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Get off the H-1B Train: H-1B Denials and Investment Options

  • Published: August 28, 2019

We are living in an era of unprecedented Request For Evidence (RFE) issuance rates and an increasing H-1B denial rate. Recent statistics released by the U.S. Citizenship and Immigration Services (USCIS) reveal an 83.5% approval rating for petitions with RFEs for FY2015 while FY 2019 approvals have plummeted to 61.5%. For the H-1B worker who has invested six, or even more, years in building a life in the United States, a complex RFE or denial can be devastating.

The higher RFE and denial rate has resulted in a flurry of inquiries from H-1B workers seeking to both understand the RFE process and explore alternatives to their current status.  I often hear H-1B workers stating, “I never had an RFE with my previous employer.” or “Did the employer do something wrong with my filing.”  The USCIS statistics make clear that you’re more likely to get an RFE than not.  What then, can the H-1B worker do to secure their future, or at least develop another income stream?

Invest or Start a Business

H-1B workers may invest in or start a new business. The investment must be passive meaning that the H-1B worker must not actively be employed or work for the company.  Actively working for an employer who has not sponsored your H-1B is usually a violation of your nonimmigrant status.  As a nonimmigrant starting a business in the U.S., it is essential to have a team of advisors for legal and accounting matters.  Hire a business attorney to represent you in your business matters.  Ideally, your business attorney will also have extensive knowledge in the H-1B process because you must ensure that your business activities do not impact your nonimmigrant status. If your business attorney is not knowledgeable about the H-1B program, hire a qualified immigration attorney.  Once you’ve assembled your team of advisors, you can invest or start your own business. Your nonimmigrant status will allow you to incorporation a U.S. company, such as an LLC or C-Corp.  Your nonimmigrant status will preclude you, however, from owning an S-Corp.

Concurrent H-1B Employment

As mentioned above, an H-1B worker may not work for an employer who is not the H-1B employer (“petitioner”).  An H-1B worker, however, may have more than one petitioner through concurrent H-1B employment.  Concurrent H-1B employment allows the H-1B worker to work multiple jobs at the same time.

Concurrent H-1B Employment and Startups

When considering alternative forms of income, the H-1B worker may consider starting a company with the goal of concurrent or primary employment with a current employer and the startup company. If you establish a company with the intent of working for that company in H-1B status, there are some considerations. The primary factor is the business structure.  The employing company must demonstrate that an employer-employee relationship exists for the H-1B worker.  If you are the sole owner and control all aspects of the company, there is no outside entity exercising control over your work and no employer-employee relationship. This petition will fail. Therefore, if your goal is to invest in a business that will eventually become your H-1B employer, consider owning a minority, less than 50%, ownership interest in that business.  In essence, someone other than the H-1B worker needs to have the “right to control” the manner and means by which the employee is carrying out their duties.  Still, when done correctly, employment by a company partially owned by the H-1B worker is a viable option.

Alternatives to the H-1B

H-1B workers who are growing increasingly concerned about a program that produces such uncertainty.  As the current administration narrows legal definitions and denies cases at higher rates, workers are seeking alternatives.  Alternatives to the H-1B include:

  1. EB5-The EB5 is an investment program requiring a significant investment in the U.S.  See our EB5 info by clicking here.
  2. E Visa-The E Visa provides a nonimmigrant alternative. The E Visa classification allows an applicant who is a national of a treaty country to apply under one of two categories; Treaty Trader and Treaty Investor.  See our E Visa info by clicking here.

Recap

Employees I speak with often feel trapped with their current employer or on the H-1B program itself.  However, there are several alternatives outlined in this article, including:

  1. Invest in a company without violating your H-1B status
    1. Maintain your current H-1B employment;
    2. Be a passive investor with no active work;
    3. Hire or partner with someone to manage the day-to-day business;
    4. Ensure you establish the right to control if your company files an H-1B petition for you.
  2. Concurrent H-1B employment
  3. EB5 Investor
  4. E Visa

Whether you stay on your H-1B or consider an alternative, you should do so with the advice and counsel of an attorney knowledgeable about business and immigration issues. This article is a free service of Stephanie ScarboroughContact us today to learn more. We offer a wide array of immigration, business and legal services and can help you make the wisest business choices.  Call us today for a review of all the legal, financial, and tax systems you need for your business.

 

 

 

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