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Immigration
consequences of mergers and acquisitions
Given
the market’s recent extreme volatility and reports predicting the demise
of many internet e-tailers, a flurry of mergers and acquisitions activity
has already begun. The trend is likely to continue as cash-strapped
companies seek to consolidate to stay afloat. In the midst of these
dynamic changes, it is essential that executives and HR directors consider
the immigration consequences such activity will have on the foreign
nationals working for these companies. The following are a few examples of
issues that may arise affecting these individuals.
Internet and other high-tech companies hire a large number of foreign
nationals. Many foreign employees utilize the H-1B specialty occupation
visa. This commonly-used visa is granted to individuals possessing a
bachelor’s degree who will be filling a position that requires the
theoretical and practical application of specialized knowledge. As part of
the H-1B petition process, a prevailing wage must be obtained.
The prevailing wage reflects the average salary that workers similarly
employed are paid in the general region where the foreign national will be
employed. In the event of a
merger or an acquisition resulting in an H-1B worker being relocated to
another work site, it may be necessary to obtain a new prevailing wage.
Prevailing wages cover a standard metropolitan statistical area and if the
new work site falls outside of this area, a new prevailing wage may be
required. The purpose behind
this is to ensure that the foreign national is being paid a salary
competitive to similar workers.
L-1 intra-company transferees also face potential problems when companies
consolidate. To obtain a L-1
visa, the petitioning company must show that a proper relationship exists
between a foreign company and itself.
The petitioning company must be a branch of a foreign company, a
parent or subsidiary of the foreign company, or the U.S. and foreign
company may be affiliates.
For example, assume a Taiwanese parent company has a subsidiary in Los
Angeles. Here, the subsidiary would be able to petition for L-1 visas for
its employees because the requisite relationship is present. However, if
the Taiwanese parent entered into negotiations with a Silicon Valley
company to sell its subsidiary, there could be a problem. If the sale goes
through, the petitioning company would no longer be able to apply for more
L-1 employees because it no longer has a relationship with a foreign
company. More urgently, the current L-1 employees of the Los Angeles
company may find themselves out of status because their employer no longer
has the right relationship with a foreign entity.
With the E visa, foreign nationals may enter the U.S. to invest or engage
in international trade. A key
requirement of this visa is that a treaty must exist between the U.S. and
the country from which the foreign national originated.
Numerous treaties exist between the U.S. and other countries and
because this visa may be obtained without having to go through lengthy INS
processing, foreign nationals find this visa attractive.
Since a treaty exists between Japan and the U.S., a Japanese parent with a
subsidiary in Seattle may be able to send over employees on an E visa
provided the other elements of the E visa are met. If
the Japanese parent decided to sell the Seattle subsidiary to an
Indonesian company, an analysis must be done to determine if a treaty
exists between Indonesia and the U.S.
If none exists, the status of these E employee may be jeopardized.
These simplified examples are only a start. U.S. immigration law imposes
strict requirements that must be met before a visa is granted. There are
many other issues that can arise in the context of mergers and
acquisitions, and it is imperative that executives overseeing transactions
between companies factor in the potential affect on immigration statuses.
Ideally, immigration counsel should be consulted at the start of
negotiations to provide counsel. Moreover, proper notice and amendments
can be given to foreign nationals and to the INS. The 1996 IIRAIRA
immigration law created severe penalties for individuals staying illegally
in the U.S. To avoid placing
its employees in dire legal straits and to minimize its own liability,
companies must be aware of the immigration consequences of mergers and
acquisitions.
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