Non-Compete Agreements/Restrictive Covenants For H-1B Visa Holders, And Other Alien Workers

Alien Worker Non-Compete Agreements - In General
Alien workers and their employers who negotiate non-compete agreements/Restrictive Covenants have several issues to consider in addition to those that apply in normal circumstances. In many instances, an alien’s ability to remain in the United States or change employers (Port) under AC21 is dependent upon the alien’s ability to maintain his visa status by remaining employed by the sponsoring employer. Upon losing the sponsoring employment, an alien may go out of status or have a break in his visa status.

A non-compete agreement that does not permit an employee to work in the same or similar position for another employer may effectively preclude the affected alien from remaining in the United States. When an alien-employer seeks to transfer his/her work visa to another employer, he/she must often show that his transfer is to the same or similar position with the new employer. Where a non-compete agreement precludes the alien employee from accepting such a position, he/she may have significant difficulty transferring his/her visa to a position that is not similar.

Additionally, non-compete agreements frequently have a clause that precludes certain types of employment for a duration. For most employment visa holders, any break in employment may result in the loss of visa status. An alien with an employment visa who remains unemployed for the time specified in the non-compete agreement is likely to lose his/her visa status.

Alien Worker Non-Compete Agreements - Loss of Visa Status And Portability
An abrupt termination of the employment relationship and inability to immediately accept similar employment elsewhere will likely result in a loss of immigration status for visas that are linked to specific employment status such as the H-1B, L-1, J-1 and E-3 visa. For H-1B visa holders and I-140/I-485 applicants, a disruption of employment may cause the alien not to be able to port either the I-140/I-485 petition or H-1B visa. With the loss of non-immigrant visa status, an alien may be placed in deportation or removal proceedings, terminating his ability to remain in the United States.

Alien Worker Non-Compete Agreements - Employer Payment of Deportation Costs
Where the termination of an H-1B visa holder occurs and the alien is unable to accept similar employment elsewhere to transfer his visa, he may be deported at the U.S. government’s expense. The terminating employer may be responsible for all of the deportation costs resulting from the termination of that alien’s employment.

Special Considerations In Negotiating Alien Worker Non-Compete Agreements
In negotiating a non-compete agreement where the employee-alien is on an H-1B visa or has a green card petition (I-140/I-485) pending, the employer and alien employee should consider the following:

  • Whether the non-compete agreement is so restrictive that it will essentially preclude the alien from obtaining similar alternative employment upon termination resulting in the loss of the alien’s immigration status by precluding a visa transfer.
  • Whether the duration of the restriction is so long that a significant break in employment status will result causing the alien visa holder to go out of visa status.
  • Whether the alien’s visa status will end as a result of the termination and whether the employee can remain in valid immigration status long enough to secure other employer to which his/her visas can port.
  • In I-140/I-485 portability cases, a determination should be made whether the I-140 is approved and whether the I-485 has been pending for 180 days to facilitate AC21 portability of the green card petition.
  • Whether a mutual accommodation can be reached by the employer and employee to avoid possible loss of visa status by the employee and eliminate the likelihood of the employer’s liability for deportation/removal costs in the event that the alien is removed.

Non-Compete Agreements - Protecting The Alien Worker And His Employer
Where possible, the employer and employee can negotiate an agreement that benefits both parties. The employer may obtain a non-compete agreement wherein the employee agrees to give up additional rights. In return, the employer may agree to modify the non-compete agreement to permit similar alternative employment where employment is terminated without notice. The employer may also shorten the period of the restriction in exchange for an amount from the alien employee in liquidated damages.

Drafted carefully and cooperatively, such a non-compete/restrictive covenant may provide adequate protection to the employer as well as the employee whose stay in the United States does not terminate as a result to the termination of his/her employment.

In addition to these considerations, please review a discussion of [Non-Competes/Restrictive Covenants] in general terms for an overview of the entire process.