An H-1B Visa Holder’s Own Company Can Sponsor Him for an H-1B Visa but Not a Green Card
Unlike many other countries, America allows each of its 50 states to have their own rules concerning the formation of companies. All of the 50 states allow foreign nationals to form a company, whether the person lives in the United States or not. Most foreign nationals are not violating any laws by forming a company in America, so long as they are not being paid for “working” in the company that they own.
Foreign nationals who are already in the U.S. working in H-1B visa status for an American employer may start up their own company. They can spend time after work forming the LLC or the Corporation (not an S Corporation), obtaining a business license, leasing office space, and hiring Americans to work for their company. They can also purchase an existing company.
After their company is running, the H-1B visa holder may also accept profits from his own company. In other words, a foreign national may own a company and collect profits, but he cannot work for that company without work authorization.
However, in certain circumstances an H-1B visa holder may start his own company and work for that company. In order for the person who is already in America on an H-1B visa to work for their own company, their company must file an H-1B visa petition on his behalf. In this scenario, it is prudent to await approval before actually working for the new company.
The U.S. Citizenship & Immigration Service (USCIS) will not approve the H-1B visa petition unless they are convinced that the company is a real, legitimate company and will be able to generate enough revenue to pay an H-1B visa salary. It is advisable to provide a business plan as well as copies of contracts with client companies, and a business lease as proof of a legitimate company.
There is no law or regulation that sets any definitive standards as to exactly what type, degree or percentage of ownership is acceptable for approval of an H-1B visa for a company founder. Further, there are no specific questions on any of the forms asking if the person being sponsored for an H-1B visa is an owner of the company.
However, the USCIS can insist that an “employment relationship” exists whereby the employer has the power to “hire, pay, fire, supervise, or otherwise control the work of every H-1B employee.”
Generally, it is hard to believe the owner will fire himself. On the other hand, the USCIS agrees that a corporation is a separate entity from its owner. As such, the corporation can establish a valid employment relationship with its owner and pay salary, benefits, etc. Indeed, this is very common in American businesses. When a business is incorporated, the founder can be considered an employee for tax, insurance, H-1B visa and other business purposes. Therefore, a corporation can sponsor its owner as an H-1B employee so long as it follows all the H-1B rules.
Sponsoring Your Own Green Card
The biggest hurdle faced by H-1B visa foreign nationals is that the company they own (or that a relative owns) cannot sponsor them for a green card because there is a rule against granting green cards to an owner (or even part owner in some circumstances). For an employer to sponsor an H-1B employee for a green card, in the majority of cases, the employer has to first go through a process known as “Labor Certification” with the Department of Labor (DOL).
To successfully complete this process, the company has to prove to the DOL that it has attempted to find a qualified U.S. worker to fill the job opening by advertising for the position and interviewing all the job applicants. The DOL has to believe that the company was fair when interviewing the U.S. workers, and is giving the foreign worker a green card only because they could not find any qualified U.S. workers to work in the position for the salary offered.
It’s easy to see why the DOL has a hard time believing that there were no qualified U.S. workers when the person who will be getting the green card has a “controlling interest” over the sponsoring company. The company has to tell the USCIS which owners have a controlling interest (or at least some influence) on the company and this triggers a more strict than normal review by the DOL before approving the Labor Certification.
Many immigration attorneys will not agree to take this type of green card case even if a spouse, other relative, or friend owns the”controlling interest,” because the Labor Certification will probably be denied because of their influence on the company.
The law is such that the employee who gets the green card may not exert any influence over the Labor Certification process because it creates a conflict of interest concerning the U.S. worker interview process.
One of the forms used in the Labor Certification process, Form ETA 9089, (Question C5) asks: “List the number of employees in the area of intended employment.” Question C9 on Form ETA 9089 further asks for a “Yes” or “No” to the following question: “Is the employer a closely held corporation, partnership, or sole proprietorship in which the alien has an ownership interest, or is there a familial relationship between the owners, stockholders, partners, corporate officers, incorporators, and the alien?” If the employer indicates that it has less than 10 employees in C5 or if the employer states “Yes” to C9, the application will trigger an audit.
In the event of an audit, the employer must be able to demonstrate that the future green card holder has no influence over the company and that the existence of a “bona fide job opportunity” (that the job is available to all U.S. workers) exists, through the following documentation:
A copy of the articles of incorporation, partnership agreement, business license or similar documents;
A list of all corporate/company officers and shareholders/partners of the corporation/firm/business, their titles and positions in the business’ structure, and a description of the relationship to each other and to the alien beneficiary;
The financial history of the corporation/company/partnership, including the total investment in the business entity and the amount of investment of each officer, incorporator/partner and the alien beneficiary; and
The name of the business official with primary responsibility for interviewing and hiring applicants for positions within the organization and the name(s) of the business’ official(s) having control or influence over hiring decisions involving the position for which the Labor Certification is sought.
If the alien is one of 10 of fewer employees, the employer must document any family relationship between the employees and the alien.
There is no clear definition of “family relationship.” In past cases, relationships that caused the USCIS to disbelieve a “bona fide job offer” (real job offer) occurred when the foreign national were related to the owners by “blood,” had financial ties to the owners, were related by marriage to the owner, or had friends who owned the company.
Being an investor or having some sort of relationship with the employer does not create an automatic bar against establishing a “bona fide job opportunity” but it does give rise to greater scrutiny. The government examines the “totality of the circumstances” when determining whether or not the job is a “bona fide job opportunity.” Examples of factors considered by the government are:
Whether the foreign national was in the position to control or influence hiring decisions regarding the job for which labor certification is sought.
Whether the foreign national were related to the corporate directors, officers, or employees.
Whether the foreign national was an incorporator or founder of the company.
Whether the foreign national has any ownership interest in the company.
Whether the foreign national was involved in the management of the company.
Whether the foreign national is on the board of directors.
Whether the foreign national is one of a small number of employees.
Whether the foreign national has qualifications for the job that are identical to specialized or unusual job duties and requirements stated in the application.
Whether the foreign national is so inseparable from the sponsoring employer because of his or her pervasive presence and personal attributes that the employer would be unlikely to continue the operation without him.
In general, approximately 75% of Labor Certification cases are approved nationwide and no immigration attorney can guarantee success in a particular case. There are so many minute details necessary for successful green card processing — in the end it is up to the discretion of the U.S. government.
If at all possible, a foreign national should try not to take the risk of having any ownership interest in a company that is going to sponsor their H-1B visa or their green card.
If you would like to speak with an experienced attorney, please contact the Ibrahim Law Group at (201) 781-7800 to arrange a free consultation. We defend individuals throughout NJ, including Passaic County, Hudson County, Union County, Essex County, Bergen County, Morris County and Jersey City.