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The process used by employers to maximize the F-1 student’s retention requires three major steps. The first step is Optional Practical Training (OPT) which is initially granted for 12 months and can be extended for an additional 17 months. The OPT is done by the students and the university and is granted with an Employment Authorization Document (EAD) which is issued by the Immigration Service. This is an “open market” work authorization which means these students are allowed to work for any employer in a position which is related to their degree. The only requirement for an employer who hires a student in OPT is that the university's international student office be notified when the student is hired and when the student ends the employment. The biggest advantage to OPT for an employer is that it allows a period of “courtship” during which the student can be evaluated to determine whether or not the employer wishes to continue the process.
If the employer decides to retain the employee, the next step is the H-1 petition for change of status. During this process the employer will file a petition on behalf of the international student to change their status from F-1 student to H-1 professional/technical employee.
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The third and final step of the employment relationship is referred to as permanent residence (“green card”). This process requires three essential steps. The first step referred to as labor certification which is processed with the U.S Department of Labor. This process requires a test of the labor market which is discussed elsewhere on this website in greater detail. The second step of the "green card" process is referred to as a petition and with most companies will simply be a ministerial act. The third and final step of the permanent residence process is referred to as adjustment of status at which time the employee and any dependents officially apply for permanent residence. Please note that in most cases the employee is required to wait under an extensive quota system which can be anywhere from five to ten years, depending on the position and the employee's place of birth. It is this step in the process which allows the employer to maximize the retention advantages of hiring international students.
Required fees include:
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Many employers refuse to consider F-1 students for employment because they have heard that it is too expensive. Although it is true that the employer must pay certain out-of-pocket expenses to hire and train F-1 employees in this context, the employer should also evaluate these costs against the value of retention.
The employer is required to pay certain filling fees during the H-1 change of status and extension process. In addition, the employer is required to pay the attorney’s fee and expenses during the labor certification process which is the first of the three step green card process. As a general rule, these costs will total approximately $8,000 over the course of employment for the F-1 students.
Since the legal system requires the international employee to keep the same employment for seven to twelve years, the “cost” of that employee should be viewed in the greater context of the value that employee brings to the company.
As an example, assuming that the employee will be paid an average of $60,000 over seven years, the cost to the employer is $430,000 (plus benefits) plus the $8,000 for the immigration process. Obviously, the out-of-pocket expenses are minor compared to the overall compensation.
In return, the legal system requires the international employee to remain with the employer until the permanent residence is granted, taking more than seven years depending on the position held by the employee and his or her country of birth.
In addition, there is a period of time early in the employment relationship, usually during the first two or three years, when the international employee may legally change employers assuming that he or she can find another employer who is willing to sponsor the H-1 petition and start the entire permanent residence process from the beginning. In these situations, the government specifically allows the employer to enter into an initial liquidated damage agreement in which the employee agrees to pay a pre-determined amount if he or she leaves within a specified period of time. By doing this, the employer is protected from the international employee leaving employment during the first two or three years and, of course, if the employee remains throughout the permanent residence process, the employer benefits from the retention of that employee for the next decade. In short, there is very little financial liability for an employer who hires an international student and “sponsors” that student through the permanent residence process even if that employee decides to leave the company prior to completing the process. Most importantly, by the end of the fourth year of H-1 status, the H-1 employee must either finish the case with that employer or leave the U.S. There is no other option.
Employer assumes almost no liability, can terminate employment at any step in process
2 main obligations of employer to student
Note: Employers seeking to pay employees sub-standard wages should not consider hiring international students
Many employers have heard stories about the liability attached to the immigration process for F-1 students who become international employees. However, this is one of the areas which is most misunderstood by employers and the public.
To the question of how much liability an employer assumes in the immigration process, the short answer is almost none. The employer is free to terminate the employment of a student in OPT, an H-1 employee or an employee in the permanent residence process at any time. There is no agreement to continue employment nor is there any agreement to continue the immigration process. The student/employee has no legal authority to force the employer to continue the employment or the immigration process and is subject to termination for any lawful reason at any time.
Obviously, in dealing with the federal government there must be some obligation on the part of the employer. Those obligations are quite simple: First, the employer must pay the prevailing wage established for the H-1 while the international employee is working for the company and second, the employer must offer to pay the return transportation for the employee to his or her country if the company ends employment. Note that the vast majority of the employees in this situation do not return to their home country but seek additional H-1 sponsorship. Therefore, it is rare for a company to actually pay for the employee's return transportation. Furthermore, if the employee leaves voluntarily there is no obligation on the part of the employer to offer the return transportation.
One additional obligation which is related to the H-1 prevailing wage issue is that the employer must agree to pay the prevailing wage as established during the permanent residence process at the time the employee receives his or her green card. In some cases the prevailing wage for the green card, established during the labor certification stay is much higher than the current salary. However, this “prevailing wage” does not have to be paid until many years later when the green card is issued.
Finally, in reference to the compensation paid to the employee, it should be noted that employers who are seeking to pay employees sub-standard wages should not be considering international students for employment in the first place. The advantage to hiring international students is not saving on compensation or out-of-pocket expenses. In fact, it is clear that hiring international students will increase the cost to the employer for that particular employee. However, this cost is offset many times over by the legal system’s requirement that the employee stay with the sponsoring employer for many years, assuming the employer has a continued need for the international employee.
Not all companies have issues with employee retention, but for those that do, hiring F-1students is an effective option to retain long term, highly qualified employees. This is true across all industries from accounting to technology.
The important aspect of hiring F-1 students is that their commitment to a particular employer is dictated by the legal system as opposed to an agreement or contract. In fact, it is the international student who must remain committed to the employer, whereas the employer has no obligation whatsoever to initiate or continue the employment. Therefore, the student must be able to complete all of the steps necessary to become a permanent residence based upon the sponsorship of the employer, but the employer is free to terminate the relationship at any time for any lawful reason.
As mentioned on this website, the average F-1student must remain with the employer for at least seven years and in many cases up to twelve years. In addition, the international employee is committed to the company since his or her ability to remain in the United States, especially after a certain point in the process, depends entirely on that employment.
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The average US college graduate leaves his or her first job after graduation in less than two years. Due to requirements of the immigration process in the U.S. international students are required to remain with an employer for approximately 7-12 years to obtain permanent residence.
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The employer is free to stop the immigration process, terminate the employment or otherwise stop the relationship with the international employee at any time and for any lawful reason. The international student takes all of the risk and must depend on the job offer being available throughout the entire 7-12 year period in order to complete the process.
The employer can protect its financial investment by entering into a liquidated damage agreement with the employee at the beginning of employment. If the employee leaves during the first several years of employment, which means the international employee must find another H-1 and permanent residence sponsor or return to school, than the employer has a legally binding agreement which can be enforced.
Companies in almost every industry in the U.S. utilize international students as employees, based primarily on the retention advantage as well as the fact that most of the highly qualified students in many degree areas are F-1 students.
If your company has little problem with employee retention or finding the qualified, long term employees that it needs to be successful, the immigration process should not be a consideration.
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David Swaim: jds@tsalaw.com