Making a Donald Trump “you’re fired” announcement may be sufficient to end the employment relationship with most employees, but not with those relying on H-1B employment authorization. As shown by Limanseto v. Ganze & Company, OALJ Case No. 2011-LCA-00005 (June 30, 2011), failing to take the additional steps required to complete a “bona fide H-1B termination” can be costly. An administrative law judge (ALJ) recently found Ganze, a California accounting firm, liable for back pay and other costs of more than $150,000 even though Mr. Kevin Limanseto, the foreign worker, provided no services during the period authorized for H-1B employment.

Under the H-1B classification, an American company may seek permission to employ a foreign worker temporarily in a specialized, professional position. The employer faces a complex regulatory scheme in seeking, maintaining, and ending H-1B employment authorization. In 2008, Ganze filed papers with the U.S. Department of Labor (DOL) and the Department of Homeland Security (DHS) to seek authorization to employ Mr. Limanseto in H-1B status as an accountant. As required, Ganze made promises about the wages and working conditions, and promised to pay the reasonable return transportation costs if it terminated Mr. Limanseto before the expiration of the H-1B authorization. DHS approved the H-1B petition for employment from October 1, 2008 through September 21, 2011.

At the time Ganze filed the H-1B case, Mr. Limanseto was already working for the accounting firm while he was in a different immigration status. In August 2008 (before the H-1B authorization became effective), Ganze told Mr. Limanseto he was fired. Mr. Limanseto went to work for another company and then returned overseas at his own expense in 2009. In August 2010 (two years after terminating him), Ganze sent a notice to DHS stating that the accounting firm did not employ Mr. Limanseto. DHS promptly revoked the H-1B petition approval. Mr. Limanseto filed a complaint with the DOL claiming back pay for the full period approved for H-1B employment. The ALJ granted the claim, stating, “immigration authorities and the Secretary of Labor expect to be told when an H-1B nonimmigrant isn’t working for the petitioning employer.” Because Ganze did not give timely notice to the government and did pay the return transportation costs, the ALJ found Ganze liable for the full period approved for H-1B employment — three years of back pay with interest. The ALJ also refused to reduce the back pay award by the amount that Mr. Limanseto earned in 2009 through other employment in the United States or for the time period after he returned to live overseas. “The failure to prove every element of a bona fide termination leaves an employer who petitioned for an H-1B worker’s admission liable ‘for the entire period of authorized employment’ . . . .” (emphasis in original).

To complete a bona fide H-1B termination under federal law, an employer must take the following steps:

  • Give notice to the foreign worker that his/her employment is terminated
  • Give notice to DHS promptly after the employment ends
  • Pay the foreign worker’s reasonable transportation costs to return to his/her last foreign address

As shown by Limanseto and other recent cases, failure to comply with the H-1B regulations can result in substantial liability and other sanctions being imposed against the employer. For example, see DOL v. Board of Education, Case No. 2011-LCA-00026 (July 7, 2011) , in which a school district was ordered to pay more than $4.2 million in back pay for failing to comply with H-1B regulations and is temporarily barred from filing further H-1B cases.