After the United Auto Workers’ (UAW) collective bargaining agreements with the “Detroit Three” automakers expired on September 14, 2023, and the parties were unable to agree on new contract terms, the UAW began a strike at targeted plants at midnight on September 15, 2023. Manufacturers and other companies within the automotive supplier network, bracing for a resulting downturn in orders, may look to implement potentially long-term loss mitigation strategies such as furloughs, pay cuts, modified schedules and even layoffs. Employers of foreign workers must consider how these actions will affect their compliance with federal immigration regulations.
While the jobs covered by the UAW’s Detroit Three labour contracts are not those that support visa sponsorship, the ancillary effects of the strike may raise compliance issues for suppliers and other affected employers. In general, any material change in a foreign national’s terms and conditions of employment may affect the validity of the underlying legal status and work authorisation, depending on the nature of the change and the specific nonimmigrant work visa category. Across-the-board cost-cutting measures that affect employee compensation and working conditions are precarious because they expose the employer to potential immigration violations.
Federal immigration regulations strictly prohibit the involuntary benching of employees with H-1B, H-1B1, or E-3 work visa status (collectively referred to herein as “H-1B”). This rule was implemented to combat the practice of employers placing H-1B workers in unpaid, non-productive status (also known as “benching”) at the end of a project or when there is insufficient work available. By definition, a furlough is a temporary interruption in the employee’s work and pay. Therefore, the involuntary furlough of an H-1B employee is not permitted and exposes an employer to sanctions, including back wages, civil penalties, and potentially even debarment from the H-1B programme. This leaves the employer with the difficult choice (and potential labour relations challenge) of continuing to pay its H-1B employees regularly during the non-productive time while their US counterparts are furloughed, or terminating the H-1B employment altogether.
Immigration regulations also prohibit any reduction in salary or any change in the H-1B employee’s work schedule that would constitute a reduction in salary. The employer is required to pay the H-1B worker the higher of the actual wage or the prevailing wage as certified by the Department of Labor (DOL) in the Labour Condition Application (LCA). The prevailing wage is not the same as the minimum wage, but is the wage rate that the DOL considers to be the “normal” wage for the particular occupation, based on the location of the job and the skill level required. Employers are not allowed to pay H-1B workers less than the prevailing wage for that occupation. Again, this puts the employer in a very difficult position and may exacerbate labour relations problems.
In addition, if the wage reduction or modified work schedule does not bring the H-1B employee’s salary below the prevailing wage, but is still considered a material change in terms and conditions of employment, the employer must notify the DOL and U.S. Citizenship and Immigration Services (USCIS) of the change in terms and conditions of employment through a new LCA and amended H-1B petition. Depending on the number of H-1B workers requiring amendment, this can be costly and employers may be forced to consider terminations. If the employer elects to involuntarily terminate the H-1B worker’s employment, the employer is required to notify the DOL and USCIS and provide the separated H-1B worker with reasonable transportation costs to return to the worker’s home country.
There are other categories of employer-sponsored work visas that do not have the benching and wage reduction restrictions of the H-1B, including E-1, E-2, L-1, O-1, and TN. In most cases, employees on these other work visas can be included in an employer’s mitigation measures, including furloughs and temporary wage reductions. Generally, furloughed workers are eligible for additional unemployment benefits under state law during the period of furlough. However, a foreign worker who has been furloughed is not automatically entitled to unemployment benefits. Unemployment benefits vary from state to state, and each state has its own rules regarding a foreign national’s eligibility for benefits. Most states require that the claimant be available for work, able to work and resident in the state. Many states further define the eligibility of foreign nationals based on the IRS definition of “resident alien”. Unemployment rules are very complicated when dealing with non-citizen workers. Eligibility varies depending on the state, the worker’s visa status, and the worker’s individual circumstances.
If a strike is prolonged, employers are likely to begin to assess the need for more definitive action, such as permanent layoffs or a reduction in force. A reduction in force may make it difficult for the employer to continue the employment of certain sponsored workers on a long-term basis, thereby delaying the foreign worker’s pursuit of permanent residence under labour certification. The employer’s inability to sponsor for labour certification then puts the foreign worker at risk of exhausting the available work authorisation, resulting in termination of employment and the worker’s departure from the United States, and the employer loses a valuable resource in moving its business forward.
