[Now includes updated filing fees from Dec. 23, 2016]

Your client, a mid-sized company, has identified two potential hires with critical skills. One works for a competitor as a financial analyst. The other is completing a master’s degree in systems engineering. Both are foreign nationals. The company wants to know what it is getting into, how much it will cost and who will pay for it, and how to protect the company if the new hire leaves prematurely. How do you bring the new hires aboard in a sensible, cost-effective way?

For these prospects, the H-1B visa is typically the work permit of choice.[1] The financial analyst can accomplish an H-1B transfer quickly (30 days or less). In contrast, the pathway for the systems engineering student is more circuitous. For each, however, there are risks and costs, and the immigration process can quickly overshadow their work if company guidelines are not in place, particularly if a green card is sponsored as well.

The Financial Analyst Transferee

UPDATED Jan. 10, 2017: The United States Citizenship and Immigration Services (USCIS) increased filing fees on Dec. 23, 2016, by 21 percent on average [81 FR 73292]. As a result, government filing fees are now $2,460 for a regular H-1B transfer and $3,685 for expedited handling. The three-step green card process now costs $5,170 in government filing fees, advertising costs, and other hard costs, before legal fees.

The financial analyst already holds a work visa, so the transfer is a matter of inserting a new employer. The USCIS will nevertheless require that the transfer petition contain complete documentation of eligibility for both the company and the transferee (even though the transferee has already been vetted for his or her current employer). Under regular processing, a transfer approval will take two to four months to obtain. The transferee can move to the new company, however, as soon as a filing receipt for the transfer petition is in hand and need not wait for the approval.[2]

Understandably, many transferees are reluctant to change employers under the receipt rule. As an alternative, expedited processing can be used, resulting in an approval within 15 calendar days. This faster route removes doubt for the transferee (and accomplishes the transfer much more quickly than the regular route, unless the transferee is willing to utilize the receipt rule). This expedited route, however, costs an additional $1,225. Most transferees insist on the expedited route — and on the new employer paying for it.

The USCIS filing fees alone for a regular H-1B transfer are $2,325. With expedited handling, the total is $3,550 and that is before legal fees and hard costs.[3] After the transferee joins the company, there may be an extension of the H-1B three years later, with USCIS filing fees in addition to legal fees and hard costs. Depending on the circumstances, expedited handling of the extension may be needed as well for the usual $1,225 premium. These may seem like comparatively small numbers, but the grand total is sizable when all costs are considered for an H-1B transfer, future H-1B extensions, and green card sponsorship.

In addition, many transferees agree to move to a new company only if that company will sponsor them for a green card — immediately. Doing so typically involves a three-step process that requires labor market testing, followed by several years of waiting to complete the green card process. All told, the three-step process costs $5,050 in government filing fees, advertising costs, and other hard costs, before legal fees. This is for the transferee alone. If family members are involved, the costs increase, naturally. And, depending on how long the green card takes to complete, the transferee may need multiple extensions of H-1B status while waiting to finish. It is therefore important for the company to have a consistent policy as to whether it pays solely for the employee or for family members as well.

If the employee has moved to another job position or location at the company before the green card is in hand, the entire three-step process must be repeated for the new position or location, unless the employee returns to the old sponsored position or location for a reasonable time as soon as the green card arrives.[4] This can be costly and disruptive. After the individual has received the green card and has been in the sponsored green card role for a reasonable period of time, then he or she is free to work in any job for any employer in the United States.

It is not unusual to see a transferee complete the green card and, soon after a reasonable time has passed, move on to another company. The sponsoring employer is then left with an empty job position and a large expenditure. Some employers utilize a repayment agreement to recoup expenses by requiring that the prospect agree, as part of the acceptance of the offer of employment, to repay expenses incurred by the company in connection with the H-1B transfer, any H-1B extensions, and the green card processing if the transferee voluntarily terminates employment during a certain period of time.[5]

Not all expenses are legally recoverable, however, so it is critical for the agreement to limit recovery to “all lawfully recoverable amounts” in order to be enforceable. (For example, all costs of any kind associated with the first step of the green card process cannot be recovered by the company in any way.)[6] The agreement should indicate that repayment can at the company’s option be accomplished through payroll deduction, final paycheck reduction, or otherwise and that, in any event, the individual will repay the full amount within a certain period after departure.

A common drafting error is to obligate the transferee to repay lawfully recoverable amounts if the transferee voluntarily terminates employment within a certain period of time “after being approved for a green card.” This faulty language permits a transferee to walk away from all repayment obligations simply by leaving the company before the green card arrives (perhaps to join another company that has also been sponsoring him or her for a green card all along).

The better approach is to secure a promise to repay all lawfully recoverable amounts spent by the company if the transferee voluntarily terminates employment “between the effective date of this agreement” and a certain period of time after the green card is approved. Given the amount of time and money that can be spent on legal fees, government fees and hard costs on an H-1B transfer, H-1B extensions, and the three-step green card process, the repayment agreement is a critical document in the immigration process.

Indian nationals hold the largest percentage of H-1B visas, followed by Chinese nationals. On paper, a green card process undertaken for an Indian national currently takes 12 to 14 years to complete — and this is for the faster EB-2 green card category. For China, it takes six to eight years. These waiting times shrink and expand monthly, based on quotas and demand. In light of this, a repayment agreement that imposes an obligation to repay “between the effective date of this agreement” and a certain period of time after the green card is approved may be too onerous, approaching involuntary servitude under these long time frames.

In fairness, the company may wish instead to impose an obligation to repay all lawfully recoverable amounts spent by the company if the transferee voluntarily terminates employment “between the effective date of this agreement” and a certain period of time after the green card is approved, with a provision that forgives repayment as to any amounts spent more than a certain number of years prior to termination. This strikes a balance between company protection and overreaching.

From a recruiting standpoint, the company may well need to agree to green card sponsorship and to payment of all immigration-related costs. Otherwise, a desirable recruit will reject the job offer and instead join a company that will make those payments. A repayment agreement helps to tackle this issue by providing the sponsorship and monetary support, while protecting the company.

An H-1B permits an individual to work in the U.S. for six years and the clock does not start over with a change of employer.[7] Unless a green card is far enough along by the time the six-year limit is reached, the H-1B must depart the U.S. at the end of the six-year period.[8] It is therefore also important for the company to understand, prior to the offer letter, how much time a transferee has on the H-1B. Otherwise, the company may find that it has brought on an individual with little time left in the U.S., coupled with an urgency to start a green card immediately.

The Systems Engineering Student

The systems engineering student presents a different challenge. Before graduating, he or she can be employed by the company under CPT (which is “curricular practical training” authorized by the school). After graduation, work can be performed under OPT (which is “optional practical training” authorized by the USCIS). OPT is valid for 12 months. It is extendable, if the employee is a STEM graduate and the company is an E-Verify employer, for one additional 24-month period.[9] Eventually, however, the OPT will be exhausted. At that point, the individual needs to have obtained an H-1B under the lottery system in order to continue working.

The H-1B visa filing window opens each April. If petitions exceed the annual quota during the first five business days of April, then a lottery is held, with a selected petition enabling an individual to begin work as an H-1B on Oct. 1. For the past several years, the quota has been exceeded, rendering the April filing window as the only opportunity for an employer to obtain an H-1B visa for a prospective employee.

Unlike the financial analyst, who already holds an H-1B that can be transferred any time during the year, the systems engineering student must participate in the lottery unless some other exemption applies.[10]

The H-1B category allows 65,000 visas per year, with an additional 20,000 H-1B visas available to holders of an advanced degree from a U.S. university. In the lottery, the 20,000 U.S. advanced degree petitions are randomly selected first. Then the remaining petitions (including all unselected U.S. advanced degree petitions) compete for the remaining 65,000 slots. An unselected petition is returned to the employer, along with the USCIS filing fees. That is fortunate, because the odds of selection in recent years have not been favorable:

If not selected, the systems engineering student can as a STEM graduate extend OPT for an additional 24 months if the company indeed uses E-Verify (which remains voluntary for most companies). This allows additional opportunities to participate in future H-1B lotteries while still working for the company in the United States. The company therefore needs to be ready for action in April of each year until the H-1B is obtained. Clearly, the individual with the best chance of selection is a STEM graduate with a U.S. master’s degree.

If the student is selected in the lottery, then the H-1B becomes effective on Oct. 1 of that year, allowing an aggregate six years of physical presence as an H-1B in the U.S. to work for the company. But remember: while working as an H-1B for the company, the individual can have another company file an H-1B transfer and move to the new company as soon as a filing receipt is in hand (or on an approved transfer within 15 calendar days under expedited processing). The USCIS does not notify the current employer of a transfer filing, so the first indication that the company has of any intended departure is typically when the individual gives notice. A well-drafted repayment agreement is helpful in this instance.

Confusion abounds in employment-based immigration matters. The transferee and the graduate gather vast amounts of internet information — some good, some bad — and then press the company for H-1B status and green card sponsorship based on that understanding. The company needs an enforceable repayment agreement in place, coupled with a consistent company policy as to who will be sponsored for what and when. A lack of these tools inevitably leads to expanding company commitments to sponsor, and pay for, immigration matters, with no cost recoupment when the sponsored employee departs.

Notes

1. 8 U.S.C. §1101 (a) (15) (H) (i) (b). For a discussion of other visa categories, see Going Global? The Risks and Benefits of Staying Competitive By Hiring Foreign Nationals, Tennessee Bar Journal, April 2007. Note that the TN visa is now available in 3-year rather than 1-year increments.
2. 8 U.S.C. §§1184 (n) (1) & (n) (2) (A-C).
3. The base filing fee of $325 is accompanied by a $500 fraud fee and a $1500 training fee. These supplemental fees were introduced in 1990 to encourage U.S. employers to hire U.S. workers. Immigration Act of 1990, PL 101-649, 104 Stat. 4978 (Nov. 29, 1990), 1990 S. 358.
4. The individual does not have to return to the old position, however, if the green card is approved more than 180 days after the filing of step 3 (the I-485), so long as they remain in the same occupation or a similar occupation for any employer. Immigration and Nationality Act (INA) §204 (j); American Competitiveness in the Twenty-First Century Act of 2000 (AC21) (Public Law 106-313), as amended, and the American Competitiveness and Workforce Improvement Act of 1998 (ACWIA), Title IV of Div. C. of Public Law 105-277.
5. Also note that, if the company terminates an H-1B employee involuntarily prior to the end of the H-1B assignment, the employer must pay the reasonable costs of return transportation to the employee’s last place of residence outside of the United States. 8 C.F.R. §214.2 (h) (4) (iii) (E); 8 U.S.C. §1184 (c) (5) (A). The USCIS must also be notified of the termination in order to avoid the benching claim. Failure to take these steps exposes the company to a front pay claim by the employee, whom the USDOL deems to have been “benched” and not terminated. Amtel Group of Florida v. Yongmahapakorn, ARB No. 04-087, ALJ No. 2004-LCA-006 (ARB September 29, 2006). However, if the individual secures USCIS approval for H-1B employment at a new employer, the approval constitutes termination for purposes of ending wage liability for the prior employer. Batyrebekor v. Barclays Capital, 2011-LCA-25, ARB No. 13-013, 9-12 (ARB July 16, 2014).
6. 20 C.F.R. §656.12 (b).
7. 8 C.F.R. §§214.2 (h) (13) (i) (B) & (h) (13) (iii) (A); Matter of Safetran, 20 I&N Dec. 49 (Comm. 1989).
8. AC21, PL 106-313 §106 (a). Note that the green card in process can have been filed by a prior employer and still serve as a basis for the extension beyond the 6-year limit, even though the new employer must repeat the green card process. Memo, Yates, Assoc. Dir. Operations, USCIS, HQOPRD 70/6.2.8-P (May 12, 2005) at P. 9, AILA Doc. 05051810 May 18, 2005 reissued Dec. 27, 2005, AILA Doc. No. 06092763.
9. 8 C.F.R. §214.16.
10. The following petitions are exempt from the H-1B quota: (1) new petitions for current H-1B workers to transfer employers of for concurrent employment; (2) petitions to extend the amount of time that an H-1B may remain in the United States, (3) H-1B physicians holding a Conrad 30 waiver of the J-1 two-year residency requirement; (4) petitions filed by (a) institutions of higher education or a related or affiliated nonprofit entity or (b) nonprofit research organizations or governmental research organizations. 8 U.S.C. 1184 §§ (g) (5) (A) & (B).

DAN E. WHITE leads the practice at The Immigration Group in Nashville. Since 1986, his law practice has focused exclusively on business immigration matters. He is a 1981 graduate of Vanderbilt Law School and an active member of the American Immigration Lawyers Association. He holds an AV rating.