H-1B Layoff Severance — 60-Day Grace Period Rules

Who this applies to

H-1B visa holders who are laid off receive a discretionary 60-day grace period under federal regulation (8 CFR 214.1(l)(2)) during which they do not accrue unlawful presence — but that clock starts the day employment ends, and severance pay does not pause or extend it. The grace period covers E-1, E-2, E-3, H-1B, H-1B1, L-1, O-1, and TN workers. It lasts up to 60 consecutive days or until the end of your I-94 authorized validity period, whichever is shorter. You may not work during those 60 days unless you have independent authorization. DHS has discretion to shorten or eliminate the period.

What changes for you

The most important thing to understand is what triggers the clock. H-1B status is employer-specific; it terminates when your employment ends, not when USCIS processes the employer's withdrawal of the petition. Your former employer is required to notify USCIS that you are no longer employed, at which point the I-129 petition approval is automatically revoked. That revocation does not create unlawful presence during the grace period — but it does mean you have no work authorization and no valid H-1B to extend. Portability under AC21 (INA § 214(n), 8 U.S.C. § 1184(n)) is your fastest path to continued work authorization. If a new employer files a non-frivolous H-1B petition on your behalf before your authorized period of stay expires — including during the 60-day grace period — you may commence work for that employer upon filing, without waiting for approval. The petition must be filed while you are still in a period of authorized stay; once the grace period expires, portability is no longer available. If you have an approved I-140 immigrant petition filed by your former employer, the outcome depends on timing. If the I-140 was approved at least 180 days ago, your employer's withdrawal cannot cause USCIS to revoke it (8 U.S.C. § 1154(j)). You retain the approved I-140, your priority date, and eligibility for H-1B extensions beyond the standard six-year cap. If the I-140 was approved less than 180 days ago, the employer can withdraw it and USCIS will revoke the approval — though you retain your priority date for future green card petitions. Severance is taxed identically to regular wages for H-1B holders: 22% federal supplemental withholding (on amounts under $1 million) plus FICA. There is no immigration-specific tax treatment, and receiving severance does not constitute ongoing employment for H-1B status purposes.

Decision tree

1. If You have an approved I-140 that's been valid 180+ days at termination

   Then → You retain priority date and may port to a new employer under AC21 (8 U.S.C. § 1184(n)). New employer can file an H-1B transfer immediately; you can begin work upon USCIS receipt.

   Else: You can still port to a new H-1B sponsor but lose priority date protection if the I-140 hasn't been valid 180 days.

2. If Your I-94 expires within 60 days of separation

   Then → Your effective grace period is shortened to the I-94 expiration date. Plan accordingly — change of status to B-2 visitor or H-4 dependent may bridge the gap.

   Else: Full 60-day grace period available; standard transfer planning applies.

3. If Employer offers garden leave (continued employment + payroll through notice period)

   Then → Grace period clock does NOT start until the formal last day of employment. Negotiate for the longest garden leave the employer will agree to.

   Else: Standard severance (paid as post-separation wages) does NOT extend the 60-day window — the clock starts the day of separation.

Calculate your numbers

Inputs default to federal assumptions; adjust to your specifics.

Action steps

• Identify the exact end date of your employment — this is day zero of the 60-day grace period, not the date USCIS processes the petition withdrawal.
• Ask your employer in writing to confirm when it will notify USCIS of your termination and to provide a copy of the withdrawal submission.
• If you have a new employer ready, ask them to file an H-1B transfer petition within the first two weeks. Request that they pay the premium processing fee (~$2,805 as of 2026) for a decision in 15 business days.
• If you have an approved I-140, verify its approval date. If it has been approved for 180+ days, your employer's withdrawal cannot revoke it — confirm this in writing with your employer's immigration counsel.
• Negotiate for an extended "last day of employment" on paper — even a few extra days shifts the 60-day clock and keeps your I-94 validity intact longer.
• Have an immigration attorney review your specific priority date, I-140 status, and new-employer timeline before signing a separation agreement.

FAQ

Exactly when does my 60-day grace period start?

The grace period begins the day your employment ends — not the date your employer submits a petition withdrawal to USCIS, and not the date USCIS processes it. Your termination letter or last day of employment as stated in your separation agreement is the operative date. If you can negotiate a later official end date in your separation agreement, your grace period starts later even if you stop working sooner.

Does receiving severance pay extend my H-1B status?

No. Severance is deferred compensation paid after employment ends; it does not constitute ongoing employment and does not extend your H-1B status or restart the 60-day clock. Your status depends on your employment relationship, not your paycheck.

How does H-1B portability (AC21) actually work when I find a new job?

Under INA § 214(n) (8 U.S.C. § 1184(n)), your new employer files a non-frivolous H-1B transfer petition with USCIS. As soon as the petition is received — not approved — you may begin working for the new employer. The petition must be filed before your authorized period of stay (including the 60-day grace period) expires. Premium processing costs roughly $2,805 and returns a decision in 15 business days.

My former employer filed an I-140 for me. What happens to it?

If your I-140 was approved at least 180 days before your layoff, the employer cannot cause USCIS to revoke it under 8 U.S.C. § 1154(j) — you keep the approved I-140, your priority date, and eligibility for H-1B extensions beyond the six-year cap. If the I-140 is less than 180 days old, USCIS will revoke the approval, though your priority date survives for a future petition.

What happens to my spouse's H-4 EAD if I lose my H-1B job?

H-4 EAD is tied to your approved I-140 or your H-1B cap-exempt status, not directly to your current employment. If your I-140 survives (approved 180+ days), your spouse's H-4 EAD authorization basis remains intact. If your I-140 is revoked, H-4 EAD eligibility may be lost at renewal.

What should I demand in my separation agreement to protect my immigration status?

Four things: (1) the latest possible official termination date to maximize your 60-day window; (2) written confirmation of when the employer will submit the I-129 withdrawal to USCIS; (3) employer payment of premium processing for your next H-1B transfer; and (4) access to the company's immigration counsel for a transition consultation at the employer's expense.

Does receiving severance affect my H-1B status?

Severance does not extend or shorten your status itself. The 60-day grace period (8 CFR 214.1(l)(2)) begins on the date your employment terminates, not the date your severance ends. Severance paid as wages-in-lieu-of-notice has been treated by USCIS in informal guidance as continuing employment for I-9/W-2 purposes, but does not extend the grace period — that requires actual continued employment (garden leave structure).

Can I work for myself or freelance during the 60-day grace period?

No. Self-employment or freelancing for a non-sponsoring entity is not authorized under H-1B status. Your only legal options during the 60-day grace period are: (a) find a new H-1B sponsor and file a transfer, (b) change status to a different visa category (B-2 visitor, F-1 student, O-1, etc.), or (c) depart the United States. Working without authorization can affect future visa eligibility.

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