AC21 Series: New Grace Period for Terminated H-1B Workers

​This is the first in a series of articles reviewing a new immigration regulation that went into effect on Jan. 17 and that implements various aspects of the American Competitiveness in the Twenty-First Century Act (AC21), which Congress passed in 1999. The regulation expands the ways U.S. employers can recruit and sponsor foreign professionals for H-1B visas and U.S. green cards, and recognizes a new type of work authorization available to temporary workers facing "compelling circumstances."

Aprovision in the new AC21 rule makes it easier for U.S. employers to recruit and hire foreign professionals whose employment with their prior sponsor terminated within the preceding 60 days. The rule makes it quicker and less expensive to hire these recently unemployed H-1B and other temporary workers whose skills and abilities employers need to support their businesses.

Prior to the new rule, foreign professionals working temporarily in the United States, along with their dependents, were required to depart the U.S. immediately once their sponsored employment ended, whether by resignation or a layoff. There was no grace period. This meant that upon termination, these professionals had no time to finalize their affairs, were unable to remain in the country lawfully in order to seek alternate employment or a new visa status, and immediately became deportable from the United States. While U.S. Citizenship and Immigration Services (USCIS) has the discretion, upon request by a new employer, to excuse a gap in lawful status when a sponsored individual has already left his or her prior job, the agency considers these requests for good cause on a case-by-case basis and historically has been reluctant to forgive status gaps of more than 30 days. 

Now, when a foreign professional loses his or her job, the new law in most cases grants him or her a 60-day grace period, during which he or she can remain legally in the United States and seek sponsorship by a new employer. This benefit also logically extends to U.S. companies seeking to fill open positions that may now enhance their search to include foreign professionals still in the U.S. whose employment terminated in the preceding two months. Before the new regulation took effect, when a foreign professional was a recruiter's top candidate and he or she had already left a previous job, employers were faced both with delays in the onboarding process while a new work permit was processed and with the costs and delays of international travel so the employee could apply for a new visa and/or cure the gap in status through departure and re-entry.

The new 60-day grace period comes with a limitation, albeit one that lacks clarity and warrants some discussion. Under the new rule, a foreign professional may only use the grace period one time—for up to 60 consecutive days—during each authorized validity period. The practical impact of this limitation is unclear with regard to H-1B and other petition-based workers. For example, if employment is terminated and then USCIS approves a petition for a new employer sponsor, does the H-1B worker have a new petition validity period that would allow him or her to benefit from another 60-day grace period if he or she were terminated again in the future?

For professionals whose U.S. work authorization may not be based on an approved petition, such as TN, E-1 and E-2 professionals, to which validity period does the one-time 60-day grace period apply? If, for example, the relevant validity period is the authorized period of stay reflected on an individual's I-94 record, then it would seem an employee could "earn" eligibility for a new 60-day grace period simply by departing the U.S. and that re-entering would grant the person a new authorized period of stay. Since this may not be what USCIS intended when promulgating the new rule, it remains unclear in what instances USCIS will deem a foreign professional eligible for a subsequent grace period.

Another question raised by the 60-day grace period is how it would apply to foreign professionals who are laid off and then re-hired by the same employer. This could be especially tricky for employers of H-1B, H-1B1 and E-3 professionals, as these employers must comply with wage obligations imposed by the U.S. Department of Labor (DOL). Under DOL rules, these employers may be held liable to pay terminated foreign professionals their full salaries until the employer formally withdraws the approved petition. So while the new rule would allow an H-1B employer to terminate a worker for up to 60 days and then rehire him or her without jeopardizing the worker's legal status, given its DOL obligations—and the presumption that employers don't wish to pay employees after terminating them—the employer could not simply have the employee resume the previously approved employment since DOL rules require the employer to withdraw the prior petition to avoid continuing wage liability. Instead, to effect the rehire, the employer would need to file a new petition, and as a result, the employee would ostensibly benefit from another 60-day grace period if there were a subsequent termination.

The impact of the one-time grace period may be clearest in the L-1 visa context. An L-1 intracompany transferee may enter the United States pursuant to, for example, a three-year approved petition. If the employment is terminated before the petition expires, the worker would remain in status for up to 60 days. If the employer elected to rehire the worker during this time period, it could do so without the need to file a new petition, so long as the originally granted three-year petition had not yet expired. But if the employer terminated the L-1 worker once again during this three-year period, no grace period would be available, and—perhaps ironically—the worker would fall out of legal status immediately upon termination.

As with any new regulation, the practical impact of the new grace period, including how the agencies will further interpret the "one-time" limitation in policy and practice, will play out over time. Most importantly, however, U.S. employers and their recruiters have a new opportunity to obtain key staff without the potential costs and delays involved before the AC21 rule was implemented.

Andrew Greenfield is the managing partner of the Washington, D.C., office of global immigration law firm Fragomen.

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