Editor’s Note: Jennifer G. Parser is a member of the Labor and Employment and Immigration Practice Groups of Ward and Smith, P.A., where her primary focus is on immigration matters.

Effect of a layoff on H-1B status

Every day it seems the media publicizes new layoffs. However, when a foreign person working in the United States on a temporary work visa, otherwise known as an H-1B visa holder, gets laid off, the impact can be far more than just economic. Whether or not an H-1B visa holder receives a severance package in connection with a layoff, the loss of employment terminates such holder’s H-1B status. In this event, the worker must leave the United States and may re-enter on a new H-1B visa only after receipt of a new offer of employment and extension of the existing H-1B visa or, depending upon certain circumstances, the issuance of a new H-1B visa.

When an H-1B visa holder’s employment is terminated, the employer is required to send written notification to the U.S. Citizenship and Immigration Services ("USCIS") and pay the reasonable cost of transporting the worker back to the worker’s home country. Furthermore, if an H-1B visa holder’s hours are reduced or status is changed from full-time to part-time employment, the employer must notify the USCIS of such a change by filing an amended Form I-129. However, a mere restructuring of the employer’s business (where a new entity such as a parent company or subsidiary assumes all of the employer’s rights and obligations), with no change to the H-1B visa holder’s terms of employment, does not require the filing of a new H-1B petition.

An employer going out of business has the same effect on an H-1B visa holder as if the worker was laid off. The employer must notify the USCIS of its intent to withdraw the H-1B visa. If the USCIS discovers from sources other than the employer that the employer is going out of business, it will send the employer a Notice of Intent to Deny, requiring the employer to rebut the evidence that it is going out of business in order to avoid withdrawal of the H-1B visas of its employees.

Of critical importance to an H-1B visa holder is that there is no grace period following termination of the employment relationship. The worker becomes immediately deportable. However, if the H-1B visa holder has found subsequent employment and the new employer applies for H-1B visa status before the worker’s existing H-1B visa terminates, the worker may commence employment and can remain in the United States, but only for as long as the existing H-1B visa allowed.

TARP and federal reserve funding recipients are restricted in their right to hire H-1B visa holders

Another blow for H-1B visa holders is the Sanders Amendment to the American Recovery and Reinvestment Act of 2009, which became law on February 17, 2009 (commonly called the "Stimulus Act"). The Sanders Amendment limits any recipient of funding under the Troubled Assets Relief Program ("TARP") of the Emergency Economic Stabilization Act of 2008 or under Section 13 of the Federal Reserve Act from hiring H-1B visa holders for two years unless the recipient first attempts, but fails, to recruit any qualified United States worker. The recipient also must attest that its hiring of the H-1B worker will not displace a United States citizen or permanent resident. In addition, the recipient cannot place any H-1B worker at the worksite of another employer – meaning it cannot outsource a worker for a client – unless the recipient first makes a “bona fide” inquiry as to whether the other employer has displaced or will displace a United States worker within 90 days before or after the placement of the H-1B worker.

Extension of the expiration of the EB-5 pilot program for regional centers

In 1990, Congress created the Employment Creation Immigrant Visa category ("EB-5"), allowing up to 10,000 foreign investors, their spouses and their unmarried minor children admission into the United States as lawful permanent residents on a two-year conditional basis.

Under the EB-5 program, conditional approval is granted only upon a favorable determination by the Department of Homeland Security that conferring permanent residence on the investor will result in investment in a new commercial enterprise in the United States. To qualify, the new commercial enterprise must: (1) benefit the United States economy; and (2) create, directly or indirectly, full time employment for at least 10 United States citizens, lawful permanent residents, or certain other immigrants authorized to be employed. Generally, the amount of investment required to gain EB-5 status is a minimum of $1,000,000.

In 1993, Congress enacted the EB-5 Immigrant Investor Pilot Program which reserved 3,000 of the available 10,000 EB-5 visas for investors in businesses located in "targeted employment areas," otherwise known as Regional Centers. Regional Centers are usually regions of high unemployment or rural areas. If the investment is being made in a Regional Center, the threshold amount required to qualify for an EB-5 visa is reduced to $500,000. Moreover, the new enterprise need not directly employ 10 qualified workers. It is sufficient for the investor to show that the enterprise will indirectly create 10 or more such jobs and generally will improve the productivity of the targeted Regional Center.

This program was scheduled to expire on March 6, 2009, but was extended to September 30, 2009. After September 30, 2009, Regional Center sponsors and certain Regional Center based petitions will not be able to benefit from the lowered investment amount and the indirect employment effect that the EB 5 Pilot Program allowed. In light of the current economic situation and the impact it is having on the immigrant population, it is unknown whether any further extensions will be granted.


It is clear that foreign workers, employers, and investors alike are being impacted by the economic slowdown. It is to be hoped that Congress will take note of a recent Harvard Business School study that evaluated the impact of highly-skilled foreign workers on technology and innovation in the United States, an important component of the new Administration’s stated goals for the United States economy. The study confirmed that total invention increases with higher admission levels, primarily through the direct contributions of foreign inventors. Only time will tell the true impact of the new restrictions on foreign workers and of any termination of the EB-5 program and, in the long term, innovation as a whole.

© 2009, Ward and Smith, P.A.

Ward and Smith, P.A. provides a multi-specialty approach to the representation of technology companies and their officers, directors, employees, and investors. Jennifer Parser practices in the Labor and Employment and Immigration Practice Groups of Ward and Smith, P.A., where she concentrates her immigration practice on business immigration, particularly investor visas. Jennifer’s practice is limited to Federal Immigration and Naturalization Law. She currently is licensed in New York only. For further information, please contact Jennifer Parser at jgp@wardandsmith.com.

This article is not intended to give, and should not be relied upon for, legal advice in any particular circumstance or fact situation. No action should be taken in reliance upon the information contained in this article without obtaining the advice of an attorney.