United States: The L-1 Category: 3 Tips To Help Your Petition Withstand Scrutiny When Filing At USCIS

Last Updated: July 21 2017
Article by Natalie L. McEwan

With the annual H-1B visa cap posing considerable staffing issues for U.S. employers requiring highly skilled workers, multinational corporations may increasingly turn to the L-1 visa to meet their need for knowledgeable, qualified professionals. For qualifying employers and employees, the L-1 can provide an attractive mechanism for effectively managing a global workforce: the L-1 does not have an annual cap or specific degree requirement and offers spouses the opportunity to obtain employment authorization. In recent years, however, the L-1 has come under increased scrutiny by U.S. Citizenship and Immigration Services (USCIS). Here are a few key tips for withstanding that scrutiny.

The L-1 Category

To be eligible to file an L-1 petition, a qualifying relationship (involving a parent company, branch, subsidiary, or affiliate) must exist between the U.S. company and the foreign company. (8 C.F.R. § 214.2(l)(1)(ii)(G)). The employer must currently be, or will be, doing business in the United States and in at least one other country. The transferred employee must have been employed by the foreign company for at least one continuous year within the three years prior to coming to the United States. The L-1 category is bifurcated into the L-1A classification which applies to qualified executives and managers, and the L-1B classification, which applies to employees possessing special knowledge of the petitioning organization's products, services, research, equipment, techniques, management, or other interests and its application in international markets, or an advanced level of knowledge or expertise in the organization's processes and procedures.

Tip #1: The Qualifying Entities Must Be Doing Business

The L-1 can be one of the best resources a global company has for gaining access to the U.S. market and maximizing its human capital. The L-1 is intended to allow multinational employers to seamlessly transfer their employees' expertise from one knowledge hub to another. It is not designed to be a mechanism for funneling employees from non-performing entities to those that continue to operate. Indeed, both the U.S. and the foreign entities must be doing business. "Doing business" means the regular, systematic, and continuous provision of goods or services by a qualifying organization and does not include the mere presence of an agent or office of the qualifying organization in the United States and abroad.  (8 C.F.R. § 214.2(l)(1)(ii)(H)).

To withstand increased USCIS scrutiny in this area, detailed documentation is key. First—Establish that both the U.S. and foreign entities exist. The most efficient way to do this is to provide corporate formation documents: articles of incorporation, bylaws, corporate resolutions, and the like. Equivalent documents should be provided for foreign entities. Demonstrate that the U.S. and foreign entities have ongoing physical presences. This can be done through the provision of real estate documents, leases, utility bills, and property tax documents. Next—Present evidence that each entity employs an active workforce: Payroll records and tax records can be utilized here. Last—Show that each entity is providing goods or services. A variety of documents can, and should, be provided here: annual reports; corporate tax returns; product brochures; client contracts; and sales invoices. In this way, potential hurdles posed by increased USCIS scrutiny in the area of doing business can be minimized.

Tip #2: L-1As for Functional Managers

The standard analysis of whether an employee is primarily managerial includes a consideration of the work delegated to others that relieves the beneficiary from performing non-managerial tasks. Indeed, in this area, providing organizational charts showing that an employee is at least one hierarchical level removed from performing non-managerial tasks is critical. What can an employer do, then, when an employee manages few employees, or no employees, but is, nonetheless, an executive or high-level manager who oversees an area that is of critical importance to the employer?

The Administrative Appeals Office (AAO) decision, Matter of Z-A-, Inc., is instructive in this regard and has been designated by USCIS as binding precedent when determining who is a functional manager. The case involved the denial of an L-1A extension filed on behalf of the vice president and chief operating officer of the petitioning U.S. entity. The beneficiary was responsible for running U.S. operations, including directing and managing the company's financial, legal, administrative, and sales activities, and he reported to the highest levels within the overseas parent company. The U.S. staff, however, consisted of only two employees besides the beneficiary, leading USCIS to conclude that the petitioning company lacked the organizational structure to support a position that was primarily managerial in nature.

The AAO determined that USCIS had failed to give sufficient consideration to the way in which the U.S. entity and the beneficiary fit into and were supported by the organization as a whole. Eight employees of the foreign parent supported the beneficiary's work in the United States, the beneficiary managed the essential function of market development in the Americas and had influence over the highest level of decision-making within the company regarding developing the U.S. market, and it was reasonable to utilize foreign staff members to directly and exclusively support the U.S. company's market development efforts.

While cases involving functional managers can face increased scrutiny from USCIS, taking into consideration the employee's role with the entire company's structure can help withstand this scrutiny.

Tip #3: With L-1Bs, a Little Seasoning Can Go a Long Way

Under the Immigration and Nationality Act (INA 214(c)(2)(B)), a beneficiary is deemed to have specialized knowledge if he or she has (1) a "special" knowledge of the company product and its application in international markets or (2) an "advanced" level of knowledge of the processes and procedures of the company. The corresponding Code of Federal Regulations (8 CFR § 214.2(l)(1)(ii)(D)) defines "specialized knowledge" in terms of "special" or "advanced" knowledge: "special knowledge possessed by an individual of the petitioning organization's product, service, research, equipment, techniques, management, or other interests and its application in international markets, or an advanced level of knowledge or expertise in the organization's processes and procedures."

In USCIS's most recent guidance on the subject—Policy Memorandum, L-1B Adjudications Policy, (PM-602-0111), effective August 31, 2015—USCIS clarified that "a beneficiary seeking L-1B classification should possess:

  • special knowledge, which is knowledge of the petitioning employer's product, service, research, equipment, techniques, management, or other interests and its applications in international markets that is demonstrably distinct or uncommon in comparison [italics in the original] to that generally found in the particular industry or within the petitioning employer; or
  • advanced knowledge, which is knowledge or expertise in the organization's specific processes and procedures that is not commonly found in the relevant industry and is greatly developed or further along in progress, complexity and understanding [italics in the original] than that generally found within the employer."

An employer may find it difficult to convince USCIS that an employee who meets the minimum statutory experience required to qualify as an intracompany transferee – one year – possesses the level of knowledge that USCIS deems necessary for specialization. Instead, employers are advised to select an employee who possesses multiple years of experience with the company. In addition, employers may want to ensure that the employee's experience abroad is actually abroad. If the employee has spent significant time in the United States, his or her experience may be more closely scrutinized. Lastly, details regarding the employee's specialized knowledge are critical:

  • Does the employee possess knowledge of foreign operating conditions that is of significant value to the petitioning organization's U.S. operations?
  • Has the employee been employed abroad in a capacity involving assignments that have significantly enhanced the employer's productivity, competitiveness, image, or financial position?
  • Can the employee's specialized knowledge normally be gained only through prior experience with the petitioning organization?
  • Does the employee possess knowledge of a product or process that cannot be easily transferred or taught to another individual without significant economic cost or inconvenience (because, for example, such knowledge may require substantial training, work experience, or education)?
  • Does the employee have knowledge of a process or a product that either is sophisticated or complex, or of a highly technical nature, although not necessarily unique to the firm?
  • Does the employee possess knowledge that is particularly beneficial to the employer's competitiveness in the marketplace?

(USCIS Policy Memorandum, L-1B Adjudications Policy, PM-602-0111, effective August 31, 2015.)

Selecting a seasoned employee for intracompany transfer in an L-1B capacity can help withstand increased USCIS scrutiny in this category.

Conclusion 

For qualifying employers and employees, the L-1 visa can provide an attractive mechanism for effectively managing a global workforce. To overcome increased scrutiny by USCIS in the L-1 arena, employers may benefit if they ensure that both U.S. and foreign entities are doing business, consider an employee's role within the entire company's structure when dealing with an L-1A functional manager, and select a seasoned employee for intracompany transfer when dealing with the L-1B category.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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