Cut Down Immigration Downsizing Risks

HR Magazine, July, 2001 by Marc Topoleski, Greg Siskind

Without proper planning, layoffs can present significant immigration problems for both employers and employees.

Since the economy began its decline, companies increasingly have turned to downsizing as a way to cut costs and remain competitive. While downsizing often can be an effective way to slash expenses, it is a complex one as well. Employers instituting layoffs face the considerable challenge of managing the legal aspects of the process while trying to help employees transition to new employment.

Generally, employers are well aware of their obligations under the labor and employment laws that apply to layoffs. However, when organizations in the United States employ alien workers, the individuals responsible for managing layoffs often overlook the significant immigration-related consequences affecting both the employer and its foreign-national employees.

Types of Alien Employees

Organizations that employ foreign nationals likely will have two different types of employees: immigrants and non-immigrants.

* Immigrant workers have obtained or are in the process of obtaining lawful permanent residency, commonly referred to as a "green card."

* Non-immigrant workers usually have an H-1B, L, E or TN temporary visa.

The H1-B, the most common nonimmigrant employment visa, is used for an "alien who is coming to perform services in a specialty occupation." L visas are used for intracompany transferees that enter this country to render services "in a capacity that is managerial, executive or involves specialized knowledge, while B visas are used for "treaty traders and investors." Finally, the TN category includes "Canadian and Mexican citizens seeking temporary entry to engage in business activities at a professional level" as listed in the North American Free Trade Agreement.

Employer Responsibilities

Employers that lay off alien workers must meet certain duties under immigration law. For example, employers that lay off workers holding most types of visas must notify the Immigration and Naturalization Service (INS) so the agency can revoke the individual's visa.

In addition, employers that lay off H-1B employees must cover the cost of returning these workers to their home countries. Employers that do not comply may be subject to continuing wage obligations: Under new H-1B anti-benching regulations, employers must pay H-1B employees their normal wages for any time spent in nonproductive status "due to the decision of the employer." In layoff situations, the employer's payment obligation ends only when it notifies the INS of the termination, the H-1B petition is canceled and the return fare obligation is fulfilled.

(Employers may legally alter an H-1B worker's wages, in lieu of a layoff. To do so, the employer would file an amended H-1B petition with a new Labor Condition Application documenting the altered conditions of employment.)

Employers also must be aware of other consequences of their downsizing strategies, particularly with respect to the H-1B visa program. One potential issue concerns severance benefits. Under newly issued immigration regulations, employers must provide H-1B workers with fringe benefits equivalent to those offered to U.S. workers. While the Department of Labor (DOL) has not specifically said that severance benefits fall under the definition of "fringe benefits," it may accept such an interpretation of the regulations.

Employers also need to focus on the new concept of "H-1B dependency," which was outlined in H-1B regulations issued by the DOL last December. Under these regulations, when an employer's workforce consists of a certain ratio of H-1B visa holders (see "Are You H-1B Dependent?" below), the employer is deemed "H-1B dependent" and must meet myriad additional legal requirements.

Any layoffs that affect this ratio--whether they involve H-1B visa holders or not--may have an impact on an employer's H-1B dependent status, either adding or relieving the employer of regulatory requirements.

For example, H-1B dependent employers that file a visa petition must attest under oath that they have not displaced a U.S. worker for 90 days before and 90 days after the petition is submitted. A "displacement" occurs when an employer lays off a U.S. worker from a job essentially equivalent to that offered to the H-1B worker. A U.S. worker who accepts an offer of voluntary retirement is not considered "laid off." Also, a layoff does not result when the employer offers the U.S. worker a similar job at equivalent or higher terms in lieu of termination.

To comply with these anti-displacement provisions, H-1B dependent employers are required to keep detailed records relating to all layoffs affecting U.S. workers.

In addition, H-1B dependent employers that place H-1B workers with secondary employers have additional legal concerns--if there are "indicia of employment" between the secondary employer and the H-1B worker.

For example, under the new H-1B regulations, U.S. workers at secondary employers are protected from displacement by H-1B workers. Thus, if you are an H-1B dependent employer and you place an H-1B worker with a secondary employer, you must ensure that the secondary employer has not displaced U.S. workers from positions equivalent to that offered the H-1B worker for a period of 90 days before and after filing the H-1B petition.