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Business Law Today

January 2010

Top five business immigration law issues: What employers need to know in today's economy

H Ronald Klasko


  • Immigration policy can have far-reaching effects on businesses and their employees, and understanding how these policies can impact business is paramount to avoiding violations.
  • This article covers: immigration law consequences when reducing workforce; criminal enforcement against employers who knowingly hire unauthorized migrant employees; the use of E-verify to check work authorization; the status of current visa categories, and; the EB-5 regional center program.
Top five business immigration law issues: What employers need to know in today's economy

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Why are businesses so concerned about immigration law and policy? Perhaps it is because, in a global economy, it is more important than ever that key personnel be able to cross borders expeditiously, with certainty and frequency. Perhaps it is because U.S. companies are competing more than ever with foreign companies for the best and brightest around the world. Perhaps it is because shockingly high percentages of the top graduates of U.S. universities, especially in STEM (Science, Technology, Engineering, Mathematics) fields, are foreign nationals. Perhaps it is because the government raids resulting in criminal prosecutions of employers and their managerial personnel for employing illegal aliens have caught everyone's attention. Perhaps it is because immigration laws create unintended consequences for employers involved in downsizing their workforces or taking other measures to cope with a down economy.

No matter which, or how many, of these factors are leading businesses to increasingly focus on immigration law issues, immigration is a hot topic in the business community. With the president stating that he intends to push hard in 2010 for a major reform of the country's immigration laws, including those affecting businesses, these issues will likely be coming even more to the fore in the consciousness of American business.

The following five issues are at the center of businesses' concerns today.

1. Immigration Law 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.

2. Enforcement Is a Priority

Ever since 1986, employers have had an obligation to verify the identity and employment authorization of their workforces. This is done through the I-9 process. This is old news.

What's not old is how the government (U.S. Immigration and Customs Enforcement or ICE) is enforcing these obligations. Until recent years, enforcement of the employer sanctions laws has been almost uniformly through civil provisions of the law. In many cases, the dollar amount of any civil penalty has been considered a slap on the wrist; no more for some employers than the cost of doing business.

That all changed during the latter years of the Bush administration and is continuing in the Obama administration. The focus now is on criminal enforcement against employers who knowingly hire employees without authorized immigration status. Enforcement has been through the mechanism of often highly publicized raids, which, needless to say, can disrupt business operations and create negative publicity. All of this has made some employers rethink the way they operate. "See no evil, hear no evil," "don't ask, don't tell" employers are abandoning their lax immigration policies in light of the potentially dire consequences. The answer of effective employer response to the law does not lie in asking more questions of prospective employees about immigration status, which risks potential violations of national origin and citizenship discrimination laws. The best practice is for companies to establish uniform and consistently followed corporate immigration policies that are communicated to all supervisory and hiring personnel with the goal of establishing a corporate culture of full compliance with the immigration laws.

To this end, employers are increasingly seeking immigration counsel for I-9 reviews, development of corporate immigration policies, and other protective measures.

3. Requirement to Use E-Verify

E-Verify is a relatively new government program whereby employers can obtain electronic verification from the government of an employee's authorized work status. This program remains voluntary for most employers.

The government would like to see this program become mandatory for all employers. Right now, it is required only for federal contractors under an Executive Order implemented in recent months.

Many employers are presently in the process of determining, with immigration counsel, whether to sign up for E-Verify while it is still a voluntary program. With E-Verify comes the right of ICE to inspect the employer's records without notice and the use of a government database that is not always accurate. One of the drawbacks of E-Verify is that employers can only do so for new hires; the employer gets no immunity from the government for its previously hired workforce. For employers in industries with a traditionally sizable illegal alien workforce—landscaping, construction, hospitality, to name a few—the peace of mind of knowing that newly hired workers are authorized employees likely outweighs any downside risks. For other employers, however, the downside risk may outweigh the potential benefits.

4. Quotas Don't Reflect Reality

The current quotas for immigrant and nonimmigrant visa categories, established by statutes decades ago, bear no resemblance to business realities in 2010.

For example, H-1B quotas are so low that, in a normal economic year with normal hiring patterns, employers have one day per year in which to file H-1B petitions for any and all foreign national professional employees whom they recruit from U.S. universities or from overseas. And, in many years, even if their application is filed on the first available day (April 1), employers are subjected to a random lottery since more applications are filed on the first day than there are visa numbers available. This system does not comport with business reality or with common sense.

Companies employing lesser-skilled workers, such as resort workers, landscapers, hospitality workers, etc., face similar quota problems under the H-2B temporary seasonal worker program. Even though these workers may be essential to the operations of the U.S. business, a separate H-2B quota that does not come close to meeting demand results in companies being unable to staff essential positions.

Equally outdated are the immigrant (green card) quotas. Let's say that an employer wants to employ a foreign national employee on a permanent or indefinite basis. In order to do so, the employer must satisfy the U.S. Department of Labor, through an extensive recruitment process, that it has been unable to find a qualified, interested, and available U.S. worker to take the position. Only if the DOL is satisfied that no U.S. worker is available to fill the position, and that the employer needs someone to fill the position immediately, will the DOL issue a labor certification. You might think that completing this process would result in the U.S. employer being able to hire the foreign national worker, whom it needs immediately, without delay. Not even close. Depending upon the education level required for the position and the country of the foreign national's birth, the foreign national worker may not be able to obtain permission to work for that employer for many years, possibly even a decade or more. This is hardly a sensible system, and the quotas need to be updated to meet the needs of a modern economy.

5. The EB-5 Regional Center Program

Let's say a foreign national wants to make a substantial investment in a business in the United States that will create employment for at least 10 U.S. workers. If the investment is at least $1,000,000 ($500,000 in high unemployment or rural areas), the law provides that the foreign investor can obtain a green card in the EB-5 category. However, largely because of a series of highly restrictive interpretations by USCIS, this immigration category has been underutilized.

Recently, the EB-5 category has become hot again because of substantial and increasing interest in the EB-5 Regional Center program. Regional Centers are government-approved projects—often construction projects—that USCIS has certified will provide substantial employment opportunities for U.S. workers, either directly or indirectly, in the community. An investor who invests the requisite amount of money—usually $500,000, sometimes $1,000,000—in a government-approved Regional Center may be able to obtain a green card more expeditiously than through any other means available. The Regional Centers have attracted large numbers of developers who, unable to obtain financing from traditional sources, seek capital inflow from foreign investors. These investors are willing to accept below-market returns because they are obtaining the significant benefit of a U.S. green card. This program is a classic win-win scenario: it provides a source of capital at a time when the capital markets are only reluctantly thawing; it creates infrastructure construction where it is sorely needed; and it creates jobs in a time of high unemployment. The popularity of this program is evidenced by the fact that the number of government-approved Regional Centers has more than tripled in the last couple of years.

While this program may provide maximum flexibility for an investor to live anywhere, work anywhere, or not work as that person chooses, and obtain permanent residence status for his or her whole family, the program is riddled with traps for the unwary. Immigration counsel experienced in dealing with EB-5 matters, as well as financial, business, tax, and/or security advisors, are highly recommended for foreign investors/prospective immigrants seeking to move to the United States under the auspices of this program.


The Obama administration has stated its intention to seek a once-in-a-generation overhaul of U.S. immigration laws. If that happens—and it is not only possible but likely that it will happen in 2010 or 2011—a whole new list of immigration law issues will arise. For the present, at least, the issues discussed in this article are important for business lawyers in assisting their clients in navigating a complex immigration law and enforcement landscape.