A Pay-Cut Could Mean "Part-Time" for H-1B Workers

Across Silicon Valley and the rest of the U.S., many employers are avoiding layoffs by reducing employee hours or by cutting salaries. However, H-1B visa holders, and their employers, can run afoul of U.S. immigration laws if the salary is cut without a corresponding reduction in hours.

An H-1B employer must attest to the Department of Labor, that the employer is paying the H-1B employee the higher of either: 1) the prevailing wage for the same occupational classification in the same area of employment, or 2) the actual wage level paid by the employer to all employees with similar experience and qualifications for the same job. When submitting the H-1B petition, the employer must state the number of hours per week that they will employ the H-1B worker. So if the prevailing wage for a software engineer in the San Jose metropolitan area is $40/hr., then for a full-time job the annual salary would be $83,200. This would be the minimum that the employer would need to pay annually, and an employer could always pay more.

Suppose your Palo Alto employer informs you that all professionals are taking an across-the-board 15% pay cut. If the prevailing wage for your job is $83,200, a 15% pay cut would lower your salary to $70,720. If your employer started paying you only $70,720 annually while you were still working full-time, your employer would be violating the H-1B regulations, and you could be in violation of your H1-B status. However, if your hours were reduced to only 34 hours per week, then at $40/hour you would earn $70,720 annually. Therefore, an employer and its H-1B employee could properly follow the H-1B regulations by reducing the employee's hours enough to still comply with the prevailing wage. Of course, in this example, the H-1B employee would only be able to work 34 hours per week.

Some H-1B workers are fortunate enough to be paid well above the current prevailing wage. If those employees take a pay cut, and all similarly situation employees take a pay cut, they may still earn above the prevailing wage. In those cases, an employee would not need to take a corresponding reduction in hours.

With an H-1B, it may not be enough to simply reduce the employee's hours to the corresponding wage. Depending upon the specific facts, an employer may be required to also file a new Labor Condition Application with the Department of Labor and may also be required to file an amended H-1B petition. Employers should check with an immigration lawyer when reducing the salary of an H-1B worker.

H-1B Visas / by Michelle Gee