Things to Consider with Mergers & Acquisitions for Nonimmigrant Employees
How a Merger or Acquisition may Affect Employment-Based Nonimmigrants in the Workforce
One thing often glazed over when companies are undergoing organizational changes is how these changes will affect their workers who are beholden to employment-based visas. Namely, many organizational changes can drastically alter the continued validity of work visas and potentially result in devastation to the newly organized company's workforce.
There are many corporate reorganizations that could entail these kinds of issues, including:
Company name changes
Relocation of company or its employees
Change in payroll source
Initial public offerings (IPO)
In this article, we will mainly focus on possible complications when it comes to H-1B, L-1 and E-1/E-2 visa-based workers, but it is important to remember that due prudence is required in relation to all work-related visas with such company reorganizations.
In many instances following a merger, acquisition or another such restructuring it will be required that the newly formed entity file for amended H-1B petitions for its workers. In deciding if this is necessary, it must first be ascertained if a successor-in-interest relationship may be established as based on the arrangements of the finalized deal.
This relationship may be considered as having been established if the buyer acquires a substantial portion of the rights, duties, obligations and assets of the seller. In such cases, so long as the underlying terms and conditions of the beneficiaries remain the same, an amended petition need not be filed. The buyer should, however, prepare a sworn statement attesting to this and assume compliance with the Department of Labor's (DOL) H-1B regulations in accordance with the existing Labor Condition Applications (LCA).
Moreover, if the location of the intended employment for applicable workers is moved outside of the geographical area covered by the original H-1B petitions, these must be amended with a new filing.
Another aspect to take into consideration is that, following any such restructurings, it is possible that the successor entity may become H-1B dependent. This occurs if the new entity has 25 or fewer full-time employees made up of at least 8 H-1B nonimmigrants, 26 to 50 full-time employees made up of at least 13 H-1B nonimmigrants, or 51 or more full-time employees of which at least 15% or more are H-1B nonimmigrants. If this is the case, the company should be sure to be in compliance with the regulations pertaining to H-1B dependent employers.
The leading issue of this kind when it comes to L-1 workers is the continuance of a qualifying relationship with a parent, subsidiary, branch or affiliate abroad.
For example, if the new entity in the U.S. is owned by the foreign parent company, but subsequently receives substantial investment funding converted into equity by which the parent company loses its majority shares in the U.S. company, the parent-subsidiary relationship is lost.
If the qualifying relationship is not maintained the company may need to find new visa categories for its employees.
E-1 and E-2 Visas
Similar to the above circumstances, a change in a company's ownership (and especially a shift in the nationality of the company's ownership) may have substantial impacts as pertaining to E visa holders. As with all changes deemed to be "material" in relation to the condition and circumstances of such employees, the appropriate actions should be taken, including the filing of amended petitions or the re-submission of visa applications at a U.S. consulate abroad.
Due Diligence Required
While this article provides a brief overview of the potential complications that may follow any of the described corporate restructurings, it is imperative that a thorough analysis be undertaken in regards to the nonimmigrants of any such effected workforce. To be callous in these measures may result in extreme difficulties, including but not limited to fines, loss of workers and government sanctions.