Termination of H-1B Employee – Is it bonafide?

What constitutes proper termination of an H-1B employee?

Termination and layoff of H-1B employees often put forth questions as to whether the termination was bonafide. H-1B regulations can impose strict penalties on employers for not properly terminating employees, resulting in unnecessary legal battles and costs, and possible future disqualification from the H-1B program for the employers.

This post will layout the regulations, and give an insight into proper procedure to be followed in an H-1B employee’s termination. H-1B employers can be found liable for back wages, and an employee may not be considered properly terminated for purposes of cutting off backpay and frontpay unless the employer abides by the following steps:

  1. Termination Letter

    Employer should properly and clearly notify the H-1B employee of the termination. This should ideally be in form of a termination letter. The letter should clearly state employee’s last day of work.

  2. Letter notifying USCIS

    Employer should notify United States Customs & Immigration Service (“USCIS”) that the employment relationship has been terminated as of the last date of H-1B employee’s work. This notice should be sent via a letter.

  3. Offer Transportation Cost

    Employer should offer the H-1B employee with payment for transportation home, in the termination letter. This could be in form of a payment for air ticket reimbursement, if the employee needs to leave for his/her home country. If, however, the H-1B employee voluntarily resigns, transfers his or her employment to another H-1B employer, or changes his or her status to another lawful visa classification, the travel-reimbursement requirement is nullified.

All the 3 steps listed above must be followed by an H-1B employer for proper employee termination. None of these steps are optional, and not complying with even a single step could result into employer being liable for back pay and/or pay until the end of Labor Condition Application (“LCA”) period.

Department of Labor (“DOL”) Compliance for proper Termination

USCIS and DOL are two separate government agencies who are responsible for H-1B program enforcement. Since DOL primarily deals with labor violations, it is primarily involved in frontpay/backpay issues and also termination/layoffs of H-1B employees. Any complaints regarding H-1B terminations are usually dealt by DOL investigators.

In order to comply with DOL, employers should withdraw the LCA, as soon as the H-1B employee is terminated. This will notify DOL of the termination.

So why is proper bonafide termination of an H-1B employee so important?

As discussed in the section above, not terminating an H-1B employee could create unnecessary legal hassles for the employer. However, more importantly improper termination can also put the H-1B employee’s status in jeopardy. In many instances, the H-1B employee might not be aware of his termination, and be under an impression that he/she is still employed by the employer. Since the employee has stopped performing specialty occupation duties, as such he/she would be considered out-of-status. Further, by the time the employee finds out of the termination, it might be a little too late, and can make it difficult for him/her to transfer H-1B visa with another employer.

Recent Cases where Employer paid heavy penalty for not following proper steps in an H-1B Employee’s Termination

In a recent DOL case, the Wage and Hour Department (“WHD”) Administrative Law judge (“ALJ”) awarded more than $150,000 in back wages, interest, and legal fees to a single H-1B employee who was wrongfully terminated by his California-based employer after only four months of H-1B employment. The basis for such a significant award was, in part, punitive, as the judge found that the employer had unlawfully retaliated against the H-1B worker upon learning that he filed a grievance with the DOL’s Wage and Hour Division. The H-1B worker alleged in his grievance that he had been unlawfully “benched” and unpaid for much of his first four months of employment. Because the employer was unable to evidence proper notification to the USCIS of the H-1B worker’s termination and, further, was unable to demonstrate it had offered to reimburse the terminated H-1B worker the cost of his travel back to his last residence abroad, the ALJ found the employer failed to effectuate a bonafide termination. The ALJ ordered the employer to pay the H-1B worker the $60,000 yearly salary listed in the LCA for the remaining two years and eight months of the H-1B worker’s “authorized period of stay” in the LCA.