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I am in the U.S. on E-1 treaty trader/E-2 investor visa. Can I furlough my E-1/E-2 employees? Can I reduce working hours or reduce salaries of my E-1/E-2 employees?

By May 6, 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 significantly 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.

Can I reduce hours of my E-1/E-2 employees? Can my E-1/E-2 employees work part-time?

There are 2 categories of employees that can come to the U.S. and work for the E-1/E-2 company:

(i) E-1/ E-2 supervisor/manager/executive employee

(ii) E-1/ E-2 essential/specialized employee

There is no specific requirement in the immigration regulations that the E-1/E-2 employees work for the U.S. entity full-time. The immigration regulations indicate that a “treaty employee may engage only in employment which is consistent with the terms and conditions of his or her status and the activity forming the basis for the E treaty status.” In addition, the regulations indicate that “prior approval must be obtained where there will be a substantive change in the terms or conditions of E status.”

If the change to a part-time employment is only temporary, the E-1 employee/E-2 employee is still performing the job duties that classify his/her as an executive, managerial or specialized knowledge employee, 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. It is very important that the E-1/E-2 employee keeps performing job duties that qualify him/her for the E visa: for example, if the employee was working as a manager, you could not transfer the employee to another department to do purely administrative work and continue to employ him/her.

If the change to part-time work would be permanent, then the employer should consider filing an amended E petition to update USCIS on the changes to the terms and conditions of employment/send the employee to apply for a new E visa at a Consulate that would reflect the new terms and conditions of the employment.

What about unpaid leaves of absence? Can E-1/E-2 employees be furloughed?

E-1/E-2 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 E-1/E-2 employee is arguably not maintaining their E status. E-1/E-2 visa holders whose employment ends are eligible for grace periods of up to 60 days. If the E-1/E-2 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 E-1/E-2 application, this would arguably be permitted as long as the underlying E petition was still valid.

Can I temporarily decrease the E-1/E-2 employee’s salary?

The salaries of E-1/E-2 employees are disclosed in the E-1/E-2 petitions that are submitted to USCIS/to the Consulate and USCIS/consulate may look at the salary as one of the factors when assessing whether the employee qualifies for the supervisor/manager/executive E-1/E-2 employee visa or the essential/specialized E-1/E-2 employee visa. For example, if your employee was coming to the U.S. as a Chief Operating Officer, and his/her salary was $20,000 per year, USCIS/the Consulate 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 E-1/E-2 employees are not required to submit a Labor Condition Application (“LCA”) for the E visa and are not required to pay the E-1/E-2 employee a particular wage.

What happens if the company indicated in the E-1/E-2 petition that it will be paying the E-1/E-2 employee $150,000 but now needs to decrease the salary due to the Corona virus outbreak?

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 substantive change and therefore does not require the employer to file an amended E-1/E-2 employee 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/sent the E-1/E-2 employee to apply for a new E visa at a Consulate.

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

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