Government Shutdown Creates Issues Of Concern For H-1B Employees Of Government Contractors

Leon Fresco is a Partner in Holland & Knight's Washington D.C. office

As the government shutdown potentially moves into a second month, many government contractors who are not receiving payment from the Federal Government may soon encounter the issue of what to do with employees they can no longer afford to pay, but are here on nonimmigrant visas, such as the H-1B visa for highly skilled workers. This issue can be quite complicated, and while it is best to seek legal advice from an attorney on each individual case, some broad themes are important to understand.

First, employers of H-1B workers cannot simply keep these employees idle without pay. Pursuant to 20 CFR § 655.731, an employer of someone working on an H-1B visa must pay their H-1B worker(s) at least the "required" wage--which is the higher of the prevailing wage or the employer's actual wage (in-house wage) for similarly employed workers. The employer must pay the guaranteed minimum hours listed in the H-1B applications filed with the Department of Labor and U.S. Citizenship and Immigration services, even if no work is available for the worker to perform. Failure to pay H-1B workers who are employed by the company, the wage the Company previously agreed to pay, can subject employers to civil penalties of up to $7,500 per violation under 20 CFR § 655.801(b) and 20 CFR §655.810(b)(2).

Second, the only way for government contractors to avoid violations of these mandatory pay regulations is to terminate any H-1B employees it can no longer afford to pay. An employer meets its obligations under the law by notifying its employee they have been terminated and by cancelling the H-1B petition with USCIS. This option, however, is obviously problematic in its own right, as many employees have families and homes in the United States, and their lawful presence in the United States is tied to whether they remain lawfully employed with their petitioner. Under 8 CFR § 214.1(l)(2), H-1B nonimmigrant workers have a grace period of 60 days if they are...