Tag Archive for: Entrepreneurs

Cyrus Mehta

National Interest Waiver Changes for STEM Graduates and Entrepreneurs, Along with Premium Processing, Will Benefit H-4 Spouses Seeking Work Authorization

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By Cyrus D. Mehta and Jessica Paszko*

Earlier this year, U.S. Citizenship and Immigration Services (USCIS) announced that as of January 30, 2023, it would accept premium processing requests for all previously filed and newly filed petitions for National Interest Waivers (NIW) under the Employment-Based Second Preference (EB-2) category. For an additional filing fee of $2,500, USCIS will adjudicate these petitions within 45 days. This premium processing development coupled with last year’s update to the USCIS Policy Manual, which clarified how the National Interest Waiver can be used by science, technology, engineering, and mathematics (STEM) graduates and entrepreneurs, makes the National Interest Waiver more appealing than ever. We last covered the National Interest Waiver five years ago after the Administrative Appeals Office of the USCIS issued its precedent decision, Matter of Dhanasar, 26 I&N Dec. 884 (AAO 2016) which articulated a new National Interest Waiver standard.

As background, the National Interest Waiver is an immigrant petition for lawful permanent residence under the EB-2 category. In the ordinary course, a valid, permanent offer of employment in the U.S. and a labor certification application certified by the Department of Labor (DOL) are mandatory prerequisites to the filing of such an employment-based immigrant petition. However, the Immigration Act of 1990 (IMMACT90) provided that the labor certification requirement in the employment-based second category may be waived and foreign nationals may qualify for the NIW in the sciences, arts, professions or business if they are: (1) members of the professions holding advanced degrees; or (2) foreign nationals of “exceptional ability” who will “substantially benefit prospectively the national economy, cultural or educational interest, or welfare” of the United States, i.e. where the foreign national’s employment is deemed to be in the “national interest.”

In the updated Policy Manual, under the Specific Evidentiary Considerations for Persons with Advanced Degrees in STEM Fields heading, USCIS states, at the outset, that it was particularly interested in persons with advanced STEM degrees fostering progress in three areas, namely (1) “focused critical and emerging technologies”, (2) “other STEM areas important to U.S. competitiveness”, and (3) “national security.”

Critical and emerging technologies “are those are critical to U.S. national security, including military defense and the economy”. To identify a critical and emerging technology field, USCIS prompts officers to consider governmental, academic, and other authoritative and instructive sources, and all other evidence submitted by the petitioner. Officers may find that a STEM area is important to competitiveness or security in endeavors that will help the U.S. remain ahead of strategic competitors or adversaries or relates to a field that may contribute to the U.S. achieving or maintain technology leadership or peer statues among allies and partners. Moreover, the lists of critical and emerging technology subfields published by the Executive Office of the President, by either the National Science and Technology Council or the National Security Council, are listed as examples of authoritative lists which officers may consider. The Critical and Emerging Technologies List Update, issued in February 2022, defines critical and emerging technologies as “a subset of advanced technologies that are significant to U.S. national security.” It then goes on to list the critical and emerging technology areas that “are of particular importance to the national security of the United States” as well as a set of key subfields for each identified critical and emerging technology. We encourage readers to view the full list, but note the following subfields: supercomputing, edge computing, cloud computing, data storage, computing architectures, data processing and analysis techniques, distributed ledger technologies, digital assets, digital payment technologies, and digital identity infrastructure.

An indicator of STEM areas important to U.S. competitiveness is inclusion as a priority in the annual research and development priorities memo about the President’s budget issued jointly by the White House Director of the Office of Science Technology Policy and the Director of the Office of Management and Budget. For example, the Memorandum on Research and Development Priorities (PDF) (August 2021) for President Biden’s FY2022 budget, where reference is again made to “critical and emerging technologies” including artificial intelligence, quantum information science, advanced communications technologies, microelectronics, high-performance computing, biotechnology, robotics, and space technologies.

U.S. national security objectives, which includes “protect the security of the American people; expand economic prosperity and opportunity; and realize and defend democratic values”, are outlined in the Interim National Security Strategic Guidance (PDF). The Policy Manual instructs that for purposes of National Interest Waiver policy and adjudications, “national security” refers to these three objectives.

Matter of Dhanasar provides that after eligibility for EB-2 classification has been established, USCIS may grant a NIW if the petitioner demonstrates, by a preponderance of the evidence, that:

  • The foreign national’s proposed endeavor has both substantial merit and national importance.
  • The foreign national is well positioned to advance the proposed endeavor.
  • On balance, it would be beneficial to the United States to waive the requirements of a job offer and thus of a labor certification.

The Policy Manual reiterates that with respect to the first prong as set forth in Matter of Dhanasar, supra, as in all cases, the evidence must demonstrate that a STEM endeavor has both substantial merit and national importance. It notes that many proposed endeavors that aim to advance STEM technologies and research, whether in academic or industry settings, not only have substantial merit in relation to U.S. science and technology interests, but also have sufficiently broad potential implications to demonstrate national importance. At the same time though, the Policy Manual makes clear that “classroom teaching activities in STEM” are not, on their own, indicative of an impact in the field of STEM education more broadly, and therefore generally would not establish their national importance.

For the second prong, the person’s education and skillset are relevant to whether the person is well positioned to advance the endeavor. Here, the USCIS officer’s analysis involves assessing whether the person has an advanced degree, such as a Ph.D. which USCIS considers an especially positive factor. But the advanced degree must also be in a STEM field tied to the proposed endeavor and related to work furthering a critical and emerging technology or other STEM area important to U.S competitiveness or national security. Additionally, taking into account that doctoral dissertations and some master’s theses concentrate on a particularized subject matter, the person’s “scientific knowledge in a narrow STEM area” must also be considered in order to determine whether that specific STEM area relates to the proposed endeavor. Finally, the Policy Manual cautions that a degree in and of itself, is not a basis to determine that a person is well positioned to advance the proposed endeavor, and urges petitioners to submit supplemental evidence, including letters from interested government agencies. Evidence that may demonstrate that the person is well-positioned to advance a proposed endeavor includes, but is not limited to:

  • Degrees, certificates, or licenses in the field;
  • Patents, trademarks, or copyrights developed by the person;
  • Letters from experts in the person’s field, describing the person’s past achievements and providing specific examples of how the person is well positioned to advance the person’s endeavor;
  • Published articles or media reports about the person’s achievements or current work;
  • Documentation demonstrating a strong citation history of the person’s work or excerpts of published articles showing positive discourse around, or adoption of, the person’s work;
  • Evidence that the person’s work has influenced the field of endeavor;
  • A plan describing how the person intends to continue the proposed work in the United States;
  • A detailed business plan or other description, along with any relevant supporting evidence, when appropriate;
  • Correspondence from prospective or potential employers, clients, or customers;
  • Documentation reflecting feasible plans for financial support (see below for a more detailed discussion of evidence related to financing for entrepreneurs);
  • Evidence that the person has received investment from U.S. investors, such as venture capital firms, angel investors, or start-up accelerators, and that the amounts are appropriate to the relevant endeavor;
  • Copies of contracts, agreements, or licenses showing the potential impact of the proposed endeavor;
  • Letters from government agencies or quasi-governmental entities in the United States demonstrating that the person is well positioned to advance the proposed endeavor (see below for a more detailed discussion of supporting evidence from interested government agencies and quasi-governmental entities);
  • Evidence that the person has received awards or grants or other indications of relevant non-monetary support (for example, using facilities free of charge) from federal, state, or local government entities with expertise in economic development, research and development, or job creation; and
  • Evidence demonstrating how the person’s work is being used by others, such as, but not limited to:
    • Contracts with companies using products that the person developed or assisted in developing;
    • Documents showing technology that the person invented, or contributed to inventing, and how others use that technology; and
    • Patents or licenses for innovations the person developed with documentation showing why the patent or license is significant to the field.

 

Lastly, with respect to the third prong, the Policy Manual reminds us that it is the petitioner’s burden to establish that factors in favor of granting the waiver outweigh those that support the requirement of a job offer and thus a labor certification. In its evaluation of the third prong and whether the U.S. may benefit from the person’s entry, USCIS considers the following combinations of facts contained in the record to be a strong positive factor:

  • The person possesses an advanced STEM degree, particularly a Ph.D.;
  • The person will be engaged in work furthering a critical and emerging technology or other STEM area important to U.S. competitiveness; and
  • The person is well positioned to advance the proposed STEM endeavor of national importance.

USCIS considers the benefit to be “especially weighty” where the endeavor has the potential to support U.S. national security or enhance U.S. economic competitiveness, or when the petition is supported by letters from interested U.S. government agencies.

The expanded guidance will also benefit noncitizen entrepreneurs under the Matter of Dhanasar standard. They may submit evidence of ownership and a role in the U.S. entity; degrees, certifications, licenses and letters of experience; investments from outside investors; participation in an incubator or accelerator; awards or grants; intellectual property such as patents; published material on the petitioner and U.S. based entity; prospects of revenue generation and job creation; and letters and statements from credible third parties.

In comparison, eligibility under the Employment-Based First-Preference category (EB-1A) can be established through evidence of a one-time, major international award or fulfillment of at least three out of ten criteria. But even after the applicant has demonstrated evidence of at least three criteria, USCIS conducts a final merits determination where it considers the submitted evidence holistically and determines whether the applicant has sustained national or international acclaim and is among the small percentage of individuals who have risen to the top of their field of endeavor. Clearly, to qualify for a National Interest Waiver, one need not satisfy any set regulatory criteria or rise to the EB-1A level of acclaim or level of expertise, which can be quite difficult to establish.  Like the EB-1A, individuals may self-petition for the National Interest Waiver under EB-2 and need not be beholden to an employer.

The NIW on its face will have little utility for India or China born beneficiaries of I-140 petitions in the EB-2. The EB-2 for both these countries is retrogressed, and more so with India which according to the February 2023 State Department Visa Bulletin, the Final Action Date is October 8, 2011. Still, even if an Indian born EB-2 beneficiary obtains the NIW they will not be bound to any employer to file a new labor certification,  and can remain in H-1B status from employer to employer until their Final Action Date becomes current.  Another advantage of the NIW under EB-2 is that dependent spouses in H-4 status can receive work authorization once the I-140 on behalf of a principal beneficiary is approved and the dates for the country remain retrogressed. Currently the EB-2 is retrogressed worldwide at November 1, 2022. Therefore, in addition to H-4 spouses of India born beneficiaries of I-140 petitions, all H-4 spouses would be entitled to work authorization once the I-140 under the NIW is approved. See 8 C.F.R. § 214.2(h)(9)(iv).   Given that there is now premium processing, the speed with which an H-4 spouse can obtain an EAD through the NIW than through the traditional employer sponsored labor certification process is significant.

Although the USCIS has broadened the evidentiary criteria for NIW petitions, it is still important to demonstrate that the national interest of the US will be advanced under the standards set forth in Matter of Dhanasar.  As the EB-1 has become muddied with the need to satisfy the final merits determination, the NIW may be easier to win under the expanded guidance for individuals in STEM and entrepreneurs and may be worth considering if one is born in a country other than India. However, even for those born in India, the NIW may have a significant benefit as it would allow the H-4 spouse to get employment authorization more rapidly.

(This blog is for informational purposes, and should not be relied up as a substitute for legal advice)

*Jessica Paszko is an Associate at Cyrus D. Mehta &  Partners PLLC. She graduated with a J.D. degree from Brooklyn Law School in 2021.

 

 

 

 

 

Cora-Ann Pestaina

A Closer Look At The Form I-983 – Training Plan for STEM OPT Students

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As we previously blogged about here, on March 11, 2016 the Department of Homeland Security (DHS) published a final rule amending regulations to expand Optional Practical Training (OPT) for students with U.S. degrees in Science, Technology, Engineering, or Mathematics (STEM). This new rule will take effect on May 10, 2016 and will replace the 17-month STEM OPT extension previously available to STEM students most significantly expanding the extension period to 24 months. But the new rule sets forth various requirements that must be met by schools, students and employers. In addition, it raises questions regarding how OPT will be perceived going forward.

The standard 12-month OPT program will remain intact. Eligible students can still engage in a 12-month program of OPT during or after the completion of an academic program. They can work at a regular job for any US employer for the duration of the authorized OPT period provided the employment qualifies as related to their major area of study in the US. But one of the more confusing aspects of the STEM OPT program is that even after engaging in regular employment for 12 months, a student wishing to apply for a STEM OPT extension, will have to prove, through submission of an elaborate Training Plan, that he or she will, for the next 24 months, be no more than a mere trainee! When questioned about this, DHS rejected the notion that students who have completed the 12-month OPT period should be considered “seasoned trainees” who don’t need this new Training Plan. The new Training Plan also leaves us with questions as to what will now be considered “training” as far as OPT is concerned.

In order to obtain this new 24-month STEM OPT, the employer must have an Employer Identification Number (EIN) and be enrolled in the E-Verify program. [revised 06/07/16].  The employment opportunity must be directly related to the student’s qualifying STEM degree and there must be an employer-employee relationship between the employer and the student.  Therefore, employment for staffing agencies where an employer-employee relationship is not maintained or other labor-for-hire arrangements will not qualify. [revised 06/07/16].  The student is also not permitted to engage in concurrent employment for multiple employers during the STEM OPT period but is permitted to change STEM OPT employers. Within 10 days of the employment start date, the student and the new employer must complete a Training Plan on Form I-983 and submit it to the DSO.

Let’s take a closer look at this elaborate Training Plan on Form I-983.

SECTION 1: Student Information

This section of the Form I-983 must be completed by the student and requires the student to provide information on the school recommending STEM OPT and the school where the STEM degree was earned if different from the recommending school. A student may be eligible for a STEM extension based on a previously earned STEM degree which is different from the school of most recent enrollment from which the DSO will be recommending STEM OPT. This section also requires information about the STEM degree; the student’s SEVIS number; and the dates of the specific STEM OPT requested period.

A student previously granted a 17-month STEM OPT and now seeking a new 7-month extension must have at least 150 days remaining on the 17-month STEM OPT Employment Authorization Document (EAD) on the day that the USCIS receives the application for the 7-month extension. The student must file for a 7-month extension on Form I-765, Application for Employment Authorization, between May 10 and August 8, 2016. Applications will no longer be accepted after August 8, 2016.

SECTION 2: Student Certification

By signing this section of the Form I-983, the student will certify, under penalty of perjury, that the training is related to the STEM degree and that he or she:

  • Has reviewed, understands and will adhere to the Training Plan;
  • Will notify the DSO if the employer is not providing the training as per the plan;
  • Understands that DHS may deny, revoke or terminate the STEM OPT of students who it determines are not engaging in the training under the plan; and
  • Will notify the DSO at the earliest opportunity of any material changes or deviations from the Training Plan.

If there are material modifications to or deviations from the Training Plan during the STEM OPT extension period, the student and employer must, within 10 days of the change, sign a modified Training Plan reflecting the material changes, and the student must file this modified Training Plan with the DSO at the earliest available opportunity. Material changes include any change of EIN resulting from a corporate restructuring; any reduction in compensation from the amount previously submitted on the Training Plan that is not the result of a reduction in hours worked; and any significant decrease in the hours per week that a student will engage in the STEM training opportunity. DHS has explained that, basically, a material change is any change from the existing Training Plan that would render an employer or student’s attestation inaccurate, or render inaccurate the information in the Training Plan on the nature, purpose, oversight, or assessment of the student’s practical training opportunity.

SECTION 3: Employer Information

This section of the Form I-983 must be completed by the employer and requests basic information such as the employer’s name, address and number of employees. The employer must indicate the number of hours of work per week, which must be at least 20 hours (except when the student is granted leave under the employer’s standard leave policy, e.g. vacation or sick days) and the offered compensation.

An unpaid, volunteer position may not form the basis of a STEM OPT extension. However, DHS has interpreted “compensation” to include wages and other forms of remuneration, including housing, stipends, or other provisions typically provided to employees. The total compensation must be commensurate with that typically provided to US workers possessing similar skills and experience, and performing similar duties.

SECTION 4: Employer Certification

By signing this section of the Form I-983, the employer will certify, under penalty of perjury, that:

  • The Training Plan has been reviewed and understood and will be followed;
  • The DSO will be notified of any material changes;
  • The termination or departure of the student during the authorized OPT period will be reported to the DSO within 5 business days;

DHS has determined that an employer “knows” a student has left the OPT opportunity once that student has not reported for training for 5 consecutive business days without the employer’s consent. Business days do not include federal holidays or weekend days.

In this section of the Form I-983, the employer also certifies that it will adhere to all regulatory provisions that govern the Training Program. These include:

  • The student’s practical training is directly related to the STEM degree that qualifies the student for the STEM OPT extension;
  • The student will receive on-site supervision and training by experienced and knowledgeable staff;
  • The employer has sufficient resources and personnel to provide the training and is prepared to implement the program;
  • The student will not replace a full-time, temporary or permanent US worker and the terms of conditions of the students employment are commensurate with similarly situated workers; and
  • The training complies with all applicable Federal and State employment requirements.

DHS has explained that the barred “replacement” of U.S. workers refers to the loss of existing or prior employment. The employer is not barred from discharging an underperforming employee simply because it also hired a STEM OPT student. DHS states that it will look at the totality of the circumstances to assess compliance with the non-replacement certification.

This section of the Form I-983 also sets forth that DHS may, at its discretion, conduct a site visit of the employer to ensure that the Training Program’s requirements are being met and that the employer possesses and maintains the ability and resources to provide structured and guided work-based learning experiences consistent with the Training Plan. DHS may contact the employer, the student or the DSO in person or via telephone or email to obtain information. Based on previous on-site-reviews of schools, DHS estimates that an employer site visit may include review of records and questions for the supervisor, and will take five hours per employer. DHS will provide notice to the employer 48 hours in advance of any site visit, unless the visit is triggered by a complaint or other evidence of noncompliance with the STEM OPT extension regulations, in which case DHS may conduct an unannounced site visit. Immigration and Customs Enforcement (ICE) currently intends to use federal employees for the site visits. There may be times when contractors accompany federal employees, but ICE currently intends that federal employees will be in charge of such visits.

SECTION 5: Training Plan for STEM OPT Students

In this section of the Form I-983, the student and the employer must enter the contact details of the individual who will be responsible for monitoring the student’s goals and performance and must describe:

  • What tasks and assignments the student will carry out during the training and how these relate to the STEM degree;
  • The training curriculum and timeline including the specific goals and objectives of the program;
  • The specific skills, knowledge and techniques the student will learn or apply;
  • How the student will achieve the goals;
  • How the employer will provide oversight and supervision; and
  • How the employer will measure and confirm whether the student is acquiring new knowledge and skills.

SECTION 6: Employer Official Certification

Here the employer must certify, under penalty of perjury that:

  • It has reviewed, understands and will follow the Training Plan;
  • It will conduct the required periodic evaluations of the student; and
  • It will notify the DSO regarding material changes or deviations from the Training Plan.

The employer’s official who signs this section of the form need not be the same person who signed on behalf of the employer in section 4.

Also on the Form I-983, the student must provide a self-evaluation which the employer must review for accuracy and sign. DHS states that the student evaluation is intended to confirm that the student is making progress toward his or her training objectives and it differs from typical employer evaluations which focus more on how well an employee is performing his or her duties. Evaluations must be completed every 12 months (i.e. at the 1 year mark and at the end of the 24 month STEM OPT period) as DHS believes that this better reflects normal employer practices where annual reviews are standard. Any appropriate individual in the employer’s organization with signing authority can sign the evaluations that the student will submit to the DSO.

USCIS will begin accepting applications for a 24-month extension on May 10, 2016. The student must submit the completed and executed Training Plan to the DSO and obtain a newly endorsed Form I-20 recommending the 24-month STEM extension. The student must file an application for employment authorization within 60 days of the DSO’s endorsement and no more than 90 days before the 12-month EAD expires. Students will get an automatic 180-day extension of their work authorization if their initial 12-month OPT EAD expires while the STEM OPT EAD application is still pending.

There may be some hiccups ahead as students, employers and DSOs get used to the new rule. DHS has expressed its awareness of the fact that the new requirements will require training to ensure that all affected parties understand their role in the process. But DHS has also expressed its confidence in the abilities of DSOs to review Training Plans and has clarified that the DSO need not possess technical knowledge of STEM fields of study or conduct additional outside research into a particular employer but need only confirm that the Training Plan (1) explains how the training is directly related to the student’s qualifying STEM degree; (2) identifies goals for the STEM practical training opportunity, including specific knowledge, skills, or techniques that will be imparted to the student, and explains how those goals will be achieved through the work-based learning opportunity with the employer; (3) describes a performance evaluation process to be utilized in evaluating the OPT STEM student; and (4) describes methods of oversight and supervision that generally apply to the OPT STEM student. The DSO should also ensure that all form fields are properly completed. DHS will find that the DSO has met his or her obligation under the rule if the Training Plan meets these requirements. DHS believes that its power to conduct site visits; request to review Training Plans; withdraw DSO certifications; and withdraw a school’s participation in the F-1 program will provide the necessary checks to ensure the new program’s success.

The new STEM OPT Training Plan effectively changes the way OPT has been viewed previously and also could potentially create contradictions. As previously mentioned, a student under the 12-month OPT need not have submitted to such an elaborate Training Plan, but now during the STEM OPT extension phase, would have to revert to being a trainee rather than an employee. This Training Plan would also stymie students who have created their own startups. While students may be employed by start-up businesses on STEM OPT, students may not provide employer attestations on their own behalf. Therefore, a self-employed entrepreneur and sole founder of a business with no employer-employee structure would need to make modifications to the business model in order to meet the STEM OPT requirements. It also remains to be seen whether STEM OPT would have to imitate the standard under the J-1 and H-3 visa programs, where productive work has to be incidental to the training. It would be completely contradictory if a student during the 12-month OPT could engage in productive work, but to be granted a STEM OPT extension would have to forego productive work in favor of training, as imposed under the H-3 and J-1 programs. It is hoped that DHS does not emphasize too much on training, recognizing that foreign students who have graduated in STEM fields ought to be able to unleash their talents in creating innovative startups that will lead to economic growth, change business models and paradigms, resulting in new job opportunities for thousands if not millions of American workers.

 

Cyrus Mehta

Senator Grassley “Hacks” The H-1B Visa For Foreign Entrepreneurs

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The H-1B visa program is in trouble. It has become everyone’s favorite whipping boy. Critics rail against the H-1B for bringing in so called cheap labor to the US, but ignoring the fact that an employer is required to pay the prevailing wage set by the Department of Labor. Some of the wages mandated by the DOL at www.flcdatacenter.com are unusually high. Take for example the position of Marketing Managers in New York City. A Marketing Manager on an H-1B visa would need to be paid an entry level wage of $108,493 year. The level two wage is $144, 123 per year, the level three is $179, 774 per year and level four is at a whopping $215, 405 per year. This is hardly cheap labor. The employer on top of these wages must also pay costs towards the H-1B visa including lawyer fees and excessively high filing fees in excess of $6,000. If the employer is dependent on H-1B or L workers, it has to additionally pay a super fee of $4,000. Only an employer who wishes to employ a highly skilled foreign worker will go through all the expenses, as well as all the regulatory procedures, under the H-1B visa.

The H-1B visa serves as the main entry point for a skilled foreign worker to aspire to work and immigrate to the United States. There already exists a shortage of H-1B visas with a meager annual cap of 65,000 plus another 20,000 for those with advanced degrees from US universities. If the H-1B visa is further restricted, there will be no entry point whatsoever. Foreign students graduating from top US universities will not get a chance to work and remain in the United States. The immigration system is already broken because of restricted pathways for non-citizens to acquire permanent residency, resulting in backlogs lasting decades. If the entry point through the H-1B visa is cut off, then we will truly have an unworkable immigration system that will no longer attract talent to the United States.

To rub further salt in the wound, Senator Grassley on February 26, 2016 wrote an angry missive to USCIS Director Leon Rodriguez protesting the use of the H-1B visa by entrepreneurs, which he likens to one who tries to “hack” the H-1B program. This is in direct contradiction to the USCIS’s well intentioned Entrepreneur Pathways portal that provides guidance on legitimate ways a founder can apply for a nonimmigrant visa through his or her own startup. According to Grassley, this is abusive and illegal, but he is wrong. Note that there is no independent startup visa in our immigration system, although America has spectacularly succeeded off the success of entrepreneurial ventures, many of which have been founded by people who were not born in the United States. Sergey Brin of Google is a prime example. Startups have to compete with more established companies within the immigration system, and where there is already a bias against the small business. A startup may be even more rudimentary than an established small business and thus more susceptible to being viewed as a fraudulent artifice. Startups may not yet be generating a revenue stream as they are developing new technologies that may lead to products and services later on. Many have received financing through venture capital, angel investors or through “Series A and B” rounds of shares. Startups may also operate in more informal spaces, such as the residences of the founders (with regular meetings at Starbucks) instead of a commercial premise. Some are also operating in “stealth mode” so as not to attract the attention of competitors and may not display the usual bells and whistles such as a website or other marketing material. Startups may also not have payroll records since founders may be compensated in stock options. Still, such startups are legitimate companies that should be able to support H-1B, L, O or other visa statuses. While, in the past, USCIS has often been accused by critics of harboring a systemic bias against small business, the Entrepreneur Pathways portal provides guidance for USCIS offices to adjudicate such H-1B petitions more favorably.

Grassley has now thrown the wrench into the works of such an entrepreneur trying to “hack” an H-1B visa. My esteemed colleague Tahmina Watson clarifies in a news article that Grassley misinterprets “hack”, which in the tech world “is a word of respect in which one finds a solution to a complicated problem.” Grassley even has the chutzpah to accuse established universities of colluding with entrepreneurs. Unfortunately, his letter is not backed up by the black letter INA provisions which support these sorts of collaborations between universities and entrepreneurs under the H-1B visa.

Under INA 214(g)(6), it is permissible for an entrepreneur to be employed by a cap-exempt employer such as a university on a part-time basis and then be able to obtain an H-1B, without being counted under the annual H-1B cap, through his or her own startup. Under INA 214(g)(5), an H-1B worker who is sponsored through a startup entity is not counted under the H-1B cap lottery if he or she is employed “at” a cap-exempt institution of higher education or is employed “at” a non-profit affiliated to an institution of higher education. While it is true that 8 CFR § 214.2(h)(4)(ii) requires the existence of an employer-employee relationship for the H-1B visa through a startup, this includes indicia such as the employer’s ability to “hire, pay, fire, supervise, or otherwise control the work of such employee.” It is the Neufeld Memo that elevates the right of control over all the other factors set forth in the regulation. Still, it is possible to invoke old decisions that recognize the separate existence of the corporate entity. It is well established that a corporation is a separate and distinct legal entity from its owners and stockholders. See Matter of M, 8 I&N Dec. 24, 50 (BIA 1958, AG 1958); Matter of Aphrodite Investments Limited, 17 I&N Dec. 530 (Comm.1980); and Matter of Tessel, 17 I&N Dec. 631 (Act. Assoc. Comm. 1980).  As such, a corporation, even if it is owned and operated by a single person, may hire that person, and the parties will be in an employer-employee relationship. This point needs to be brought out when advancing an H-1B for an entrepreneur. Still, we acknowledge that the H-1B petition may have more success when there is another investor or shareholder, and the beneficiary is not the sole owner of the entity. That person may be able to exercise control over the H-1B beneficiary, even if he or she has a minority interest. It may not be necessary to show that the other individual or entity has the power to discipline the beneficiary, but only that this person can exercise negative control over the beneficiary’s decisions. There is nothing preventing the other individual from being a family member, and the shareholder or director also need not be residing in the US.

Difficult as it already is to gain an H-1B through a startup, Senator Grassley is needlessly thwarting the intent of Congress under the H-1B visa program to attract entrepreneurs who will only benefit the country. And this is being done when we have such a paltry number of visas. With respect to H-1B filings under the FY2017 H-1B cap, some are of the opinion that there will be fewer H-1B filings because of the increase in the super fee from $2,000 to $4,000 and also since the F-1 Optional Practical Training program is vulnerable to attack in litigation. I completely disagree. The increase in the fee to $4000 will not deter certain employers dependent on H-1B or L employees from filing H-1B cases as there still continues to be a lack of skills in the US workforce,  and the need to execute and manage transformative IT projects with a skilled foreign IT workforce. Most of corporate America relies on the very employers who depend on skilled H-1B workers and have been unfairly penalized with the $4,000+ fee to keep their business and operations humming, which in turn benefit the American consumer. An increase in the fee thus will not be daunting whatsoever as the stakes are truly high for both IT consulting firms and most of corporate America.

Also, the prospects of the STEM or regular OPT being held invalid by a court create further uncertainty for the foreign entrepreneur. Fortunately, the likelihood of the court invalidating F-1 OPT is slim since the DHS has now allayed the court’s concern by proposing regulations for notice and comment under the Administrative Procedures Act. If at all there is any uncertainty with respect to OPT, entrepreneurs will be more concerned and will want to file H-1B petitions sooner than later while OPT is still in effect in order to ensure that there vital foreign worker can still be employed. This will create additional pressure on the H-1B cap, unless they are doing so in collaboration with universities and are seeking H-1B cap exemption.

All this demonstrates the need for more H-1B numbers rather than less as H-1B workers, including entrepreneurs, are essential for our economic growth and prosperity. The H-1B visa provides the entry point for someone to work in the United States, and in the absence of a special startup visa, the H-1B visa also serves an additional important purpose. Many universities have created programs to attract entrepreneurs and collaborate with them, so that they can legitimately take advantage of gaining H-1B cap exemption through INA 214(g)(5) and 214(g)(6). Senator Grassley’s letter may discourage USCIS adjudicators from granting H-1B visas filed by entrepreneurs, despite favorable policy guidance through Entrepreneur Pathways and provisions in the INA that provide cap exemption. Still, the USCIS should be assured that there is a sufficient legal basis to approve such H-1B petitions, and there is also undoubtedly a great policy argument, which Grassley overlooks, to allow entry of promising foreign entrepreneurs into the US in the hope that their startups will succeed, which in turn will create jobs and benefit the US economy.

Cyrus Mehta

Phantom Visa Statuses

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While life is fortunately not always so dull and single dimensional, a rigid immigration system may force you into a straightjacket. Is there any leeway in the US visa system that might enable foreign nationals to pursue interests outside the narrow purpose of their entry without jeopardizing their visa status?

One who comes on an H-1B visa to work for a specific employer as a software engineer may not be prevented from also pursuing activities that are permissible under a tourist visa – such as participating in a community orchestra as an amateur violinist or taking rock climbing lessons in Yosemite national park. Similarly, someone visiting the United States on a tourist visa should not be prevented from also participating on a business conference call relating to one’s occupation in his home country.  I for one have furiously sent business e mails back and forth in relation to my law practice in the United States while waiting in an immigration line of another country’s airport to enter as a tourist. Even before the age of smart phones and Skype, nothing prevented a tourist in the United States from jotting notes on a yellow pad in preparation for a business meeting that would take place in his or her home country after he returned.

There is nothing in the Immigration and Nationality Act that prevents one from engaging in activities in what I call a “phantom” status, provided they do not constitute unauthorized unemployment.  This is recognized in the State Department’s Foreign Affairs Manual (FAM) at 9 FAM 41.11 N3.1, which states that “[a]n alien desiring to come to the United States for one principal, and one or more incidental, purposes should be classified in accordance with the principal purpose.” The FAM note provides the example of a student who prior to entering an approved school wishes to first make a tourist trip of not more than 30 days. The FAM instructs that the person should receive the F-1 or M-1 student visa rather than a B-2 tourist visa.

The H-1B employee in the above example while working for her employer as a software engineer may decide to invest in a startup company. Preparatory activities such as meeting with corporate lawyers to incorporate the company and to market the business idea to venture capitalists would arguably be permissible under the B-1 business visa. Since one cannot hold H-1B and B-1 status at the same time, she can potentially engage in permissible business activities through this phantom B-1 status even while actually being in H-1B status. One must be careful, though, not to cross the line.  Once the startup is established and the H-1B worker manages its day to day affairs, she may engage in activities that would not be permissible under the B-1 visa and this would constitute unauthorized employment.

There is a clear prohibition against unauthorized unemployment. 8 CFR 214.1(e) provides:

Employment. A nonimmigrant in the United States in a class defined in section 101(a)(15)(B) of the Act as a temporary visitor for pleasure, or section 101(a)(15)(C) of the Act as an alien in transit through this country, may not engage in any employment. Any other nonimmigrant in the United States may not engage in any employment unless he has been accorded a nonimmigrant classification which authorizes employment or he has been granted permission to engage in employment in accordance with the provisions of this chapter. A nonimmigrant who is permitted to engage in employment may engage only in such employment as has been authorized. Any unauthorized employment by a nonimmigrant constitutes a failure to maintain status within the meaning of section 241(a)(1)(C)(i) of the Act.

The question is when does one cross that line so that it constitutes unauthorized employment? This is hard to tell, but the best way to gauge this is whether the activity would be permissible under the B-1 visa for businessor the B-2 visa for pleasure. Thus, our H-1B employee may regularly participate as a violinist in an amateur orchestra as such an activity would be permissible under the B-2 tourist visa. If the H-1B worker was also a professional violinist, and was paid to play in a professional philharmonic orchestra in the United States while on an H-1B visa, that would be an impermissible activity as it would constitute unauthorized employment. The most appropriate visa for a performer would be an O-1 visa (an H-1B visa claim for a violinist was turned down a few years ago, see Louisiana Philharmonic Orchestra v. INS). When there are two competing work activities that can only be done under different visa statuses, the person must choose to either be in the United States on an H-1B visa or an O-1 visa. It is unfortunate that our visa policy cannot accommodate a renaissance woman like our H-1B employee and violinist. On the other hand, if the work activities can be done under the same visa, the H-1B worker who is employed as a software engineer can also potentially be employed concurrently in H-1B status through her startup entity.

The ability to engage in activities under a phantom status is especially crucial in light of the USCIS policy to attract entrepreneurs to the United States under the existing visa system, and in the absence of a specific startup visa. One encounters many students who desire to establish startups while still in F-1 student status, or H-1B workers too who have dreams of leaving their existing jobs for the companies they have founded So long as their activities are preparatory in nature and otherwise permissible under the B-1 visa, they have arguably not violated their F-1 status. The USCIS Entrepreneur Pathway Portal provides a good explanation of activities permissible under the B-1 visa that could arguably be undertaken even while in another nonimmigrant status such as an F-1 or H-1B:

The B-1 visa is intended only for business activities that are a “necessary incident” to your business abroad. This covers a wide range of activities such as attending meetings, consulting with associates, engaging in negotiations, taking orders for goods produced and located outside the United States, attending conferences, and researching options for opening a business in the United States (such as locating or entering into a lease for office space). Generally speaking, you cannot engage in any activity or perform a service that would constitute local employment for hire within the United States. What constitutes local employment for hire will depend on the circumstances of each case, but generally speaking, any activity you perform in the United States must be directly connected with and part of your work abroad. 

If you are coming to secure funding for a new business, you cannot remain in the United States after securing the funding to start actual operations or to manage the business, unless you change status to another classification that authorizes employment in the United States.

In Garavito v. INS, the First Circuit shed further light on activities that might not constitute unauthorized employment in the context of one who had established a gas station in contemplation of later applying for an E-2 visa:

The INS nowhere explains, however, what law would prevent a business visitor from making phone calls, giving employees instructions, or taking clients to their cars. Indeed, were the INS regulations to make such activity unlawful, it is difficult to see how foreign businessmen could conduct business within the United States, and it is equally difficult to see how any such regulation could fall within the lawful scope of the relevant statute.

Once the line is crossed from starting to managing the business, the individual in F-1 status must change to H-1B visa status through the startup, or if already in an H-1B status must file a concurrent H-1B visa through the startup. There are other reasons why it is good policy to permit activities under a phantom status. A person admitted on a B-1 visa to participate in business meetings should also be permitted to engage in tourism. Likewise, someone who primarily enters the United States to visit family members should be permitted to participate in an incidental one hour business meeting without having to switch status from B-2 to B-1. In the same vein, it would be preposterous to penalize a tourist who engages in communications through her iPhone relating to professional activities outside the United States while rock climbing in Yosemite!

Cyrus Mehta

WHY WE SHOULD ALL BE MAD ABOUT THE H-1B VISA CAP

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The USCIS announced today, April 9, 2014, that it had received 172,500 H-1B visa petitions for the 65,000 H-1B regular cap and the  20,000 additional cap for graduates with advanced degrees from US universities. This is much more than the 124,000 H-1B visa petitions the USCIS received in 2014. The H-1B cap makes no sense, and here are 10 good reasons why we should all really be more upset about it this year for the simple reason is that we face the cap each year, and nothing ever changes. Enough is enough!

The first reason to be mad about the H-1B cap is that it forces employers to scramble way before the start of the 2015 fiscal year, which is October 1, to file for H-1B visas, only to get rejected by a randomized lottery. This is no way to treat US employers who pay thousands of dollars in legal and filing fees, along with all the steps they need to take in being in compliance. The whole concept of a nonsensical quota reminds us of Soviet era central planning, and then to inject a casino style of lottery into the process, just rubs salt into an oozing old wound.

Second, one can only feel for all the foreign national prospective employees, who all need to qualify to work in a specialty occupation, as defined under the H-1B visa law. Out of the 172,500 H-1B cases received, 87,500 people will get rejected. That is 87,500 hopes and dreams dashed. Many who are in the United States after graduating from American universities may have to leave. Others won’t be able to set foot into the United States to take up their prized job offers.

Third, imagine if all of these 87,500  who will be rejected could  actually come and work in the United States. Their employers would benefit and become more globally competitive – and could have less reason to outsource work to other countries. They would have also been productive workers, and spent money in the US economy, including buying houses and paying taxes. The H-1B cap has robbed the economy of this wonderful cascading effect.

Fourth, the USCIS has taken pains to encourage entrepreneurs to establish startups in the United States because of the potential of creating new technologies resulting in more jobs,  and keeping the country competitive. The entrepreneur portal encourages entrepreneurs to use the H-1B visa to sponsor themselves through their own startups. What a pity to lose out on that entrepreneur who could create the next Google or Tesla electric car.

Fifth, immigration attorneys and their staff who toiled away hard for the past few weeks will feel really bad for their clients, and also for themselves that their labor will not come into fruition.

Sixth, people who have lost the lottery will try to come to the United States under other options, which are much harder. They may also resort more to the B-1 business visa, and although the business visa is ambiguous enough to cover activities that go beyond a business meeting, many will fall afoul of the visa wittingly or unwittingly. Using the B-1 visa when the H-1B visa is not available is like engaging in risky unprotected sex. People will get into trouble at some point in time and the party will be over.

Seventh, the While House very recently announced that it would allow a limited number of spouses on H-4 visas the ability to work. The whole purpose is to encourage highly skilled people to work in the United States on H-1B visas. What is the purpose of such an announcement when the cap eliminates the ability of people to enter the United States on H-1B visas in the first place. It all feels like a joke, rather like flatulence, on this day when it was announced that 172,500 people applied for a meager 85,000 visas.

Eight, even the lucky ones who have gotten selected are by no means guaranteed that their H-1B cases will get approved. The USCIS applies rigidly impossible standards, and also reviews the cases unevenly, the California Service Center being far more cruel than the Vermont Service Center. And even those whose H-1B visa petitions get approved may not be issued visas at the US Consulates overseas, especially consuls in India who use the visa process as a trade barrier to curb the flow of Indian IT professionals from making it to the United States.  Then, those who finally make it will also likely get subjected to oppressive green card quotas down the road.

Ninth, one should also really be incensed at Congress for not doing anything about the 65,000 cap since 2003.

Tenth and lastly, even when Congress does get into the act of doing something, it may make things worse rather than better. The H-1B proposals in the Senate bill, S. 744, make the H-1B visa far more difficult to use and have an outer limit of 180,000. In other words, Congress may not be capable of fixing the problem.

Postscript:  I am actually an optimist, but the only way we can bring about positive change to the H-1B visa cap problem, is to collectively get mad about it!

Cyrus Mehta

THE BLOCKING OF AN ENTREPRENEUR: A BROKEN IMMIGRATION SYSTEM AT WORK

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3D printing technology is about to revolutionize the way we understand manufacturing, and the country that takes the lead in this new technology will be the winner ofwhat The Economist magazine has called the third industrial revolution. A state of the art hearing aid or a high tech component for a military jet can be designed through a computer and printed on an unattended 3D printer as a solid functioning object.

Yet, the US Customs and Border Protection on the Canadian border recently refused admission to a dual national Canadian/British entrepreneur JF Brandon who is part of a startup called D Shape – which has developed a large-scale 3D printer that will revolutionize the way architectural design is planned, and building constructions are executed. By simply pressing the “enter” key on the keypad D Shape gives the architect the possibility to make buildings directly, without intermediaries who can add interpretation and realization mistakes.

Although refused entry into the United States, Mr. Brandon participated in a panel discussion on February 13, 2012 at Brooklyn Law School in New York entitled Immigration Policy and Entrepreneurship: Challenges and Pathways for Startups. Thanks to technology that has now become so routine, he could participate through Skype from overseas, and told a riveted audience that he had been refused entry under a NAFTA TN visa to work for D Shape in New York, which is limited to certain occupational categories and applies to Canadian and Mexican citizens. For an individual who wishes to work in a business related field, the only TN occupational classification is “Management Consultant,” but the CBP official did not think Mr. Brandon would fall under this category as he would be more of a “Manager,” which is not a TN classification. Although he will try again for a TN visa, the H-1B visa category is more obvious,  which allows one to work in many more professional fields, but there are no H-1B visa numbers left for this fiscal year. If he applies for one, he will have to wait until October 1, 2013 to get in, and that too if he is lucky enough to get selected in the event that the USCIS receives more than the allotted 65,000 H-1B visas during the first week April 2013 – the first month when employers can file H-1B visas for an effective start date of October 1, 2013.  Other than the H-1B visa, there are few options for enterprising foreign entrepreneurs. The O-1 visa is limited to foreign nationals who can demonstrate extraordinary ability in their fields through sustained national or international acclaim. The L-1 visa is available to intra-company executives, managers or specialized knowledge employees who have been working for an affiliated overseas company for one year in the same capacities. The E-2 visa, applies to nationals of a few countries that have as treaty with the US (and Canada is one of them), but it requires the entrepreneur to make a substantial investment.

I was honored to be on the distinguished panel last week, along with Jeremy Robbins who is Director of the Partnership for a New American Economy and Special Advisor to Mayor Bloomberg, Michael Wildes, Partner of Wildes and Weinberg PC and Owen Davis, Venture Capitalist, Director of NYC Seed.  The moderator was Professor Jonathan Askin, who is the Director of the innovative Brooklyn Law Incubator Policy Clinic, which also sponsored the program along with New York Legal Hackers. Apart from the wonderful ambience and engaging audience –and there was jazz at the beginning and end of the program – the panelists generallypainted a grim picture of the visa options available to foreign entrepreneurs who wish to develop startups in the US. Indeed, Mr. Davis said that NYC Seed would be reluctant to fund foreign national entrepreneurs due to the inherent risks and uncertainties caused by the immigration system. Mr. Wildes described the many immigration options that exist in the US immigration system, but then qualified that it would be very difficult for an entrepreneur to take advantage of them. Under the H-1B visa program, for example, the USCIS insists on the need to show that the H-1B worker’s employment will be controlled by the employer, which will be difficult in the case of startup owned by the foreign national. This obstacle is in addition to the fact that H-1B visa numbers run out even before the start of the fiscal year. Even the E-2 visa is limited to nationals of treaty countries, according to Wildes, which does not include any of the dynamic BRIC (Brazil, Russia, India and China) countries.  I pointed out that there may be new hope, even amidst the bureaucratic “culture of no” mindset, in the USCIS’s new Entrepreneurs in Residence Initiative, where immigration officers have been trained to recognize the unique nature of startups, such as operating in stealth mode or not having an established office space. Control of employment may also be shown in other ways, through the need to maintain a separate existence between the corporation and the shareholder, as well as the possibility of minority shareholders exercising control through shareholding agreements or through their latent power to seek dissolution based on egregious conduct by the majority shareholders.  Mr. Robbins highlighted the political realities, which means that a new Startup Visa will only be enacted be when Congress rolls out a Comprehensive Immigration Reform bill.  Despite the importance of foreign entrepreneurs, and the fact that America knows best how to nurture entrepreneurship, there is little chance of a Startup Visa Act in the absence of Comprehensive Immigration Reform.

The take away from this program is that we clearly need Congress to create a Startup Visa rather than entrepreneurs using existing visas that were not designed for them, but those legislative proposals will flounder unless they are included in a Comprehensive Immigration Reform (CIR) bill.  One version of a Startup Visa would require the entrepreneur to invest a minimum of $100,000 in order to get a two year green card. To keep the green card past two years, the founder would need to create five jobs and either raise at least $500,000 in additional funding or $500,000 in revenues. Even if Congress enacted a Startup Visa, these requirements could be rather burdensome for a nimble entrepreneur who could still launch a successful business without an initial $100,000 investment. Thus, a CIR proposal can also tweak some of the existing visa categories to make it easier for founders to remain in the US as nonimmigrants and provide alternative pathways, such as by relaxing the element of control in the H-1B visa and also allowing a majority shareholder to be sponsored for a green card through the labor certification program. The well-intended guidance for entrepreneurs under existing visa categories should also be part of reform legislation rather than remain as mere guidelines that run the risk of not being followed by an immigration officer.  Otherwise, we will have initiatives like Blueseed, which envisages a ship in international waters off Silicon Valley that will serve as an incubator for foreign entrepreneurs to develop their startups without needing to get a US visa. They can visit shore briefly on a B-1 business visa for meetings, and then return to the ship to work at their startup. To add to the uniqueness of the entrepreneur and immigration program in Brooklyn, the founder of Blueseed, Dario Mutabdzija, also participated through Skype. I have a feeling that Blueseed will succeed even if we have CIR as there will always be entrepreneurs who may not be able to take advantage of onerous visa options in the early stages of the startup.

Finally, from my experience as a practitioner, I have seen that immigrants from all backgrounds can become entrepreneurs, and it is not necessary that only graduates from STEM (Science, Technology, Engineering and Math) programs will succeed with startups. A lesser educated immigrant with burning ambition, such as a cook, can one day start a restaurant chain just as a Ph.D in Engineering can develop the next generation 3D printer.  Both create more jobs – and America could also enjoy more cultural diversity through the businesses of foreign entrepreneurs.As I recently tweeted on Twitter, “We need both brilliant STEM and delectable tandoori chicken in America.” Thus, if the political reality is to include startup visa options in CIR, let’s bring it on sooner than later so that American will be able to benefit from the talents of foreign entrepreneurs of all backgrounds and stripes.

Cyrus Mehta

The Sweet Smell of Success: H-1B Visas for Entrepreneurs

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By Gary Endelman and Cyrus D. Mehta

The title of this blog may seem odd as the H-1B visa is usually associated with an employee who earns a regular wage at the prevailing rate. Yet, entrepreneurs may benefit from the H-1B. Since the USCIS recently set up an Entrepreneur Pathways Portal inviting entrepreneurs to use existing nonimmigrant visas, including the H-1B visa, an analysis on how the H-1B visa can be legitimately exploited by entrepreneurs is worthy of further  exploration.

At the outset, it is worth noting that law is neither applied nor interpreted in a vacuum but is suffused with the attitudes and assumptions of the adjudicator. The same is true here. What does the USCIS want to achieve through its new embrace of foreign entrepreneurs? What is its end goal? Does it accept the legitimacy of the H-1B and does it believe that its proper application or deployment will be in the national interest? Unless we know these things first, no formula or set of legal guidelines can result in a proper, informed decision.  In the end, unless and until the moral and ethical legitimacy of employment based immigration is both embraced and appreciated, there will not be the intellectual flexibility necessary to help entrepreneurs reach their dreams.

Last week’s blog summarized the nonimmigrant options for entrepreneurs suggested in Entrepreneur Pathways, and it also speculated whether this new welcoming embrace of foreign entrepreneurs may possibly change the “Culture of No” within USCIS, whose officials generally places a small business under a fraud profile. A startup may be even more rudimentary than an established small business and thus more susceptible to being viewed as a fraudulent artifice. Startups may not yet be generating a revenue stream as they are developing new technologies that may lead to products and services later on. Many have received financing through venture capital, angel investors or through “Series A and B” rounds of shares. Startups may also operate in more informal spaces, such as the residences of the founders (with regular meetings at Starbucks) instead of a commercial premise. Some are also operating in “stealth mode” so as not to attract the attention of competitors and may not display the usual bells and whistles such as a website or other marketing material. Startups may also not have payroll records since founders may be compensated in stock options. Still, such startups are legitimate companies that should be able to support H-1B, L, O or other visa statuses. While, in the past, USCIS has often been accused by critics of harboring a systemic bias against small business, Entrepreneur Pathways holds out the promise of a new and more welcoming attitude. The degree to which this flexibility will operate in practice will depend, in large measure, on the extent to which emerging companies and inventive business strategists press their case for immigration benefits.

Regarding the H-1B visa, it is true that 8 CFR § 214.2(h)(4)(ii) requires the existence of an employer-employee relationship, which includes the employer’s ability to “hire, pay, fire, supervise, or otherwise control the work of such employee.” Can the startup owner be able to sponsor himself or herself on an H-1B through the startup? The USCIS portal is surprisingly receptive, but still limited by the rigid methodology and narrow assumptions of the Neufeld Memo that elevates the right of control over all the other factors set forth in the regulation, such as the right to hire, pay, fire or supervise the employee. Still, the USCIS suggests that a startup may be able to demonstrate this if the ownership and control of the company are different. This can be shown through a “board of directors, preferred shareholders, investors, or other factors that the organization has the right to control the terms and conditions of the beneficiary’s employment (such as the right to hire, fire, pay, supervise or otherwise control the terms and conditions of employment).” Some of the suggested evidence could include a term sheet, capitalization table, stock purchase agreement, investor rights agreement, voting agreement or organization documents and operating agreements. Not only can observance of corporate formalities serve legitimate business interests and avoid the “piercing of the corporate veil”, by providing the patina of control over individual initiative they may also serve to convey immigration benefits.

The ethos of any new business idea is change, an unwillingness to sacrifice creativity and growth on the alter of certainty.  It is the preference for certainty, however, most notably reflected in the Neufeld Memo that  may make it difficult for the 100% owner of a startup to successfully obtain an H-1B visa. If the beneficiary has not only conceptualized the business, but also invested only her own capital, it will be difficult for her to have a board of directors that can have the ability to discipline or fire her. Indeed, noted attorney David Ware asks a good question: “What entrepreneur in his or her right mind is going to invest blood, sweat and tears, not to mention money, in an entity holding this power?”  If we expect the entrepreneur to take a chance, must not the USCIS itself accept some measure of risk?  Concern over fraud, while totally legitimate, must be balanced against no less compelling concerns for allowing the honest expression of commercial imagination.

Although Mr. Ware’s point is well taken, we caution against being completely dismissive of the USCIS effort to welcome entrepreneurs, especially the H-1B visa, which one can have more access to over other visas such as the O-1, E-2 or L-1A. The agile practitioner should invoke old decisions that recognize the separate existence of the corporate entity. It is well established that a corporation is a separate and distinct legal entity from its owners and stockholders. See Matter of M, 8 I&N Dec. 24, 50 (BIA 1958, AG 1958); Matter of Aphrodite Investments Limited, 17 I&N Dec. 530 (Comm.1980); and Matter of Tessel, 17 I&N Dec. 631 (Act. Assoc. Comm. 1980).  As such, a corporation, even if it is owned and operated by a single person, may hire that person, and the parties will be in an employer-employee relationship. This point needs to be brought out when advancing an H-1B for an entrepreneur. Still, we acknowledge that the H-1B petition may have more success when there is another investor or shareholder, and the beneficiary is not the sole owner of the entity. That person may be able to exercise control over the H-1B beneficiary, even if he or she has a minority interest. It may not be necessary to show that the other individual or entity has the power to discipline the beneficiary, but only that this person can exercise negative control over the beneficiary’s decisions. There is nothing preventing the other individual from being a family member, and the shareholder or director also need not be residing in the US.

There are other difficulties for an H-1B entrepreneur that may be beyond the USCIS’s control. Every H-1B petition must be accompanied by a certified Labor Condition Application from the DOL. Under an LCA, the employer attests that it must pay the beneficiary the higher of the prevailing or actual wage, and must also do so on a regular prorated basis. In a startup, there may be no revenue stream to pay the entrepreneur initially. Thus, unless the startup is sufficiently capitalized through venture capital or other forms of financing that can ensure a steady stream of income to the H-1B beneficiary at the required wage, the petitioning entity may be in violation of the DOL rules if it cannot guarantee a regular prevailing wage.

Also, a DOL rule at 20 CFR § 655.731(c)(9)(iii)(C) states that any attorney fees paid by the H-1B beneficiary will be viewed as a lowering of the required wage that the employer is required to pay the beneficiary. There is also a prohibition of the employee paying the training fee of $750 or $1,500. In the case of a startup, where the H-1B beneficiary has invested his own money into the enterprise, the fact that the petitioning entity makes these payments ought not to be viewed as a violation of the DOL rules regarding impermissible payments. Since it is the entity that is making these payments, which is considered separate from the beneficiary, and which also controls the beneficiary, it should not be viewed as impermissible. Otherwise, there is no way that the USCIS can promote the H-1B to entrepreneurs.

Even if an H-1B founder of a company successfully establishes that the entity can control her employment through a board of directors or through preferred shareholders, the USCIS could likely challenge whether a position in a startup, where the beneficiary may be wearing many hats, can support a specialized position. The H-1B visa law requires the petitioner to demonstrate that a bachelor’s degree in a specialized field is the minimum qualification for entry into that occupation. Also, positions in innovative startups may not necessarily fit under the occupations listed in the Department of Labor’s Occupational Outlook Handbookbut may yet require at least a bachelor’s degree. It is hoped that USCIS examiners are trained to be receptive to other evidence to demonstrate that the position requires a bachelor’s degree. Furthermore, an MBA degree should be considered a specialized degree in itself since many MBA programs at top business schools focus on entrepreneurship and other fields, such as technology or web analytics, which equip one to be a successful entrepreneur. The very notion of specialized occupations has and will continue to change as the pervasive impact of technology in the Internet Age makes itself felt at all levels of economic activity.

While there are insurmountable hurdles for H-1B entrepreneurs, it is hoped that the USCIS will make every effort for the program to work for them. The H-1B is the most accessible visa to a foreign student as the E-2 visa only applies to nationals of limited countriesthat have a treaty with the US, and none of the BRIC countries have such treaties. Very few entrepreneurs can qualify as extraordinary under the O-1 and the L-1A visa would only apply to an individual who has been employed overseas for one year in the past three years in an entity that has a parent, subsidiary, affiliate or branch in the US. It also raises a larger question: How can we use US immigration policy not merely to preserve the status quo but actually create wealth and jobs? For it to work successful, USCIS officials have to examine and approve cases consistent with this objective. The problem goes beyond the “Culture of No.” The USCIS should think of immigration in a strategic sense as a mechanism to create wealth and expand the economy. Presently, USCIS thinks in static terms so naturally the focus is on protecting what now is and judging people not by their potential but by their documented accomplishments. USCIS, on the other hand, should think like an entrepreneur so as to avoid a dissonance or disconnect between the regulators and those whom they regulate. The USCIS Entrepreneur in Residence program, from which the Entrepreneur Pathways portal has ensued, appears to be a step in the right direction. Only time will tell whether it will truly serve the needs of entrepreneurs. The willingness of the entrepreneur to take risks must be matched in full measure by an immigration system that also embraces the value of innovation. As T.S Elliot famously reminded us: “Only those who risk going too far can possibly find out how far it is possible to go.”

Cyrus Mehta

HR 3012: A Good Bill Saddled With a Bad Amendment

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By Myriam Jaidi

As Cyrus Mehta noted in his December 7, 2011 blogpost regarding H.R. 3012, “How Fair is the Fairness for High-Skilled Immigrants Act?”, although not a perfect bill, H.R. 3012 passed the House in November 2011 by a landslide. The bill, as passed by the House, would eliminate the employment-based per country cap entirely by 2015 and raise the family-sponsored per-country cap from 7% to 15%. The passage of this bill by a margin of 389-15 signaled the strong bipartisan concern with the significant inequities in the immigrant visa system with regard to individuals from certain countries, especially individuals from India and China sponsored for employment-based immigrant visas. Although the country limits addressed by H.R. 3012 were originally enacted for all countries, these limits have resulted in mind-boggling wait times for people from India and China. For example, for Indians in the employment-based third preference (EB-3) category, some have estimated the wait times could be up to 70 years!

The landslide, bi-partisan passage of H.R. 3012 in the House was also proof positive that Congress, despite the gridlock and often seething partisanship, is in fact deeply concerned with repairing our country’s dysfunctional and unfair immigration system, especially in at a time when economic and global realities require the United States to reform the system to facilitate our ability to compete more effectively in the global economy. Both our “home-grown” and imported talent will mutually benefit from more reasonable access to visas for highly-skilled immigrant (and nonimmigrant) workers, as many U.S. business leaders such as Bill Gates have attested (see pages 12 to 14 of his testimony). Further proof of that fact is the strong support of entrepreneurs, both foreign and domestic, by the Obama Administration, as demonstrated by the Start-Up America and Entrepreneurs in Residence initiatives.

Then along came Senator Grassley’s hold on the bill in December 2011. After extensive negotiations, on July 11, 2012, Senator Grassley lifted his hold. To remove the hold, senators in favor of the original bill reached what may well be a sort of “Faustian bargain” with Senator Grassley. In order to agree to lift the hold on the bill, Senator Grassley demanded provisions that could severely hamper the already difficult H-1B nonimmigrant visa process and, in tandem with that, hamper U.S. businesses and their ability to compete in the global economy.

So, what’s the big deal? This is what Senator Grassley had to say about the amendment he proposed:

[T]here is agreement to include in H.R. 3012 provisions that give greater authority to program overseers to investigate visa fraud and abuse. Specifically, there will be language authorizing the Department of Labor to better review labor condition applications and investigate fraud and misrepresentation by employers. There is also agreement to include a provision allowing the Federal Government to do annual compliance audits of employers who bring in foreign workers through the H–1B visa program.

I appreciate the willingness of other members to work with me to include measures that will help us combat visa fraud, and ultimately protect more American workers.

Sounds fine, right? Protect American workers, combat fraud, what’s wrong with that? There is of course nothing wrong with protecting American workers and preventing fraud. Supporters of the amendment seem to frame their support in the same way that people who criticize the Constitutional protections against unreasonable searches and seizures and self-incrimination frame those criticisms: if companies are not doing anything wrong, they have nothing to fear, right, from a search, seizure or questioning?

Senator Grassley’s description of his proposed amendment is something of a gross oversimplification. First of all, the amendment covers issues already addressed by existing law so query whether the amendment will serve any constructive purpose. The Immigration and Nationality Act (“INA”) and implementing regulations, as well as the related rules promulgated by the Department of Labor (“DOL”) addressing the process of obtaining approval of a labor condition application (“LCA”), the necessary first step of the H-1B sponsorship process, already include extensive protections for American workers and provisions to search out and punish fraud, if it does occur. Just to name a few examples, the existing rules require notice to “U.S. workers” (which, pursuant to the DOL regulations at 20 C.F.R. § 655.715, include citizens or nationals of the United States as well as green card holders, refugees, asylees, or “an immigrant otherwise authorized (by the INA or by DHS) to be employed in the United States” – it is unclear who Senator Grassley’s term “American workers” includes), provide minimums for offered salaries to ensure that such salaries do not undercut the salaries of U.S. workers, and where employers are “H-1B dependent”, the rules require, if such employers offer a salary of less than $60,000 per year, that they attest, and when called upon to do so, demonstrate, that they have made good faith efforts to recruit U.S. workers for the offered position (see 20 C.F.R. § 655.738-655.739)). Penalties for violations of the rules are already included in the statute and governing regulations (see INA § 212(n)(2)(C)).

So what does Senator Grassley’s amendment do? The amendment changes, but does not clarify, the trigger for DOL review of an application from “only for completeness and obvious inaccuracies” to “for completeness, clear indicators of fraud or misrepresentation of material fact.” The amendment does not define what might constitute “clear indicators of fraud or misrepresentation of material fact,” although these may be similar to the ones some authors have observed that USCIS followed (and may still) as indicators of fraud in H-1B cases: companies grossing under $10 million per year, companies with less than 25 employees, companies established less than 10 years ago, etc. Grassley’s amendment to the bill also changes the investigation process by removing the need for “reasonable cause” to conduct an investigation based upon a complaint, which continues to be the basis on which an investigation may be commenced. Thus, any complaint, reasonable or not, received by the DOL about an employer could serve as the basis for an investigation.

What does this mean for the process? It could bring the process of getting an LCA approved to a standstill and therefore limit or even prove fatal to an employer’s ability to hire a highly skilled foreign worker on an H-1B nonimmigrant visa. First, let us consider cap-subject cases. Each fiscal year, only 65,000 H-1B visas are available and time is usually of the essence because the H-1B cap “opens” on April 1, for an October 1 start date for cases subject to the cap, and in many years, the cap was often reached on or soon after that April 1 date, so there is great competition for these visas and having them ready to file on time is crucial. Currently, the process of getting an LCA approved takes about 7 business days. During this period, the DOL checks for obvious inaccuracies, checks the existence of the employer, salary details, and whether the employer has made the appropriate attestations, among other details. This 7-day period is a built-in delay of the process. Under the current laws, an investigation may be conducted for a period of up to 60 days (see INA § 212(n)(2)(G)(viii)). Under the proposed amendment, there appears to be no time limitation on the length of time an investigation may continue.

Without any sense of how long an investigation may take, and given the uncertainty of the trigger, an employer who is certain it wants to hire an individual for an October 1 start date, cannot build in more than 6 months of precautionary time for what could amount to a random investigation, because the current process does not allow an LCA to be prepared and submitted to the DOL for processing more than 6 months prior to the intended start date of the H-1B visa. For cases that are not cap subject, such as a company hiring an individual who already holds H-1B status, the risk is losing a highly-skilled prospective employee who may be desperately needed because of uncertain delay in the very first step of the process. The portability process created by the American Competitiveness in the 21st Century Act (“AC21”), which allows a change to a new employer immediately after that employer files an H-1B petition, cannot do anything for an employer looking to transfer someone’s H-1B to their company if they cannot get the H-1B petition filed because the LCA process is held up by investigation. Viewed in this light, this amendment to a well-meaning bill would obstruct the flexibility promoted by AC21, the intent of which was to promote the United States’ ability to compete in the 21st Century!

Senator Grassley’s amendment also allows the DOL to conduct “surveys of the degree to which employers comply” with Grassley’s new LCA regime. Exactly how such surveys would be conducted, who would be involved, and how long they might take is unstated. Under Senator Grassley’s amendment, the DOL may also conduct annual compliance audits of any H-1B employer. Of course, compliance audits are already a part of the existing rules. However, the new twist is that the DOL must conduct such annual compliance audits of “each employer with more than 100 full-time equivalent employees who are employed in the United States if more than 15 percent of the number of such full-time employees are H-1B nonimmigrants . . . .” Although there is a four-year period between allowed compliance audits for employers who pass muster, the amendment also provides for publication of the DOL’s findings. Given the current anti-immigrant climate and the tendency of many people to blame foreign workers for the lack of available jobs, publishing results even of companies who are completely in compliance could lead to backlash against the companies, or could lead companies to avoid hiring foreign workers in the United States, and perhaps moving operations overseas or to Blueseed to avoid exposure.

Removing per-country limits on employment-based immigrant visas and increasing the limits on family-based immigrant visas are obviously laudable goals, but query what risks Senator Grassley’s amendment poses. The reality appears to be that the amendment will not serve its stated ends but rather will serve to obstruct access to highly-skilled foreign workers and undermine U.S. businesses and their ability to compete in the global economy. Perhaps it would be best if H.R. 3012 were passed – without Senator Grassley’s amendment.