Entrepreneurs, Investors and Business Persons

The U.S. immigration regimen presents a sometimes contradictory approach to attracting persons who would otherwise be considered a boon to the economy.  For this reason the U.S. immigration system sometimes appears counter intuitive to an experienced business person.  The best way to view this hypothesis is to examine the principal administrative characteristics of certain of the major visa categories.

The L Visa

This status is offered to a person who has been employed abroad for at least one out of the last three years for the same employer which seeks to employ that person in the United States in a U.S. company which is related to the foreign employer as a subsidiary, affiliate or branch.  The L-1(a) is issued to a person who has worked abroad as an executive or manager and seeks to work in that capacity in the U.S. while the L-1(b) is issued to an employee who possess “specialized knowledge.” 

Under the regulations, however, the definitions of executive and manager are quite technical. An executive is someone who makes broad policy decisions and who is answerable only to a board of directors.  If, however, the executive also performs some of the work of the U.S. company, that is, including providing some of the company’s ultimate service the executive is disqualified as an executive.  I refer to this as the “dirty hands” disqualification.

A manager is a person who manages a particular department or function of a company.  However, if the manager in order to so qualify under the regulations must be a second tier manager.  That is [s]he must manager other managers – unless the employee manages a particular function of the company.

If the employee to be transferred to the U.S. is also an owner of the foreign company then the government often requires a manifestation of the benchmark which will cause the employer/owner to return abroad.  Another way of putting it is that being an owner of the foreign employer can sometimes result in an added evidentiary burden for the company.

It is not require that the U.S. company be in full operation before the transfer can be effected.  The U.S. company must demonstrate that it is ready to commence business and has acquired office premises, bank account and start-up capital.  Even in this age of virtual companies and rampant out-sourcing, I do not recommend that a company seek to operate, even initially, out of the employee’s home.  Appearances are everything in this context – especially since most USCIS examiners have never managed or owned their own business enterprise.

An employee for a new company defined as one which seeks to start up a new enterprise in the U.S., is issued the visa for one year in order to enable the U.S. company to get started.  However, one year is usually an unrealistically short period of time to establish a company such that it will be able to justify the continued presence in the U.S. of a manger, executive or person of specialized knowledge.  Thus I recommend that a company not petition for the L visa until such time as it has already organized its office, banking arrangements, etc. 
A spouse can obtain employment authorization.

Parenthetically, this visa category does not require any particular level of investment so long as the business plan addresses this issue clearly.

The E-2 and E-1

The E-2 status is issued to a person who is a national of a country with which the U.S. has signed either a treaty of friendship and commerce or a bi-lateral investment treaty and who invests a “substantial” amount of “capital” in an enterprise which is not “marginal” and which the “investor” will “direct and manage.”  Almost all of the words in the preceding sentence require documentation.

“Substantiality” is often measured by a formula which measures the percentage of invested capital against the total cost of the enterprise.  For business which cost less than $100,000.00 the government will require close to 100% investment by the foreign person.  For nationals of certain West European countries an investment of less than $200,000.00 will be difficult to sustain. The investor must also demonstrate that the enterprise will provide an economic benefit to the community in which it will be established or that it will be profitable and that the investor will earn more than just a mere living from the investment. 

A spouse can obtain employment authorization.

The initial application can be made either at the U.S. consulate abroad or from within the U.S. at  a USCIS Service Center.  Even if the petition is filed successfully from within the U.S. and the investor has received a Change of Status to E-2 (or E-1) the U.S. consulate abroad will seldom give any weight to the prior USCIS adjudication.  The surest way to make a bad first impression is to indicate to the U.S. Consulate that one merely wishes to have the E-2 visa “stamped” into the passport. 

The H-1B visa

This status is issued to a person who seeks to work termporarily (up to 6 years) for a U.S. company in a specialty occupation.  A “specialty occupation” is a job which requires at a minimum a baccalaureate degree and which requires the exercise of independent judgment and the application of abstract principles to resolve practical problems.  The best example of a specialty occupation is a civil engineer.  One does dictate the solution of an engineering problem to the engineer since that is the very purpose of hiring an engineer.  Any occupation the mental function of which parallels an engineer will probably satisfy the definition of a specialty occupation,

A spouse cannot obtain employment authorization.

It is possible for an H-1B employee to also be a part owner of the company in which [s]he is employed but it must be demonstrated that the employer is legally separate from the employee.   There are obvious risks with this arrangement and it should not be attempted by the uninitiated.

The preceding were all non-immigrant statuses but in the context of discussing investors and business persons it is appropriate here to consider the EB-5 investor immigrant category which is described more fully in the section on Immigrant status.

Employment Based.

EB 1st Preference - Aliens of extraordinary ability (Nobel Prize winners and equivalent) and certain multi national executives and managers.
EB 2nd Preference - Those with advanced university degrees as well as those of exceptional ability.
EB 3rd Preference - skilled workers performing jobs requiring a minimum of 2 yrs. of education, training or experience and professionals (Baccaluareate degree).
EB 3rd Preference (Other Workers) - persons who perform jobs requiring less than 2 years of skill or training.
EB 4th Preference - Special Immgrants including Ministers of Religion
EB 5th Preference - For persons who invest either a minimum of $500,000.00 or $1,000,000.00 depending upon the nature of the investment and who create at least 10 permanent jobs for U.S. workers.  This preference category is receiving more attention by many prospective immigrants as it offers the opportunity to those who otherwise would not be eligible for any of the above Family Based or Employment Based Preferences as long as they have the required minimum capital.   Anyone interested in applying for LPR status through this category is well advised to seek professional guidance at the inception.  

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