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Mergers, acquisitions and other corporate changes are commonplace in today's volatile market. The immigration consequences of such business transactions are often complex and far-reaching. Usually, a change in ownership or structure will affect the employees' nonimmigrant (temporary) and immigrant (permanent) visa cases. In large transactions, the immigration concerns are usually secondary to other business considerations (liability, tax, etc.). Nevertheless, the transfer of foreign employees from the previous entity to the new entity should be strategically planned prior to the proposed transaction. A consultation with an experienced business immigration attorney before the deal takes place will often help the company to avoid Immigration Reform and Control Act (IRCA) violations and other after-the-fact Human Resources complications inherent in mergers and other transactions. Perhaps most importantly, an experienced business immigration attorney can offer comprehensive solutions that will ease the fears and anxieties of the company's foreign professionals and workers (Request Consultation).
Most nonimmigrant or temporary visa classifications (e.g. E, H-1B, L-1, TN) are "employer-specific", meaning that such a classification only authorizes employment with the petitioning U.S. employer. For example, a foreign professional with an H-1B sponsored by X corporation cannot work for Y corporation unless Y files a new or amended H-1B petition with the INS. When a foreign professional or executive is changing employers as a result of a merger, stock acquisition, asset acquisition, spin-off or some other transaction, the "employer-specific" doctrine applies and the new employer will need to file an amended nonimmigrant visa petition with the INS. In the case of an L-1 or E classification, the new employer must prove that it has the same qualifying relationship (e.g. international affiliations or treaty with U.S.) as the pre-transaction employer. For example if X corporation acquires the assets of Y corporation, all of the E-1 employees working in the U.S. with Y will not be able to obtain E-1 status with X unless X corporation is also a national of a certain country with a trade treaty with the U.S. Ostensibly, the E-1 employees could qualify for some other status such as an L-1 or H-1B. The real focus is whether the purchased or new entity continues to be a qualifying organization for purposes of employing foreign personnel in E or L status. In the case of changing from L-1 employer to another, the key consideration is whether the new employer "..is or will be doing business...as employer in the United States and in at least one other country directly or through a parent, branch, affiliate or subsidiary.." Even if the qualifying relationships remain intact or are re-established, a material change in employment has occurred and an amended petition must be filed to notify the INS. In the cases of H-1B and TN employees, the new entity must file an amended petition with the INS. Since the employees still qualify for such classifications by virtue of their bachelor's degrees (or equivalents) or nationality (Canadian or Mexican), the amended petitions should be approvable, assuming all other requirements (e.g. - prevailing wage or pure nonimmigrant TN intent) are met.
Lawful Permanent U.S. Residents (LPR's) have self-authorizing employment status and may change employers (or be unemployed) without the filing of an amended petition. In short, a merger, stock acquisition, asset acquisition, spin-off or some other transaction does not have any affect on LPR employees. However, foreign personnel who have pending employment-based applications for LPR status are significantly affected by material changes in employment. At a minimum, such changes in employment will usually require the filing of a new immigrant visa petition by the new employer. In most instances, the new employer will be required to undergo the permanent labor certification process with the U.S. Department of Labor before the new immigrant visa petition can filed with the INS. In some cases, where the new employer can establish that it is a "successor in interest" of the previous sponsor employer, the approved labor certification can be transferred to the new employer, assuming the permanent offer of employment is for the same occupation and in the same location (metropolitan statistical area or "MSA") as the prior employment. Effective in 2000, in some instances the foreign national may change sponsors of the immigrant visa without filing a new or amended I-140 immigrant visa petition. This new rule is referred to as “I-140 portability.”
A merger occurs when one or more corporations become a part of or merge with another corporation. In such a transaction, the former corporation(s) cease to exist but the latter corporation continues to exist. The company that continues to exist retains its name and identity and acquires the assets, liabilities, franchises and powers of the corporation(s) that cease to exist. Thus, if company A merges with company B, company B survives and company A ceases to exist.
A consolidation occurs when one or more corporations unite to form a new corporation and the original corporations cease to exist. The newly formed consolidated corporation acquires the assets of the former corporation(s) and assumes the liabilities of the former corporation(s). Thus, if company A consolidates with company B to form company C, companies A and B cease to exist.
A stock acquisition occurs when an acquiring company purchases all of the stock of a target company. In the stock acquisition, both companies retain their legal existence after the transaction. Thus, if company A purchases all of the stock of company B, both company A and B continue to exist even though company A now owns the stock of company B.
An asset acquisition occurs when an acquiring company purchases all of the assets of another company. In an asset acquisition, both companies retain their legal existence after the transaction. Thus, if company A purchases all of the assets of company B, both company A and B continue to exist even though company A now owns the assets of company B.
The INS considers an entity to be a "successor in interest" when it has taken over all of the obligations, liabilities, rights and assets of the original business and continues to operate the same business operated by the original business. When a corporation becomes a true successor in interest, the successor corporation can pursue the visa petition filed by the original corporation. In the context of a temporary or nonimmigrant visa, the successor employer may continue to employ the alien by filing an amended petition. With respect to pending immigrant visa cases, the successor corporation may continue pursuit of the immigrant visa without having to obtain a new labor certification if the alien will be working in the same metropolitan statistical area (MSA) that was tested during the labor certification process. Of course, the successor company has the burden of proving the successorship and its ability to pay the wages offered. In short, if the succeeding petitioner is not a true successor in interest, a new labor certification must be obtained. In the context of a temporary visa, a new petition (extension of status) must be filed with the INS. Some transactions such as asset or stock acquisitions do not usually create true successors in interest. For example, if company A purchases the assets of company B but does not assume company B’s liabilities, company A is not a true successor in interest. Unless the transaction is merger, consolidation or some other agreement where the assets and liabilities are assumed by the successor, a new labor certification will need to be obtained.
In some instances, such as a transfer to affiliated corporation, a new or amended petition is not required even if the payroll source is going to change. This is especially true when a company has filed a "blanket" L petition for its corporate group of branch offices or subsidiaries and the company is seeking to transfer the L-1 alien from one subsidiary to the other. Another instance where a new petition may not be required is when an employer is merely changing its name. |
