Employer Who Failed to Report Termination of H-1B Employee Liable for Back Wages

A recent decision from the Administrative Review Board (ARB) held that when an H-1B employer fails to terminate H-1B employee and notify USCIS of such termination is liable for payment of back wages.  ARB held:

Under the INA’s “no benching” provisions, the employer is obligated to pay the required wage even if the H-1B nonimmigrant is in “nonproductive status” (i.e., not performing work) “due to a decision by the employer (e.g., because of the lack of assigned work)…” 8 U.S.C.A. § 1182(n)(2)(C)(vii)(I); 20 C.F.R. § 655.731(c)(7)(i).

But the employer does not have to continue to pay the H-1B nonimmigrant the required wage “if there has been a bona fide termination of the employment relationship.” 20 C.F.R. § 655.731(c)(7)(ii). The employer must notify the Department of Homeland Security (DHS) that the employment relationship has ended so that the federal government may revoke approval of the Petition for a Nonimmigrant Worker, and must, under certain circumstances, provide the nonimmigrant with payment for transportation home.  Additionally, the employer need not pay wages to an H-1B nonimmigrant who is in nonproductive status due to conditions unrelated to employment that remove the nonimmigrant from his or her duties at his or her “voluntary request and convenience” or render the H-1B non-immigrant unable to work. 20 C.F.R. § 655.731(c)(7)(ii).

The benching rule has been around for some time, but in light of economic slowdown, many H-1B employers may decide to put their employers on non-paid leave and, as a result, violate the benching rule.  It is important to consider an employer’s human resource needs and the employee’s immigrant status in connection with notifying USCIS of termination of employment.  There may be alternatives which are available to employers who are hoping to avoid temporarily paying wages to H-1B holders while expecting better economic times.  We would be happy to consult your company on this matter.