H Visa H1B visa holder rights: Ex employer broke the law

[EEzn]

My jurisdiction is: NY

I received my H1B visa in the middle of 2006, and started working for a firm in New York City. I was paid as a 1099 contractor, even though I was clearly an employee of the firm.

I confronted my sponsor about this on several occasions, and he always insisted it was fine. Come tax filing time, I would always file my taxes as a 1099 and pay my taxes in full. I have paid taxes as a 1099 contractor (on an H1B visa) for the years 2006, 2007 and 2008.

I left that employer in October 2008, and I am now working on a new H1B visa as a W2 employee, also in New York City.

Last week I received a letter from the IRS, stating that I've been selected for a foreign residency compliance examination. I spoke to someone at the IRS, and she mentioned that I'm not supposed to work as an 1099 contractor when I'm on an H1B visa.

I also Googled it, and talked to the lawyer that organized my initial H1B visa, and it looks like my old employer broke the law by employing me as a 1099.

Here are my questions:

a. What rights do I have as an H1B employee if my old employer violated the terms of my visa? (I have upheld my end of the bargain, always paying my taxes, filing accurately etc.)

b. Is it wise for me to report him to the DOL? What are my rights as a whistleblower? Does it matter that I'm not employed by him anymore?

c. Is there any chance of me being forced to leave the U.S. because my old employer violated the terms of my visa? (Even though I am now legally employed as a W2?)

 

[Michael Wechsler]

I doubt you will suffer any problems as a result of the non-compliance. It certainly wasn't your fault. With regard to your old employer and being a whistleblower, there are laws protecting employees from abuse such as this and the repercussions are more on the employer than employee. You certainly should have been an employee and not a contractor and they know that. My guess is that if you bring it up as a defense, the IRS will investigate what your employer has been doing for a long time. What did your lawyer say?