Consequences of Improperly Terminating H-1B Employee

An employer may not validly terminate an H-1B employee by simply notifying him or her that the employment has ended. An accounting firm was reminded of this rule the hard way in a recent case decided by an Administrative Law Judge in San Francisco.

The employer in that case filed an H-1B petition for a tax accountant for employment beginning October 1, 2008.  The employee had been working for the firm on optional practical training status under his F1 visa.

In the H-1B petition, the beneficiary was listed as a full-time employee working 40 hours a week. The USCIS approved the petition, but six weeks before the start date, he was terminated from the job. Before his termination, the employee was paid $25.30 per hour.

A bona fide termination of an H-1B worker requires a showing by the employer of three things. First, the employer must give notice to the worker. Second, it must give notice to the Immigration and Customs Enforcement (ICE) so that the I-129 petition can be cancelled. Third, it must pay for the worker’s transportation back home.

Failure to prove every element of a bona fide termination carries with it the harsh consequence of making the employer liable to pay the required wage rate for the entire period of authorized employment.

The employer failed to meet the second and third elements.  It did not inform the ICE that the H-1B employment would not materialize after all. The H-1B petition was revoked more than two years after the employee was fired when the employer finally reported it to the USCIS in 2010. The employer also did not pay for the worker’s return flight to his home country.

The administrative law judge ordered the employer to pay back wages for a period of almost three full years, with pre- and post-judgment interest. It was further ordered to reimburse the worker for the legal fees incurred in the filing of the H-1B petition, which by law should be borne by the employer.

The decision was careful to note that H-1B employment does not result in an indentured servitude. The employer may terminate the worker’s H-1B employment at any time, and the H-1B worker is likewise free to leave his or her employment. Regardless of which party ends the relationship however, there will be consequences to such termination. In this case, to be relieved of its wage and other obligations, the employer must have complied with the legal requirements for a bona fide termination.

Interestingly, the judge even found that the worker’s earnings while he worked at another tax firm after he was fired by the employer should not be deducted from whatever amount is ordered against it. The judge explained that the rule of mitigation of damages did not apply to the action which was based on immigration law and regulations, and that the worker did not earn the income while on a voluntary absence from the employer.

This case is a sharp reminder to any employer that until the immigration authorities are informed of an H-1B termination, it remains liable for the H-1B worker’s wages and benefits. The inconvenience of having to mail a notice to the ICE and paying several hundred dollars for a terminated employee’s plane fare certainly seems negligible compared to the liability that could very easily be incurred by employers who are unaware of the rule on bona fide termination.