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American Bar Association - Defending Liberty, Pursuing Justice

SPRING 2010

Vol. 6, No. 3

BUSINESS LAW

 

Immigration Issues for Employers in a Downturn

Terminations, layoffs, forced leaves of absence, hiring freezes, salary reductions, benefits reductions, reductions in hours, furloughs: all are unfortunate ramifications of today's economic woes. Although businesses are generally well aware of the consequences of these actions under U.S. labor laws, they are not always as aware of the consequences under U.S. immigration laws. Businesses operating in the United States should be aware because the result of adverse employment actions can be quite severe for both the employer and its foreign national employees.

The most common visa category used by employers hiring foreign national employees at a professional level is the H-1B visa. An H-1B visa allows an individual to come to the United States temporarily to perform services as a professional in a specialty occupation. Each adverse employment action listed above potentially implicates the immigration law and the status of both the employer and the foreign national worker.

Termination or Layoff of H-1B Employee
For purposes of the immigration laws, terminating an H-1B employee is not as simple as issuing a pink slip. Until the employer notifies the Department of Labor (DOL), notifies U.S. Citizenship and Immigration Services (USCIS), and offers the employee the return cost of transportation to that person's home country, an employer that thought it had terminated an employee may find itself having a continuing wage obligation to a supposed former employee.

Additionally, if a termination or layoff involves U.S. workers, and if the U.S. workers are in a related occupation, the employer may not be able to proceed with the process to confer permanent residence (green card) status on a foreign national employee unless it notifies and considers the laid-off U.S. workers.

Leave of Absence
If an H-1B employee requests a leave of absence, there is no impact on the employer. However, if the employer, as a cost-saving measure, requires its employees to take a leave of absence, the employer has a continuing wage obligation to pay foreign national H-1B employees even if it does not have an obligation to pay its U.S. workers in the same situation.

Salary and Benefit Reduction
The employer of an H-1B employee must pay the employee the higher of the "actual wage" (the wage it pays comparable U.S. workers) or the "prevailing wage" (the average wage paid by other employers to similar employees in the geographical area). So what happens if the employer's entire workforce receives an across-the-board wage reduction? Normally, there would be no legal impact on the employer arising from such treatment of U.S. workers, but there is potential legal liability for employers who hire foreign workers. As long as the foreign national employees are treated the same as U.S. workers at the company, there is no actual wage problem for the employer. The employer, however, is still obligated to pay the higher of the actual wage or the prevailing wage. So, the company may find itself with a back-pay obligation if the salary reduction puts the H-1B employee below the prevailing wage level, despite the company's equal treatment of its employees.

Reduction in Hours
As a cost-saving measure, what if the company reduces the hours of its employees? If the reduction in hours results in an H-1B employee changing from full-time to part-time status with a concomitant reduction in pay, even for a temporary period of time, the employer has violated the immigration laws. The employer will find itself getting fewer hours of work but, through ultimate enforcement of the law, paying the same full-time wage as required under the immigration laws.

The bottom line: seemingly prudent measures by an employer to deal with a business downturn may cause violations of the immigration laws. Employers should seek counsel before taking any action that might affect the wage-and-hour status of any foreign national working for them.

Note
This article is an excerpted reprint of “Top Five Business Immigration Law Issues: What Employers Need to Know in Today's Economy” by Ron Klasko, Business Law Today Magazine, 19:3. Copyright 2010 © by the American Bar Association. Reprinted with permission.

This information or any or portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.

H. Ronald Klasko ( www.klaskolaw.com) is a Philadelphia-based former national president of the American Immigration Lawyers Association (AILA). He served for three years as AILA general counsel. He is one of only three practicing attorneys ever honored with the AILA Founders Award for his contributions to immigration jurisprudence. He has been selected for inclusion in Best Lawyers in America every year since 1991. Mr. Klasko was chosen as the most highly regarded immigration lawyer in the world by International Who’s Who of Business Lawyers. His firm, Klasko, Rulon, Stock & Seltzer, LLP, was chosen with five other firms by Chambers Global in 2006, 2007, 2008, and 2009 as the top U.S. business immigration law firm. Mr. Klasko is a member of the prestigious Alliance of Business Immigration Lawyers. He can be reached at 215-825-8608 or rklasko@klaskolaw.com.

© Copyright 2010, American Bar Association.