IMMIGRATION OPTIONS FOR ENTREPRENEURS

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1 BOSTON HARTFORD STAMFORD NEW YORK NEWARK EAST BRUNSWICK PHILADELPHIA WILMINGTON WASHINGTON, DC IMMIGRATION OPTIONS FOR ENTREPRENEURS Amy Haberman Partner McCarter & English, LLP McCarter & English, LLP Nonimmigrants v. Immigrant Nonimmigrant indicates a temporary stay in US Immigrant indicates a permanent residence in the US Nonimmigrants can stay for a particular purpose (to study, to research, to work in a specialty occupation) and a period coinciding with that purpose (duration of studies, duration of employment up to 5, 6, or 7 years, etc.) Nonimmigrants can only stay for the duration of authorized period of stay (usually date on I-94) and may engage only in those activities authorized for their visa category 2 1

2 Status vs. Visa Lawful nonimmigrant status (H-1B, TN, F-1, etc.) is evidenced, primarily, through two documents: A valid, unexpired Form I-797 (Approval notice); and A valid, unexpired Form I-94 (Arrival record). A visa is a travel document issued by a US consulate abroad that allows the bearer to board a US-bound vessel and present him or herself for inspection at a US port of entry. The visa does not confer nonimmigrant status or employment authorization, and the validity of the visa does not relate whatsoever to the period of time you are authorized to remain in the US. 3 Form I-797 (Approval Notice) 4 2

3 Form I-94 (Arrival Document) 5 Visa 6 3

4 Nonimmigrant Classifications: B-1: Business (NOT WORK) Visitors (6 months or 90 days) H-1B: Temporary Workers (6 years with extensions for green card process) E-1 or E-2: Treaty Trader or Investor (duration of business enterprise) E-3: Australian Specialty Occupation Visa (renewable indefinitely in 2 year increments) TN: NAFTA Professionals (renewable indefinitely in 3 year increments) L-1A Managers (7 years) or L-1B Specialized Knowledge Professionals (5 years) : Intracompany Transferees O-1: Extraordinary Ability Aliens (unlimited duration) 7 B-1 / B-2 Nonimmigrant Classification Name Requirements Observations B1/B2 Business/ Visitor Must demonstrate that they have a residence in their home country which they do not intend to abandon. Visit to the U.S. is for a period not to exceed 6 months. Purpose of their trip must be to engage in legitimate business or tourist activities. Entry may be up to six months. B-1/B-2 s are generally not authorized to work. May be used for the following: Meetings Trainings (short period) Pleasure Family Trips 8 4

5 F-1 Nonimmigrant Classification Name Requirements Observations F-1 Student Student must be enrolled in school full time. Duration: Throughout the length of the studies or duration of status. Possible Work Authorization: CPT - Curricular Practical Training Must present letter from Student Advisor authorizing employment. OPT Optional Practical Training Must have authorization from school on Form I-20 and requires valid Employment Authorization Card from the CIS. Eligible for up to a year of OPT after completion of every educational level (one year following B.A., one year following M.A., and one year following Ph.D.). Must convert to nonimmigrant work authorized visa 9 F-1 Nonimmigrant Classification Special Provisions for F-1 Students Cap Gap provision Automatic extension of OPT for F-1 student who timely files for and is the beneficiary of an approved H-1B petition where there is a gap between the end of OPT and the H-1B start date. STEM extension of 17 additional months of OPT for E-Verify employer gives two bites at H-1B. 10 5

6 L-1A/B Intracompany Transferee Name Requirements Observations Intracompany Transferee L-1B: Specialized Knowledge L-1A: Managerial/ Executive FN must have been employed outside of the U.S. for a qualifying affiliate or subsidiary for 1 year in either a managerial, executive, or specialized knowledge role. FN must also be coming to the U.S. to assume either a managerial, executive, or specialized knowledge role. Duration: 3+2 (+2 for an L-1A) Maximum duration: L-1B: 5 years L-1A: 7 years L-1A transferee may proceed toward permanent residence (green card) quickly and easily. To qualify for the L-1A classification, a FN may manage a function/process rather than people. L-1A/L-1B transferees may be paid from overseas entity payroll. L-2 (Spouse) may apply for work authorization from the USCIS. 11 L-1 issues for Entrepreneurs Must have sufficient space for a new office. Must submit a detailed business plan that shows the U.S. investment and the ability to commence business in the U.S. A new office L will be approved for one year. After that the business must be active and operating, i.e., employees, inventory, revenue stream, orders. Must justify need for manager. 12 6

7 H-1B Classification Name Requirements Observations H-1B Professional Specialty Occupation Category is Employer Specific; Category is Location Specific; Salary must meet prevailing wage requirements; Position must require a U.S. Bachelor s Degree or equivalent. Initial duration: 3 years with a 6 year maximum stay (with some exceptions). H-1B holder may port to a new employer provided that the new employer petitions on his/her behalf. Portability rule allows FN to begin employment once CIS issues a filing receipt. Any previous stays in H-1B or L-1 capacity are counted towards the 6 year max. Change in work location or position requires an amendment. H-1B is numerically capped 65,000 new petitions. This cap does not impact prior H-1B holders, H-1B workers who are employed by not-for-profit and government research institutions (and engaged in research), and recipients of a twoyear home residency requirement waiver (bearers of a J-1 or J- 2 visa). An additional 20,000 H-1B numbers are reserved for U.S. university advanced degree recipients H-4 (Dependents) are not authorized to work in U.S. H-1B Cap Issues Limited to 65,000 initial visas per fiscal year plus an annual cap exemption of 20,000 visas for H-1B beneficiaries who have a U.S. university a Master s degree or higher. During current economic climate, cap may be an issue. Identify prospects now. H-1B tend to mirror hiring generally. Once the hiring starts, expect the cap to be quickly exhausted as in years past. 7

8 H-1B Cap Issues Individuals who are currently on an H-1B with another employer or who have had an H-1B within the past year are not subject to the cap. Citizens of Singapore and Chile have per-country setasides that give them better odds of making the H-1B cap. Students (F-1) generally will have a period of work authorization remaining on their Optional Practical Training. For most this will be one year. H-1B Issues for Entrepreneurs Is there a valid Employer/Employee relationship? You must disclose that you are one of the founders or owners of the company. You must demonstrate the distinction between your ownership interest and the right to control your employment: board of directors, preferred shareholders, investors, or other factors that show your organization has the right to control the terms and conditions of your employment 8

9 H-1B Issues for Entrepreneurs Term Sheet Capitalization Table Stock purchase Agreement Investor rights Agreement Voting Agreement Organizational documents and operating agreements 17 Alternatives to the H-1B Canadian, Mexican, and Australian citizens can utilize other classifications (TN & E-3). The O-1 or extraordinary ability classification can be an alternative for certain foreign nationals (high notoriety/published/top in field). 9

10 TN Nonimmigrant Classification Name Requirements Observations Trade NAFTA Canadian or Mexican citizen, seeking classification as a professional. Duration: 3 years, however, may reapply several times. Canadian citizens may apply directly at Class A US ports of entry. Mexican citizens must apply for TN visas at an appropriate US Consulate. Professional categories are specifically enumerated. Dependents are not employment authorized. 19 E-3 Australian Specialty Occupation Visa Name Requirements Observations E-3 Australian Specialty Occupation Visa available to Nationals of the Commonwealth of Australia Employer Specific Location Specific Position requires a Bachelor s FN must possess Bachelor s or equivalent LCA Required May apply directly at the Consulate (expedited processing and no filing fees) E-3 spouse eligible for employment authorization Renewable indefinitely 2 year increments 20 10

11 O-1 Classification Name Requirements Observations Extraordinary Ability Set aside for aliens of extraordinary ability in the sciences, arts, education, business or athletics. The applicable regulations provide that individuals who have risen to the very top of their field of endeavor qualify for this classification. May be extended for an indefinite period. Requires a no objection letter from a peer group. Requires at least 3 of the following: 1. Receipt of nationally or internationally recognized prizes or awards for excellence in the field of endeavor; 2. Membership in associations in the field that require outstanding achievements of their members (as judged by recognized national or international experts in the discipline or fields); 3. Published material in professional or major trade publications or major media about the alien s work in the field; 4. Participation on a panel, or individually, as a judge of the work of others in the field; 5. Original scientific, scholarly, or business-related contributions of major significance in the field; 6. Authorship of scholarly articles in the field in professional journals or other major media; 7. Employment in a critical or essential capacity for organizations and establishments that have distinguished reputations; or 8. High salary or other remuneration commanded by the individual for services (as evidenced by contracts or other reliable evidence). E-1 Treaty Trader/E-2 Treaty Investor Requirements Duration Benefits FN entering the U.S. pursuant to a treaty between U.S. and country of FN s nationality FN entering to carry on substantial trade between U.S. and treaty country; to develop and direct operations of a bona fide enterprise in which the FN invests substantial capital; FN of same nationality may enter as employee of the investor in executive, supervisor capacity or as person whose services are essential to the efficient operation of the enterprise; Principal employer must be a registered treaty trader/investor and enterprise must be at least 50% owned by persons having nationality of treaty trader/investor country. Indefinitely issued in 2 year increments No Prevailing wage requirement No filing fee for new petitions May apply directly at the Consulate E-1/E-2 spouse eligible for work authorization Renewable indefinitely 22 11

12 What requirements must an individual meet to become an E1 Treaty Trader? A treaty, with treaty trader provisions, exists between US and foreign state (see The individual and/or business possess the nationality of the treaty country; Business activities constitute trade; Trade is substantial and international in scope; Trade is principally between US and the treaty country; and The individual intends to depart the US when the E1 status terminates. 23 What requirements must the employee meet to become an E1 employee? The employee must be a national of the treaty country; The employee s employer must either be in valid E1 status, or if outside of the US, the employer is classifiable under E1 status; The employee is coming to the US to fill an executive or supervisory position, or has special qualifications essential to the firm s operations in the US; and The beneficiary intends to depart the US when the E1 status terminates

13 What requirements must an individual meet to become an E2 Treaty Investor? A treaty, with treaty investor provisions, exists between US and foreign state; The individual and/or business possess the nationality of the treaty country; Has invested or is actively in the process of investing a substantial amount of capital in a bona fide enterprise in the US; Is seeking entry solely to develop and direct the enterprise; and Intends to depart the US upon the expiration or termination of treaty investor (E2) status. Note: A substantial amount of capital is distinct from a relatively small amount of capital in a marginal enterprise that is solely for the purpose of earning a living. 25 What requirements must the employee meet to become an E2 employee? The employee must be a national of the treaty country; The employee s employer must either be in valid E2 status, or if outside of the US, the employer is classifiable under E2 status; The employee is coming to the US to fill an executive or supervisory position; or has special qualifications essential to the firm s operations in the US; and The beneficiary intends to depart the US when the E2 status terminates

14 Can an E1/E2 ultimately petition for Lawful Permanent Resident status? An E1/E2 alien must maintain an intention to depart the US upon expiration or termination of their E1/E2 status. However, E1/E2 nonimmigrant workers can be beneficiaries of an immigrant visa petition, or take other steps toward lawful permanent resident status without affecting their nonimmigrant, temporary worker visa status. Note: Intent as used here only applies to the employer s intentions at the time of the filing of Form I Employment Based Immigrants Intending Immigrants are those foreign nationals who are applying for permanent residence based on an offer of full-time, permanent employment in the US. Employment-based immigrants are allotted approximately 140,000 immigrant visas annually. The availability of visa numbers depends on the applicant s country of birth and his or her respective preference category. Certain classifications must overcome presumption of immigrant intent upon entry (ex. TN marrying USC, TN with too many renewals) Dual Intent for H-1B and L

15 Preference Categories 1. EB1: L-1A Multinational Managers and Executives (exempt from Labor Certification) 2. EB2: Advanced Degree Professionals job requires Master s degree or higher OR Bachelor s degree + 5 years of experience (require PERM Labor Certification) 3. Professionals job requires less than a Bachelor s + 5 years (require PERM Labor Certification) 4. Fourth Preference: Special Immigrants 5. Fifth Preference: Immigrant Investors 29 Three Principle Steps Involved in the Permanent Residence Process Application for Labor Certification (USDOL) The first preference category is exempt from this step. Immigrant Petition (USCIS) 30 Adjustment of Status (United States) (USCIS) Immigrant Visa Process (abroad) (USCIS and USDOS) 15

16 Priority Dates Immigrant visas are subject to an annual quota Priority date for visa determined by date of filing immigrant petition (Form I-140) or application for alien labor certification (Form 9089) May only file an application for Lawful Permanent Residence (Form I-485) when visa category is current Information on priority dates and visa availability found at: 31 DOS Visa Bulletin Priority date for Immigrant visa is established on the earlier of (1) the date of filing immigrant petition or (2) the filing date of an application for alien labor certification [ PERM ] Immigrant petition must be filed within 180 days of approval of PERM application Application for Adjustment of Status may only be filed when Priority date is current All Chargeability Areas Except Those Listed CHINAmainland born INDIA MEXICO PHILIPPINE Employment-Based 1st C C C C C 2nd C 15JAN08 01SEP04 C C 3rd 15MAR07 15NOV06 15NOV02 15MAR07 22AUG06 5th C C C C C 32 16

17 First Preference Employment (EB1) Based Green Cards Extraordinary Ability (EB1A) (exempt from Labor Certification) You must be able to demonstrate extraordinary ability in the sciences, arts, education, business, or athletics through sustained national or international acclaim. Your achievements must be recognized in your field through extensive documentation. No offer of employment is required. You must meet 3 of 10 O1 criteria. 33 First Preference Employment (EB1) Based Green Cards L-1A Multinational Managers and Executives (exempt from Labor Certification) Employed outside the US in the three years preceding the petition for at least one year by a company and you must be seeking to enter the US to continue service to that company or an affiliate, subsidiary. Your employment must have been outside the US in a managerial or executive capacity. US petitioner must have been doing business for at least one year, as an affiliate, a subsidiary, or as the same corporation or other legal entity that employed you abroad. Must be able to document need for permanent manager position

18 EB2/3 Green cards based on Labor Certification PERM (Program Electronic Review Management System) Electronic system for filing labor certification applications allows us to obtain a labor certification in days (unless selected for audit). Immigrant Petitions may be premium processed. Bottleneck and delays have shifted to the last leg of the Lawful Permanent Residence Process as one s priority date must be current in order to apply for the last step. EB2/3 Green cards based on Labor Certification Once I-140 approved employer may petition for a 3 year H-1B on behalf of an employee in a backlogged visa category (i.e., EB 3, Indian, Chinese, Mexican and Philippine nationals) Once I-140 approved or PERM pending for 365 days employer may petition for one year H-1B extensions beyond 6 year max-out for any employee 36 18

19 EB5 Employment Creation Entrepreneurs Foreign national invests $1 million in a new enterprise that employs 10 U.S. workers, not including the immigrant, the immigrant's spouse, or the immigrant's children. The amount of the investment only needs to be $500,000 in a targeted employment area (TAE = rural or other designated area where unemployment rate equals 150 percent of the national average). Rural area means any area not within either a metropolitan statistical area (MSA) or the outer boundary of any city or town having a population of less than 20,000. Immigrant Investor Pilot Program Regional Centers to focus investment in geographic areas. The individual investor must meet all the criteria of employment creation investors except he or she can demonstrate that investment in the regional center will create jobs indirectly beyond the commercial enterprise. 37 Eligibility Requirements To be initially eligible for the Alien Entrepreneur classification, an alien must have: Established a new commercial enterprise: 1) In which the alien will engage in a managerial or policy-making capacity; 2) In which the alien has invested or is actively in the process of investing the amount required for the area in which the enterprise is located; 3) Which will benefit the U.S. economy; and 4) Which will create full-time employment in the U.S. for at least 10 U.S. citizens, permanent residents, or other immigrants authorized for employment. Note: Unless adjusted downward for targeted areas or upward for areas of high employment, the amount of investment shall be $1 million

20 How to Apply for Conditional Permanent Residency based on Employment Creation 1. File a Form I-526, Immigrant Petition by Alien Entrepreneur, with USCIS. 2. Upon approval of I-526, file Form I-485, Application to Register Permanent Residence or Adjust Status, or apply at nearest consulate if a visa number is available. 3. Grant of conditional permanent residency is for a two-year period. 4. Ninety days before the two-year anniversary of being granted conditional permanent residency, the Alien Entrepreneur files Form I-829, Petition by Entrepreneur to Remove Conditions, at the California Service Center. 39 'Entrepreneurs in Residence' USCIS launched the Entrepreneur Pathways web portal, to provide information to the entrepreneurial community: Developed and deployed a training workshop for immigration officers that focuses on entrepreneurs and the environment for startup; Trained a team of specialized immigration officers to handle entrepreneur and startup nonimmigrant visa cases; Modified Request for Evidence (RFE) templates for certain NIV s to incorporate new sources of evidence related to entrepreneurs and startup companies into the adjudicative process; and In 2013 will focus on existing immigrant visa pathways that may enable foreign entrepreneurs to create a business and pursue a path to permanent residency

21 Disclaimer and Contact Information This presentation should not be considered, or relied upon, as legal advice. Do not act on the information in this presentation without consulting an attorney for advice. Amy Haberman Partner

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