January 17, 2019

Government Shutdown Creates Issues of Concern for H-1B Employees of Government Contractors

Holland & Knight Government Contracts Blog
Leon Fresco

As the government shutdown potentially moves into a second month, many government contractors who are not receiving payment from the Federal Government may soon encounter the issue of what to do with employees they can no longer afford to pay, but are here on nonimmigrant visas, such as the H-1B visa for highly skilled workers. This issue can be quite complicated, and while it is best to seek legal advice from an attorney on each individual case, some broad themes are important to understand.

First, employers of H-1B workers cannot simply keep these employees idle without pay. Pursuant to 20 CFR § 655.731, an employer of someone working on an H-1B visa must pay their H-1B worker(s) at least the "required" wage--which is the higher of the prevailing wage or the employer's actual wage (in-house wage) for similarly employed workers. The employer must pay the guaranteed minimum hours listed in the H-1B applications filed with the Department of Labor and U.S. Citizenship and Immigration services, even if no work is available for the worker to perform. Failure to pay H-1B workers who are employed by the company, the wage the Company previously agreed to pay, can subject employers to civil penalties of up to $7,500 per violation under 20 CFR § 655.801(b) and 20 CFR §655.810(b)(2).

Second, the only way for government contractors to avoid violations of these mandatory pay regulations is to terminate any H-1B employees it can no longer afford to pay. An employer meets its obligations under the law by notifying its employee they have been terminated and by cancelling the H-1B petition with USCIS. This option, however, is obviously problematic in its own right, as many employees have families and homes in the United States, and their lawful presence in the United States is tied to whether they remain lawfully employed with their petitioner. Under 8 CFR § 214.1(l)(2), H-1B nonimmigrant workers have a grace period of 60 days if they are terminated from their employment to transition to another employer who can file an extension or change of status within the 60-day period. Similarly, the worker could also potentially change to some other status on his or her own, such as to an F-1 student visa, after enrolling in a school. Employers should consider working with their H-1B employees to try to achieve soft landings whenever possible in the event termination becomes potentially necessary.

Finally, H-1B employees may themselves choose to leave if they feel that their job is in potential jeopardy. In those cases, employers should remember that under 20 CFR § 655.810(b)(1), it is unlawful to charge an employee an early termination penalty. Fines for such a violation can be up to $1,800 per employee. Employers should also take care not to make any employment termination decisions on the basis of the immigrant's status, as opposed to ability to pay, as this can subject the employer to fines of up to $7,500 per employee under 20 CFR 655.801(b) and 20 CFR 655.810(b)(2).

It is prudent to consult with expert legal counsel if these problems arise, and guidance can be given to achieve the soundest legal options to resolve these suboptimal situations.

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