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An H-1B Visa Holder’s Own Company Can Sponsor Him (Sometimes) for an H-1B Visa but Not a Green Card

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by DANIELLE NELISSE, Immigration Attorney

Explaining idea 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 an American company, whether the person lives in the United States or not.

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 they are finished for the day working for their H1b employer legalizing their own LLC or Corporation and then obtaining a business license for their new American company.  The H1B visa holder is allowed to lease office space and hiring Americans to work for their company. Their new corporation can also purchase an existing American company. For example, many Indian veterinarians have created new American LLCs or Corporations.  Their LLC or Corporation then purchases one or more fully staffed animal hospitals.

After their company is operational, the H-1B visa holder may accept profits from his own company. In other words, a foreign national may own an American company and collect the profits, but he cannot work as an employee for that company without work authorization.

close up of young indian business man enjoying coffe during workIn certain circumstances an H-1B visa holder may start his own company and get an H1b visa to work for that company.

When Can a Foreign National get an H1B Visa to Work for His Own Company?

  • Company Must Be Operational and Have Ability to Pay H1B Visa Salary

The U.S. Citizenship & Immigration Service (USCIS) will not approve an H-1B visa petition unless they are convinced that the applicant is a legitimate company that will be able to generate enough revenue to pay an H-1B visa salary. Normally a company needs to be operating for at least 6 months (1 year is better) to prove that it has enough clients to pay an H1b salary.

  • H1B Beneficiary/Owner Must be “Employee”

The USCIS can insist that an “employment relationship” exists whereby the employer (normally through its board of directors) has the power to “hire, fire, pay, supervise, or otherwise control the work of every H-1B employee.”

Generally, it is hard to believe the owner of an American company would fire himself. On the other hand, the USCIS agrees that a corporation is a separate legal entity from its owner. As such, the corporation can try to establish a valid employment relationship with its owner and pay salary, and benefits, through legal documents. 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 try to sponsor its owner as an H-1B employee so long as it follows all the H-1B rules.

  • Percentage of Ownership Not Specified – But Less than Majority Ownership Recommended

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. But as of May 1, 2015 there are specific questions on the new I-129 petition (see below) asking if the person being sponsored for an H-1B visa owns part of the company, which means that the willingness by the USCIS to grant an H1b to someone who has part or majority ownership in the H1b sponsor company could be required to prove that they are truly an employee that can be fired by the American company.

Even though there is no law regarding what percentage of ownership is acceptable, in cases where the prospective H1B employee has owned a majority interest of the sponsoring employer the USCIS has taken the position that this may cast doubt on whether the employer has the ability to exercise control over the worker. A person that owns more than 50% of a company’s outstanding shares is considered a majority owner. My conclusion is that the lower the percentage of ownership, the higher the chance of getting the H1B visa approved.

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 an employer sponsored green card because there is a rule against granting green cards to the owner of a company (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 the green card processing, 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” in 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.

Diverse business colleagues working together via the internetThe 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:

  1. A copy of the articles of incorporation, partnership agreement, business license or similar documents;
  2. 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;
  3. 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
  4. 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.
  5. 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 the USCIS regulations. 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, only 75% of Labor Certification cases are approved nationwide (including cases where the employee is not an owner) 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.

IMPORTANT 2015 UPDATE:  The I-129 H1b application (called a “petdanielle nelisseition”) now requires that the employer answer this question (Page 13, Question 7): Does any beneficiary in this petition have ownership interest in the petitioning organization [the employer]? If yes, please explain.

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 either their H-1B visa or their green card (permanent residence).

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