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7 Ways to Prepare for an H1B Layoff in Uncertain Times
by Phil on Jun 12, 2024 11:45:28 AM
Introduction
The tech sector is witnessing a rise in layoffs, affecting workers across the board. However, those on H1B visas are particularly vulnerable. An H1B layoff not only costs you your job but also jeopardizes your residency status, forcing you to search for new employment, explore H1B alternatives, or potentially leave the country.
According to CNBC, the tech sector saw more than 263,000 jobs disappear in 2023. This trend has continued into 2024, with more than 75,000 job losses recorded by April. Given these figures, you need to be prepared for the possibility of losing your job and understand how to handle the challenges you’ll face if your employment situation changes.
In this article, we’ll explore seven strategies to help you prepare for and respond to job loss as an H1B visa holder.
1. Stay Updated on Industry Trends
Tracking Industry News
Keeping up to date with trends in the tech sector can help you anticipate potential layoffs. Begin by regularly reviewing technology new outlets into your routine. Sites like TechCrunch and Crunchbase can help you track which companies are growing and securing investments as opposed to those that are facing challenges, signaling potential job market fluctuations.
In addition, the site Layoff.fyi is a useful resource that compiles detailed reports of layoffs across the tech sector. By observing patterns and frequencies of layoffs as reported on this site, you can better predict the stability of your current company or of prospective employers.
Monitoring Internal Communications
Your employer might circulate a company newsletter, a regular communication tool that keeps you informed about company news, employee achievements, HR policy updates, and more.
You can also utilize an internal newsletter to monitor the health and strategic direction of the company. Mentions of cost-cutting, restructuring, or shifts in business priorities can be early indicators of potential layoffs.
If you notice any such updates, consider updating your resume and expanding your professional network to prepare for a potential layoff. Moreover, making yourself aware of new job opportunities at this stage can also help you stay prepared for any significant changes to your employment situation.
2. Strengthen Workplace Relationships
Networking within your company is important if you face uncertain job security. Building relationships with HR and direct managers can provide critical insights and provide you with advocates who can highlight your contributions to the organization during the threat of layoffs.
Moreover, regular check-ins with supervisors can help you understand your position within the company and stay updated on any developments that could affect your employment status.These scheduled meetings can help you prepare for and manage the risks associated with potential layoffs.
3. Understand Visa Implications
The H1B Grace Period
Once you are laid off, you are granted a 60-day grace period to either find new employment, change your visa status, or leave the United States. This period begins the day after your job ends and offers you a window of time to make new arrangements.
You can use the H1B grace period to seek a new H1B sponsor. If you find a new employer, they must file the H1B petition within the 60-day grace period in order for you to maintain lawful status and begin your new job.
However, finding a new sponsor within this timeframe is not always easy. If you cannot find a new employer by the time the H1B grace period expires, you will need to leave the United States to avoid unlawful status. If you secure employment after the grace period, your new employer can still file an H1B petition, but you will need to depart the country and return only once it is approved.
Exploring H1B Alternatives
Because finding a new sponsor within the H1B grace period can be difficult, you might want to plan ahead and research H1B alternatives. Some common options include:
- H4 visa: If your spouse holds a valid H1B, the dependent H4 visa offers you a pathway to remain in the United States and plan for future employment or education. In addition, if your spouse has an approved I-140, you can apply for an H4 EAD, which will allow you to work while maintaining dependent status.
- B2 visa: Changing from H1B to B2 offers another solution if you’re facing a layoff. The B2 visa allows you to remain in the United States temporarily for tourism or leisure without the need for employment or sponsorship. This can provide a buffer for you to explore new opportunities or plan future activities while complying with U.S. immigration laws.
- F1 visa: Shifting from H1B to F1 allows you to pursue further education in the United States. The F1 visa permits full-time study as well as participation in Curricular Practical Training (CPT) employment opportunities, exposing you to practical work experience during your studies. Moreover, some schools offer Day 1 CPT programs, enabling you to start practical training from the start of your academic program, minimizing income disruption following an H1B layoff.
Effects on Dependents
If you have a spouse with a dependent H4 visa, your layoff will directly affect your spouse’s visa status, since it’s tied to your H1B. If you’re unable to secure another H1B job, both you and your spouse must leave the United States, change your status, or face the risk of being out of status.
If you are able to shift from H1B to F1, your spouse can apply for an F2 visa, which will allow them to study part-time but will not allow them to work within the country. Additionally, your spouse could also consider transitioning from H4 to F1 in order to study and take advantage of CPT or OPT work opportunities.
4. Negotiate Your Exit
As noted above, you will have a 60-day grace period following your H1B layoff, starting immediately after your last official day of employment. However, if you receive a severance package, you would have ways to "maximize" your H1B grace period and buy you more time for job searching. This effectively extends your stay in the United States, giving you more time to find a new sponsor or adjust your visa status.
Negotiating the terms of your severance package can be a strategic move to extend your grace period. By asking that your severance be paid in installments rather than in a lump sum, you might be able to delay the start of your grace period.
If you don’t receive severance pay, you could negotiate with your employer for unpaid leave to push back your termination date, allowing you to remain employed while not receiving direct payment. Extending your employment in this manner provides valuable extra time to address your visa and employment situations.
5. Understand Your Rights
Severance Pay
While negotiating the terms of a severance agreement can help you extend your H1B grace period, you might not necessarily be entitled to severance pay. Whether you receive a severance package can depend on several factors–your employer’s policies, your employment contract terms, and federal or state laws.
Many companies have policies covering severance pay for terminated employees, and your employment contract might outline specific severance terms. However, federal and state laws generally don’t require employers to provide severance, except in specific circumstances such as large-scale layoffs regulated by the Worker Adjustment and Retraining Notification (WARN) Act.
You may be covered by the WARN Act if your company employs more than 100 workers and either closes a plant or conducts a mass layoff. Under this law, employers must provide their employees warning at least 60 days in advance of closures or mass layoffs. If you’re not notified in advance, you may be entitled to two months’ worth of severance pay, possibly including the cost of benefits, such as health insurance.
The Family and Medical Leave Act
Facing a layoff can reasonably cause a lot of stress and uncertainty. As an H1B worker, you are entitled to up to 12 weeks of unpaid leave under the Family and Medical Leave Act (FMLA) for serious health conditions, including mental health issues. This allows you to manage your health without fear of losing your visa status, giving you time to adjust or find new employment.
Moreover, using FMLA leave when facing a layoff can potentially extend your H1B grace period. By requesting to use FMLA to delay your last day of employment, you can buy yourself extra time to change your visa status or secure a new H1B sponsor. In this case, make sure you communicate your needs clearly and keep detailed records to support your FMLA leave.
Cost of Return
If you are laid off before your authorized H1B stay ends, your employer is typically required to cover reasonable transportation costs back to your last foreign residence. The company’s responsibility is restricted to covering the costs of your physical return only and does not extend to relocating your family members or your property.
Your employer should either pay you a sum equivalent to your return costs or provide you with a ticket through their travel agent after you are terminated. They should also offer you a written agreement giving you a reasonable timeframe to accept the payment or travel arrangement.
6. Build a Financial Safety Net
Creating a Layoff Fund
Living and working while in H1B status is not a time to spend excessively. Once you are able, you should aim to keep around 12 months of living expenses in your bank account as a stable financial cushion to help you manage a potential job loss.
This begins with a clear and planned budget that balances your income and expenses. You should prioritize necessary costs such as housing, utilities, and groceries, and track your spending to minimize unnecessary purchase. Budgeting apps can be useful tools for monitoring and adjusting your spending to meet your financial objectives.
Managing Retirement Funds
If you have a 401(k) and are planning to return to your home country, you have a few options for managing your retirement savings. You can leave the funds in the 401(k) until you reach 59 1/2, allowing you to withdraw without penalty, or you can roll the funds over into an IRA. Each option carries implications for your financial future:
- Cashing out early: Early withdrawals from your 401(k) carry financial penalties, attracting a 10% penalty plus taxation as income, regardless of your residence at the time of withdrawal.
- Rolling over funds: Rolling over your 401(k) funds to an IRA will help you avoid the early withdrawal penalty. However, distributions from an IRA before you hit age 59 ½ still incur a 10% penalty unless they qualify for exceptions like unreimbursed medical expenses or first-time homebuyer expenses. Additionally, certain IRAs offer flexibility for withdrawing funds for education expenses without penalties.
If you find a new H1B employer and will remain in the United States, you have several additional options for managing your 401(k) account. In general, you can:
- Leave your 401(k) with your former employer: If you’re satisfied with the investment options and plan fees, you can leave your 401(k) account with your former employer’s plan. However, you won’t be able to make additional contributions to this account.
- Roll over to new employer’s plan: If your new employer offers a 401(k) plan that allows rollovers, you can transfer your old balance into the new plan. This can help keep all of your retirement savings in one place and simplify your finances.
7. Plan to Manage Your Property
If you purchased a home in the United States and are currently paying the mortgage, you will need to plan accordingly, especially if you’ll be leaving the country. Despite facing a loss of your visa status, your ownership of any real estate remains unaffected. You’ll retain the right to own, lease, or sell your property.
If you plan on returning to the United States, you may consider renting out the property to help with mortgage payments. In this case, you’ll be subject to a 30% withholding tax on the gross rental income. This tax applies regardless of your immigration status, and failure to comply can result in a lien on your property. Alternatively, you may consider selling the property if you determine that managing it from abroad will be too challenging or if the financial burden will be too great.
Conclusion
As the tech sector continues to fluctuate, you need to be proactive in safeguarding your career and residency status. Preparing for the worst case scenario by understanding your rights and establishing a financial safety net will help ensure an H1B layoff won’t entirely derail your personal and professional plans.
While losing your job while on an H1B status can be daunting, careful preparation and planning will help you manage your situation with confidence. Remember, each step you take now will enable you to overcome obstacles and approach new opportunities with determination.