It probably falls into the category of cult classic, but one of my favorite movies is 2000’s “O Brother, Where Art Thou?” starring George Clooney. To me, it is the Coen brothers at their finest. Loosely based on Homer’s “Odyssey,” the movie follows Everett McGill (Clooney) and his companions Delmar and Pete in 1930s Mississippi. At one point later in the movie, Everett finds his ex-wife and their kids. His daughter explains that her mom’s new beau is “bona fide:”
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Penny Wharvey McGill: “Vernon here’s got a job. Vernon’s got prospects. He’s bona fide. What are you?”
Everett: “I'll tell you what I am. I’m the paterfamilias.”
What does this have to do with wage and hour law, you ask? It’s that part about “bona fide,” particularly when it comes to the final paycheck for H-1B workers (I haven’t found a way to apply “paterfamilias” to wage and hour law yet, but I’m working on it).
Last week, we discussed whether you might be running a construction business. As I explained then, you have to look beyond the FLSA to comply with your wage and hour obligations, and that’s doubly true for employers who rely on immigrants with H-1B visas, too. Both the U.S. Citizenship and Immigration Services (USCIS) and the Department of Labor (DOL) enforce certain termination requirements for H-1B workers, including that employers may need to pay terminated employees’ return transportation to their last country of residence. However, what happens if you know (or at least suspect) that an H-1B worker that you terminate is not leaving the United States? Do you still have this additional obligation? The DOL yes…if you want your termination to be “bona fide.” The wage and hour costs of non-compliance could be high.
Under USCIS regulations, if an employer terminates an H-1B employee before the end of that employee’s period of authorized stay, the employer is liable for the “reasonable costs” of return transportation for the employee to his or her last country of residence (helpfully, the regulations suggest that employers do not have an obligation to return anyone or anything but the H-1B employee, such as family members or property). Some employers maintain policies suggesting that employees must “prove” or “certify” that they are leaving the U.S. at termination before they receive any final payment for that return transportation. These well-intentioned policies probably spring from the USCIS regulation that gives employers a reprieve from the return transportation requirement for an employee who elects not to depart the United States post-termination. However, not paying H-1B workers these costs at termination is risky because the DOL has its own regulations defining a “bona fide termination” of an H-1B worker.
Unlike the USCIS regulations, DOL regulations require employers to pay an H-1B employee his or her full wages—even when they are “benched” and not working—until there is a “bona fide termination.” A “bona fide” termination means more than simply terminating the H-1B worker’s employment, though. The DOL also requires that you have notified the USCIS that the H-1B petition should be cancelled and that you have provided the worker with payment for transportation home as required by USCIS regulations. The DOL’s Administrative Review Board has held repeatedly in recent years that an employer’s obligation to pay the H-1B worker’s salary continues until these conditions for a “bona fide” termination are met. Failing to pay return transportation costs at termination could result in in the DOL awarding back pay for the entire time after the employee’s termination up to the expiration date of the employee’s H-1B petition. Often, terminations of H-1B workers come early in their tenures, meaning you could be on the hook for nearly 3 years of pay.
How can you make sure that your H-1B employee termination is “bona fide?” First, you should always immediately notify USCIS of the termination and request that the H-1B petition is revoked. Then, along with any final wages, you should pay (or at the very least offer in writing) the employee a sum approximating the reasonable costs of return transportation, in the event that the DOL questions whether the termination was “bona fide.” If you are concerned about an employee gaming the system to get a windfall from you while staying in the U.S., there are a few other solutions that we can discuss depending on your exact factual situation. Even if you don’t take advantage of H-1B programs, though, the DOL’s benching regulations are another reminder to think beyond the FLSA if you terminate an employee.