Startups, Visas, and Hiring Foreign Talent
Finding the right talent is hard enough. Bringing in a non-U.S. worker can be especially daunting. Delya Ghosh, Partner at Berry Appleman & Leiden (BAL), shed light on the process including visa categories, working with federal agencies, and managing the application process. Read below for the highlights and check out the presentation deck for Immigration Challenges for Startups and Emerging Businesses on SlideShare.
First up, some definitional clarifications. “U.S. Immigration” or more frequently, “Immigration” is shorthand for the U.S. CIS (U.S. Citizenship & Immigration Services). Though there are multiple federal agencies involved with immigration, it’s primarily the Department of Homeland Security (DHS), The Department of Labor (DOL) in its role of protecting U.S. workers and their wages, and the Department of State which runs the consulates and U.S. embassies where people apply to enter the U.S., that you’ll interact with.
If this seems exhaustive, keep reading. As you’ll see, you could opt to go through the process without an attorney, but given the length and complexity involved, it’s not recommended. An experienced attorney can guide you through the pitfalls of conflicting agency requirements and keep you on pace.
Basic concepts: Non-Immigrant Visas versus Immigrant Visas
Just as there are a number of agencies involved in regulating immigration, there are also different categories of immigrants and different types of visas. The two broad distinctions for visas are non-immigrant and immigrant visas.
- Non-immigrant visas are temporary. They give holders the right to reside in the U.S. for a finite period of time.
- Immigrant visas are for those who have received or are in the process of receiving green cards: meaning they intend to be in the U.S. on a more permanent basis. Commonly an employer sponsors someone for a non-immigrant visa, then eventually sponsors that person for a green card.
Immigration Visa versus Status: what’s the difference?
A visa stamp is a document required at the point of entry into the U.S. A status is much more important than a visa stamp. Immigration status is a work authorization that must be requested from the immigration service once someone is admitted into the U.S. At that point, s/he is given an electronic I-94 record which controls the length of an individual’s authorized stay and shows his or her classification.
Non-immigrant visas = Alphabet Soup
There are many types of non-immigrant visas. Here are the most common ones relevant to startups and small businesses.
- For specialty occupation workers — professionals (generally requires degree or equivalent in relevant field)
- Does not depend on a shortage of U.S. workers — no requirement to perform a test of the labor market (more on that later)
- Subject to a cap of 85,000 applications per year
- Issued in 3 year increments but is the one type of visa that can be extended beyond the maximum time allotted of six years, so long as green card application is started within a certain period of time.
L-1A/L-1B Intracompany Transfers
- L-1A — For multinational managers and executives
- L-1B — For professionals with specialized knowledge
- For companies that have a foreign entity
- Employees must have previously worked abroad in one of the company’s entities for at least one year in the last three.
- Spouses can apply for work authorization while in the U.S.
- Initially valid for three years, but can be extended for up to five years (L-1B) or seven years (L-1A) years; but not beyond that period.
Startups face a number of challenges when it comes to non-immigrant visas:
Limited number of slots — As of April 7, U.S. Immigration had received 240,000 applications for 85,000 slots. The next application window won’t open until April 2016. These go quickly every year and there’s no prospect of a meaningful raise of the cap in the near future.
Greater scrutiny — Though application requirements are on paper the same for all businesses, in practice the government scrutinizes smaller businesses more carefully than larger ones (sometimes requiring photos and bank account statements for potential employees) and imposes higher evidentiary standards on them. Startups and small companies can also find it hard to meet the burden of proof when it comes to demonstrating an established brick and mortar office. The government will accept co-working spaces as long as a company can meet the requirements to post job notices for 10 consecutive days.
Employee-employer relationship required — This eligibility requirement means that you can’t sponsor a contractor. Another significant hurdle is that company owners and founders are not considered employees.
Financial disclosures — The trickiest evidentiary requirement to meet relates to funding and proving that a company can pay its workers, meet prevailing wage requirements, and run its business. Companies can be uncomfortable exposing their financial picture to all and sundry; but agencies don’t typically share data. Lawyers can also request that company documents be returned at the end of the consideration process — though agencies don’t always honor those requests.
Immigrant Visas, Green cards, and Permanent Residency
There are five categories of visas included in employment-based preference categories for green cards, but only three that are relevant for startups:
1. EB-1 — Designated for people with extraordinary ability (noteworthy prizes, Nobel anyone?), outstanding professor/researchers, and multinational executives/managers who are acclaimed in their fields. This category doesn’t require a labor certification/market test and not surprisingly is the fastest way to get a green card.
2. EB-2 and EB-3 — Reserved for advanced degree professionals and skilled workers or other professionals and require labor market tests.
Green cards — the three-step process
1. Employer files for labor certification with the DOL — This involves a labor market test and an electronic application filing. In order to file, a company must show that there is a shortage of qualified, willing, and able U.S. workers to meet its specific position and job requirements. To do that, it has to undertake mandatory recruitment efforts. And, this is the most difficult part of the process, it must be able to explain why domestic applicants aren’t qualified, willing or available. The application filing date is important because it sets a person’s place “priority date” in the line for green cards.
2. Employer files I-140 Immigrant Visa Petition with the Immigration Service within six months of receiving approval of labor certification from DOL. Company presents proposed worker qualifications and demonstrates it has the resources to pay employee’s offered wage and run its business.
Though it sounds straightforward, this is where things can get bogged down. A person’s place in line for visas is determined by his/her country of birth (not nationality), employment-based preference, and priority. People from countries with large visa backlogs, for example India and China, might have to wait for up to 10 years versus a Canadian who might wait for only one year.
3. Employee requests an Adjustment of status to that of green card holder (Essentially a background check, this may be filed concurrently with the Immigrant Visa Petition in step two).
Special Considerations for Startup Founders and Business Owners
What trips up startups and small businesses most often?
1. Controlling interest — If an owner or founder can’t be fired or controlled by the board or an independent body, the government questions that person’s status as an “employee.” In that case, the application may not meet the eligibility requirements. Some startups grant their boards (in their articles of incorporation) the right to fire the founder as a way around this concern.
2. Pre-launch — Work visas are required for “any productive employment completed in the U.S.” If you have a full-time job and launch a startup on the side, your startup work may not qualify you for visa.
3. Ability to pay — This came up earlier, but companies must be able to demonstrate they can pay an employee’s wages by I140 must submitting audited financial statements or in cases where the owner is also the applicant, tax forms.
4. Green cards are location and position specific — This means if you decide to relocate your company to a lower cost state or to be closer to funders say, you would have to re-apply for a new green card with all the costs and time that entails for the relevant employee.
5. Time lag — Even for the “fast track” (EB-1) green card, determining eligibility could take one to two years — and your intended employee and/or your company might not qualify.
6. Termination of employment — If you fire the employee, or the company fails and you have to let her go before the three year expiration of her visa, the company must pay the transportation costs to return the employee home or to her last place of residence. You also have to notify immigration services of the termination.
Deborah Adeyanju is Content Strategist & Social Media Manager at Early Growth Financial Services (EGFS), an outsourced financial services firm that provides small to mid-sized companies with day-to-day accounting, strategic finance, CFO, tax, and valuation services and support. Prior to joining EGFS, Deborah spent more than a decade as an investment analyst and portfolio manager with leading financial institutions in New York, London, and Paris. Deborah is also a Chartered Financial Analyst (CFA) charterholder.
What are the biggest mistakes you’ve made or witnessed other startup founders make? Share your experiences in the comments section below or contact Early Growth Financial Services for accounting support.
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