Terminating an H-1B employee is never an easy call for an employer. It’s a sensitive process that affects both the legal responsibilities of an organization and the well-being of the employee being terminated.
However, due to the unstable market conditions, economic pressures, and organizational restructuring, H-1B employers are sometimes left with no option but to proceed with the termination. Since H-1B employment is closely tied to immigration status and legal compliance, it becomes crucial for employers to handle the process fairly and responsibly to ensure all compliance formalities are met.
This article discusses the lawful grounds for ending H-1B employment and outlines the important steps employers must take to manage H-1B terminations properly.
When Can H-1B Employers Legally Initiate a Formal Termination?
H-1B employers can proceed with the termination of H-1B employees under certain conditions, such as:
Performance-based termination: This happens when an employee can't finish tasks on time. It applies if they keep underperforming, even after getting feedback and Performance Improvement Plans (PIPs).
Misrepresentation in the H-1B petition: It happens when an employee gives wrong or inconsistent details in their application.
Loss of license: If an H-1B worker does not keep a valid job license, their employer can fire them right away.
Misconduct or violation of company policies: Every organization has certain rules that employees must respect and follow. Violating these rules may lead to immediate termination without prior notice.
Failure to maintain immigration eligibility: If the H-1B employee fails to maintain a valid immigration status (e.g., passport expiry, denied visa extension).
End of contractual obligations: If the H-1B employer hired an employee for a short duration of time to complete or work on a specific project, and the assignment was concluded.
Business restructuring or downsizing: In cases of layoffs, budget cuts, mergers, or role elimination, H-1B employers can lawfully terminate the employees if the decision is part of a bona fide business necessity and not targeted based on visa status.
Key Steps to Lawfully Terminate an H-1B Employee
Notify the H-1B employee in writing: Clearly communicate with the employee regarding their termination and inform them respectfully in writing. The notice is supposed to state that their employment is ending, and all immigration authorities will be notified.
Offer return transportation: The employer must provide return transportation for the employee to their last place of foreign residence. However, if the H-1B employee is voluntarily resigning from their position, then the employer is not required to provide return transportation.
Notify USCIS in writing: It’s a legal obligation for all H-1B employers to inform USCIS in writing that the employment relationship has ended. This step is important to complete a ‘bona fide termination’. Employers must send this message via a traceable delivery method and keep all copies of their records.
Discuss next steps with the employee: The H-1B employer must understand the weight of this situation and ensure the employee is fully aware of their rights and the next steps they must take. It’s important to help them understand all available options so they don’t feel alone in this stressful time and feel comfortable asking for guidance.
Update internal systems and revoke access: Since the H-1B employee is no longer working for your organization, it is important to remove them from the payroll, benefits, immigration tracking systems, email accounts, and other internal databases to ensure compliance.
Retain all documentation: When terminating an H-1B employee, employers must record all steps and save them securely to ensure audit-readiness.
Note: Refer to this article to understand the key steps employers must take when an H-1B employee quits and ensure the organization remains compliant with immigration regulations.
H-1B Employee Termination: Avoiding Common Pitfalls
Not confirming the last day of work: Many H-1B employers think that the termination date is considered an employee’s last day of work. However, USCIS considers the last day the employee actually performed their work as the official end of employment.
Not informing USCIS promptly: H-1B employers must promptly notify USCIS to avoid serious compliance risks and maintain fair employment practices. For example, employers must file the withdrawal letter immediately after the employee’s last working day.
Assuming the employee knows about the grace period: There’s no legal obligation to inform the employee about the 60-day grace period, but since many employees are unaware of this rule, they may hold the employer accountable for not informing them.
Not offering return transportation: Even if the employee doesn’t ask for return transportation, the H-1B employer is supposed to offer it if the termination was initiated by the employer.
Overlooking email and access deactivation: Failing to disable email, internal tools, or immigration databases after termination can lead to unauthorized system use or data retention issues, especially for remote employees or hybrid employees.
What is the 60-Day Grace Period?
The 60-day grace period lets H-1B workers stay in the U.S. for 60 days if they quit or were fired. This time helps them get their affairs in order. During this time, their presence is considered lawful.
An H-1B worker gets a 60-day grace period when they are lawfully terminated or resign. However, if the worker quits suddenly or the resignation is deemed unlawful, they won't receive the grace period.
The 60-day grace period helps the H-1B employees to:
Look for a new sponsoring employer who can file an H-1B visa transfer petition.
Change to a dependent status if their spouse is working in the U.S. on an H-1B or L-1 visa.
Change their visa status to H-4, F-1, B-2, etc., provided they meet the eligibility and file the appropriate forms.
Form I-539: Understanding the Significance
Form I-539 is the Application to Extend or Change Nonimmigrant Status. It is for nonimmigrants, such as students, visitors, and temporary workers. They use it to ask for more time in the U.S. or to change their nonimmigrant status.
Form I-539 is used to:
Change nonimmigrant status (e.g., from H-1B to B-2, F-1, or H-4)
Extend stay in a current nonimmigrant status
Lawfully stay in the U.S. and look for alternate visa options
For instance, an H-1B worker who has been recently terminated or who has voluntarily resigned from their position may submit this form if they fail to secure a job in the 60-day grace period.
Filing a Form I-539 will allow H-1B workers to stay in the U.S. for up to 240 days while their application is pending, helping them figure out their next steps while maintaining a lawful status. Once the application is approved, the H-1B worker may stay in the U.S. according to their new status.
Form I-539: Step-by-step Filing Process
Determine eligibility and timing: Ensure you are eligible to file Form I-539 and your I-94 record has not expired yet.
Gather required documents: Make sure to collect all necessary information, such as:
Copy of current I-94
Copy of passport and visa pages
Termination letter
Letter of explanation mentioning your reason for applying to change status
Proof of financial support
Two passport-sized photos
Complete the form: Access the latest Form I-539 through your USCIS account and complete all mandatory sections such as your name, date of birth, status, etc.
If you don’t want to file Form I-539 online, download and print the latest version of the form and fill in all mandatory details. Refer to the official USCIS portal to check your filing location.
Pay the filing fees and submit the form: Once applicants have completed the Form, they must pay $470 for paper filing and $420 for online filing.
Wait for Form I-797C: Once USCIS receives your petition, they will issue a receipt notice that will have a case number. You can use this number to track the status of your application online.
Await notification for Biometrics appointment: In some cases, USCIS may ask you to attend a biometrics appointment to ensure transparency and fair practices. You will receive a separate notice for this appointment that will contain the time, date, and location of the office.
Wait for the final decision: The processing time for Form I-539 ranges from 3 months to 12 months. During this period, your stay will be considered authorized. However, if your application is denied, you must leave the U.S. on an immediate basis.
Additional Best Practices for H-1B Termination Compliance
H-1B employers must adopt a structured approach so they don’t get subject to serious legal and financial consequences that can potentially ruin the image of their organization and affect their relationship with stakeholders.
Key practices employers must follow include:
Use a checklist or template: If employers fail to follow any crucial step when terminating an H-1B employee, the termination will not be considered a bona fide one.
H-1B employers must create an action plan. This plan should list all important steps. Then, they can check off each item to ensure they don’t miss anything crucial during the process.
Document every step: To stay compliant during audits, document all steps and secure them to prove the legitimacy of the termination process. Save all forms of internal communication, including emails, texts, and notices, in a separate file.
Avoid H-1B benching: Benching H-1B workers is considered a legal offense by the Department of Labor. Before hiring foreign workers, employers must ensure they have enough work for their employees throughout the H-1B period.
Coordinate with payroll: Make sure the employee receives all dues and is paid up to the final working day as stated in the LCA.
Consult immigration counsel: Before a formal termination, contact your legal counsel to ensure compliance with USCIS and DOL guidelines.
Summing Up
The U.S. markets, economy, and political landscape are constantly evolving. Due to this, many H-1B employers must make difficult decisions and lay off skilled workers. H-1B jobs are linked closely to legal status, immigration rules, and federal laws. So, employers need to follow a clear process to stay compliant with these guidelines.
Stay audit-ready and compliant with OnBlick. We help H-1B employers streamline immigration workflows, track LCA and petition statuses, generate customized Public Access Files, and stay ahead of regulatory updates.
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