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What the President's “Executive Action” on immigration means for entrepreneurs

Q: Do we even know what the President's Thursday, November 20, 2014 announcement means at this point?

A: Not completely. Many of the promised changes await policy memos on implementation, or actual regulation by the government agencies involved. I hate to use clichés like “the devil is in the details” - but this phrase is a cliché because of situations just like this. What exactly those promised policy memos and regulations say will tell us a great deal about whether the announcement actually helps people at all, or was simply political window dressing.

Q: OK – so what's the potential gain here? What might actually happen based on this announcement?

A: There are six main areas that might be impacted by the announcement:

  • Help for entrepreneurs who first entered unlawfully (or those who overstayed visas and so can't as a practical matter become lawfully here in most cases);
  • Help for potential startup founders on non-immigrant [temporary] visas who want to make the jump to start their own business but are locked into a long permanent residence process with a current employer;
  • Help for potential startup founders recently graduated from US degree programs in certain fields;
  • Help for overseas companies and their specialized non-manager employees wishing to move into the US market;
  • An easier path to permanent residence (a green card) for entrepreneurs, and
  • Help for the spouses of entrepreneurs.

To date, there hasn't been very much actual help on any of these items.

Nothing at all on the first two items, really (though other initiatives might conceivably help entrepreneurs in the first situation - but only incidentally and not because they are entrepreneurs).

On the third item, recent graduates, a rule proposed in August of 2016 might offer a Parole option - but this wouldn't help many people and is yet to become final.

No movement on the fourth item for overseas entities hoping to enter the US market, just the existing categories.

On the fifth, an easier path to a green card for entrepreneurs, there was a pronouncement that entrepreneurs can use the National Interest waiver permanent residence category in exactly the way they already could have used it - so no real help there.

For the final category, help for spouses of entrepreneurs, there has been movement in permitting limited employment authorization for some visa types which entrepreneurs might use, but again this only incidentally helps entrepreneurs.

Q: How will this help entrepreneurs who entered unlawfully or overstayed a visa?

A: Under current conditions, little help is available for those who entered unlawfully or overstayed visas. Such individuals are in most cases prevented from obtaining legal status without first leaving the US (marriage to a US citizen is the most often-heard among a very few exceptions, and only works for those who merely overstayed after lawful admission). The act of leaving after a long enough stay after unlawful entry or overstay will normally trigger a long bar to reentry - three years or ten years. Such a person can't stay on legally, and can't as a practical matter leave to get an entrepreneurship-related status for which they might otherwise qualify.

The presidential announcement implies an expansion of the now-very-limited “parole-in-place” program. This essentially creates a lawfully recognized admission retroactively while a person is present in the US. The person can in most instances apply for employment authorization.

Parole in Place allows the “parolee” a lawful means of being here, if not an actual immigration status. Such a person can now be eligible to “Adjust Status” - to change to a green card in the US – where they would not previously have been able to - IF they have some other basis for doing so (such as an employment-or family-based petition).

As of now, there's been no expansion of this - and the Deferred Action for Parental Accountability ("DAPA") program which would have helped many people in this situation if they had US citizen children has been ehld up in the courts, with a divided Supreme Court effectively letting stand the lower court injunction preventing implementation of the program.

What other protections might this afford? It's very difficult to say without the expected implementing guidance.

Q: How will this help potential startup founders on non-immigrant [temporary] visas wanting to start their own business, but locked in to a current employer by a long permanent residence process?

A: There are two main elements of this presidential announcement which, taken together, would help potential entrepreneurs in these circumstances.

First, and this one is pretty huge, those waiting in long immigrant visa backlogs to file the final stage of the permanent residence process in the US (the “Adjustment of Status”) may get some relief, allowing them to file this stage earlier. Currently, individuals filing employment-based permanent residence cases in certain categories can face a wait of up to ten years before they can file the Adjustment of Status. The promise here is that filing, if not ultimate approval, can occur earlier.

This is particularly important. Only the Adjustment of Status phase – not earlier stages – offers any protection in terms of a right to remain in the US independently of an employer-specific nonimmigrant work visa such as an H-1B or L-1. Only the Adjustment of Status – not earlier stages – provides the ability to apply work and travel authorizations independent of the non-immigrant work visa.

The independence from the non-immigrant visa is a fantastic feature here, but this alone won't help those seeking to leave green card sponsoring employers for startups before the green card is approved (requiring that an immigrant visa be immediately available – often after that up-to-ten-year backlog).

So, what's been done? the US State Department DID implement earlier dates for filing - which provides slight help for people abroad processing through a consulate. But, only a USCIS Adjustment of Status filing provides protection of the ability to remain here and interim work and travel authorization - and USCIS hasn't been honoring the earlier filing dates...instead sticking to the original system of permitting filing only when an immigrant visa becomes available.

The second benefit interacts with the first: the presidential announcement contains a promise to clarify the AC21 “Same or Similar” language. As it exists today, this provision (often referred to as “AC21 portability”) allows individuals in the green card process with an approved immigrant visa petition and a final-stage Adjustment of Status petition on file for 180 days or more to change jobs to a “Same or Similar” position...WITHOUT losing the benefit of the existing employment-based permanent residence process and having to start over.

Right now, the employee takes the risk that a position they believe is “the same or similar” to the job offer on which the green card petition was based will be determined by USCIS to actually be the same or similar. Clarification here may help a potential entrepreneur seeking to make the leap to understand how exactly the “Same or Similar” language will be applied, and manage this risk better. An expansive definition of “Same or Similar” may make this available to far more people than those comfortable using this provision currently.

Combined with the ability to file an Adjustment of Status case far earlier, before the immigrant visa is actually available, this part of the announcement has the potential to solve the problem of how late in the process the AC21 portability benefit activates. If implemented correctly, this could become a meaningful way to break the chains locking a potential entrepreneur to an existing job and help remove a major obstacle to moving on to a new venture.

In practice, they DID come out with guidance on this issue - but much like the National Interest Waiver guidance mentioned above, it really only restated current policy in one place.

Less clear: will employers be less willing to sponsor permanent residence cases given the time, effort and expense involved and the shorter period of service they are likely to get from sponsored foreign national workers.

Q: What does this do to help potential entrepreneurs recently graduated from US degree programs?

A: Those who complete degree programs in the US using F-1 student visas are generally eligible for a year of “Optional Practical Training” (OPT) employment authorization upon graduation. For those with degrees in “STEM” fields (Sciences, Technology, Engineering, Mathematics) on a specific, government-maintained list of degrees, the one year of OPT can be extended an additional 17 months to 29 months total. Even under current policy and law, this employment authorization may be used for entrepreneurship as long as the work being done is in the field of the former student's study.

The presidential announcement promises an increase in the 29 month limit. It also promises to expand the number of degrees recognized as STEM degrees, expanding the scope of the benefit for the additional time permitted. And this is where something tangible has actually happened: those in STEM fields can now get up to three years of OPT.

This is especially beneficial for those seeking initial H-1B visas, a visa with a very low annual numerical limitation relative to demand. The available H-1Bs have been entirely used in the first five days of availability for the last two years, leading to lotteries – last year there were more than twice as many applications as available visas. Even given the extreme difficulty of using an H-1B for entrepreneurs much of the time (an issue unaddressed in the presidential announcement we discuss further below), many of those who CAN use them are shut out from availability if unsuccessful in the lottery.

Additional years in OPT status significantly extend the possibility that an entrepreneur can remain in the US, actively pursue their new venture, and ultimately be able to pursue an H-1B again in future years' lotteries. Since ultimately pursuing permanent residence is far better done in H-1B status than in F-1 Student/OPT status, this isn't a perfect fix...but it does solve the catastrophic problem of an entrepreneur suddenly being left without a means of pursuing their business in the US at all.

The announcement also carries a somewhat ominous sounding promise that stronger ties will be required between the OPT former student and their universities after graduation. This could mean stronger reporting requirements and further enforcement & government intrusion into the work being done for a strip by an OPT holder. As with so much under the presidential announcement, we'll need to see memos and regulations implementing all of this to really know the impact.

Not clarified: will the “non-immigrant intent” requirement of the F-1 visa underlying the OPT, which requires an intent to return abroad rather than make a home in the US at the end of the authorized stay, be clarified in such a way that someone who has started a business here on a long term OPT under this provision will be free from problems reentering after international travel?

Q: How will this help overseas companies and their specialized non-manager employees wishing to move into the US market?

A: An overseas company seeking to open a US branch or subsidiary will often find a need to transfer some key people over to begin US operations. The L-1 “intracompany transferee” visa exists to facilitate intracompany moves of people where the US entity has a qualifying relationship - parent/subsidiary, affiliate (common ownership), branch, etc. - to the overseas entity, and where the individual being transferred has at least a full year of work with the overseas entity within the last three years before seeking to transfer.

There are two types of L-1 visas: L-1As for intracompany managers or executives (occupying such a job abroad for the required period and seeking to work in the US in such a position), and L-1B “specialized knowledge” workers – those with specific knowledge of the overseas entity's technologies, products, techniques, methods, etc. seeking to use that knowledge here with the new US related entity.

While the requirements for a new-company L-1A intracompany manager or executive visa are hardly easy to meet, the L-1B category has become so problematic in the context of younger, smaller companies as to be nearly impossible to use. There is currently an almost 50% inquiry rate for these petitions at adjudication USCIS service centers, very often followed by denial. Even these depressing figures don't present a true picture of the problem in the entrepreneurial context, given the deference often given to large, established multinationals compared to newer companies. Immigration practitioners frequently complain that the standard implemented by existing memoranda bear little relation to the requirements in the status and regulations.

As much as a new US entity attempting to transfer an overseas parent's highly specialized product or service may require an employee with specialized knowledge, the L-1B has become so uncertain in application that it rarely represents a realistic way forward at this stage. The presidential announcement promises additional guidance – but says little else.

If done correctly, this guidance could significantly improve the lot of the entrepreneurial overseas company seeking to establish a new business in the US. But beyond a promise to clarify, little is known at this stage.

Q: What does the presidential announcement mean for entrepreneurs who ultimately seek to remain in the US for good, obtaining US permanent residence?

A: To date, there has been little by way of a clear pathway to an employment-based green card for foreign national entrepreneurs (at least, based upon that entrepreneurship).

There is an EB-1 (Employment-Based, First Preference) multinational executive or manager path similar to the L-1A non-immigrant visa. This doesn't help the majority of foreign national entrepreneurs who aren't transferring from existing companies, but rather starting a wholly new US venture.

There is an EB-1 Extraordinary Ability permanent residence category roughly analogous to the O-1 Extraordinary Ability category, but this is a very high bar to meet – perhaps useful for serial entrepreneurs who have already started and sold off a couple of successful ventures, but difficult early on in an entrepreneur's career.

The EB-5 category exists for those investing $1 million ($500,000 in some cases) and creating ten US jobs, but the investment requirement creates a fairly high bar to entry. Most investors won't have this level of funding of their own to invest, and/or their venture may not require this level of funding, at least at inception.

The more traditional EB-2 or EB-3 PERM Labor Certification route to an employment based green card is foreclosed for many entrepreneurs because of prohibitions on sponsorship by companies over which the foreign national may have significant control or equity.

There has for some time been a separate EB-2 path for individuals of “Exceptional Ability” - as distinguished from the “Extraordinary Ability” category described above. This path allows a waiver of the PERM Labor Certification prerequisite if the “National Interests” of the US are served (a “National Interest Waiver.”).

While the Exceptional Ability criteria are perhaps not overly easy to meet, they are less stringent than the Extraordinary Ability category – hardly impossible. However, the criteria for the “National Interest Waiver” portion of the case – the portion necessary to avoid labor certification and the prohibitions on control of the company by the foreign national – have proven far more daunting.

The presidential pronouncement gave indications that a policy memorandum would be released somehow making this path easier for entrepreneurs, researchers, inventors and founders. Yet again, we are left waiting for the actual release of policy guidance to determine how much help this will be.

Q: What about help for family members of entrepreneurs?

A: For startup founders and early employees who have family members accompanying them to the US, often the biggest problem involves situations where a spouse with his or her own career can't work on a derivative [spousal] visa. For those using the E-2 treaty investor visa or L-1A intracompany transferee/executive or manager visa, this problem has been solved for a while now – an E-2 or L-2 derivative spouse can apply for separate employment authorization allowing them to accept employment in the US.

So far though, the most popular/common employment visa, the H-1B Specialty Occupation visa (where the job requires a Bachelor's or higher degree or equivalent in a fairly specific field, and foreign national employee has a degree in that relevant field) has provided no option for spouses to obtain employment authorization.

A regulation was put forth a few months back to grant employment authorization to H-4 derivative spouses – but only in certain circumstances (where the H-1B is pretty far along in a permanent residence petition). It may help certain long-suffering stay-at-home spouses, but really not many unless that pending regulation is reworked...further delaying implementation.

The presidential announcement promised a move forward with this regulation, but again not specifically when this would happen, and said nothing about expanding it to all H-4 spouses.

On top of the limitations built in to the regulation, H-1Bs are pretty rare for early-stage start-up founders since the 2010 Neufeld memo redefined the employer-employee relationship, making it difficult as a practical matter for an early stage start-up founder, who was likely to have significant equity and control of the company, to get an H-1B to begin with.

Nothing in the President's announcement mentions walking back this directive, which has been remarkably effective for the US in shooting itself in the foot with respect to encouraging entrepreneurship and job creation.



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The above is presented for informational purposes only, and does not constitute legal advice or create an attorney-client relationship with our firm. The information provided should not be used as guidance in pursuing an immigration matter absent consultation with a qualified immigration attorney.