Making Business Work: Workforce Reductions & Immigration Law Compliance

Businesses of all types must take measures at times to cut costs, restructure operations, and enhance efficiency. These questions and answers discuss the ways that corporate restructuring and downsizing can impact the employment of foreign nationals and sponsorship for permanent residence, commonly referred to as the “green card.” The issues covered here are intended to inform decision-makers and other responsible parties of the need to enhance awareness of issues related to compliance with the complex laws administered by U.S. Citizenship & Immigration Services (USCIS) and the U.S. Department of Labor (DOL).

Reducing H1B Workforce

1. The company is experiencing an unexpected slowdown in the amount of work for its employees. Can the company keep its H1B employees, even if they are not performing any work?

The DOL’s rules prohibit the practice referred to as “benching” H1B workers, by generally requiring the H1B employer to pay for nonproductive time at the full-time rate of the DOL’s prevailing wage. If an employee’s work visa is based on a part-time H1B petition quoting a range of hours, then the DOL rules may permit payment of wages calculated based on an average of those cited hours normally worked, but in no event for less than the minimum number of hours.

2. What if the H1B worker is nonproductive because of non-work reasons?

The DOL rules apply when the nonproductive status is employment-based, such as lack of assigned work, lack of a necessary permit or studying for a licensing exam. Generally, when a company’s H1B worker is taking time off for family leave or for other personal reasons, or departs the U.S., the company is not required to pay the prevailing wage.

3. If the company is reducing its workforce due to economic changes, can the company stop paying nonproductive workers?

An employer’s obligations under the DOL rules generally stop when there is a bona fide termination of the employment relationship. When this occurs, the company is required to notify the USCIS of the termination and request revocation of the H1B petition, end the employment in writing and offer the cost of return home transportation.

4. I have heard from other employers about former H1B workers seeking back wages after termination. How can I avoid this from happening to my business?

Foreign nationals seeking back wages that they are owed under the law can initiate a request by filing a claim with the DOL. Typically, these claims arise when the individual was in nonproductive status and was not paid, in violation of DOL requirement.

An employer generally can defend itself against a claim for back wages by showing that wages owed were paid while the individual was employed and by documenting when the employment relationship was terminated, that notice was given to USCIS, DOL, and the worker, as well as showing that the employee was given or offered the “reasonable” cost of return transportation.

Status after Employment Ends

5. I want to help the H1B employees that I am letting go. Can I tell them about a grace period during which one can find a job so s/he can stay in the U.S. in H1B status?

Unfortunately, there is no grace period for an H1B worker to find a job after being terminated. USCIS generally takes the position that once the job ends, the individual is not in H1B status any longer. As a practical matter, USCIS may overlook a small amount of unemployed time when processing an H1B petition from a new employer, if the period is reasonable. This situation will be evaluated on a case-by-case basis. The employer can provide as much advance warning as possible prior to the termination. However, the employer must protect itself by documenting the termination, including revoking the petition once the employer / employee relationship terminates.

6. If the H1B worker is out of status after being terminated by the company, is there anything of which s/he should be especially aware in planning for the future?

Generally, when an H1B holder is out of status, s/he may not change employers in H1B, change to another status, or request an extension of permission to stay in the United States. It may be possible to regain status by departing the U.S. and returning in a valid status. If the foreign national remains in the U.S. for more than 180 days while being out of status, then s/he may not be eligible to obtain an approval of the final stage of the green card process known as Adjustment of Status. Staying in the U.S. without status can cause difficulties with visa approvals and other discretionary matters.

7. Can the company continue paying the former employee his or her benefits and severance package spread out over a few months so the foreign national is still “in H1B status?”

An H1B worker is admitted into the United States to provide services to a U.S. company. Unfortunately, providing benefits and / or wages as part of a severance package will generally not be considered as evidence of maintenance of status. An employer also should be cautious about ensuring the former employee understands the employment relationship has ended to minimize the risk of becoming subject to back wages under DOL rules.

Reducing Hours and Wages while Keeping H1B Workers Employed

8. While layoffs will be the last resort, right now the company just does not have enough work for full-time employment and wages. We do expect things to improve, however, and do not want to lose these employees, who are a valuable asset to our business and ability to grow as the economy improves. What can we do?

An employer may consider reducing salaries or reducing hours, but only after certain steps are taken to avoid becoming subject to back wages or violating the prohibition against benching. H1B petitions will have to be amended to reflect any such change in hours and terms.

9. What is required of the company in the case of reduction in salary?

An employer generally is required to pay an H1B worker the greater of the actual wage or the prevailing wage for the job. If the salary reduction would not result in a wage below the required wage, set out in the Labor Condition Application, then there is no need to take any remedial action. However, if the new salary drops below the required wage, a new Labor Condition Application is required, with a wage that is still within the greater of actual or prevailing wage rates. It may be necessary to amend the H1B petition.

10. What is required of the company in the case of a reduction in hours?

One of the components of every H1B petition submitted to and approved by the USCIS is employment hours. An employer generally needs to obtain a new Labor Condition Application and submit an H1B petition to the USCIS changing the hours to be worked by the employed foreign national. An H1B can be approved by the USCIS for part-time employment or, more generally, for a range of hours to be worked.

It is important, however, to note that, given the intersection of rules from the USCIS and the DOL in the H1B program, if a worker employed based on an H1B petition with a range of hours is benched, the DOL generally requires that the employee must be paid for at least the average number of hours normally worked.

Employing H1B Worker before USCIS Approval

11. My business has located a foreign national being laid off and would like him to start as soon as possible. Can he start before the H1B we file for him is approved?

Generally, if an employer hires a foreign national in H1B status, and files an H1B petition with the USCIS, the employee can begin working once the H1B case has been filed, even though it is not yet approved. The law provides that, if the foreign national has been lawfully admitted into the U.S., filed a non-frivolous H1B petition before his or her current status expired, and has never worked without permission previously, s/he can work for the new petitioner once the H1B is filed.


We at the Murthy Law Firm closely monitor developments effecting employers across the United States and their relationships with foreign national employees. Our attorneys leverage our knowledge of the law and experience in advising employers on ways to meet their business needs while complying with the law. We develop strategies to help you – our valued clients – meet your goals. Whether you are faced with reducing your workforce, or just keeping your business flexible enough to meet your operational goals while complying with the law, it can be difficult to manage in these times. The experienced attorneys at the Murthy Law Firm are able to provide the knowledge and counsel to help you make the right choices, enabling your business survive and, hopefully, even thrive in tough economic times.


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Disclaimer: The information provided here is of a general nature and may not apply to any specific or particular circumstance. It is not to be construed as legal advice nor presumed indefinitely up to date.