H1B out of status options when I had a H4 visa valid till 2016

I am currently on H4 visa, it is valid till 2016. I got a job this year i.e 2013 and my employer has filed for my H1B.
My H1B is still under process it has gone to RFE but will likely get approved as it not complicated. Now my employer recently laid me off as they have no projects and they asked me to start looking for new job. They have not filed for the H1B withdrawal to USCIS and also said will help with my RFE but they will not pay me from October. I am currently in USA on H4 visa and it is valid till 2016. Now I have a few questions:
1. Is it ok for my company to withdraw my H1B as soon as USCIS approves it?
2. If my employer files for a withdrawal will my H4 visa still be valid? Can I still continue staying in US on H4 visa.
3. Also will I be cap exempt the next time any employer applies for my H1B visa?
Thanks in Advance!

Are you working on H4 before your H1B approval?

no not worked on H4.

  1. Yes
  2. Yes, but you have to make sure that COS is also invalidated. If H-1 is withdrawn but COS goes into effect, you will be on H-1 status from Oct 1 w/ no employer.
  3. Yes, you will be cap-exempt

My suggestion is to find a new employer ASAP. Once the current petition gets approved, ask the new employer to file cap-exempt petition for you w/ COS. From Oct 1, start working for new employer based on your COS approval (either through 1st employer or the 2nd one).

Thanks for your reply, it is helpful!

Thanks Saurabh. I had not heard about COS before. What does COS mean? Is it something one needs to get done even after H1B gets approved?

COS is change of status. When your H-1 was applied, your employer may have opted for COS so that you can start working on H-1 from Oct 1 w/o needing to get H-1 visa stamped first.

So check w/ your employer if they had filed w/ COS or not.