Options for Foreign Companies Doing Business in the U.S. - Immigration Perspective (L-1 Intra-Company Transferees)

Published on 30 June 2014 Hits: 717

When a company, owned by foreign national(s), wishes to transfer their home-grown employees and/or hire non-U.S. Citizens to conduct business in the United States, it needs to ensure that these foreign employees will have a legal authorization to work and the employer meets all legal responsibilities that the U.S. law requires. In the next few articles, I will explain the companies' options and provide some useful background information. I will first begin this series with L-1 Intra-Company Transferees.

In the spirit of facilitating international economic development, the L-1 category was created to allow foreign companies, or U.S. companies with foreign affiliates or subsidiaries, to temporarily and with ease transfer important executives and managers ("L-1A") and technical personnel having "specialized knowledge" ("L-1B") to U.S. affiliates, branches, subsidiaries, or parents, in the United States. If the company later chooses to petition permanently for the transferee, high executives and managers, almost always who are already in L-1A status, may qualify for a 'green card' under the employment-based first preference immigrant category.

This category is a popular way for larger and established international companies to bring important foreign employees to the United States. Of course, this non-immigrant visa is also available to smaller entities including family-owned and operated businesses that have the financial ability to open and operate a U.S. enterprise (while maintaining the foreign parent's operation). In both cases, in order to utilize the L option, the employee must have worked abroad for the overseas company for a continuous period of one year in the preceding three years, the company abroad must be the same employer or a subsidiary or affiliate of the U.S. company, and both parent and subsidiary must be doing and maintaining business activities (for the L status to lawfully continue). In comparison with other options available to the companies doing business in the U.S. (including the E and H categories), the L option is especially useful when the company is transferring executives or managers, or other essential employees to establish a new office in the United States, or to a subsidiary or affiliated existing office that would not otherwise be able to confer E-1 or E-2 visa status on its employees or executives/managers. For example, unlike E visa status, the L visa does not require the employee and the employer to share the same 'treaty country' nationality. New Office Where the company does not have existing commerce, established clientele, or a substantial investment in the U.S. and wishes to set up a subsidiary or affiliate, L-1 visa category may prove to be most useful. Under this visa category, employees, including owners, may be transferred to the United States for the purpose of opening a new office. At this time, the company may be cautiously approaching the new market and may not be ready to make a substantial investment. The L category allows a company in such a situation to transfer one of its trusted employees to come to the U.S. and help establish a new office even with minimum investment.

At this point, when the L-1 petition is filed with USCIS, the new office does not have to be fully established, or show revenues; however it must have a physical location, and be able to convince the U.S. immigration service of its credibility and viability (usually in the form of a business plan). Of course, financial support from the foreign parent or entity is also a must. Generally, this preparatory work can be performed by somebody already in the United States, i.e., the company's American representative or a foreign employee during a B-1 short-term business stay.

It should be noted that the initial approval period of such a case will be limited to one-year, after which additional evidence will have to be filed to show the U.S. office's continuing need for such employee. Extensions L-1A stay for executives and managers can be extended up to 7 years and L-1B stay up to 5 years in total. Contrary to popular belief, the initial approval of L-1 petition does not assure the approval of extensions. L-1 extensions can be easily denied on several grounds.

If the US office is relatively young, the company will have to show it is in the process of carrying out the original business plan, is a real operating business, and continues to require the expertise of the L-1 personnel. Oftentimes, the issue will be one of "what or who is there to manage or be an executive over?" If the US office is more established, the continued reliance on a foreign national, as opposed to U.S. workers, may be questioned. In all circumstances, the legitimacy of the U.S. operation and the qualifying role of the L-1 personnel must be proven for a successful extension. It should be also noted that the USCIS has at times launched an investigation into the American operation and revoked approved petitions if the real situation was found inconsistent with the petition. Blanket L Petitions (under review for changes) For Multinational companies that regularly relocate their people, they may be able to utilize blank L-1 petitions instead of individual petitions for maximum flexibility and speed. This is suitable for established transfer programs.

Employers, interested in Blanket L status, must meet four basic requirements. 1. The employer must have an office in the U.S. that has been doing business for one year or more. 2. The employer has to be a multinational organization, with at least 3 or more foreign branches, subsidiaries, or affiliates. Common ownership and control (50% or more) must exist for each one of these entity to be included in the Blanket L entity list. 3. The employer, and each of the listed entities, must be engaged in either commercial trade or services. Thus, a non-profit employer may not qualify. 4. The employer, alone or in combination with other qualifying entities on the list, must meet one of three criteria: $25 million in combined annual sales; 10 L-1 visa petition approvals in one year; or a U.S. workforce of at least 1,000 employees.

The approval of the initial Blanket L petition for an employer means that USCIS authorizes the entities listed on the approved entity list to transfer employees under the Blanket L procedures. A qualifying organization listed in the approved Blanket L Petition may not transfer an employee to or from a corporate entity not listed on the approved Blanket L entity list. However, newly acquired entities may be added to the Blanket L entity list by the filing of an amended Blanket L petition. Limitations There are maximum allowed stay limitations on both L-1A (7 years) and L-1B (5 years). The company can only transfer employees that have worked for the foreign parent for 1 out of the past 3 years. The foreign parent must continue to do business, and the relationship between the foreign parent and U.S. entity must remain the same to maintain L-1 status. Thus, if the corporate relationship or ownership structure changes, the company and employees might have to quickly change to another option. Also, USCIS approval is required before a visa can be issued, and petitions for extension must be submitted every 2 years to continue in the L-1 status. Advantages Those executives and managers who are already in L-1A status may qualify for permanent residence under the employment-based first preference immigrant category and therefore avoid the lengthy and laborious labor certification process normally required. Also, unlike most other non-immigrant visa categories, L-2 dependent spouses are not only permitted to attend school but also seek an employment card after obtaining a spousal employment authorization.

In Conclusion Although the L-1 visa category is very useful for companies with U.S. affiliates, subsidiaries, or parents, or for those who desire to open such an entity, it is important to note that this category is only applicable to those employees who have a specific existing relationship with the company. The sister E 'treaty-trader and treaty-investor visa category, which will be discussed in my next article, is another useful vehicle for business expansion and entrepreneurs.

Mario Guevara-MartinezJune 30, 2014