Unemployment Compensation: Where does Covid-19 leave Foreign National Employees Laid Off in the U.S.?

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Due to the rapid spread of the COVID 19 pandemic, many US employers have slowed or shut down normal business operations forcing large scale furloughs and layoffs of employees. As a result, state employment offices have received historically high levels of unemployment insurance claims. The following practice advisory serves as general guidance for the eligibility of foreign nationals as they apply for state unemployment insurance.

Background

A combination of federal and state law determine which employees are eligible for compensation, the amount they receive, and the period of time benefits are paid. Unemployment insurance is a joint state-federal program that provides cash benefits to eligible workers. Each state administers a separate unemployment insurance program. Each state promulgates its own standards for unemployment insurance eligibility via statute and state regulation. However, all state standards must also be approved by the US Secretary of Labor. At the time of applying for unemployment benefits, the state unemployment agency must determine what alien status the claimant has at present and what alien status the claimant had at the time they performed services for the employer.

The guidelines for unemployment insurance eligibility are found at 20 § CFR 604.5 where the regulations explain that all workers applying for unemployment insurance benefits must be unemployed “through no fault of their own”, have enough wages earned or hours worked to establish a claim and most relevant for immigration purposes, they must be able and available to work.

Under 20 § CFR 604.5(f), the regulations explain when alien status means in relation to availability to work:

Alien status. To be considered available for work in the United States for a week, the alien must be legally authorized to work that week in the United States by the appropriate agency of the United States government. In determining whether an alien is legally authorized to work in the United States, the State must follow the requirements of section 1137(d) of the SSA (42 U.S.C. 1320b-7(d)), which relate to verification of and determination of an alien's status.

Each applicant for unemployment insurance must be evaluated to see what their alien status is at the time of the application but also what it was during the base period of time the claimant performed services for the employer. Further guidance as to an alien’s availability to work is provided in the analysis of the base period by the Federal Unemployment Tax Act, or FUTA, enacted originally in 1954 as an amendment to the Social Security Act of 1935. FUTA provides that certain requirements must be present in state law before the Secretary of Labor may approve that law for a state’s use. If a state unemployment insurance program is out of conformity with the FUTA guidelines, the Secretary of Labor may withhold federal payments to the state.

FUTA at 26 U.S. Code § 3304(14)(a) provides direction as to which alien statuses are eligible for employment insurance as the time when services were performed, stating:

“compensation shall not be payable on the basis of services performed by an alien unless such alien is an individual who was lawfully admitted for permanent residence at the time such services were performed, was lawfully present for purposes of performing such services, or was permanently residing in the United States under color of law at the time such services were performed (including an alien who was lawfully present in the United” States as a result of the application of the provisions of section 212(d)(5) of the Immigration and Nationality Act)

As a result, all states have passed statutes and regulations mirroring FUTA which places aliens into one of three categories, E.g. California Unemployment Insurance Code - UIC § 1264 (a)(1); Ohio Revised Code ORC § 4141.25(J); New York Consolidated Laws - LAB § 590(a):

(1) Permanent Residents (Green Card Holders);

(2) Aliens who were lawfully in the United States for the purpose of performing services (H-1B, OPT, TN, etc.), and;

(3) Aliens who were “permanently residing in the United States under color of law.”

Eligible as Permanent Residents

Under the FUTA definitions, legal permanent residents are eligible for unemployment insurance benefits.

Eligible under PRUCOL

Those persons “Permanently residing under color of law” (“PRUCOL”) are eligible for unemployment insurance benefits. Persons falling into this category include: (1) Refugees; (2) Immigrants who have been granted political asylum; (3) Immigrants who have been “paroled” into the US. (This is not “parole” in the sense of on “parole” from a criminal conviction, but a different kind of parole given for humanitarian reasons); (4) Immigrants who have received “withholding of deportation;” (5) People who are “conditional entrants” into the US (this is a category that was used before 1980 to describe refugee status); (6) Cuban/Haitians who have been granted parole, applied for asylum or have not received a final order of deportation; (7) Immigrants who have been notified in writing by the DHS that deportation action will not be taken against them or that deportation is indefinitely delayed; (8) Certain immigrants presumed to have been lawfully admitted for permanent residence under 8 CFR 101; or (9) Immigrants who have been granted a lawful immigration status that allows them to remain in the US for an indefinite period of time.

PRUCOL is a broad category, and each case needs to be evaluated at an individual level to ensure eligibility.

Foreign Nationals who are lawfully in the United States for the purpose of performing services

In the area of employment-based immigration, the most commonly asked question among employers and employees is in regard to the second category above. Who are the persons in the United States on a visa for the purposes of performing services?

Not Eligible for Unemployment Compensation

If a foreign national was working on one of the temporary visa types listed below during the base period, their employment authorization was tied to one specific employer and they are not available to accept employment under the rules for unemployment compensation:

CW-1, E-1, E-2, E-3, H-1B, H-1C, H-2A, H-2B, H-3, I, L-1A, L-1B, O-1, O-2, P-1A, P-1B, P-2, P-3, P-4, Q-1, R-1 and TN.

All states have an appeals process for unemployment claims, and the State of New York has found TN holder’s ineligible in the case of Matter of Commissioner of Labor, 46 A.D.3d 1065 (3rd Dept. 2007) (redacted); and In re Claim of Graif, 250 A.D.2d 1012 (3rd Dept. 1998). Because of the scale of the COVID-19 layoffs and furloughs, it is likely that intrepid attorneys around the United States may make further challenges along these lines in the future months, so case law in this area may evolve rapidly.

Possibly Eligible for Unemployment Compensation

A handful of non-immigrant work visas do not require the visa sponsorship of a specific employer before work can begin following the termination of their prior employment. Therefore, they are arguably eligible for immediate employment with another employer and qualify for unemployment compensation. The visas with the strongest claim for unemployment eligibility in this category are the F-1 (with OPT) and M-1 (with OPT) and J-1 exchange visitors.

OPT beneficiaries may or may not be immediately available to immediately take on new employment depending on the type of OPT they hold, the timing of their claim and possible interpretations of state law concerning the definition of “available” in the unemployment benefit context. For example, OPT status ends after 90 days (120 days for STEM OPT) of unemployment. In such situations, the foreign national is no longer available to accept employment on OPT even if their underlying F-1 visa status is still valid. Such foreign nationals would arguably not be eligible for unemployment benefits after the 90/120 unemployment period.

STEM OPT holders present another interesting scenario that may require additional analysis at the state level. STEM OPT requires that the sponsoring employer participate in the E-Verify system and that the student submit a form I-983 with their DSO before commencing STEM OPT employment. A case such as this could raise not only issues of availability to them but also questions of suitability, as claimants are not required to be available for work that they are not reasonably fitted for. A case by case analysis by an attorney versed in state employment law and procedure is strongly advised when determining scenarios where an OPT holder is eligible for unemployment benefits.

Eligible with a Work Authorization Document (EAD Card)

Some employees are permitted to work based on an employment authorization document (EAD card). The EAD card is often issued to people who have filed for but not yet received approval of a permanent resident card (green card). Many spouses who accompany another visa holder (i.e. a spouse accompanying an H-1B holder) is eligible to work in the United States after obtaining and EAD card, such as H-4, L-2 or J-2 visa holders. Counterintuitively, an H-4 visa holder may be eligible for unemployment compensation where their spouse, holding an H-1B visa is not eligible.

Determination of Eligibility at the State Application Level

The definition of alien status under 20 § 604.5(f) provides the state agencies with both a legal framework to determine which category visa holders are immediately available to accept work after a termination and a practical way to filter out those foreign nationals who are not qualified for unemployment insurance at the individual applicant level. 20 § CFR 604.5(f) directs the states to use the requirements of section 1137(d) of the Social Security Act (42 U.S.C. 1320b-7(d)) to verify an alien’s eligibility for unemployment benefits. This section of the Social Security Act establishes the system for verifying social security numbers before distrusting benefits called the Systematic Alien Verification for Entitlements system (SAVE). As it stands today, SAVE is a computer interface where state officers can enter an alien’s information, and the system will provide a response as to the alien’s eligibility for the benefit requested. The states are then directed to make their own determinations as to eligibility using the parameters listed above.

Unemployment Benefits and the Public Charge Ground of Inadmissibility

Unemployment benefits are not considered a public benefit that would negatively impact adjustment of status. See USCIS Policy Manual, Chapter 10, B. 1. The reasoning for this treatment is that unemployment benefits are considered earned benefits See 84 FR 41292. Benefits received or even claimed but not received should not be weighed against applicants for adjustment of status absent a finding of fraud or other impropriety.

Conclusion

While determination of eligibility for unemployment benefits are made on a case by case basis, the framework above can be applied as a predictor of how a claim filed by an alien will be treated in any given scenario.


About The Author

Matthew Nierman is an Associate Attorney at the Cincinnati office of Hammond Law, LLC. His practice focuses on employment-based immigration solutions for medical, IT and academic professionals.


The opinions expressed in this article do not necessarily reflect the opinion of ILW.COM.