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I am an employer and may need to furlough, reduce the working hours, or reduce salaries of my staff. Can my L-1 employees work part-time? Can they be furloughed?

By April 28, 2020March 29th, 2021COVID-19

Covid-19 has changed the rules for travel, engagement and employment. Many companies have started to reduce wages and put staff on leave, and some companies have reduced hours or terminated employees.

Employers are facing difficult questions about how to proceed in light of Covid-19, including how to handle reduced schedules or furloughs for employees with work visas. For certain visa categories such as H-1B and E-3 visas, there are wage obligations that can make it more difficult to take steps such as reducing wages, or furloughing employees. However, employees on other work visas, such as the L-1, E-1, E-2, O  or TN visa, are not subject to the same strict wage obligations.

If my employee is on an L-1 visa, can their hours be reduced? Can they work part-time?

The most important consideration for an L-1 employee is whether they are still performing the job duties that classify them as an executive, managerial or specialized knowledge employee. For example, if the employee was working as a specialized knowledge worker in an engineering role, the employer could not transfer the employee to another department to do purely administrative work and continue to employ them. However, if the employee’s hours and/or salary are temporarily reduced but the job duties remain the same and there is an expectation that the role will resume as normal in the future, the temporary reduction in hours or wages would be allowed. If the change to part-time work would be permanent, then the employer could consider filing an amended L-1 petition to update U.S. Citizenship & Immigration Services on the changes to the terms and conditions of employment.

What about unpaid leaves of absence? Can L-1 employees be furloughed?

L-1 employees are allowed to take voluntary leaves of absence, for example, for parental leave, sick leave, to take care of an ill family member or for other personal reasons. If your company authorizes a voluntary unpaid leave of absence this should be documented in the employee’s personnel file and the period of absence should be reasonable. If the leave of absence is an involuntary leave of absence required by the employer and the employee is no longer performing any work for the employer, this could be an issue, as the L-1 employee is arguably not maintaining their L-1 status. L-1 visa holders whose employment ends are eligible for grace periods of up to 60 days. If the L-1 employee is in the U.S. in their grace period and you are able to hire them back under the same terms and conditions as outlined in the L-1 application, this would arguably be permitted as long as the underlying L-1 petition was still valid.

Can I decrease L-1 employees’ salaries?

Immigration regulations require that companies file amended petitions to reflect any material changes in the terms and conditions of employment or the alien’s eligibility as specified in the original approved petition. The salaries of L-1 employees are disclosed in the L-1 petitions that are submitted to USCIS and  USCIS may look at the salary as one of the factors when assessing whether the employee qualifies for the L-1A (manager/executive) visa or L-1B specialized employee visa.

For example, if your employee was coming to the U.S. as an executive, and his/her salary was $30,000 per year, USCIS could question whether he/she is coming to the U.S. to perform executive duties. However, in contrast to the H-1B visa, employers sponsoring L-1 employees are not required to submit a Labor Condition Application (“LCA”) for the L-1 visa and are not required to pay the L-1 employee a particular wage.

What happens if your company indicated in the L-1 petition that it will be paying an L-1 employee $150,000 but now needs to decrease the employee’s salary?

As discussed above, there is an argument that if the decrease in the employee’s salary is only temporary and the job duties remain the same, this is not a material change and therefore does not require the employer to file an amended L petition. However, if the change in salary is long-term or permanent and would be material (e.g. the employee’s salary decreased 80%), the company should consider filing an amended petition.

You can find key immigration information related to the Corona Virus below.

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