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HR Magazine: Cut Down Immigration Downsizing Risks

By Marc Topoleski and Greg Siskind  7/1/2001
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HR Magazine, July 2001
Vol. 46, No. 7

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 non-immigrant employment visa, is used for an "alien who is coming to perform services in a specialty occupation." L visas are used for intra-company transferees that enter this country to render services "in a capacity that is managerial, executive or involves specialized knowledge," while E 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?"), 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.

Secondary employers who lay off workers are not subject to liability. The H-1B dependent employer, however, is obligated to inquire about the secondary employer's layoffs and cannot ignore knowledge that the layoffs have occurred.

Issues for Non-Immigrant Employees

Non-immigrant work visas are issued for the specific purpose of allowing individuals to work for a particular employer. Thus, non-immigrants who hold temporary work visas are legally authorized to remain in this country only as long as they work for the employer listed on their visa applications. If these employees are laid off, they immediately lose their visa status.

As a result, when employers lay off non-immigrant employees with little or no notice, they render these individuals illegal—or at least desperately seeking to preserve their status. If non-immigrant employees cannot secure an alternate status, they must choose between remaining in this country illegally or leaving everything behind and returning to their home country. If the non-immigrant has a family, his or her dependents also must leave the country because their visa status is derived from that of the non-immigrant worker.

This can be particularly hard when, for example, children must be pulled out of school in the middle of the year or a family member is receiving regular medical treatment.

It is very difficult to secure an alternative visa status on short notice. Even if non-immigrants are fortunate enough to secure alternate employment offers, they would not be permitted to work for a new employer under most non-immigrant work visa categories until a new visa petition is actually approved—a process that could take several months.

Non-immigrant workers holding H-1B visas legally can start work for a new employer as soon as they file a new visa petition. But it is rare that non-immigrants can find a new employer immediately willing to sponsor an H-1B visa.

Non-immigrants who have no job prospects may be able to secure another temporary visa, such as a tourist visa, but such a visa would not allow these individuals to work, so they still would remain unemployed for at least a few months.

In situations where non-immigrants remain in the United States on a visa that prohibits employment or while an employment-based visa is pending, the individual generally is not eligible to collect unemployment compensation under most states laws. To be eligible for unemployment compensation under most unemployment statutes, an individual must be available and authorized to accept work.

Thus, unlike their U.S. counterparts, alien workers must get by without any supplemental income during this interim period—even though unemployment taxes were deducted from their wages.

Terminated non-immigrant employees who spend even a short period of time out of legal status can lose certain immigration benefits.

For example, the green card application process involves three steps that can take years to complete. Individuals who are laid off in the final stage of the process usually have the choice of completing the application in the United States or at the U.S. Consulate of their home country. However, individuals who have spent any period of time out of status may be forced to return home to complete the process. (Alien employees who are laid off during the first two steps of the process must restart the entire process with another employer.)

Individuals who spend longer periods of time out of status are faced with considerably more serious consequences. Under immigration law, individuals who are unlawfully present in the United States for six months to a year are barred from re-entering the United States for three years. Individuals unlawfully present in the United States for more than one year are barred for 10 years.

Depending on their situations, alien employees laid off during the third step of the green card application may be able to continue the process. Under a law passed last October, alien employees whose applications for adjustment of status have been pending for more than six months now can switch employers without validating their immigrant petition—as long as they will be working in a position similar to the position noted in green card petition.

Dealing with Downsizing

With careful planning, employers can protect themselves and their employees from most of the immigration problems associated with corporate downsizing discussed above. Here are some general guidelines to keep in mind when developing your company's layoff strategy:

  • Try to provide as much advance notice as possible to alien employees who will be laid off. With advance notice, alien employees may be able to secure an alternate visa status, which will allow them to remain legally in the United States without spending time out of status or being required to leave the country.

Also, employers should try to fully understand each individual's immigration situation. Employers may learn that keeping an alien worker employed for a few more weeks or months would allow that individual to secure immigration benefits that would take several years to reprocess if the employee had to start over.

If you don't fully understand the immigration issues facing your alien employees, work with an immigration attorney to help develop a comprehensive transition plan.

  • Make sure you are aware of the immigration-related obligations that apply to your organization based on the types of alien employees you are laying off. Different visa categories have different requirements when terminating employment. Failure to comply with these requirements could result in considerable financial liability for the employer.

  • As layoffs occur, constantly reassess whether the resulting change in the makeup of your workforce affects your H-1B dependency designation. A change in your company's classification could result in a substantial increase or decrease in legal compliance obligations.

  • If you are an H-1B dependent employer, carefully consider how layoffs at your company, or at companies where you place your employees, affect the prohibition against displacing U.S. workers.


Layoffs bring with them a variety of issues, and immigration problems may not immediately jump to the forefront when deciding how to handle this difficult task. But with careful planning, employers can protect themselves and their employees from most of the immigration problems associated with corporate downsizing discussed above.

Marc Topoleski is an attorney with the Detroit office of the Immigration Law Offices of Siskind, Susser, Haas & Devine. Greg Siskind is an attorney with the Memphis office of the Immigration Law Offices of Siskind, Susser, Haas & Devine.
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