Immigration Implications of Layoffs, Salary Reductions, and Furloughs—What Educational Institutions and Research Institutions Need to Know

The current economic climate has caused colleges, universities, and research institutions across the country to consider a variety of budget reduction initiatives. These have included layoffs, salary reductions, and furloughs. Universities and research institutions often employ large numbers of foreign nationals as faculty members and researchers and may be unaware that layoffs, furloughs, or salary reductions of these employees may trigger certain obligations under U.S. immigration law.

This Management Alert summarizes important considerations when implementing a layoff, furlough, or salary reduction involving foreign national employees.

H-1B Employees

H-1B sponsors must comply with specific requirements concerning the terms and conditions of employment, including a wage obligation. Every H-1B petition filed includes a Labor Condition Application (LCA) certified by the U.S. Department of Labor ( DOL). By filing an LCA, the employer attests that it will pay the H-1B employee the higher of the “actual wage” paid by the employer to similarly situated employees and the “prevailing wage” for that occupation within the geographic area of intended employment—known as the required wage.

Employers must pay the required wage for the duration of the approved H-1B petition or until there is a bona fide termination of the H-1B worker’s employment. DOL regulations prohibit the “benching” of H-1B workers (where the employee is unpaid for nonproductive time due to a decision of the employer, such as forced unpaid vacation, shutdown, or reduction in scheduled hours). DOL has authority to enforce the H-1B wage obligations and may impose penalties on employers who fail to comply with this requirement. Additionally, a “material” change in the terms and conditions of employment of an H-1B worker results in an obligation to file an amended H-1B petition.

U.S. Citizenship and Immigration Services (USCIS) and DOL regulations provide that an employer is liable for the reasonable costs of return transportation if an employee is terminated involuntarily before the conclusion of the authorized period of admission in H-1B status. This requirement does not apply to dependent family members of the H-1B worker, however, and there is also no requirement that the H-1B sponsor pay for the return of the employee’s personal or household goods. Historically, USCIS has refrained from becoming involved in disputes involving the return transportation obligation, taking the position that the return transportation obligation is a matter of private contract between the H-1B employer and employee. DOL, however, has looked at the return transportation obligation as one factor in determining whether there has been a bona fide termination of employment of the H-1B worker. As discussed below, without a so-called “bona fide termination,” the employer may be required to continue paying the H-1B worker even if there has otherwise been a standard termination of employment.

O-1 Employees

Unlike the H-1B category addressed above, there is no wage obligation for O-1 employees and the DOL is not involved in the process. USCIS regulations governing the O-1 category, however, do require that employers notify USCIS if the worker is no longer employed by the petitioning organization. The regulations further state that the O-1 petitioner/employer is liable for the reasonable cost of return transportation in the event an O-1 employee is terminated prior to the conclusion of his or her period of authorized stay. As with the H-1B, there is no requirement that the employer pay for the return of family members or personal possessions.

Potential Issues for Employees in the Midst of the Green Card Process

Institutions that have sponsored employees for labor certification indicate the offered wage for the sponsored position on the form submitted to DOL (the ETA Form 9089). U.S. immigration law requires that the beneficiary of the labor certification be paid the offered wage no later than the conclusion of the green card process (i.e., when the employee’s adjustment of status is approved or when he or she reports for work after admission to the United States with an immigrant visa). Additionally, employers that have conducted layoffs within the six month period prior to filing a labor certification application for a position at the same location and in the same job family must disclose this information and take additional steps as part of the pre-filing recruitment process or else defer recruitment and file the labor certification at a future datewhen there will not have been any layoffs in the six months preceding filing.

Considerations in the Event of a Proposed Layoff, Salary Reduction, or Furlough

• Identify the affected foreign national population and determine each employee’s U.S. immigration status;
• In the event of a layoff,
  • Ensure that a “bona fide termination” of any H-1B employees has occurred to stop the clock on the employer’s obligation to pay wages. In case law, DOL has taken the position that a bona fide termination requires the following: 1) notification to the H-1B worker of the termination; 2) notification to USCIS of the termination; and 3) provision of return transportation home;
  • Ensure provision of reasonable return transportation to laid-off O-1 employees and that USCIS is notified of termination;
  • Assess whether labor certification cases are in preparation and review the requirements for labor certification filing after layoff to determine if cases in preparation can proceed in the six months following the layoff;
• In the event of a salary reduction or furlough:
  • Determine whether H-1B workers should be exempted. If not, review the salary reduction or furlough plan and each employee’s H-1B petition paperwork to determine whether a new LCA and amended H-1B petition filing will be required; and
  • Review the labor certification filings of employees with pending green card applications who have been sponsored through labor certification to determine whether the salary reduction or furlough will drop employee wages below the offered wage.

These are just some of the issues your institution may wish to consider before implementing a layoff, furlough, or salary reduction that includes foreign national employees.

Seyfarth’s national University and Research Institution Immigration Team has deep expertise advising schools, colleges, universities, and research institutions in connection with the myriad of immigration issues that are unique to such organizations. We represent both public and private universities and research institutions across the United States and assist organizations from small or newly founded institutions to some of the largest and most established universities in the country.

The team includes two former PDSOs (Principal Designated School Officials) who have run major university programs. Additionally, team attorneys have served as Chair or as Committee members of the American Immigration Lawyers Association’s (AILA) national committee on Students and Scholars and Liaisons to the BAROS (Boston Area Responsible Officers) group of NAFSA—The Association of International Educators. Our attorneys have also presented on multiple occasions to the Annual and Regional Conferences of NAFSA and AILA on a variety of advanced immigration topics of concern to the scholar student and research communities.

For additional information, please contact the Seyfarth attorney with whom you work or any attorney in our Business Immigration Group (see Seyfarth.com/Immigration).