Why Employers Must Handle H-1B Terminations Carefully: Understanding Your Legal Obligations

20 November 2025

U.S. employers who sponsor foreign talent under the H-1B categories often focus heavily on the hiring process, but few realize that the termination process carries equally serious legal obligations. Both the U.S. Department of Labor (DOL) and U.S. Citizenship and Immigration Services (USCIS) impose strict requirements when a foreign worker’s employment ends before the expiration of their authorized status.

Failing to follow these steps can expose employers to significant back-wage liability, legal fees, and DOL investigations—even if the employee has stopped working or has moved on to another job.

Why Termination Triggers Liability

H-1Bs are tied to the Labor Condition Application (LCA), which contains strict wage requirements. Under the LCA’s “no benching” rules, employers must continue paying the required wage unless:

• The employee voluntarily resigns, or
• A bona fide termination occurs.

Simply stopping an employee’s work or removing them from payroll does not end the wage obligation.

What Is a “Bona Fide Termination”?

Although the regulations do not define the term directly, the leading case—Amtel Group of Fla., Inc. v. Yongmahapakorn—makes it clear that three steps are mandatory:

1. Notify the employee of termination

You must clearly and explicitly inform the worker that their employment has ended.

2. Notify USCIS of the termination

This allows USCIS to revoke its prior approval of the petition.

3. Offer (or pay for) the employee’s return transportation home

This applies only to the foreign national employee, not family members, and only for H-1B/H-1B1/E-3 principal workers.

Failure to complete all three steps keeps the employer liable for wages—even if the employee has already stopped coming to work.

Do You Need to Withdraw the LCA?

Surprisingly, withdrawing the LCA is optional under DOL regulations. While some employers do file withdrawals for housekeeping, the absence of a withdrawal does not affect the bona fide termination analysis.

However, employers should be aware that the Ninth Circuit has held that the LCA validity period—not the visa stamp—is what controls the wage obligation period.
See: Persian Broadcast Service Global, Inc. v. Walsh (2023).

When Back Pay Is Cut Off—or Not

Some cases have limited or eliminated back-pay liability when certain events occur:

• Approval of a new H-1B petition by another employer
  • Batyrbekov v. Barclays Capital
  • Jain v. Metromile, Inc.
• Settlement agreements
  • Jain v. Hinge Health, Inc.

But relying on these exceptions is risky, and they are highly fact-specific.

What Does DOL’s Wage & Hour Division Say?

DOL’s Wage & Hour Division (WHD) enforces LCA violations. Their position is clear:

• The employer must take all three steps for a bona fide termination.
• The timing does not change even if the worker is in the 60-day grace period.
• Employers must still send USCIS termination notices for consular E-3 and H-1B1 cases.

WHD acknowledges the confusion but still expects employers to comply as best as possible—meaning you should always send the termination notice.

Why This Matters: Long, Costly Investigations

WHD investigations are notoriously slow and can last months or even years, often requiring employers to produce detailed payroll records, communications, and compliance evidence. Even if the employer ultimately prevails, the legal costs can exceed the cost of:

• A termination letter to USCIS
• A return-transportation ticket

In other words, compliance is far cheaper than defending an investigation.

Practical Tips for Employers

• Document termination clearly and in writing.
• Offer or pay for return transportation, and keep receipts.
• Maintain LCA and payroll files for the required retention period.
• Consult experienced immigration counsel to avoid missteps.

Conclusion

For employers, the biggest risk in terminating an H-1B employee is overlooking the steps required for a bona fide termination. Failure to follow these steps exposes the company to back-pay liability and lengthy DOL investigations.

A simple letter to USCIS—and a plane ticket—can prevent tens or hundreds of thousands of dollars in potential liability.

If your company needs guidance on compliance or handling a termination correctly, our firm is here to help. Contact us here!