June 25, 2016

H-1B Visas for Entrepreneurs & Startup Companies

H-1B Visas for Entrepreneurs and Startup Companies

H-1B VISA BASICS

An H-1B nonimmigrant visa is a temporary visa for professional workers in specialty occupations that normally require a bachelor’s degree or equivalent as a minimum requirement. The H-1B visa is valid for three years and can be renewed for an additional three years.

BENEFITS OF THE H-1B VISA

  • The H-1B allows for “dual intent,” which eases travel restrictions for those applying for immigrant visas.
  • It is possible to hold more than one concurrent H-1Bs, for different types of work
  • Spouses & dependent family members of H-1B visa holders (H-4 visa holders) do not receive work authorization, but they are allowed to study.

HURDLES TO THE H-1B

The entrepreneur’s path to an H-1B is not direct, due to the rules and regulations specific to this type of visa.

THE EMPLOYER-EMPLOYEE RELATIONSHIP REQUIREMENT
An H-1B visa requires an employer-employee relationship. That makes it difficult for investors who want to run their own companies. Entrepreneurs who are majority or sole owners of U.S. startup companies have historically been discouraged from applying for H-1B status.

USCIS has recently suggested some solutions for entrepreneurs trying to meet the employer-employee requirement: mainly, that the H-1B petition must establish a distinction between the petitioning company’s ownership and control over the beneficiary’s employment.

Some ways to establish this distinction?

  • Evidence of a board of directors separate from the company’s ownership (for example, other investors or shareholders) with the right to control the terms and conditions of employment;
  • Executing a restricted stock purchase agreement giving IP ownership to the company along with an employment agreement and a periodic performance review conducted by the board.

It follows, then, that planning ahead is vital for any entrepreneur considering H-1B status.

ANNUAL LIMIT (CAP) ON THE NUMBER OF AVAILABLE H-1Bs
There is an annual limit of about 85,000 on the number of new H-1B visas that can be issued each year.

As a point of reference, USCIS received 236,000 petitions for new H-1B visas in the first week of April 2016, effectively making this category a lottery system. For the past few years, well under half of the H-1B petitions filed actually resulted in H-1B status.

However, there are some types of H-1Bs that are “cap-exempt.” Institutions of higher education and affiliated nonprofits, as well as research organizations, are exempt from this quota.

In some cases, entrepreneurs have attained a cap-exempt H-1B though a university or research organization and then, based on USCIS guidance, have obtained a concurrent cap-subject H-1B to also work on an entrepreneurial venture. The concurrent H-1B must be for employment that furthers the cap-exempt employment. For example, a student working at a university at a post-doctorate research graduate in big data may obtain a concurrent cap-subject H-1B with another company working on big data or a related field.

“SPECIALTY OCCUPATION”
An H-1B visa petition must demonstrate that the sponsored employment is a “specialty occupation” that requires the skills and knowledge of an individual holding a bachelor’s degree or equivalent.

Given that an entrepreneur of a startup company may not have evidence of prior hires in the same or similar positions requiring a bachelor’s degree or equivalent, as well as possibly a cloudy picture of her actual job duties, it may be a challenge to meet the specialty occupation requirement.

For some entrepreneurs, these requirements may be quite expensive for the first few years of business growth. Many entrepreneurs may want to forgo a salary while developing their business. If they are in H-1B status, however, they must receive remuneration of a minimum standard. The employer must also maintain documentation of continued pay and employment.

H-1B VISA NEWS

Some universities (like the University of Massachusetts, with the Global Entrepreneur-in-Residence Program) have formalized the concurrent H-1B process for a small number of entrepreneurs each year. U.S. Senator Charles Grassley wrote a letter to USCIS in early 2016 expressing concerns about such a program, but to date there has been no follow-up, and GEIR programs are operating in several states.

USCIS has proposed a rule that would update and codify the H-1B cap-exemption guidelines, but that rule has yet to be finalized.