Advice on threatened Liquidated Damages for H-1B employer in offer letter: Not signed offer letter yet

[Chicken7585 36]

I have received a offer for H-1B employment with an employer where I will be a consultant ultimately working at a local client site. I have not signed the offer letter yet. I have never worked as a "consultant" before - always directly employed by a company. 

 

The following two sections of the offer letter seem bizarre and/or very onerous. Does anyone have experience with working with such a contract? I have told the employer that I have no intention to sign this till I am satisfied with how they have arrived at these numbers.

 

 

Quote

 

3. Termination and Relocation: You agree to provide <<EMPLOYER>> with four (4) weeks advance notice of termination and, <<EMPLOYER>> may agrees to provide you with two (2) weeks advance notice of termination of employment except in cases of termination by <<EMPLOYER>>  CONSULTING  &  SERVICES  due  to  your  willful  misconduct  or  non-performance  or  if  the termination of your employment takes place at a time when you are not billing on a project.

 

You will promptly comply with <<EMPLOYER>>. Instructions concerning relocation to or from a customer site as and when applicable.   In the event you resign  or your employment is terminated for cause (such as non-performance, non-compliance with <<EMPLOYER>> policies etc.) within eighteen (18) months after either the start date or your relocation to a customer site, you agree to repay in a) other advances paid to you or reimbursed by <<EMPLOYER>> b) a sum (as liquidated damages and not as a penalty) equal to Dollar Ten Thousand.   You authorize the deduction and withholding of such repayment in full from any compensation or other amounts owed or payable to you. Moreover, if you terminate your employment without  providing  the required  advance  notice  or  you  refuse  to  report  for  work  (after  your  initial consent) in accordance with <<EMPLOYER>> relocation instructions, you agree to be responsible to <<EMPLOYER>> for any cost or damage it urs as a result of such action or omission, including but not limited to the loss of a contract with a client, costs or loss associated with extended deadlines, free billing to the client, and the like.

 

 

4.  Liquidated Damages:  Employee acknowledges that the Company will make a substantial investment of time, money and resources and preparing Employee’s work assignment, and that the Company will incur significant expense in connection therewith, including but not limited to, recruitment expenses, travel and relocation expenses, housing and lodging expenses, training expenses, legal expenses, and other expenses incurred in connection with applications for an H-1 visa, if applicable.  Additionally, the Company has invested considerable time and money in locating worksites for Employee and will lose tremendous amounts of money if Employee prematurely cancels this contract and Employer is not able to place a suitable replacement for Employee at the worksite.

 

The Company is prepared to make this in investment in you and incur these expenses in specific reliance upon your express promise and representation that you will remain in the employ of the Company for a period of at least the length of time to complete 18 months.  A billable hour shall be defined as time reported on Employee’s timesheet and for which Employee actually worked.   The Company would not and will not be prepared to enter into this Agreement if you do not or did not make that representation and promise.  If you terminate your employment with the Company prior to the completion of 1 year, the Company would suffer economic loss consisting of the expenses set forth above as well as lost revenue. The parties agree and acknowledge that in the event that the employee terminates this Agreement prior to the completion of 18 months, damages would be difficult to accurately ascertain and the parties agree and acknowledge that the amount of $25,000.00 (twenty- f i v e Thousand Dollars) is a fair and reasonable sum that best approximates the damages that the Company would incur in the event of the employee's breach of this provision.

 

 

[Grant PDX 183]

Sounds way beyond a reasonable amount.  Unless that's equivalent to a couple of week's pay.  If it is, congrats, if not... I'd say no way to those clauses, or the whole thing.  Assuming it's months of pay, the employer seems to hold all the cards and it is extremely onerous.

 

Good luck.

[SusieQQQ 11,586]

I’ve never in nearly 30 years of working heard of any financially punitive implications of resigning, and I’ve known plenty of people who work for (reputable) consultancies. 

Those numbers are big and yes unless that’s like less than a months pay, almost verges on indentured labor. That’s even apart from the fact that normally the notice period is the same for both employer and employee, not lopsided like it is here. I don’t see any exceptions for things like unacceptable working conditions or any other kind of situation that a reasonable person would resign for. Looks like a situation ripe for - even designed for - exploitation of the employee.

 

sounds like you may have got yourself involved with a visa mill? Most companies who sponsor H1B visas happily wear the full cost themselves without threatening their employees. Personally I wouldn’t touch this company with a barge pole. 

Edited March 8, 2018 by SusieQQQ

[Coco8 1,042]

That is very strange.  The only thing I've heard of is that if a company gives you money to relocate (let's say, 5,000 cash or reimbursement for moving company, etc.) and you resign in less than 12, you have to repay that sum money they gave you.

 

The wording on the contract is also odd because there are 2 ways of counting the 18 months. Usually, in contracts, they add a sentence mentioning what happens if one way of counting is 18 months and the other is less than 18 months. 

 

Also, 25,000 is too much. That is more than the costs of putting together the H1B. Plus, my understanding is that it is illegal for an employee to pay for the costs of an H1B visa so technically they would be making you reimburse them for it if you resign (if I understand correctly).

Edited March 8, 2018 by Coco8

[geowrian 22,337]

I'll preface my response by pointing out that I am not an attorney and have not personally participated in a contract with said provisions.

 

In almost every state, working is considered "at-will" or some similar form of it. The specifics do matter here. Anyway, the point is the company entered into an agreement with the worksite, and holding you personally and financially accountable to their commitments does not follow that model. A company can, in exchange for some benefit, provide services as an investment in you as an individual so that you can use those at your workplace...and then in some circumstances require compensation if you do not meet a minimum commitment. For instance, my company provides tuition assistance, but it is conditional on a certain minimum grade and competition of the course(s). If you choose to terminate the employment agreement before the end of a reimbursed semester (or are fired for due cause), then you are required to provide repayment of those benefits. But something like trying to apply this to their recruitment efforts, their efforts to find a worksite, legal costs, etc. just does not hold up. Even training that they conduct would generally not qualify either. Maybe there is an argument with the housing and relocation side of things...that I don't know how it is viewed.

 

Legal fees and expenses incurred as a result of the H-1B process generally fall under USCIS and/or DOL regulations. Certain aspects of it (the largest fee sections) are prohibited from being paid by the beneficiary. They could get in trouble (fines or a suspension) for violating that. In some circumstances, they can deduct other costs from a paycheck so long as it does not fall below the prevailing wage. Given that most H-1B cases already tend to err on the side of paying as close to the prevailing wage as possible (especially through an agency), trying to recoup any of that would be a challenge IMO. Basically, trying to charge you for any H-1B process other than your own visa related fees can be a liability for them if the DOL is informed.

Some other info on this aspect: http://www.immig-chicago.com/h-1b/h-1b-who-pays-the-fees/

 

Beyond that, I'd be hard-pressed to find an employer try to actually enforce these kinds of provisions. While the above may be their policies, until they actually try to act on it, they haven't violated anything AFAIK. It seems more like a threat. That said, I'd be very wary about employment with any organization that tried to force agreement to these terms...it rubs me the wrong way and would make me feel like just a pass-through money source.

Edited March 8, 2018 by geowrian

[SusieQQQ 11,586]

4 minutes ago, geowrian said:

I'll preface my response by pointing out that I am not an attorney and have not personally participated in a contract with said provisions.

 

In almost every state, working is considered "at-will" or some similar form of it. The specifics do matter here. Anyway, the point is the company entered into an agreement with the worksite, and holding you personally and financially accountable to their commitments does not follow that model. A company can, in exchange for some benefit, provide services as an investment in you as an individual so that you can use those at your workplace...and then in some circumstances require compensation if you do not meet a minimum commitment. For instance, my company provides tuition assistance, but it is conditional on a certain minimum grade and competition of the course(s). If you choose to terminate the employment agreement before the end of a reimbursed semester (or are fired for due cause), then you are required to provide repayment of those benefits. But something like trying to apply this to their recruitment efforts, their efforts to find a worksite, legal costs, etc. just does not hold up. Even training that they conduct would generally not qualify either. Maybe there is an argument with the housing and relocation side of things...that I don't know how it is viewed.

 

Legal fees and expenses incurred as a result of the H-1B process generally fall under USCIS and/or DOL regulations. Certain aspects of it (the largest fee sections) are prohibited from being paid by the beneficiary. They could get in trouble (fines or a suspension) for violating that. In some circumstances, they can deduct other costs from a paycheck so long as it does not fall below the prevailing wage. Given that most H-1B cases already tend to err on the side of paying as close to the prevailing wage as possible (especially through an agency), trying to recoup any of that would be a challenge IMO. Basically, trying to charge you for any H-1B process other than your own visa related fees can be a liability for them if the DOL is informed.

Some other info on this aspect: http://www.immig-chicago.com/h-1b/h-1b-who-pays-the-fees/

 

Beyond that, I'd be hard-pressed to find an employer try to actually enforce these kinds of provisions. While the above may be their policies, until they actually try to act on it, they haven't violated anything AFAIK. It seems more like a threat. That said, I'd be very wary about employment with any organization that tried to force agreement to these terms...it rubs me the wrong way and would make me feel like just a pass-through money source.

Good points.

 

re the bit about wondering if it would be enforced - it’s not clear from the original post, but if the contract is signed in India it may be enforceable there despite the contradictions to US law and practice that you point out.

[geowrian 22,337]

4 minutes ago, SusieQQQ said:

re the bit about wondering if it would be enforced - it’s not clear from the original post, but if the contract is signed in India it may be enforceable there despite the contradictions to US law and practice that you point out.

Good point...I have no clue what the labor laws in India are. But if he were to be in the US at the time of employment, good luck trying to enforce that internationally. It just might be an issue upon returning home...

[SusieQQQ 11,586]

9 minutes ago, geowrian said:

Good point...I have no clue what the labor laws in India are. But if he were to be in the US at the time of employment, good luck trying to enforce that internationally. It just might be an issue upon returning home...

I don’t know either, but I’ve seen a lot of bad press about H1 consultancies that operate out of India.

its easy to force him to return home - once his employment is terminated he has to leave the US, unless he can find another H1 sponsor.

[*Snowdrop* 604]

Have you researched this employer? The language, mistakes and typos in the agreement make it sound like a scam. 

 

 

[SusieQQQ 11,586]

3 minutes ago, Trellick said:

Have you researched this employer? The language, mistakes and typos in the agreement make it sound like a scam. 

 

 

I also thought some of the wording sounded suspect, like “will lose tremendous amounts of money”. 

 

Can also google “ H1 scam India “ to come up with suspect companies/consultancies 

[*Snowdrop* 604]

On further research seems like it's quite a common thing - but it's not completely clear if it's enforceable unless the company can prove their numbers: 

 

https://www.avvo.com/legal-answers/breaking-an-employment-contract-while-in-h1b-visa--1559483.html

 

 

[SusieQQQ 11,586]

34 minutes ago, Trellick said:

On further research seems like it's quite a common thing - but it's not completely clear if it's enforceable unless the company can prove their numbers: 

 

https://www.avvo.com/legal-answers/breaking-an-employment-contract-while-in-h1b-visa--1559483.html

 

 

Could be the same company.... 

and again the (lack of) enforceability aspect assumes they try to do that in the US. 

[Boiler 45,524]

I know USCIS is cracking down on these sort of scam employers, so maybe moot, having to get though the lottery and then the audit?

[Chicken7585 36]

Thank you all for your comments and suggestions. This company, as far as I can tell, is not a visa offender. When I talked to the HR people today, they seem to say that this is standard boilerplate because they bring people over from other countries and sometimes after paying all the bills and costs for visa processing, they quit and join another company. They offered no explanation as to how they arrived at the $10K or $25K figures. There was no mention either about how that would diminish over time (you would owe the same "liquidation damages" on Day 2 and 18 months later).

 

This whole experience has given me the creeps.

[Boiler 45,524]

3 minutes ago, Chicken7585 said:

Thank you all for your comments and suggestions. This company, as far as I can tell, is not a visa offender. When I talked to the HR people today, they seem to say that this is standard boilerplate because they bring people over from other countries and sometimes after paying all the bills and costs for visa processing, they quit and join another company. They offered no explanation as to how they arrived at the $10K or $25K figures. There was no mention either about how that would diminish over time (you would owe the same "liquidation damages" on Day 2 and 18 months later).

 

This whole experience has given me the creeps.

I am not saying you can not find it elsewhere, but it is a predominately IT/Indian situation.