Immigration-related Issues Employers (And Employees) Should Look Out for Before a Layoff or Reduction in Force

2022 is concluding with significant economic uncertainty, principally illustrated by a series of announcements by major employers of layoffs and other reductions in force. It remains to be seen whether these corporate events reflect an economic downturn in 2023 or merely workforce realignment measures that were postponed as a result of the COVID pandemic. This article provides practical considerations and tips for employers whose foreign talent workforce are impacted by these corporate events.

Layoffs and other downsizing measures raise immigration-related obligations and considerations for employers. Employers who sponsor nonimmigrant visas and/or green cards for their employees must consider the impacts of layoffs on foreign national employees, compliance, and the company’s immigration and mobility program overall. Importantly, these corporate events also have significant impacts on the lives of foreign nationals working temporarily in the United States.

Recognizing these broad impacts, U.S. Citizenship and Immigration Services (USCIS) recently published guidance to foreign national workers who have been or will be affected by voluntary or involuntary employment termination. Below we highlight some of the key impacts of layoffs on employers’ immigration and mobility programs.

Nonimmigrant Visa Sponsorship

Each nonimmigrant (temporary work) visa category comes with its own set of obligations for sponsorship of foreign national employees. Certain obligations are unique to specific visa categories, where other obligations may overlap across several categories. Many of the obligations related to H-1B sponsorship, for instance, also apply to the E-3 and H-1B1 visa categories. When considering layoffs or other reduction-in-force measures, employers should examine the universe of employees impacted to ensure they comply with all relevant immigration laws. We provide below just one example of the obligations that employers must consider if they employ workers in the H-1B category.

Obligations Arising from Sponsorship of H-1B Visa Holders

One of the most common employment-based nonimmigrant visas is the H-1B visa. The H-1B visa category allows for employers to sponsor foreign national professionals, or those who possess at least a bachelor’s degree (or its equivalent) in a field directly related to their profession. Notably, employers terminating H-1B employees are required under [8 CFR § 214.2(h)] to:

1. Provide written notice of the termination to the employee;
2. Provide written notice of the termination to USCIS;
3. Withdraw the labor condition application (LCA) with the U.S. Department of Labor (DOL) (when possible); and
4. Offer to pay the cost of reasonable transportation to the employee’s country of last residence.

If an employer fails to comply with these requirements, the company risks certain monetary penalties, including costs related to back wages, transportation costs, or other fines. Thus, employers should ensure their immigration policies are updated to reflect their current approach and:

1. Identify who is employed in H-1B status and work with outside counsel to notify USCIS and DOL of their last date of employment;
2. Budget for the need to potentially pay for return transportation; and
3. Consider providing guidance, or access to outside counsel, to foreign national employees relating to their obligations to find a new employer, change status, and/or depart the United States within 60 days of their last date of employment, or the end date of their nonimmigrant status, whichever is

This last point is key. Considering the corporate culture, companies should memorialize their approach on these issues and ensure their approach is reflected in their immigration and mobility policies. This proactively ensures the company avoids potential complaints that similarly situated employees are being treated dissimilarly.

Effective Date of Termination and Maintenance of Status Issues Resulting from Layoffs

Employees working on an employer-sponsored visa (e.g., E-1, E-2, E-3, H-1B, H-1B1, L-1, O-1, and TN) must work pursuant to the terms of their employment to maintain their immigration status in the United States. Upon termination, an individual in these categories may remain in the United States for 60 days or until their current nonimmigrant status expires—whichever is sooner. By the end of that period, they either need to identify and be sponsored by a new employer, change to another temporary visa status, or depart the United States.

In addition to immigration-related considerations, these strategies should also be informed by other employment law obligations such as the notification requirements imposed by the Worker Adjustment and Retraining Training (WARN) Act. In terms of immigration-related considerations, however, the effective date of termination for work sponsorship will depend on how employers choose to structure their layoffs. And this date will impact when a foreign national is required to leave the United States, should they be unable to or choose not to change status or find a new employer.

In light of the impacts on foreign workers, many employers choose to structure layoffs in a scheduled fashion. For example, employers may choose to first give notice and ask employees to cease work, while still paying their salary. This structure provides foreign nationals with a larger buffer period for changing status or finding new employment.

As the regulations and guidance related to this issue can be complex, employers should seek counsel to determine the impact of the layoffs on their foreign workforce and whether varying layoff strategies could result in improved sponsorship conditions for employees following their departure from the company. Similarly, employees should seek their own private counsel to determine the impact to their overall immigration status, including any maintenance of status issues or whether subsequent filings are needed.

Wage Reductions and Furloughs for Sponsored Employees

Employers who are considering wage reductions and/or furloughs must also be aware of their compliance obligations that result from sponsoring foreign national employees.

DOL regulations, for example, require employers to pay the wages listed in the LCA for H-1B, E-3, and H-1B1 employees for the entire period covered by the LCA. As a result, an employer is not permitted to reduce the salary of those employees below what is listed in the LCA, without securing the approval of an amended petition from USCIS. Until the amendment is filed, the employer is still obligated to pay that employee pursuant to the wages listed in the LCA. See 20 CFR § 655.731 (c)(7)(i).

Violations of these obligations can come with steep penalties, including payment of back wages, reimbursement of fringe benefits, and even civil money penalties. In addition, failure to comply can result in debarment from DOL’s immigration program, prohibiting employers from obtaining any new nonimmigrant or permanent program foreign workers for one to three years.

Employers can take action now to mitigate potential risk. Before implementing broad wage reductions and/or furloughs, employers should:

1. Identify the population of their workforce that are work-sponsored visa holders;
2. Map out the obligations that arise as a result of employing these visa holders; and
3. Ensure their workforce realignment measures do not conflict with these obligations.

Although these proactive steps can be time consuming, employers that closely track their work-sponsored workforce save future time and effort. Consulting with immigration counsel can further ensure that these processes are efficient and effective.

Impacts to the Green Card Process

When it comes to permanent employment sponsorship, employers should consider not only the impacts on their foreign national employees but also the obligations that arise from broad layoffs and their opportunities to sponsor newly hired employees who are the beneficiary of the green card process with their former employer.

Employer Obligations During the Green Card Process

DOL regulations require employers who wish to sponsor certain employment-based green cards to conduct a labor market test, known as the PERM process. Importantly, the regulations require that if there has been a layoff within the 6 months preceding the filing of a PERM application in the “intended area of employment,” an employer must (1) notify all potentially qualified laid off employees of the job opportunity related to the PERM application, and (2) document that notification. 20 C.F.R. § 656.17(k)(1). Potentially qualified laid-off employees are those that were laid off from any occupation that requires workers to perform a majority of the essential duties involved in the PERM-related occupation.

Additionally, compliant employers that recognize the layoffs on PERM applications and abide by the obligations discussed above often see that their responses may trigger audits by DOL that request cumbersome amounts of documentation to evidence the employer’s compliance. These audits request documentation of the full recruitment process, screening results for applications received for the PERM-related position, and an abundance of information describing how the employer determined that no U.S. workers were qualified for the position in addition to evidence related to the employer’s obligation to notify and consider potentially qualified laid-off U.S. workers.

As such, even compliant employers who experience layoffs can delay their employees’ green card processes by as long as 12 months. On November 11, 2022, DOL announced it was reviewing responses to PERM audits, on average, at a pace of 368 days. This means that employees relying on a timely green card process for continued work authorization could be in jeopardy of falling out of status as a result of layoffs even if those layoffs did not impact their position directly.

Impacts on Laid Off Employees’ Green Card Processes and Opportunities for Attracting Impacted Workers

Layoffs can have a deep impact on employees who are beneficiaries of an ongoing green card process. For example, these employees will need to re-start the PERM process with another employer, especially if their PERM application was not filed (and approved) prior to the layoff. Because the PERM process can be time consuming and costs employers thousands of dollars, finding new green card sponsorship can be difficult, particularly when the employee is running short on available nonimmigrant status. This is another opportunity for employers to consider how layoffs are structured, especially if timing can impact a foreign national’s overall green card application and ability to extend nonimmigrant status. 

Layoffs therefore also present opportunities for other employers to attract and retain top-tier talent. Employers should consider ways to leverage a potential employee’s previously approved Form I-140 immigrant petition (I-140) to create long-term employment strategies. However, when recruiting and onboarding employees who are the beneficiary of a previously approved I-140, employers should consider several factors:

1. Whether the I-140 has been withdrawn by the former employer;
2. If withdrawn, whether the withdrawal took place more than 180 days after approval;
3. Whether the employee previously filed for adjustment of status (green card application) with their former employer; and
4. If filed, whether the application has been pending for more than 180 days.

Depending on the answers to these considerations, employees may be able to either leverage their prior green card process to extend their nonimmigrant status with a new employer or even maintain the benefits of their previous employer’s adjustment of status application to adjust their status to lawful permanent resident.

Strategies for Employers to Stand Out and Attract Top Talent

Taking steps to be thoughtful about the impacts of layoffs on foreign workers, and creating strategies that reduce those impacts, can set a company apart in their industry.

Layoffs may be unavoidable. But they can be implemented in a way that provides the best opportunity for foreign workers to find alternative arrangements and that attempts to attract top talent considering new employment with employers who will support work visa sponsorship. Employers who are experiencing necessary layoffs may consider:

1. Providing extended notice in advance of layoffs to provide affected employees with a longer period of time to find alternative employment.
2. Advising foreign national workers affected by layoffs that they should reach out to personal immigration counsel in advance of the layoff to ensure their status is protected.
3. Timing layoffs of green-card-sponsored employees in a way that allow those workers to take advantage of portability eligibility to lessen the immigration impacts of those layoffs.

Taking steps to lessen the impacts on affected employees can reinforce the company’s perception in the market as a desirable workplace. This becomes important when employers begin looking to increase their workforces again once economic circumstances change.

Further, as a result of the recent significant layoffs across industries, the talent pool in the available labor force has been reinvigorated. This presents an opportunity for employers seeking to strengthen their bench with new skills that were previously scarce in the market. This is particularly true given the White House’s recent initiatives to facilitate the influx of STEM talent in the United States.

This year, for example, both the Department of State and the Department of Homeland Security announced new initiatives to drive STEM talent into the country by creating the Early Career STEM Research Initiative, increasing the number of fields included in the STEM Option Practical Training program for F-1 students, broadening the list of acceptable evidence of O-1 extraordinary ability workers, and prioritizing national interest waiver petitions for individuals working in STEM fields.

Employers can take advantage of this influx of new talent by updating onboarding policies to illustrate their need for these skills and their support for workers who may have these skills. These strategies may include:

1. Aligning workforce needs with the in-demand fields of workers impacted by recent layoffs;
2. Prioritizing onboarding benefits for individuals that possess these in-demand skills; and
3. Very early in their tenure with the company, offering green card sponsorship for foreign national workers.

Given the effects of layoffs on the foreign national workers, day-one green card sponsorship in particular is a clear signal that an employer is focused on supporting their employees and their families.

Quarles Law Clerk Nicholas Lowrey is a contributing author.

Employers that would like to take advantage of this opportunity or assess their compliance activities may reach out to the Quarles team to discuss immigration strategies for navigating uncertain economic circumstances at:

Timothy D'Arduini: (202) 780-2641 / timothy.darduini@quarles.com

Lynn O’Brien: (202) 372-9530 / lynn.obrien@quarles.com

Andrew Kuntz: (202) 780-2638 / andrew.kuntz@quarles.com