Q: I run a small software development business. Last summer, we had an intern from China who was absolutely fantastic. She is studying engineering at a local university and plans to graduate this spring. We would love to offer her a permanent position. She has asked us to sponsor her for an H-1B visa. We would love to do this for her but are unsure of any legal or tax consequences of doing so. Can you help us out by providing some basic information?
A: The whole subject of visas for international students is extremely complicated. There are numerous work visas available to students before and after they graduate, but the U.S. Department of Homeland Security (the agency that issues these visas) keeps changing the rules just about every year.
The bottom line here is that you should consult with an immigration lawyer. This area of the law is extremely specialized, and I doubt that the lawyer who handles your business's corporate law matters will know what to do, although I suspect he or she can refer you to someone who can help.
Having said that, here are a few basics.
The H-1B visa is a nonimmigrant visa allowing U.S. employers to hire a foreign worker for a specialty occupation for a temporary period, as long as the worker has a bachelor's degree or its equivalent. Specialty occupations are mostly those in the STEM fields (science, technology, engineering and mathematics). But interestingly, fashion models can qualify for this visa as well: The bachelor's degree requirement is waived if a model is "of distinguished merit and ability." You gotta love the government.
The duration of stay under this visa is three years, extendable up to six years. It also gives the foreign worker an opportunity to participate in the annual "green card lottery" by marrying a U.S. citizen, having a child in the U.S., or doing other things that might qualify them for an immigrant visa.
Generally, the employer of an H-1B visa candidate sponsors the worker by petitioning the Department of Homeland Security on his or her behalf, filling out the application forms and paying the filing fees. The process of obtaining an H-1B visa can take up to several months and may cost up to several thousand dollars depending on the candidate's individual circumstances.
When making an offer of employment to an H-1B candidate, you would use the same offer-letter form you would give to a U.S. citizen, with a few modifications. Your biggest concern will be how to prevent the worker from quitting and going elsewhere once he or she has obtained the H-1B visa you have laboriously worked to obtain.
There are a number of accepted ways to deal with that scenario, but the most common is to require the worker to pay you liquidated damages if he or she leaves voluntarily (or is terminated "for cause") during a specified period of time after you have applied for the H-1B visa. The rules for H-1B visas allow you to impose such damages as long as they are reasonably related to the costs you incurred while obtaining the visa, and as long as they're not a penalty designed to hold the worker in a condition of involuntary servitude.
In a recent case, the U.S. Department of Labor upheld an offer letter clause requiring an H-1B employee to pay damages of $10,000 if he or she quits during the first six months of employment; $7,000 during the next six months; $4,000 for the next six months; and $3,000 for the next six months, where these amounts were based on the following considerations:
—Damage to the employer and its need to protect its overall investment and interest as a going concern, and investment of the company in securing the services of the employee.
—Direct and indirect costs incurred when bringing an H-1B employee to the U.S., and the amount of profits expected to be derived from the employee ($1,000 per worker per month).
—The market perspective value of such employees to other employers, as other employers may seek to hire such employees away from their current employer and pay the employee's damages.
The "liquidated damages" clause should not apply if the foreign worker is terminated by the employer without cause. It may be invoked if the worker is terminated for cause as defined in the offer letter.
An employer should also consider provisions allowing for termination of the employment relationship if:
—The application for the H-1B is denied or delayed.
—The federal government changes the rules for H-1B visas in such a way that it is no longer feasible for the employer to continue the sponsorship (this determination should be made in the employer's sole discretion).
If the H-1B worker will have access to sensitive technology, he or she should also sign certain restrictive agreements, such as confidentiality, nonsolicitation and intellectual property assignment, just like any other employee.
Cliff Ennico ([email protected]) is a syndicated columnist, author and former host of the PBS television series "Money Hunt." This column is no substitute for legal, tax or financial advice, which can be furnished only by a qualified professional licensed in your state. To find out more about Cliff Ennico and other Creators Syndicate writers and cartoonists, visit our Web page at www.creators.com.