It’s that time of year when employers prepare and file H-1B visa petitions on behalf of foreign workers. The H-1B visa is an employment-based, non-immigrant visa category for temporary workers. H-1B visas allow foreign workers with at least a bachelor’s degree or equivalent to work in specialty occupations for U.S. employers. They have become an essential tool for many businesses to get highly skilled and qualified workers in many different fields. In fact, many industries continue to lobby the government to raise the H-1B caps, which limit the number of H-1B visas granted each year, and thereby enable more foreign workers to work in the U.S.
The Immigrant Investor Program, also known as EB-5, is set to expire on September 30th as Congress continues to debate its merits. The EB-5 program enables foreigners to obtain legal permanent residency in the US through investment in a new commercial enterprise. Although the program brings almost $2 billion into the US annually, it has been subject to ongoing criticism. Changes to the bill have been proposed to reauthorize EB-5 so foreign investors should be prepared. We’ll analyze the changes as soon as they are passed. But why are changes being made to such a successful program in the first place?
EB-5 visas have been very effective in bringing in investment capital particularly since the 2008 financial crisis. As banks tightened lending, the investor program became the best way for a startup to obtain capital. In 2001 there were fewer than 200 EB-5 visas issued, but in 2014 there were nearly 10,000 issued.
The $2 billion in investment capital the program brings into the US annually does not account for the indirect money the program brings into the US economy. The foreign investors who enter the US with an EB-5 visa are not living in a vacuum. These individuals spend money in US stores; they buy or rent homes; they pay for services from US companies; and they pay taxes to local, state, and federal government. The program injects an extraordinary amount of money into the US economy.
So why the criticism? The EB-5 program should be the least offensive of the US immigration policy. US immigration policy costs the taxpayers billions of dollars in enforcement. The EB-5 program is generating revenue rather than creating debt. Moreover, opponents of opening US borders to immigrants by and large base their opposition on how doing so would flood the labor market, potentially lower wages, and take jobs away from US citizens. The EB-5 program is doing the exact opposite by creating jobs for US citizens.
Nonetheless, there are valid concerns about the program particularly problems of fraud that need to be rectified. Currently the SEC can step in when there are issues of fraud in an EB-5 investment. However, by the time the fraud is discovered there is nothing left for the SEC to do but clean up the mess. New proposed regulations would allow the SEC to regulate the investment process so they may actually prevent the mess from occurring in the first place. Regional Centers are also likely to be held more accountable for making financial disclosures and complying with securities laws. We welcome rules to protect against investment scams and corruption; however, these rules are likely to add complexity to the process and investors will need guidance navigating the new rules.
While the proposed changes will make the EB-5 program much more transparent, it will not change one of the program’s most glaring criticisms. Some argue the EB-5 program allows the wealthy to buy their spot at the front of the line.
It is true that the EB-5 program allows wealthy immigrants a faster route to legal status in the US. However, it is misleading to say that these foreign investors are cutting the line for a visa. The EB-5 program has visas set aside for these investors so they are not taking away a visa from someone who is already waiting.
It may seem unfair that the EB-5 program discriminates against the poor who cannot afford to participate. However, the immigration policies of the US have always been inherently unfair since the US first entered the business of controlling the movement of people. The entire concept of citizenship and the foundation of US immigration policy are rooted in discrimination against people born in certain geographic locations. Other paths to citizenship in the US are based on completely arbitrary factors such as whether there is a family member in the US, whether documents were filed a document before a particular date, whether a foreigner falls in love with a US citizen, and in many cases which Immigration Judge is assigned to a case. There is nothing “fair” about immigration laws.
US immigration policy is deserving of criticism. The US immigration system is a disaster. However, the EB-5 program is one of the very few examples where Congress got it right.
Although there will be changes to the rules, we expect EB-5 to be reauthorized. Contact us for the latest updates on the Immigrant Investor Program.
Many H-1B employers, especially in the IT industry, send their employees to various locations to work for clients. Unfortunately, they don’t always realize that such a move could result in revocation of an H-1B visa. On July 21, 2015, USCIS released its final guidance on when such employers must file an amended or new H-1B petition for changes in work location. This follows a recent decision in Matter of Simeio Solutions, LLC (Simeio). The decision and guidance clarify when there is a material change in the conditions of employment, the employer must obtain a new Labor Condition Application for Nonimmigrant Workers (LCA) and amended H-1B petitions.
Prior to this new decision, there was a great deal of ambiguity in the rules which resulted in conflicting decisions around the country.
In Simeio, the company had an H-1B employee working at various client sites in different parts of CA and NY. The company didn’t disclose this and USCIS revoked the H-1B visa. The case went to the Administrative Appeals Office (AAO) which confirmed the USCIS action. The AAO held that an H-1B employer must file an amended or new H-1B petition when a new LCA is required due to a change in the H-1B worker’s place of employment.
PERM was supposed to help employers speed up permanent residency applications for foreign workers. It allows employers to submit an Application for Permanent Employment Certification directly with the Department of Labor (DOL) to reduce labor certification times. Although PERM improved approval times in some cases, it also created backlogs and resulted in many denials for de minimis errors, all of which place unfair burdens on employers.
Seeking labor certification from the DOL is the first step for an employer looking to sponsor a qualified foreign worker for a green card. Before the Department of Homeland Security (DHS) and the Department of State (DOS) may issue visas and admit individuals to work permanently in the U.S., the DOL must certify that “(a) there are not sufficient U.S. workers who are able, willing, qualified, and available at the time of application in the place where the individual is to perform the work, and that (b) the employment of the individual will not adversely affect the wages and working conditions of similarly employed U.S. workers.”
Starting in March 2005, employers seeking to hire foreign workers could file ETA Form 9089 online or by mail directly with the DOL. Assuming there was no DOL audit, approval was supposed to occur within 60 days, a big improvement for employers and employees.
Unfortunately, that hasn’t been the case. One of the main problems with the system is that electronic processing is very unforgiving. Any errors, even innocent typos, can’t be corrected and can be grounds for denial. The only option in such cases is to withdraw and refile a new form, but that only works if the advertising, recruiting and prevailing wage determination are still valid and within the prescribed time limits. The PERM application must be filed within 180 days of the beginning of the advertising and recruitment process. If the application is denied after the 180 day period, the employer has to undergo expensive advertising and recruiting again before refiling.
Too often we’ve seen small errors, like incorrect dates and typos, result in denials and the employer having to start all over again because they fell outside the 180 day period. In addition, the PERM form itself has created difficulties for employers. Confusing and unclear instructions have been problematic for the last 10 years. Some instructions for filling out the form are on the form itself while others are published separately on the DOL website. For example, we’ve had trouble determining where to include specific information about the worker’s licenses and understanding the requirements and procedures for advertising and recruiting online. DOL’s solution was to issue FAQs, which are an additional layer of material for the employer to decipher.
As a result of these issues with the PERM process and other criticisms, the DOL announced it will be initiating a review of the PERM program and relevant regulations. As part of this review, DOL is seeking input on the following:
- Options for identifying labor force occupational shortages and surpluses and methods for aligning domestic worker recruitment requirements with demonstrated shortages and surpluses;
- Methods and practices designed to modernize U.S. worker recruitment requirements;
- Processes to clarify employer obligations to insure PERM positions are fully open to U.S. workers;
- Ranges of case processing timeframes and possibilities for premium processing; and
- Application submission and review process and feasibility for efficiently addressing nonmaterial errors.
DOL stated its intention to modernize the program to make it more responsive to changes in the national workforce and enhance the integrity of the labor certification process. (Click here to read the DOL release.) We hope that’s the case. As it stands now, approval times for unaudited forms are at around 7 months. For audited applications, it takes over 15 months, which is well beyond the 180 day period.
In the meantime, the best course of action is to have experienced legal staff handle these applications to ensure there are no errors. Starting over to fix a mistake is an expensive and time-consuming remedy that no employer wants to undertake.