The sponsorship of temporary, nonimmigrant work visas and U.S. permanent residence can be a tremendous lure for U.S. employers to attract and retain foreign talent— but it comes with a large price tag. Is a U.S. employer permitted to “claw back” legal fees and costs associated with visa and residence programs, thus shifting the financial burden to the employee? Federal regulations do permit some costs to be clawed back. Others? Not so fast!

Some employment agreements permit clawback provisions that require, in the event of a resignation by the employee by a certain date, the employee to reimburse the employer for a portion of the costs or fees associated with the visa process. For foreign national employees, the employer must carefully navigate the federal regulations to assure compliance with the specific visa or permanent residence process embarked upon by the employer to hire and retain such individuals.

What fees can and cannot be clawed back by a U.S. employer?

Fees that can be clawed back by U.S. employers include:

• Immigrant Petition (I140) Fees – Attorney’s fees and government fees associated with the I-140 petition may be clawed back and/or covered by the foreign national themselves.
• Adjustment of Status (I485) Fees – The employer may claw back legal fees and U.S. government filing fees associated with the I485 adjustment of status fee for the employee and/or their family members. The foreign national employee may also cover these expenses on their own.

Fees that cannot be clawed back by U.S. employers include:

• H-1B Petition Fees – H-1B employers may not claw back any legal fees or U.S. government filing fees associated with the H-1B visa process. Further, if the employer terminates employment early, the employer certifies it will pay the reasonable expenses for the employee’s return transportation to their home country.
• E-3 Australian visas, the Singapore/Chile H1B1 visas, H-2A and H-2B visas – may also not be clawed back by the employer.
• PERM labor certification application for U.S. permanent residency – The Department of Labor forbids U.S. employers from clawing back any costs associated with the PERM recruitment process, which would include attorney’s fees and recruitment costs.

Also Worth Noting

• Clawback provisions should be included, in writing, in a formal contract with the foreign national employee. The provisions should also indicate that employment remains ‘at will.’
• Many states do not permit deductions from a final paycheck without express approval of the employee—this would include fees and costs pursuant to the clawback provisions.
• The result of imposing clawback on foreign employees—and even domestic ones—will deter early departure. For the foreign national sponsored for U.S. permanent residence, there is also the requirement that if sponsored for a green card, the foreign national will work for the employer for a reasonable period after residence is granted. There is no formula for that specific timeframe; however, it would be assumed that the sponsorship is a bona fide one undertaken by both parties, and the foreign national works for employer upon grant of U.S. permanent residence.

The Immigration Team at Tarter Krinsky & Drogin stands ready to advise on both immigrant and nonimmigrant matters