Business Transitions And H-1Bs

Key international high-tech workers on H-1B visa status can be lost in rapid business transitions if they are not carefully protected. Most of these temporary "specialty occupation" workers come to the United States from India, China, and Canada to work in computer-related or engineering fields. Thousands of H-1B workers come to Oregon and Washington each year. With the recent downturn and consolidations in high-tech industry, however, H-1B workers are in less demand, and often face employer transitions. Transitions affect H-1B status because it is neither automatically transferable in a restructure nor easily redirected to new work within a company without prior approval.

Immigration issues are often overlooked during business transitions such as mergers, acquisitions, and spin-offs. Such inattention brings consequences to the employer and the H-1B worker, including fines, prohibition on future H-1B employment, denial of permanent residence or future entry, and possible deportation. If your company employs nonimmigrants of any status or is in the process of sponsoring foreign workers for permanent residence, it is imperative to consult with immigration counsel during transition planning.

Essentially, H-1B status is employer-specific, authorizing employment only in the specific position and for the minimum pay described in the INS petition. Problems can arise when companies or divisions are merged or acquired, or projects involving H-1B workers take an entirely new direction. Many companies have unknowingly abandoned or cut off immigration status for essential personnel by undertaking transitions without considering the immigration consequences. If a work location or job duties substantially change (including major promotions), then an amended H-1B petition must be filed with the INS.

A new statute clarifies that certain changes in corporate structure, such as mergers or spin-offs, are now expressly allowed without an amended petition, provided that the H-1B worker's underlying job or location does not change substantially and the new employer entity expressly takes on all existing immigration obligations. Another recent policy change that can benefit high-tech employers in rapid transitions is referred to as "H-1B portability." This change now allows an H-1B employee to start a new H-1B position upon filing of a "non-frivolous" H-1B petition by a new employer. Previously, the new petition had to be fully approved before new employment could begin. Portability can be used when transitions take place on short notice, but is available only for H-1B employees who maintain legal status and still requires some prior planning for preparation of a new H-1B petition.

In a classic illustration of conflicting authority in immigration law, several sources have created confusion on what options are available to terminated H-1B workers. First, the U.S. State Department issued a diplomatic cable in February explaining the new H-1B portability provisions. The cable states that H-1B status is not automatically revoked when an employee leaves his or her employer and that an H-1B petition remains valid until its expiration or affirmative revocation by the INS. An INS official was also quoted in Wired Magazine as saying that short periods between employers would be allowed. This information created an expectation among some H-1B workers that if they were terminated, they need only find a new employer willing to submit a new petition in order to continue working in the United States.

In May, the INS Office of Business Liaison published a bulletin taking the position that H-1B status derives strictly from the approved employment, that the H-1B alien loses status immediately when approved employment ends, and that an out-of-status alien is ineligible for H-1B portability. An exchange of e-mail communications among several experienced attorneys in the American Immigration Lawyers Association also concluded that there is no clear statutory basis for requesting H-1B portability for terminated H-1B workers, even though some INS adjudication officers have granted subsequent approvals.

Then, in an internal guidance memorandum dated June 19, 2001, the INS announced its intention to formulate a policy recognizing some reasonable period of time between employers for H-1B workers to qualify for portability, such as 60 days. The memorandum emphasized that such a grace period is not official policy and will only be effective when regulations are properly published. As a result, employing an out-of-status H-1B worker remains a gamble, with no binding grounds for appeal if authorization is denied, but there is hope for a limited transition period after the INS publishes its final rules in this area.

In the rapidly evolving high-tech community, where the bulk of H-1B workers serve in computer-related professions, it is important to protect the H-1B status of valued employees through transitions. By ignoring immigration consequences in an otherwise beneficial and seemingly straightforward transition, a company can unwittingly jeopardize the status of valuable H-1B employees.