As a result of economic conditions caused by COVID-19, many startups and employers are having to make the difficult decision of whether they need to furlough H-1B workers. The US government has not released any COVID-19 specific relief for H-1B employers that need to temporarily reduce their workforce.
If this situation applies to your team, it helps to understand the paths you can take before pulling the trigger.
The difference between furlough and lay-off
Furloughing is when an employer temporarily suspends work without pay. This is different from a lay-off, which is when employment is permanently terminated.
Can US employers place H-1B workers on furlough?
Short answer: No, H-1B workers cannot be furloughed without pay.
A key component of the H-1B application is the Labor Condition Application (LCA), a document that declares the employee’s job title, work location, and salary to the Department of Labor. The LCA also dictates that the US employer must pay the H-1B worker the salary listed on the LCA until the employment ends.
This means that the sponsoring company would be required to continue paying the salary to H-1B employee during the furlough period.
There is an exception! Unpaid leave of absence for H-1B workers is authorized if the leave was:
- requested by the employee;
- not related to the employment; and
- part of your company’s standard policy.
For example, a H-1B worker may request an unpaid leave of absence to take care of their sick family member. Because the leave was requested by the worker, not related to the employment, and part of the company’s standard leave policy, the employer would not have an obligation to pay the employee’s salary during the leave period.
What are the penalties for non-compliance?
If the Department of Labor (DOL) receives a complaint that a H-1B worker has not received the required salary, after an investigation, the employer could be subject to: civil penalties, back wages plus interest to the H-1B worker, and be banned from the sponsoring H-1B talent.
If furloughing H-1B workers is not possible, then what options are available to employers?
Instead of furloughing H-1B workers, the employer may decide to terminate employment to end the salary payment obligation. The employer must then offer to pay for the worker’s reasonable costs of return transportation abroad.
Alternatively, the employer may reduce the H-1B worker’s hours from full-time to part-time. This will require filing a H-1B amendment, which includes a new LCA that documents the part-time hours and prevailing hourly wage. The employer would then only be responsible for paying the new part-time salary.