Introduction
Termination of an H-1B employee is not a routine HR event. Unlike normal at-will employment, where an employer may terminate a worker for any lawful reason, the H-1B category imposes strict federal immigration obligations on the employer. These rules arise from the Immigration and Nationality Act (INA), the regulations of the United States Citizenship and Immigration Services (USCIS), and the Department of Labor (DOL) enforcement of Labor Condition Applications (LCAs).
Failure to follow these obligations can expose the employer to significant back-wage liability, DOL audits, civil penalties, and even disqualification from filing future H-1B petitions. For employees, an improperly handled termination may cause loss of lawful status, unlawful presence, and serious complications in future visa or green card proceedings.
Legal Framework Governing H-1B Terminations
A. USCIS Regulatory Structure (Immigration Law)
USCIS regulations require that H-1B employees maintain lawful non-immigrant status at all times. A termination — especially an involuntary one — affects the beneficiary’s legal status immediately. USCIS provides a discretionary up to 60-day grace period, but only if the termination is genuine, properly documented, and if the beneficiary’s I-94 has remaining validity. The employer must notify USCIS of the termination so that the petition may be withdrawn; otherwise, USCIS may consider the employment relationship ongoing.
B. DOL Regulatory Structure (LCA and Wage Obligations)
The Department of Labor regulates employer obligations under the Labor Condition Application (LCA). The LCA mandates that employers pay the “required wage” for the entire duration of authorized employment unless a bona fide termination occurs. Back wages may accumulate if the employer fails to properly end the H-1B relationship. Additionally, the employer cannot bench or place a worker in unpaid status unless the worker voluntarily requests time off for personal reasons.
C. Employment Law Considerations
While U.S. employment is generally at-will, this principle does not override immigration obligations. Employers may terminate for any lawful reason, but termination must be executed in a manner consistent with immigration regulations. The H-1B program adds layers of compliance not applicable to U.S. citizen or permanent-resident workers.
What Constitutes a “Bona Fide” H-1B Termination?
A lawful (bona fide) termination requires a three-step legal process. All three elements must be completed to end employer wage liability and maintain immigration compliance.
Step 1 — Clear Notice to the Employee
The employer must provide unequivocal notice of termination to the H-1B employee. Written notice is strongly recommended, such as a termination letter or email confirming the last day of employment. Verbal terminations are legally insufficient because they may not be verifiable during a DOL audit.
Step 2 — Written Notification to USCIS
The employer must notify USCIS in writing, requesting withdrawal of the H-1B petition. Until USCIS receives this withdrawal request, the petition remains active, and the employer may be held responsible for continued wage obligations. USCIS petition withdrawal is a critical component of establishing bona fide termination.
Step 3 — Offer of Reasonable Return Transportation
The employer is legally obligated to offer one-way transportation to the H-1B worker’s home country if the termination is involuntary. This obligation does not extend to H-4 dependents. The offer may be made via email or in writing. Employers are not required to pay if the employee declines the offer or resigns voluntarily.
Employer Wage Obligations After Termination
A. Obligation to Pay Wages Until Bona Fide Termination Is Complete
Even after a termination is communicated, the employer must continue paying wages until all three elements of bona fide termination are met. This means that wage liability may continue even after performance stops if USCIS withdrawal or return transportation is delayed.
B. Bench Status and Nonproductive Time
Under DOL regulations, an H-1B worker must be paid for all nonproductive periods unless the absence is voluntary or for personal reasons. Lack of client work, project cancellation, or internal restructuring does not excuse wage payment obligations.
C. Penalties for Non-Compliance
Violations may lead to:
- Back-wage awards
- Civil monetary penalties
- DOL audits
- Employer debarment from the H-1B program
- Adverse findings that can affect future petitions
Employee Rights After H-1B Termination
A. The 60-Day Grace Period
When an H-1B worker is terminated, USCIS grants up to 60 days (or until the I-94 expiration, whichever is sooner) to take action. During this period, the beneficiary may:
- File an H-1B transfer with a new employer
- File a Change of Status (COS) to another category
- File a reinstatement request (if eligible)
- File a B-1/B-2 change of status for additional time
- Depart the United States
The grace period is not a work-authorized period unless a new employer files an H-1B transfer allowing portability.
B. Impact on H-4 Dependents
The status of dependents is tied to the principal. Once the principal H-1B loses status, H-4 dependents must take parallel action to maintain lawful presence.
C. Consequences of Improper or Hidden Termination
If the employer does not issue proper notice, USCIS may believe the beneficiary is still employed, leading to:
- Confusion in future filings
- Status violations
- DS-160 inconsistencies
- Green card delays or denials
Risks and Legal Exposure for Employers
A. Back-Wage Claims
Employees may file complaints with the DOL Wage and Hour Division. If the employer cannot prove bona fide termination, back wages may be owed for months—or even years.
B. DOL Investigations
Improper termination may trigger:
- LCA audits
- Worksite visits
- Comprehensive wage examinations
C. USCIS Fraud Detection Unit Scrutiny
Inconsistent filings, misreported wages, or delayed revocations may prompt USCIS investigations.
D. Litigation & Civil Consequences
Terminations following complaints, accommodation requests, or protected activities may result in retaliation claims.
Practical Termination Procedure for H-1B Employers
A. Preliminary Legal Review
Before terminating an H-1B employee, Immigration Fleet recommends reviewing:
- The LCA wage level
- Petition validity dates
- Previous amendments
- Any pending extensions or transfers
- State labor laws regarding final pay
B. Termination Notice
Employers should issue a clear, factual, and non-accusatory termination letter. The communication should avoid unnecessary detail to reduce litigation risk.
C. Return Travel Offer
A written offer of reasonable transportation must be made. Employers should document acceptance or rejection.
D. USCIS Petition Withdrawal
Notification should include:
- Employer information
- Receipt number
- Employee name
- Statement of termination
E. Final Pay and Documentation
Follow state laws and document:
- Final wage payment
- Benefit termination
- COBRA notices (if applicable)
F. Record Retention
Maintain records for at least five years, including:
- Termination letter
- USCIS withdrawal letter
- Transportation offer
- Payroll records
Immigration Fleet Professional Recommendations
- Always Document Terminations Thoroughly
- This protects the employer in DOL or USCIS audits.
- File Withdrawal Letters Immediately
- Prompt notification minimizes wage liability.
- 3. Ensure Clean Compliance with Wage Rules
- Never bench or reduce wages unless legally allowed.
- Provide Beneficiaries With Status Guidance
- A brief explanation of the 60-day grace period and next steps significantly reduces confusion.
- Avoid Any Appearance of Retaliation
- Document performance issues clearly before termination.
- Treat the H-1B Worker Professionally and Respectfully
- Positive interactions reduce the risk of complaints.
Conclusion
Termination of an H-1B employee is a complex process governed by intersecting immigration and labor regulations. It must be handled with precision, documentation, and a full understanding of employer obligations. A valid termination requires:
- Written notice to the employee
- USCIS petition withdrawal
- Return transportation offer
