Layoffs, furloughs, and the obligation to pay H-1B employees

BY , Jason Gerrol

Many employers are already facing the tough choices involved with reducing their workforces in response to the novel coronavirus (COVID-19) pandemic and the resulting impact on their businesses and organizations. Workforce reductions can occur in the form of layoffs and furloughs.

What is a layoff?

Generally, a layoff is recorded by an employer as a termination of employment, not for any performance-related cause.

Laid-off employees have no expectation that they will return to work with the same employer.

What happens to an H-1B employee's status when a layoff occurs?

A foreign national's H-1B nonimmigrant status is tied to his or her employment with a particular employer. Therefore, when an H-1B employee is laid-off, his or her H-1B status ends.

The foreign national can remain in the U.S. following termination of employment for the shorter of 60 days from the layoff date or the expiration date of the foreign national's I-94 document.

During the 60-day grace period, the foreign national can seek new employment opportunities but a new employer will need to file a change of employer petition with U.S. Citizenship and Immigration Services (USCIS) to sponsor the foreign national for H-1B status or, if eligible, file with USCIS to change to another non-immigrant status that allows for employment.

If a new employer has not filed an H-1B change of employer petition, or if the foreign national has not otherwise filed for another non-immigrant status within the grace period, then the foreign national will need to leave the U.S. A foreign national with a pending green card (or Adjustment of Status) application, or other pending application granting lawful status (e.g., asylum), should consult with independent immigration counsel regarding their options.

What is a furlough?

A furlough is the placing of an employee in a temporary non-productive, non-pay status because of lack of work or funds, or other non-disciplinary reasons. An employer will use a furlough to retain staff it can't afford to pay but doesn't wish to layoff or terminate. A furloughed employee will generally continue to receive benefits during the period of non-productive status.

Furloughed employees have an expectation that they will return to work with the same employer. Usually (but not always), an employer will specify a date or a condition for furloughed employees to resume their duties.

Can an H-1B employee be furloughed and not paid his/her wages?

No. An employer must continue to pay the required wages to H-1B employees placed in a nonproductive status at the direction of the employer. Therefore, in the event of a company furlough, an H-1B employee will need to be paid the wages certified by the Department of Labor on the Labor Condition Application (LCA), and reflected on the H-1B petition submitted to USCIS.

Should an employer opt to instead reduce the H-1B worker's hours (e.g., from full-time to part-time), such action would be considered a material change in the terms and conditions of employment requiring an amended LCA and H-1B petition to be filed with USCIS on the employee's behalf.

In certain cases, an employer may require furloughed H-1B workers to use accrued paid-time off, or sick leave, and those cases should be reviewed with immigration counsel to ensure continued compliance with the H-1B regulations, as well as any paid leave provisions of the Families First Coronavirus Response Act.

When does an employer's obligation to pay an H-1B employee end?

An employer's obligation to pay an H-1B employee ends only when there is a bona fide termination of employment. A bona fide termination of H-1B employment requires the employer to notify USCIS of the termination and to withdraw the LCA filed with the Department of Labor in connection with the H-1B petition.

In addition, in order for there to be a bona fide termination of employment, an employer is required to pay "the reasonable costs of return transportation" of the H-1B employee to his/her home country, unless the employee has voluntarily terminated employment prior to the expiration of his/her period of admission, or is dismissed when his/her authorized period of stay is over.

Failure to effectuate a bona fide termination could render an employer liable for back wages to the terminated H-1B employee.

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Courtney H. New


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Jason Gerrol

Of Counsel

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