US visa layoffs
Global Workforce

Rules, Regulations, and Compassion: When Layoffs Impact Employees on US Work Visas 

As a native of South Africa, Elon Musk is no stranger to the US visa system – and the challenges foreign nationals face. He arrived in America on an F-1 student visa, converting it to an H-1B visa when he was no longer a student. Eventually, he got a green card through the EB-5 Immigrant Investor Program and gained US citizenship in 2002.

Two decades later, as the new owner of Twitter, Musk finds himself on the other side of the ledger, sending out dismissal notices to about 3,700 employees, including many who hold the same H-1B visa Musk used to launch his own career.

While sudden job loss is extremely unsettling for anyone, layoffs to visa holders have an extra layer of complication – and urgency. The visas are often sponsored by the company that hires the employee. If the job is lost, so is the sponsorship. That means the individual has no legal basis for remaining in the country if quick action isn’t taken.

In those cases, the US immigration department allows a 60-day grace period. People on work visas who lose their jobs have two months to find new employment (and thus new sponsorship) or leave the country within the grace period allotted. If they remain in the US illegally, they face the possibility of being barred from entering the US for three or even 10 years.

Company Responsibility for Laid-Off Workers with H-1B Visas

The Twitter layoffs were announced the same week as job cuts at other tech giants, including Stripe, which cut 1,000 people and Lyft, which laid off 700 more – with more to come, including Meta. As the economic situation gets worse, it could be just the beginning.

So far this year, more than 50,000 people lost their jobs in the US tech sector. That figure will inevitably include a significant number of people holding H-1B visas, designated for highly skilled employees. The tech sector tends to attract a particularly large number of highly skilled people from abroad. At Twitter, for example, about 8% of the workforce (pre-layoffs) were H-1B visa holders.

When the job was held by an individual with a work visa – most commonly the H-1B – the company is required to take a number of steps:

1. The company must inform the immigration office in writing

When a company hires a foreign national, it assumes a certain level of responsibility for that individual. To end the relationship, it must send a letter to the US Citizenship and Immigration Services department stating the date the job was terminated and requesting to revoke the petition. If the immigration office is not informed, it will continue to hold the company responsible for the employee, which could be problematic if, for example, the former employee remains in the country after the grace period.

2. The company has to cover the costs of the return travel to the country of origin

If a foreign employee on an H-1B visa is fired or laid-off, the company is responsible for the reasonable costs for traveling back to the home country. This does not apply if the individual resigns on their own. This requirement applies during the entire 60-day grace period, so an individual can use the time to look for alternative work without waiving the right to travel costs. If the person finds new employment and the company files an application for a new H-1B visa, the employee does not have to leave the country and the original company does not have to pay for travel.

3. Other considerations for companies:

  • To hire a laid off H-1B visa holder, companies need to file a Petition for a Nonimmigrant Worker (form 1-129) with the immigration authorities. As long as the petition is pending, they can work until a decision has been made. If the petition is approved, the worker can continue working. If denied, they would need to stop working and depart the country.
  • It may be more cost-efficient to hire a laid off visa holder than a first-time visa holder because some of the initial filing fees for the visa have already been absorbed by the original company. However, the company will have to endure the bureaucratic process and the possibility that the application will be denied.

What Laid Off Individuals Need to Know

People with US work visas who are laid off suddenly find themselves facing a ticking clock. In the US, they have 60 days to take one of the following three actions: they can 1) find a new employer to sponsor a work visa, 2) leave the country, or 3) change their visa status. Filing for a different visa, such as a B-1 or B-2 tourist visa can allow for a longer stay in the US. It may be possible to transition back to an H-1B if they find an employer.

People who find themselves in this situation are strongly advised to speak to an immigration attorney as quickly as possible to discuss their individual situation. Circumstances can differ greatly and only a qualified lawyer informed about all of the individual factors can give proper advice.

Stripe CEO, Patrick Collison, acknowledged as much, setting up consultations for immigration support for laid off Stripe employees on work visas and promised to “support transitions to non-employment visas wherever we can.”

The grace period begins immediately following the last day of work

The grace period begins after the date the company considers the employee’s last day at work. It should be the same date the company designates as the last day in its letter to the immigration office. As a general guideline, the period begins immediately when the employee stops working. The date is not based on when the company stops paying the person. Some companies will cushion the blow to the employee by continuing to pay after employment has stopped. This does not affect the grace period.

The grace period is not an extension of the visa

People who are on their grace period cannot return to the US if they leave the country during this period. The grace period is an opportunity to settle affairs and to try to find alternative employment, but it does not allow people to come and go across national borders.

A new company must file an H-1B application within 60 days

If a new company agrees to hire the employee, a pending application for the new visa is enough to permit the employee to remain in the country. It is not necessary to complete the process in order to start working. The new company becomes the employee’s sponsor until a decision is handed down. There are also limits on companies that are eligible to hire someone with a H-1B visa. An employer of record (EoR), for example, is ineligible.

Those who are on L or E visas are more limited in their options

People on L-1 or L-2 visas, which are designated for intracompany managerial-level transfers to the US, may move to other jobs within that company. In some cases, depending on the employment agreement, and the organizational set-up, they could potentially move to another subsidiary of a parent company. In some cases, this may require a change in immigration status to an H-1B or other visa type. The grace period for people on E-1 or E-2 visas is only 30 days.

Layoffs could impact green card applications

People who are applying for a green card are often advised not to leave the country. If the application was sponsored by the employer, they may choose not to move forward with it. But circumstances vary widely and need to be examined on a case-to-case basis.

Holidays are a Time of Compassion

The grace period for the current wave of layoffs falls during the last two months of the year – which is also the holiday season in America. That makes it particularly hard for people to find new jobs, and uniquely painful for them and their families.

It is an opportune time for companies to think about the impact they are having on the lives of the employees and on the investment the companies made to bring foreign workers to America in the first place.

One way companies can meet their goals of cutting costs while also minimizing their impact on employees is to consider reducing people’s roles to half-time instead of cutting them altogether. This could give them more time to find new jobs without the immense pressure they are currently experiencing.

I also want to direct attention to a worthy initiative to help people with H-1B visas find new jobs. It’s a database of people who are currently on their grace period and need to find work. People can add their information to the Google Sheet. Those who have jobs to offer can find candidates in a snap and add their company information to the database as well.

Treating employees with compassion is never a bad business strategy. It always pays off in ways you never expect.

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