Immigration Best Practices for Mergers & Acquisitions

QUESTIONS TO ASK ABOUT THE PROPOSED MERGER/ACQUISITION:

• How is the deal to be structured?
• Is it a merger or a spin-off where employees will have a new employer with a different FEIN?
• Is it a stock purchase?
• Is it an asset acquisition where no liabilities are being assumed?
• Is it a successor in interest where liabilities will be assumed?
• What is the timing of the merger/acquisition?
• Is there enough time to file new petitions?
• Will the I-9 documentation of the post-transaction survive?

BEST PRACTICES:

• Map the immigration structure of the corporation
• I-9 compliance best practice tip: conduct sample audit of the I-9s ensure compliance. Two options:
  1. Treat all acquired employees as new hires and complete a new Form I-9 for each; OR
  2. Retain previous owners I-9s for each acquired employee.
     1. Review/update I-9s with every acquired employee (cant discriminate) and re-verify info as necessary. (But time-consuming for large employers.)
     2. Note risk: acquiring company inherits all potential liabilities attached to old I-9 errors and omissions made by the previous employer.

IMPACT OF MERGER/ACQUISITION ON VARIOUS VISA CATEGORIES

H-1B category

• Does the corporate change result in a new employer?
• If so, what are the interests of the target corporation being assumed?

Rules:

A new LCA is NOT REQUIRED if a corporate reorganization occurs provided that the successor entity, prior to the continued employment of the H-1B worker, agrees to assume the predecessors obligations and liabilities under the LCA with a memo to the Public Access File kept for LCA purposes. (We did this for GWF)

Material changes in the employees duties and job requirements as well the relocation of the employee to a new MSA may require a new LCA.

L-1 category:

L-1 category requires a qualifying relationship between the U.S. entity and the foreign entity from which the employee will be transferring. A change in the corporate structure may terminate the qualifying relationship, which would invalidate the underlying L-1 visa.

If the qualifying relationship survives, only an amended petition is necessary.

TN category:

Determine whether a successor in interest exists. If so, a new petition is NOT required.

Green Cards:

PERM cases: Look at these factors:

• The job opportunity offered by the successor-in-interest must be the SAME as the job opportunity offered on the PERM application;
• The successor must prove its ability to pay the proffered wage from the date of filing the PERM until the date of the transfer of ownership to the successor-in-interest employer; AND
• The successor has fully described and documented the transfer and assumption of ownership of the predecessor.

If the new employer entity does NOT qualify as a success-in-interest, a new PERM app is required.

I-140 petitions:

The new employer must assume ALL of the prior employers liabilities. If no successor-in-interest exists, a new I-140 is required.

A new I-140 is also required in order to document the successor-in-interest transaction.