News & Insights

Maintaining an H-1B workforce during the COVID-19 pandemic

During the current pandemic, many struggling businesses are furloughing or laying off employees at alarming rates.  However, for employers of H-1B workers, different rules apply and for those Employers wanting to maintain their workforce, there are other options to consider first.

H-1B lottery winners- should Employers withdraw selected registrations following the loss of a project?

USCIS recently announced that it received a total of 275,000 H-1B registrations for FY 2021.  This is a significant increase on last year’s applications, which saw USCIS receive a total of 201,011.  This is largely due to the fact that USCIS switched to an electronic registration system this year, which significantly reduced the entry barriers to submitting an application.  This year Employers were only required to submit a brief form online together with a $10.00 filing fee.

However, due to the quickly spreading coronavirus, many applicants are now losing projects, which is likely to result in the withdrawal of many applicant’s H-1B selected registrations.  This is truly devastating given that many individuals have had to try several years in a row before finally being selected, only now to have that selection withdrawn.

Employers considering withdrawing the H-1B registrations following the loss of a project, should not be so hasty.  Employers have 90 days in which to file registrations and therefore given the possibility of a new project in the future, it is recommended not to withdraw the H-1B, until closer to the 90- day mark.  After all, who knows what the next few months will hold.

While things may seem bleak, there is at least some good news for the candidate who was not selected in the recent H-1B lottery.  Given the potential for a large number of withdrawals, there is still a possibility of selection later in the year because any withdrawn registrations will result in more numbers returning to the cap.

Can an Employer’s furlough H-1B workers?

Due to the anti-benching provision passed as part of the American Competitiveness and Workforce Improvement Act of 1998, Employers cannot bench H-1B employees and must continue to pay them during any “non-productive” periods.  Failure to pay wages can result in fines and an order requiring an Employer to pay back wages.  Due to this provision it means that an Employer cannot furlough H-1B workers.

However, Employer’s are not required to pay an H-1B employee’s wage for a leave of absence, where the leave of absence is specifically requested by the Employee.  While this could include time to recover from an illness, an Employee who contracts COVID-19 would be covered by the Families First Coronavirus Response Act which provides for paid leave to all employees related to COVID-19 illness/quarantine.

Before terminating an H-1B worker’s employment, Employers should consider whether they can reduce the employee’s wage/hours.

Can an Employer reduce an H-1B worker’s wage?

Having attested to pay a certain wage on the Labor Condition Application (LCA), an Employer cannot simply reduce an H-1B employee’s pay without violating the regulations and facing fines or backpay.  Therefore, despite the current pandemic Employers must continue to pay H-1B employees the promised LCA wage, unless they choose to affect a bona-fide termination (See below for further details).  Even if the reduced wage is above the prevailing wage, if it falls below what was stated on the LCA and I-129 form, it would not be advisable to reduce the wage.

The only possible exception to this would be if the wage increased since filing the LCA/H-1B petition and the Employer wishes to reduce the wage back to the wage stated on the LCA/petition.  For example, if the LCA wage when the petition was originally filed was $90k a year and then an Employer later increased this to $100k.  An Employer could arguably reduce the wage back to $90k without filing an amendment.  However, this is a gray area and Employers are strongly advised to consult with an Immigration Attorney because effecting any changes.

Can Employers reduce an employee’s wage and pay a guaranteed bonus at the end of the year?

This is a possible option where the Employer has agreed to pay a yearly salary, rather than hourly.  If an Employer reduces the employee’s wages below the LCA wage but then agrees to pay a guaranteed bonus later in the year which brings their salary back up to the LCA wage, this is likely to be defensible.  However, this bonus cannot be conditional in any way, shape or form.   Stock options would not be an option as the lump sum would have to be paid in salary with the applicable taxes being deducted.

Can an Employer reduce an H-1B worker’s hours?

An Employer can reduce an employee’s hours, therefore reducing their pay but only by filing an amendment with USCIS.  This is probably the best option available to Employers right now if they do not wish to lose vital resources and cannot afford to pay the full- time wage.

A change to an H-1B employee’s hours is considered to be a material change in employment and requires an amendment to be filed.  Once filed with USCIS, an Employer can reduce the hours accordingly, but this must match what is listed on the new petition.

By converting an H-1B employee from full-time to part-time following the loss of a project an Employer can avoid losing key employees and will continue to be in compliance with the regulations, provided they continue to pay them.  Once a new project is found, a further amendment petition can be filed to convert the employee back to full-time employment.

How to effectuate a bona-fide termination.

If an Employer cannot continue to pay an H-1B employee and does not wish to file an amended petition to reduce hours/pay there is nothing to prevent an Employer from terminating the employment agreement provided there is a bona-fide termination.  In fact, an Employer should ensure that they effect a bona-fide termination, otherwise they may find themselves liable for backpay.

To effectuate a bona-fide termination an Employer must carry out the following three crucial steps:

  1. Notify the employee in writing of their decision to terminate the employment relationship. Employers should ensure that they obtain the employee’s written acknowledgment where possible;
  2. Notify USCIS in writing and make a formal request to USCIS to withdraw the H-1B; and
  3. Offer the employee the reasonable cost of return transportation to their home country.

Upon termination, an employee is entitled to a 60- day grace period or until the end of the authorized validity period, whichever is shorter.

Can H-1B workers work from home?

Yes, for further details of this please refer to our previous article at:

https://www.patellegal.com/staying-h-1b-compliant-during-the-covid-19-outbreak/

If you have any questions regarding any of the above issues please do not hesitate to contact our Senior Immigration Attorney, Chris Prescott at cprescott@patellegal.com.

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