Many employers are already facing the tough choices involved with reducing their workforces in response to uncertain economic conditions 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, having nothing to do with performance.
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 their employment with a particular employer. Therefore, when an H-1B employee is laid-off, their H-1B status ends.
The foreign national can remain in the U.S. following termination of employment for the shorter of sixty (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 status.
If a new employer has not filed an H-1B change of employer petition or the foreign national has not otherwise filed for another status within the grace period, then the foreign national will need to leave the U.S. to avoid being out of status. 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, unpaid status because of lack of work or funds or other non-disciplinary reasons. An employer will use a furlough to retain employees it can’t afford to pay but doesn’t wish to lay off 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 wages?
No. An employer must continue to pay the required wages to H-1B employees placed in a nonproductive status by the employer. Therefore, in the event of a company furlough, an H-1B employee will still need to be paid according to the certified Labor Condition Application (LCA) and H-1B petition.
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. Those cases should be reviewed with immigration counsel to ensure continued compliance with the H-1B regulations and any other applicable laws.
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.
The employer is also required to pay “the reasonable costs of return transportation” of the H-1B employee to their home country.
Failure to effectuate a bona fide termination could render an employer liable for back wages to the terminated H-1B employee.