Temporary Foreign Workers: H-2A, H-2B and J-1’s

Maine, like many states, faces a significant challenge during the tourist season: staffing seasonal businesses. Think about the many restaurants, hotels, fisheries, and landscapers that make Maine’s tourism industry thrive. To meet the demand, many businesses turn to temporary foreign workers. These workers bring invaluable skills and fill essential roles for numerous small businesses.

But managing and staying compliant with temporary foreign workers isn’t always straightforward. Foreigners applying for visas to work in the U.S. must following numerous rules and regulations. In this article, we’re going to explore the common types of visas: the H-2A, H-2B and J-1 visas. By the end of this article, you’ll have a clear understanding of these temporary foreign workers and what it takes for your business to stay on the right side of the law.

At Paper Trails, we understand the challenges small businesses face. That’s why we’re passionate about providing guidance and support, especially when it comes to payroll, HR, and small business management. So, let’s dive into the world of temporary foreign workers together.

Temporary work visas

There are many different types of work visas provided by the U.S. Department of Homeland Security each year. The types of visas that seasonal businesses in Maine deal with most frequently are H-2A, H-2B and J-1 visas.

H-2A Visa

A H-2A visa is used to allow temporary, nonimmigrant workers to perform agricultural labor or services of a temporary or seasonal nature.  The nonimmigrant worker must demonstrate that there are not enough U.S. workers who are able, willing, qualified, and available to do the temporary work.  Further, employing H-2A workers may not adversely affect the wages and working conditions of similarly employed U.S. workers.

H-2A visa requirements include:

• Before requesting H-2A classification from USCIS, the petitioner must apply for and receive a temporary labor certification for H-2A workers from DOL.
• After receiving a temporary labor certification for H-2A employment from DOL, the petitioner must file Form I-129 with USCIS.
• After USCIS approves Form I-129, prospective H-2A workers who are outside the United States must apply for an H-2A visa with the U.S. Department of State (DOS).
• H-2A classification may be extended for qualifying employment in increments of up to 1 year each. A new, valid temporary labor certification covering the requested time must accompany each extension request.
• The maximum period of stay in H-2A classification is 3 years.
• Under the H-2A Visa Program, employers must guarantee workers employment hours equal to at least 75% of the workdays in the contract period. The employer will pay workers who weren’t offered sufficient hours.
• Employers must provide housing at no cost to H-2A workers.  If the employer elects to secure rental accommodations for such workers, the employer is required to pay all housing-related charges directly to the housing’s management.
• Employers must provide daily transportation between the workers’ living quarters and the employer’s worksite at no cost to covered workers living in employer-provided housing.
• Employers must keep accurate records of the number of hours of work offered each day by the employer and the hours actually worked each day by the worker.

H-2B Visa

A H-2B visa is provided to a “skilled” or “unskilled” worker. This type of visa is required by an employee to perform a job that is temporary or seasonal in nature and for which there is a shortage of U.S. workers. The employment of this foreign worker must be temporary in nature and the person cannot be looking for immigration status.

Additional H-2B visa requirements include:

• The employer has requested and been granted H-2B Registration by DOL.
• Workers must be paid at least federal or state minimum wage, whichever is greater.
• Job opportunities must be a full-time, temporary position of at least 35 hours per workweek.
• The employer must make all deductions from workers’ paychecks required by law.
• Accurate records of workers’ earnings, hours of work offered, and hours actually worked must be kept.
• Employers must either advance all visa, border crossing, and visa-related expenses to H-2B workers, pay for them directly, or reimburse all such expenses in the first workweek.
• A DOL-provided poster detailing H-2B workers’ rights must be posted at each worksite.
• Retain all documents pertaining to the Application and Registration, the recruitment-related documents, the payroll records, and related documents for 3 years.
• The maximum period of stay in H-2B classification is 3 years.

J-1 Visa

J-1 Visa, also known as the Exchange Visitor Program, is used to facilitate scientific, cultural, and educational exchange.  Anyone looking to apply for a J-1 visa must have prearranged employment, training, or research established. Consequently, these visas cannot be used for ordinary seasonal employment as the applicant must have previous training and experience in the field.

The main category of J-1 visas that seasonal businesses take advantage of comes from the Summer Work and Travel program. This program allows full-time college or university students to come to the U.S. to receive this additional training and work experience.

Additional J-1 visa requirements include:

• Employers must develop a Training/Internship Placement Plan, Form DS-7002.
• Workers must be paid at least federal or state minimum wage, whichever is greater.
• Provide a minimum of 32 hours of work per week.
• Must notify the sponsor organization if there are any changes to the program such as pay, training, supervisors, etc.
• The maximum period of stay in the Summer and Work Travel program is 4 months.

How businesses stay compliant with H-2A, H-2B and J-1 visas

As an employer, it is important to know the rules surrounding foreign workers for your business to stay compliant. From a payroll standpoint, employers must pay at least minimum wage to foreign workers with either type of visa. In addition, foreign employees must also receive overtime pay for any hours worked over 40 hours in a given 7 day period.

Foreign workers are also subject to certain payroll tax requirements. In terms of taxes, different categories of foreign workers are treated differently. Let’s take a look.

Taxes for H-2A visas

Employers must withhold and match certain taxes for these visa holders.

• Employers are not required to withhold U.S. federal income tax from compensation paid to an H-2A agricultural worker.
• However, it is quite possible that the H-2A agricultural worker will owe U.S. federal, and state depending on location, income tax when he or she files a U.S. individual income tax return for the year.
• H-2A workers DO NOT pay FICA taxes.
• Employers DO NOT match FICA taxes.
• Wages paid to these workers are subject to FUTA or SUTA taxation (unless the total wages paid to all your farmworkers (including H-2A visa workers) is less than $20,000 (not likely)).

Taxes for H-2B visas

Employers must withhold and match certain taxes for these visa holders.

• Federal income tax.
• State income taxes where applicable.
• FICA taxes, which is divided up between Social Security and Medicare.
• Employers must match FICA taxes for H-2B workers.
• Employers also pay FUTA and SUTA taxes on each H-2B worker.

To summarize, H-2B workers pay the same taxes as U.S residents but cannot collect company benefits.

Taxes for J-1 visas

J-1 workers are categorized as resident or nonresident based on the Substantial Presence Test. Generally, a J-1 alien who spends 183 days during the 3-year period that includes the current year and the 2 years immediately before that, with at least 31 days in the current year, will meet the Substantial Presence Test for the current calendar year and be considered a U.S. resident. Most Maine employers employ nonresident J-1 workers and they are not subject to FICA taxes.

Resident J-1’s

• Federal income tax.
• State income taxes where applicable.
• FICA taxes, which is divided up between Social Security and Medicare.
• Employers must match FICA taxes for resident J-1’s.
• Employers also pay FUTA and SUTA taxes on resident J-1’s.

Nonresident J-1’s (the majority of Maine businesses deal with these visas)

• Federal income tax.
• State income taxes where applicable.
• DO NOT pay FICA.
• Employers DO NOT match FICA
• Employers DO NOT pay FUTA or SUTA.

Paperwork requirements

When it comes to employing temporary foreign workers on H-2A, H-2B and J-1 visas, employers must adhere to specific paperwork requirements to ensure compliance with federal regulations.

• Form W-4 Completion: All foreign workers are obligated to pay federal and state income taxes, necessitating the completion of Form W-4. This form determines the amount of federal income tax to be withheld from the worker’s paycheck and employers must ensure that each employee fills out this form accurately to avoid discrepancies in tax withholding.
• Form I-9 Verification: Like all other employees in the United States, H-2A, H-2B and J-1 workers must complete Form I-9 to verify their identity and employment authorization. This form requires workers to present acceptable documents that establish both identity and eligibility to work in the U.S. Employers are responsible for verifying these documents and maintaining records of Form I-9 for each employee.
• Form W-2 Distribution: At the end of each calendar year, employers are required to furnish Form W-2 to every foreign worker they have employed during that year. Form W-2 reports the worker’s annual wages and the amount of taxes withheld from their paychecks throughout the year.
• Form W-3 Reporting: Alongside providing Form W-2 to individual workers, employers must also report the total wages paid to H-2A, H-2B and J-1 employees on Form W-3. This summary document provides an overview of the wages and taxes withheld for all employees.

Conclusion

Employing temporary foreign workers in Maine’s seasonal industries involves understanding visa regulations, tax responsibilities, and paperwork requirements. The H-2A, H-2B and J-1 visas offer pathways to address staffing needs, each with its own rules.  For employers, following compliance requirements such as ensuring minimum wage payments and managing tax withholdings, is crucial.  For help with your temporary foreign workers, or any of your employee issues, contact our team here.