the required wage. The employer must decide whether it is willing to assume all such potential liabilities. The use of representation and warranty and/or indemnification provisions relating to LCA compliance in the acquisition agreement or related contract may be useful in this regard. If the new employer does not wish to assume liability for the predecessor, then it must file a new LCA.
Second, consider the following situation: The name of the employing entity has changed as a result of some corporate event and an H-1B employee thereafter travels outside the U.S. Upon applying for readmission to the U.S., that H-1B employee may well be asked questions by an INS officer at the port of entry designed to determine whether the H-1B beneficiary is still employed by the employer that filed the H-1B petition on his/her behalf. If there has been a change in the name of the employer, it could create an awkward situation for the H-1B employee, who might have to convince the INS officer that a "successor employer" exists.
Even if the H-1B employee is provided with appropriate documentation of the "successor employer" relationship, this is a potentially dangerous situation because it leaves the "successor employer" determination to the INS officer at the port of entry, and he or she has broad discretion over re-admission of the H-1B employee. It is therefore advisable to file an amended H-1B petition to reflect most corporate changes, even if such a petition may not be legally required, to avoid potential travel-related problems for the H-1B employee.
Current INS rules require an "amended" petition to reference any new Labor Condition Application that is applicable to the person's employment. As a result, if the employer elects to file a new LCA, it will also trigger the need for an INS petition to be filed. This is potentially quite burdensome to employers. Thus, for example, if an employer files a new LCA for numerous H-1B nonimmigrants, it must also prepare corresponding amended petitions. When situations like this arise it may be possible to work out a flexible arrangement with the relevant INS service center.
If a corporate change results in a material change in the H-1B employment, rendering information on the original LCA inapplicable (such as reassignment to a new area of employment or a change in duties sufficient to place the job in a new occupational classification), the employer of course must file a new LCA and an H-1B petition. Employers must always file LCAs and petitions reflecting material changes in H-1B employment, regardless of whether the material change is the result of corporate restructuring.
Finally, the employer should remember that when it files an "amended" petition that does not seek any extension of the validity period of H-1B classification beyond what was granted in the original petition, it will not have to pay the $1,000 education and training component of the petition filing fee.
B. Termination or Resignation of an H-1B Employee
A variety of issues arise when an employer elects to terminate the employment of an H-1B employee, or the employee resigns, before the end of the petition period. Concerns about the consequences of terminating H-1B employees have become common with the downturn in the economy. There are two issues to consider: the employer's duties in the termination, and the effect on the foreign national's legal status in the U.S.
Employers have three duties following the termination of an H-1B employee. First, the employer should notify the INS when it terminates an H-1B worker. The INS requires petitioners to notify the INS "immediately . . . of any changes in the terms and conditions of employment of a beneficiary which may affect eligibility under [the H-1B program]. . . . If the petitioner no longer employs the beneficiary, the petitioner shall send a letter explaining the change(s)" to the INS.
Second, if the H-1B employee is dismissed by the employer for any reason prior to the end of the authorized H-1B stay, the employer is liable for "the reasonable costs of the return transportation of the foreign national abroad." "Abroad" means to the foreign national's last place of foreign residence. The obligation does not include H-4 family members. This is a specific commitment which the INS requires the employer to make in signing the H Classification Supplement to the Form 1-129. However, as a practical matter, the obligation to pay return transportation costs for foreign nationals does not arise frequently because many foreign nationals do not wish to return home and instead seek other H-1B employment. The obligation also does not extend to paying the foreign national the cash equivalent of an airplane ticket home if the foreign national elects to stay in the U.S.
Third, unless the employer takes certain steps to evidence the termination, the DOL might determine that it placed the H-1B foreign national in "nonproductive" status in violation of the employer's required wage obligations, with attendant back pay liability. The regulations specify that the required wage obligation continues until there has been a "bona fide termination of the employment relationship." The nature of "bona fide termination" depends on the circumstances. One important factor is the presence of a clear, unequivocal statement in writing to the employee that the relationship has been terminated. Two other factors listed in the regulations are whether the employer has taken the steps described above to notify the INS and to offer return transportation.
Therefore, when it terminates an H-1B employee, the employer should, for its own protection, (1) confirm the termination in writing to the employee, (2) notify INS in writing of the termination, (3) offer to tender an airplane ticket, or otherwise provide for transportation to the person's home country, and (4) keep documentation that it has taken these steps. The notice letter to INS need only reference the INS file number of the approved H-1B petition and report that the foreign national is no longer employed by the petitioner. The INS will then issue a letter acknowledging the withdrawal and stating that approval is "automatically revoked" pursuant to regulatory procedure.
Of separate significance is the impact of the termination of employment on the foreign national's ability to maintain H-1B or other temporary status and stay in the U.S. The foreign national's H-1B status is dependent upon continued employment in the position that was the basis for the H-1B classification. Therefore, once the employment ends, the individual can no longer maintain H-1B status. Once a foreign national loses nonimmigrant status, there is no "grace period" in the law enabling the person to remain in the U.S. Thus, the foreign national will likely be unable to "transfer" the H-1B status to a new employer in an amendment or extension of status petition or apply for change to another nonimmigrant status because such a petition or application requires proof of lawful maintenance of status under the prior petition until the new petition is filed. The INS requires evidence of continuing employment in the prior H-1B job, such as copies of recent paychecks, as part of such a petition or application. If the beneficiary cannot demonstrate continued H-1B status, then the request to transfer the H-1B to a new employer or change status will likely be denied. The foreign national then must leave the U.S. and obtain a new visa abroad before returning to the U.S.
If employers want to assist terminated H-1B nonimmigrants to transition to other U.S. employment or otherwise manage to stay in the U.S. legally, they must ensure that a foreign national's employment is not terminated until he or she has a new employer and the new employer has filed an H-1B petition on behalf of the employee or the employee has properly applied to change status. The termination of the old employment will not affect the validity of a new H-1B petition once it is filed.
Sometimes the H-1B nonimmigrant may not secure new employment before termination is effective. If the foreign national remains in the U.S. following the termination, he or she is not in valid H-1B status and consequently is subject to removal. Depending on the circumstances, it still might be possible for a new employer to submit a petition requesting extension of H-1B status using the "extraordinary circumstances" discretionary relief provision. Typically, the H-1B beneficiary describes in an affidavit the circumstances of the termination that were beyond his or her control, and how he or she diligently pursued a new job offer immediately upon learning of the termination. In the past, INS has been reasonably flexible in approving petitions requesting "retroactive" extensions of status for beneficiaries who suffered sudden layoffs in a prior position for short periods after the termination. In a June 2001 memorandum, INS indicated that it expected to propose a rule to afford H-1B beneficiaries no longer working for the initial H-1B employer "some reasonable period of time such as 60 days" after leaving the employer to begin working for a new employer and have an H-1B transfer petition filed under AC 21 portability. Pending such a proposal, adjudicators were to consider H-1B transfer petitions with issues about maintenance of status on a "case by case" basis, and were reminded of the regulatory provisions permitting discretionary relief under certain circumstances. However, in the wake of September 11 the INS never proposed this 60 day grace period rule, and now states that the policy is "zero tolerance" for status violations. "Extraordinary circumstances" relief can still be requested but it will likely be much less freely given.
The return transportation obligation does not apply when the H-1B foreign national voluntarily terminates his or her employment. Similarly, the employer is excused from the "required wage" obligation because the absence from work would be at the employee's voluntary request, rather than due to employer-imposed nonproductive time. If the foreign national resigns, the employer should therefore obtain a written resignation letter for its file as evidence of the voluntary leaving.
When an H-1B employee resigns it is still advisable to notify INS and withdraw the petition to terminate any obligation to the person. However, if the employee might return at a later time, the employer can take no action and leave the petition approval "open." The employee may then return to work any time during the approval's validity period. Again, the employer should obtain a written resignation statement or request for extended leave from the foreign national for its file which indicates that the foreign national voluntarily left employment. This safeguard should obviate the "nonproductive" time required wage and return transportation obligations.
Finally, the employer should be aware of one other obligation which arises when an H-1B employee resigns. Under another statutory change added by ACWIA, it is a violation of law for the employer to "require an H-1B nonimmigrant to pay a penalty for ceasing employment with the employer prior to a date agreed to by the nonimmigrant and the employer." This statute does not prohibit the employer from recovering liquidated damages. Whether a particular payment constitutes a penalty and or liquidated damages is determined by state law. Under no circumstances may liquidated damages recoup the $1,000 education and training portion of the filing fee.
 The individual might also qualify for L-1 intracompany transferee status at the end of the one-year period.
Note that although employment of an existing H-1B nonimmigrant worker may continue under the LCA with the appropriate statement placed in the file, the LCA may not be used to support any new or extension petitions which are prepared after the corporate change in structure. A new LCA bearing the correct new information must be filed at that time.
The author encountered a situation where, under this scenario, a simple tax identification number change resulting from an employer's tax-related consolidation of business units (under the former scheme where a change in EIN did require a new LCA) would have required the employer to file 600 amended H-1B petitions for workers whose jobs were wholly unaffected by the change. Due to the unusual circumstances and potential burden this would have imposed on the employer and the INS, the latter agreed to waive the new petitions. The employer was obligated instead to report the change when it petitioned for routine extensions for individual workers.
About The Author
George N. Lester IV is of the Immigration Practice Group (the "Group") of the law firm of Foley, Hoag & Eliot LLP. Foley, Hoag & Eliot LLP is a full-service law firm of 200 lawyers in Boston and Washington, D.C. It was the first large law firm in Boston to develop an expertise in business immigration law, and for over thirty years its Group has represented employers in a full range of procedures to obtain temporary or permanent authorization to employ foreign professionals. Mr. Lester has practiced immigration law for ten years, and regularly speaks to business, academic, and professional groups on immigration topics. As part of his regular AILA activities, Mr. Lester meets with officials of the INS Vermont Service Center to discuss H-1B and other liaison topics. He also serves as Treasurer and a Board Member of the Political Asylum/Immigration Representation Project (PAIR) in Boston, and received that organization's Pro Bono Attorney Award for Dedication and Commitment to Human Rights in May 1996. Mr. Lester is a 1989 graduate of Northeastern University School of Law.
This article is a consolidated reprint of Articles 24-26 which originally appeared in the beginning of each week's issue as of the December 30, 2002 issue of Immigration Daily and is based on a chapter George N. Lester authored titled "Specialty Occupation Professionals," in the treatise Business Immigration Law: Strategies for Employing Foreign Nationals, edited by Rodney A. Malpert and Amanda Petersen, and appears here with the permission of the publisher. Published by Law Journal Press. Copyrighted by NLP IP Company. All rights reserved. Copies of the complete work may be ordered from Law Journal Press, Book Fulfillment Department, 105 Madison Avenue, New York, New York 10016 or at www.lawcatalog.com or by calling 800-537-2128, ext. 9300.
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The opinions expressed in this article do not necessarily reflect the opinion of ILW.COM.
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