United States: U.S. Immigration Considerations When Establishing A Business In The U.S.

A foreign business entity or individual seeking to do business in the United States should assess U.S. immigration laws at the earliest opportunity. The question of U.S. immigration is a threshold issue, for the very reason that the laws do not accommodate all foreign persons seeking to work in the U.S. Furthermore, travelling to the U.S. without an understanding of the criteria for the various options that do exist can result in a costly mistake, which might jeopardize the viability of the fledgling U.S. entity. However, with careful consideration of the immigration alternatives and strategies for both the short and long terms at the time of market assessment, the vast majority of situations can be accommodated.

Business persons seeking to enter the U.S. for the purpose of assessing the market may generally do so as Business Visitors on the B-1 visa. This visa is available to persons who have their permanent residence outside the U.S. and who desire to enter the U.S. on behalf of their foreign employer for the purpose of conducting business meetings with prospective customers. Research on U.S. market conditions with respect to a possible investment may be carried out on this visa, providing the research is to be utilized by the foreign entity for analysis of market conditions. B-1 persons may not receive any compensation from a U.S. source, although the reimbursement of expenses that are incidental to the trip may be undertaken by a U.S. entity. B-1 Business Visitors may be admitted to the U.S. for an initial period of up to one year, and extensions of stay are possible providing the above criteria are still satisfied.

Citizens of some 28 countries (primarily those of Western Europe, Japan, Australia and New Zealand) may apply for admission to the U.S. without a B-1 visa on the so-called Visa Waiver Pilot Program, providing they otherwise qualify for a B-1 visa and desire to remain in the U.S. for no longer than 90 days. Participants on the VWPP must be in possession of a return ticket at the time of admission to the U.S. Note that no extensions of stay are permitted for business visitors on the VWPP.

The B-1 visa also permits the holder to establish a U.S. business enterprise. This can include instructing lawyers to incorporate a U.S. entity and generally attending to all aspects of the start up phase of the entity. For example, the visitor may sign a lease to premises on behalf of the new U.S. entity and enter into contracts with customers and vendors. However, permitted transactions do not include working for the U.S. entity and the actual fulfillment of these contracts, since such activities may be regarded as local labor for hire for which a work visa is required. Again, citizens of the same 28 countries may engage in the establishment of an U.S. business enterprise on the VWPP, providing the activities in question can be carried out within the 90-day period.

U.S. Immigration law offers a number of options that permit temporary work in the U.S. These alternatives have different criteria and their availability depends on the facts and circumstances of each situation. It is possible for an individual to be qualified for more than one option, and the final selection depends on the nature of the activities to be undertaken and the qualifications of the individual.

The L-1 intracompany transferee visa is available to executives, managers and specialized knowledge personnel, who are to be transferred to a U.S. parent, branch, subsidiary or affiliate. The transferee must have worked for the overseas entity for at least one full year in the previous three years prior to transfer to the U.S. and in an executive, managerial or specialized knowledge capacity. There is no nationality restriction or quota imposed on intracompany transferees. The maximum period of stay for executives and managers is 7 years. Specialized knowledge personnel are limited to a maximum of 5 years.

Before the L visa can be applied for at the U.S. consulate, the U.S. employer must file a petition with the Immigration and Naturalization Service (the Service) in the U.S. This petition must include documentation confirming the nature of the relationship between the transferor and transferee entities, as well as details of the responsibilities of the person to be transferred. Processing of the petition by the Service generally takes a few weeks.

The petition to the Service can request an initial period of eligibility of up to three years. However, in new office situations (where the U.S. office has been in existence for less than one year), the maximum period of initial petition validity is one year. For such start up situations, the Service will also need to review the relevant documentation pertaining to the entity's formation, including its lease to premises. Such petitions may be extended beyond the one year period of initial validity, providing the entity can clearly demonstrate its financial viability to continue the employment of the transferee in the relevant capacity of executive, manager or specialized knowledge person.

Multinational organizations that have U.S. sales in excess of $10 million or who have in excess of 1000 employees may petition the Service for blanket designation to issue their own approval notices to qualified executives, managers and specialized knowledge professionals. This L blanket program is one of the most important nonimmigrant options available to multinationals, since L visa applications may be submitted directly to the U.S. consulate, without the necessity of having to file an individual petition with the Service for each transferee.

The E Treaty visa is available to citizens of certain countries that have entered into a Treaty of Friendship, Navigation and Commerce or such other arrangement with the U.S. Most of the European countries have such treaties, and other countries include Canada, Mexico, Japan, Australia and New Zealand. The E-1 visa is available to treaty traders and the E-2 to treaty investors. Note that the E visa is available to individual entrepreneurs, as well as to employees of treaty trading or investing entities.

In employee situations, it must be demonstrated that the entity to employ the visa applicant is a citizen of the treaty country. Nationality of the entity is determined not by the place of its incorporation or place of business, but by the nationality of 50% of the ultimate owners of the entity. In situations where the ultimate parent company is publicly owned, the entity is presumed to be a citizen of the country where its shares are principally traded.

Once the nationality requirement for each of the employing entity and the visa applicant has been satisfied, it must also be demonstrated that the employing entity in the U.S. is engaging in substantial trade between the U.S. and the treaty country or is a substantial investment of a treaty entity. Substantiality for trade purposes is demonstrated by the frequency of the transactions. For investment purposes, there is no set dollar figure which makes any investment substantial but, in general terms, the amount invested should be sufficient to ensure the financial viability of the business in question. Marginal investments that will do little other than provide a means of living for the investor will not qualify.

Unlike the L-1 visa, no visa petition needs to be filed with the Service and no prior employment with the business entity overseas is required. Also, the visa is generally valid for an initial period of four or five years, depending on the country, for executives and managers and two years for persons with essential skills. The E visa may generally be extended without outer limit.

The H-1b visa is available to specialty occupation workers, who will work in a professional field and is most often used for technology related positions. The visa presupposes that the job in question requires the achievement of a university degree in a particular field and that the foreign national possesses such a degree. For the H-1b, the employer must file a petition with the Service. However, the petition must be accompanied by an approved labor condition application from the Department of Labor, indicating that the wages offered to the foreign national will not be less than the wages paid to similarly situated workers at the job site and in the local metropolitan area.

The H-1b visa program is subject to quota, with 115,000 visas being available for the year ending September 30, 2000. This quota was reached during March, 2000 and business groups are hoping that the Congress will elevate the numbers in succeeding years.

The H-1b visa is valid for an initial period of up to three years and can be extended for a maximum of six years.

The U.S. nonimmigrant visas are generally inhospitable to the needs of the working spouse since each of the L, E and H-1b do not permit the spouse or any other dependent to work in the U.S. on an automatic basis. Such persons must qualify in their own right for a working visa.

In situations where the U.S. business needs the services of the foreign national on an indefinite basis, consideration should be given to the immigrant visa option. Known as the greencard, the immigrant visa gives the holder the right to remain indefinitely in the U.S. with full civil rights, but no political rights. Since spouses of immigrant visa applicants are eligible to obtain immigrant visas on a derivative basis and also be accorded full civil rights, the procurement of an immigrant visa may make sense to accommodate the needs of a working spouse who is otherwise ineligible to obtain a work related nonimmigrant visa.

There are three main programs to obtain an immigrant visa.

U.S citizens may petition the Service to classify spouses, parents and children as permanent resident aliens. Such immediate relative petitions are not subject to annual quota.

Preference petitions may also be filed by permanent resident aliens on behalf of their spouses and children, but these petitions are subject to numerical quota and significant delays due to the backlogs in the availability of visa numbers.

U.S. employers may file an immigrant preference petition on behalf of a foreign worker. Petitions in the Second and Third Employment based preference categories generally require a certification from the Department of Labor that there exists a shortage of U.S. workers for the position in question. Such labor certification applications can take many years to process, depending on the jurisdiction. Under a procedure known as Reduction in Recruitment, however, where the employer engages in a period of advertising prior to filing the application, processing times at the Department of Labor can be shortened. This RIR option can be particularly effective for technology positions.

Positions that fall within the First Employment based category are exempt from the labor certification requirement. This category includes Multinational Executives and Managers, who have been employed by an overseas entity for one full year in the prior three years and are to be transferred to a U.S. branch, parent, subsidiary or affiliate of the overseas entity. Also exempt are persons who are considered to be of Extraordinary Ability. This category is reserved for persons who have reached the top of their field in business or the sciences. A third category exists for outstanding Researchers and Professors.

The U.S. also makes available a number of immigrant visas for persons who were born in certain countries and regions from which the U.S. has experienced relatively low immigration during the prior five years. Natives of African and European nations (with the notable exception of the U.K.) are the primary recipients of these so-called lottery visas.

The immigration laws of the United States present a number of options for both short and long term assignments. Yet the eligibility criteria for each classification and option makes consideration of their application one of the threshold items when assessing the viability of the U.S. market as a place to do business. Furthermore, a mistake in the selection of the most appropriate option can be costly since the wrong choice may inhibit longer term planning and overcoming a negative determination may be difficult. In sum, the retention of competent immigration counsel is critical at the outset.