In recent years, despite the U.S.’s rich history as a haven for ambitious immigrants, many foreigners looking to work in the U.S. have had to cope with increasingly restrictive immigration policies. As a result, the number of immigrant-founded startups in Silicon Valley, to take an example, has declined from 52.4% in 2005 to 43.9% in 2012. A few days ago, on November 28, 2012, U.S. Citizenship and Immigration Services (USCIS) Director Alejandro Mayorkas marked a significant milestone for the USCIS Entrepreneurs in Residence (EIR) initiative by launching an online resource center. The resource center, Entrepreneur Pathways, provides entrepreneurs who seek to start a business in the United States an intuitive way to navigate the immigration process.
The Online Entrepreneur Resource Center
By launching the online resource center, USCIS acknowledged that “our nation has always attracted individuals with great drive and entrepreneurial spirit.” As the world’s greatest economy and a global leader in innovation, the United States must continue to welcome and retain the next generation of foreign entrepreneurs who will start new businesses and create new jobs here in America.
The Online Entrepreneur Resource Center is essentially a collection of materials describing (in a fairly cursory manner) the visa options for foreign entrepreneurs. The guide has few sections, explaining what visa options there may be, how to file an application, what happens after approval, when an arrival can be expected, etc. However, the descriptions and guidance provided are extremely broad and vague and are unlikely to provide an entrepreneur, willing to start a business or invest a substantial amount of funds, the level of accuracy and detail which are key for a sound business decision.
Clarifications to Options for H-1B Holders-Entrepreneurs
An interesting portion of the guide is how it deals with the option for H-1B work visa for entrepreneurs. Our office has previously reported on the problems H-1B holders entrepreneurs face in the U.S. Specifically, the issue of “right to control” (discussed below) effectively prevented many foreign entrepreneurs establishing a company and then having this company sponsor an H-1B for them.
By way of background, the H-1B temporary work visa program was made off-limits to many individual entrepreneurs, as a result of the January 8, 2010 Neufeld Memorandum which required each H-1B work visa petition to show that the petitioning employer has the right to control, including to hire and fire, the foreign national employee. Most often entrepreneurs are the owners or have a controlling interest over a company, and the right to control in many cases could not be shown. Effectively, the Neufeld Memorandum prohibited H-1B self-sponsorship for foreign entrepreneurs. In subsequent guidance, USCIS has indicated that certain corporate structures may permit companies to sponsor H-1B work visas for founders/owners if there is a mechanism (such as independent board of directors) which can provide the company’s right to control over the sponsored H-1B employee/owner.
The Online Entrepreneur Resource Center provides more information on the kind of documents/information which may be needed to establish the employer-employee relationship (or the right to control). Specifically,
If you own your company you may be able to demonstrate an employer-employee relationship if the ownership and control of your company are different. For example, if your company has a board of directors, preferred shareholders, investors, or other factors that show your organization has the right to control the terms and conditions of your employment (namely the right to hire, fire, pay, supervise or otherwise control the terms and conditions of employment), you may be able to meet this requirement. Some of the evidence you may submit to demonstrate the distinction between your ownership interest and the right to control your employment includes: Term Sheet, Capitalization Table, Stock purchase Agreement, Investor rights Agreement, Voting Agreement, Organizational documents and operating agreements.
This additional information is helpful as it provides a clearer guidance on what USCIS is looking for. Essentially, it seems that they may consider the employer-employee relationship and the right to control established when the ownership (by the sponsored entrepreneur) and the control (voting, etc.) are by different parties. In many situations, this may permit a foreign entrepreneur to qualify for H-1B; however, in many others, especially small startup companies, this structure may not be feasible or practicable.
In the welcome move, the EIR initiative announced that while the entrepreneurs will not be able to file the petition on their own behalf, in some cases the business entity that they will run or create may file as their employer. This effectively contradicts the 2010 Neufeld Memorandum’s requirement for a petitioner’s right to control.
We welcome USCIS Director Mayorkas’s announcements and welcome the additional options for entrepreneurs who seek to start a business in the United States. Please feel free to subscribe to our free weekly newsletter to obtain developments on this and related topics. If our office can be of any help, please feel free to contact us.