The L-1 (“intracompany transferee”) visa category is designed to facilitate the transfer of foreign nationals with management, executive or specialized knowledge skills, allowing these personnel to come to the United States to continue employment with an office of their employer, or its parent, subsidiary or affiliate. This visa category is an invaluable tool for multinational organizations which regularly engage in the international transfer of personnel.
The L-1 petition filed with USCIS may be granted with an initial validity of up to three years. Extensions may be available thereafter if such need is sufficiently documented. The statute limits the total stay in L-1 status (or L-1 and H-1 status combined) to five consecutive years for “specialized knowledge” L-1’s and seven years for “executive” or “managerial” L-1’s.
LEGAL DEFINITION
An intracompany transferee is defined as “…an alien who, within three years preceding the time of his application for admission into the United States, has been employed continuously for one year by a firm or corporation or other legal entity an affiliate or subsidiary thereof, who seeks to enter the United States temporarily in order to continue to render his services to the same employer or a subsidiary or affiliate thereof in a capacity that is managerial, executive or involves specialized knowledge.” Immigration and Nationality Act §101(a)(15)(L).
Virtually every term used in the statute (“affiliate,” “subsidiary,” “manager,” “executive,” etc.) is defined, in great detail, in either the statute itself (INA §214(c), INA §101(a)(44)) or the USCIS regulations (8 CFR 214.2(l). These definitions must be reviewed when analyzing L-1 eligibility.
ANALYZING THE L-1 CASE
The key factors which must be analyzed in determining eligibility for L-1 classification are whether the employer meets the standards set forth for a “qualifying organization” and whether the employee’s roles both abroad and the proposed role in the United States, meet the requirement of being of managerial, executive or involving the use of specialized knowledge.
To qualify as an L-1 visa designate, all of the following elements must be present:
o The employer must be a “qualifying organization” as defined below
o The alien must have been continuously employed for one year in three years preceding the transfer at the parent, branch, subsidiary or affiliate of the organization abroad;
o The alien’s past (foreign) and proposed (U.S.) assignments must be managerial, executive or in a capacity requiring specialized knowledge
A. Qualifying Organization
A “qualifying organization” for the purposes of petitioning for an L-1 intracompany transferee, means a United States or foreign firm, corporation, or other legal entity which is a parent, branch, affiliate or subsidiary which is or will be “doing business” as an employer in the United States and in at least one other country, directly or through a parent, branch, affiliate or subsidiary, for the duration of an alien’s stay in the United States as an intracompany transferee. (8 CFR 214.2(l)(ii)(G)).
“Doing business” means the regular, systematic, and continuous provision of goods and/or services by a qualifying organization. The mere presence of an agent or office in the United States and abroad does not constitute doing business for the purposes of the statute.
Since the L-1 category is specifically designed to benefit international business, there is no requirement that the petitioning organization be an American firm. Further, in order to qualify as a petitioning organization, the employer need not necessarily be engaged in foreign trade, and an organized religious, charitable service or other non-profit organization may qualify.
Transfers are permissible to “new offices” in the United States which bear the requisite relationship to the employer abroad, but special rules pertain to employees coming to new offices. For example, the petitioner must show that physical premises have been secured for the new business and must provide detail about the organization’s proposed activities. The initial petition approval for a new business will be valid only for one year instead of three (with extensions possible). Blanket petition approvals, further discussed below, may not be used in “new office” situations.
The following legal entities may serve as L-1 petitioners (see 8 CFR 214.2(l)(ii):
1. Parent
Any business entity (firm, corporation or other legal entity) which has subsidiaries is a “parent.” (Note that a subsidiary may own other subsidiaries and thus be both a subsidiary and parent at the same time.)
2. Branch
An office or operating division of the same organization which is merely housed in a different location and is not established as a separate business entity is considered a “branch.”
3. Subsidiary
A “subsidiary” means a firm, corporation or other legal entity of which a parent owns, directly or indirectly, more than half of the entity and controls the entity; or owns, directly or indirectly, half of the entity and controls the entity; or owns, directly or indirectly, 50% of a 50/50 joint venture and has equal control and veto power over the entity; or owns, directly or indirectly, less than half of the entity but in fact controls the entity.
Ownership and control are the important factors in determining whether a business entity qualifies as a “subsidiary.” The relationship is usually measured by stock ownership and a substantial degree of managerial control. However, control need not be demonstrated solely by majority ownership. There are situations where control may be demonstrated notwithstanding a lack of a majority. For example, the proxy votes of minor stockholders might give a larger stockholder a majority, or in the case of larger corporations, extremely diverse holdings of minor stockholders could give control to a larger stockholder. In addition, in joint venture situations, where neither party owns a majority, either party is deemed to exercise control pursuant to the concept that both have “negative control” of the organization.
4. Affiliate
The term “affiliate” is defined as any one of the following:
1) One of two subsidiaries owned and controlled by the same parent or individual.
2) One of two legal entities owned and controlled by the same group of individuals, each individual owning and controlling approximately the same share or proportion of each entity. (Note that the USCIS has been reluctant to further define what constitutes “approximately the same share” and will consider each ownership situation on a case-by-case basis.)
3) A partnership that is organized in the United States to provide accounting services along with managerial and/or consulting services and that markets its accounting services under an internationally recognized name under an agreement with a worldwide coordinating organization that is owned and controlled by the member accounting firms, will be considered to be an “affiliate” of the partnership (or similar organization) outside the United States.
The latter provision was added by IA90 to include international accounting firms as qualified entities which may petition on behalf of intracompany transferees. Previously, they were generally considered ineligible, because as partnerships they did not fit readily into the “pigeonholes” that described other legal structures.
Note that contractual relationships such as licensing and franchising, will not suffice to establish a qualifying relationship, absent other factors establishing the requisite control.
Presuming that a qualifying relationship exists, one must next look to the nature of the services to be performed, and which have been performed, by the proposed transferee. These services must be in a capacity which is executive or managerial in nature, or which require that employee’s use of specialized knowledge. As previously noted, these terms are fully defined in the statute or USCIS regulations.
B. Qualifying Employment
1. Employees performing in a Managerial Capacity
In order for an individual to be considered as performing in a managerial capacity, s/he must primarily:
a) Manage the organization, or a department, subdivision, function or component of the organization;
b) Supervise and control the work of other supervisory, professional or managerial employees, or manage an essential function within the organization, or a department or subdivision of the organization;
c) Have authority to hire and fire or recommend those as well as other personnel actions (such as promotion and leave authorization) if another employee or employees are directly supervised, or if no other employee is directly supervised, the employee functions at a senior level within the organizational hierarchy or with respect to the function managed; and
d) Exercise discretion over the day-to-day operations of the activity or function for which the employee has authority. A first-line supervisor is not considered to be acting in a managerial capacity merely by virtue of the supervisor’s supervisory duties unless the employees supervised are professional.
2. Employees performing in an Executive Capacity
In order for an individual to be considered to be performing in an executive capacity within an organization he or she must primarily:
a) Direct the management of the organization or a major component or function of the organization;
b) Establish the goals and policies of the organization, component or function;
c) Exercise wide latitude in discretionary decision-making; and
d) Receive only general supervision or direction from higher level executives, the board of directors, or stockholders of the organization.
An executive or manager may manage a function within an organization, rather than a staff of professionals, pursuant to the definitions set forth in IA90. Although staffing levels may be taken into account, they are no longer the sole determinant (INA §101(a)(44)(C)).
3. Employees performing in a capacity requiring use of specialized Knowledge
In order to qualify as an employee who possesses “specialized knowledge” an individual must possess special knowledge of the petitioning organization’s product, service, research, equipment, techniques, management, or other interests and its application international markets, or an advanced level of knowledge or expertise in the organization’s processes and procedures, which are not readily available in the U.S. labor market (INA §214(C)(2)(B); 8 CFR 214.2(l)(ii)). An individual who possesses general knowledge or expertise necessary to produce a product or provide a service which is in no respect proprietary to the organization will not be considered to possess specialized knowledge for L-1 purposes, nor does a mere skilled worker qualify for L-1.
Some characteristics of an employee who has specialized knowledge include the following:
o The employee possesses knowledge that is valuable to the employer’s competitiveness in the marketplace.
o The employee is uniquely qualified to contribute to the United States employer’s knowledge of foreign operating conditions.
o The employee has been employed in a key position abroad and has been given significant assignments which have enhanced the employer’s productivity, competitiveness, image or financial position.
o The employee possesses knowledge which can be gained only through extensive prior experience with that employer.
4. Outsourcing of L-1B (Specialized Knowledge) Workers
Recent regulations have addressed the issue of outsourcing L-1B workers. Under new rules L-1B workers can no longer work primarily at a worksite other than their petitioning employer if the work will be controlled and supervised by a different employer or if the offsite arrangement is essentially to provide labor-for-hire, rather than services related to the specialized knowledge of the petitioning employer.
DOCUMENTING THE L-1 CASE
A. Place and Manner of Filing Petition
1. General Rule
As with H-1B visas, approval of a petition by the USCIS is generally prerequisite to L-1 visa issuance or admission to the United States in L-1 status. The general rule is that an L-1 visa petition is filed with the Regional Service center of the U.S. Citizenship and Immigration Services which has jurisdiction over the place where the alien will be employed. There are two major exceptions to this filing procedure: the filing of individuals petitions and certifications under blanket petitions for citizens of Canada under the United States-Canada Free Trade Agreement (FTA) and the filing of “blanket” petitions which permit continuing approval of a qualifying organization and some or all of its parent, branches, subsidiaries and affiliates.
2. Filings under the FTA
A U.S. or foreign employer seeking to classify a citizen of Canada as an intracompany transferee may file an individual petition on Form I-129 in duplicate, in conjunction with the application for admission of the citizen of Canada — that is directly at a U.S. border port of entry. Such application must be made to an immigration officer only at a “Class A” port of entry, a U.S. airport handling international traffic, or at a U.S. pre-clearance/pre-flight station. The petitioning employer need not appear, but Form I-129 must bear the authorized signature of the petitioner.
Citizens of Canada may also present the original and two copies of Form I-129S, and three copies of Form I-797 (Notice of Action) in applying for admission to the United States under an approved “blanket” L visa petition (further discussed below). An immigration officer at one of the ports of entry or USCIS inspection stations described in the preceding paragraph may determine the eligibility of the individual seeking L classification under the blanket petition.
Citizens of Canada are not required to follow this procedure, but merely have it available to them as an alternative. They may still file under the usual procedure with an USCIS Service Center.
“Blanket” L-1’s
Certain well-established organizations may be eligible to receive “blanket” approvals of L-1 petitions, which allow for continuing approval of the qualifying organization, its parent, branches, subsidiaries and affiliates. The criteria for eligibility are:
(a) The petitioner and each of the entities for which approval is sought are engaged in commercial trade or services;
(b) The petitioner has an office in the United States that has been doing business for one year or more;
(c) The petitioner has three or more domestic and foreign branches, subsidiaries, or affiliates; and
(d) The petitioner and the other qualifying organizations have obtained approval of petitions for at least ten “L” managers, executives, or specialized knowledge professionals during the previous 12 months; or have U.S. subsidiaries or affiliates with combined annual sales of at least $25 million; or have a United States work force of at least 1,000 employees.
Unlike individual L-1 petitions, blanket petitions are filed with the USCIS director having jurisdiction over the area where the petitioner is located. Once approved, managers, executives and “specialized knowledge professionals” employed by one of the entities approved under a blanket L may be classified as L-1’s by a Consular Officer (where a visa is required) or by a Service officer (where the individual is visa-exempt). Note that individuals engaged in services that require their specialized knowledge, who are not also “professionals” do not qualify for admission under a blanket petition, and must have individual petitions filed in their behalf.
Blanket L programs may be advantageous with respect to time-savings for qualifying organizations, as it obviates the need for filing petitions with the USCIS Service Centers for each employee to be transferred. A major disadvantage, however, is the fact that subjective legal determinations regarding the employees’ credentials and employment as a manager, executive or specialized knowledge professional are thereby relegated to the Consular Officer in the country of visa application. Unfortunately, the level of expertise in matters of substantive immigration law is somewhat uneven amongst Consular Officers, and accordingly, the employer may find determinations of its employees’ eligibility lack the uniformity expected of the USCIS Regional Processing Centers.
4. Premium Processing
Premium Processing may be requested on any L-1 visa petition filed with a Service Center of U.S. Citizenship and Immigration Services. Upon payment of an additional filing fee of $1,000.00 and filing of Form I-907, Immigration Services will adjudicate the petition within 15 business days.
B. Documents required
Individual petitions for L-1 classification are filed with the following:
1) Form I-129, with L Classification Supplement
2) Evidence that the petitioner and the organization which employed the alien abroad are qualifying organizations
3) Evidence that the alien will be, and has been employed for at least one year in the preceding three, in a capacity which is managerial, executive or involves specialized knowledge.
The elements of the “basic” L-1 documentation are more dully described below. Note that additional documentation is required in the case of “blanket” L’s and for cases which involve new businesses. Because of the specialized nature of these circumstances, it is beyond the scope of this article to fully describe those requirements.
1. Required Immigration Forms
As revised, Form I-129 is now used for new employment, for extensions of L-1 stay, and for the filing of amended petitions, such as where a change is made in previously approved employment. The use of Form I-129 also enables the principal applicant, if in the United States, to change his or her status from another visa classification or extend his or her status if currently in L-1 status. Where either of these latter actions are requested, the application should be accompanied by a copy of the alien’s Form I-94 (Arrival/Departure Record) to evidence that the person is lawfully in the United States.
Accompanying family members may file to extend their visa classification or to change their classification to L-2 on Immigration Form I-539. As above, this form should be accompanied by copies of each applicant’s Form I-94 to evidence lawful status in the United States.
2. Fees
The I-129 petition must be accompanied by the appropriate filing fee of $320.00. Form I-539 (if required) carries a filing fee of $300.00. Further, all new L-1 petitions now require a one-time payment of $500.00, which is designated as an anti-fraud fee.
3. Evidence of the Relationship of the Companies
a. In General
In the case of large, established organizations, a statement by the company’s president, corporate attorney, corporate secretary, or other authorized official describing the ownership and control of each qualifying organizations, accompanied by other evidence such as a copy of its most recent annual report, Securities and Exchange Commission filings such as 10K statements, or other documentation listing the parents and its subsidiaries, will generally suffice to establish the corporate relationship.
For small businesses or marginal operations, in addition to a statement of an authorized official regarding ownership and control of each qualifying organization, other evidence should be submitted to include, for example, copies of stock certificates and records of stock transfers, profit and loss statements or other financial reports, tax returns or articles of incorporation, by-laws and minutes of board meetings.
For partnerships, a copy of the partnership agreement should be submitted. In proprietorships or cases where the business is not a separate legal entity from the owner, the petitioner’s statement of ownership and control should be accompanied by evidence, such as a license to do business, record of registration as an employer with the Internal Revenue Service, business tax returns, or other evidence which identifies the owner of the business.
b. Specific Documents which may be furnished
Sample documents which establish the bona fides of the petitioner’s operations and the qualifying relationship of the companies include:
i. Corporate Documents from Overseas Company:
o Statement, including Address, description or nature of business, date of incorporation, number of employees.
o Certified copy of Certificate of Incorporation.
o Certified copy of latest financial statement or tax return.
o Certified copy of any current licenses (registrations) to operate business.
o Corporate brochures, annual report or other printed matter (e.g. newspaper and magazine articles)
ii. Corporate Documents from United States Corporation:
o Statement, including address, description or nature of business, date of incorporation, number of employees.
o Certified Copy of Certificate of Incorporation.
o Lease or deed evidencing office space in the United States.
o Certified copy of latest financial statement or tax return.
o Corporate brochures, annual report or other printed matter.
iii. Documents establishing Corporate Relationship:
o Notarized statement by the Corporate Secretary, General Counsel, or independent accountant setting forth a description of ownership and control.
o Copies of all issued stock certificates of the U.S. corporation. If all of the authorized stock is not issued, a statement from the attorney for the corporation or corporate officer attesting to the fact that the certificates represent the total amount of stock issued and outstanding.
o Minutes of the U.S. and foreign corporation or other corporate records confirming affiliate or subsidiary relationship.
4. Evidence of the Qualifying Nature of the Employment
As with establishing corporate relationship, generally the statements of an established company official regarding an employee’s job history and the employment offered will be taken at face value. Where questions arise, independent verification of employment may be requested. The following documentation may be filed to establish qualifying employment:
a. From a large international organization, a detailed statement from the petitioner, giving job title and description of job responsibilities in the overseas office and the proposed employment in the United States. This statement should described how the position is an executive or managerial one or one requiring specialized knowledge.
b. In cases where employment records are less “centralized” — i.e. with smaller companies, a separate statement may be submitted from the overseas company to verify employment.
c. Independent evidence of alien’s continuous employment for at least one year in the three years preceding transfer: i.e. tax filings, payroll records, etc.
d. Organizational charts of both U.S. and foreign corporation which indicate beneficiary’s managerial, executive, or specialized knowledge position within the firm as well as the individuals (by title) s/he presently supervises and will supervise in the U.S. company, if applicable.
ADVANTAGES/DISADVANTAGES OF THE L-1 CATEGORY
There are significant advantages to the L-1 category. It allows for employment for relative long-term temporary services (5 or 7 years) and, under the doctrine of “dual intent” may be held by an individual even though he or she is simultaneously pursuing an application for lawful permanent resident status. Moreover, if the employee has qualified for the L-1 as a manager or executive that individual is eligible for “priority worker” classification should permanent residence be sought. [Priority workers are not required to obtain individual alien labor certifications — see the discussion of permanent residence infra.] In this regard, even though the employee may hold a visa classification other than that of an intracompany transferee (such as E or H) and still be eligible for priority worker classification as a multinational executive or manager, possession of the L-1 visa creates a “psychological” benefit — generally the USCIS will presume that the qualifying relationship of the companies, etc. has previously been established in connection with the “L” application.
There are really no disadvantages to the L-1 visa, other than its limited application, since it will only be available to employees of international companies who have previously worked for the company or its parent, branch or subsidiary overseas.
PROBLEM AREAS
A. Relationship of the Entities
Probably the most difficult area substantively arises with respect to L-1 affiliation issues. For example, the Service has taken a narrow view of the definition of “affiliate,” and has applied the regulatory language in a way that seems inconsistent with statutory intent, and fundamentally illogical when viewed in the context of what companies qualify as affiliates in any other area of law.
Take, for example, the following hypothetical:
Mr. and Mrs. Jones own company ABC in England, with Mrs. Jones owning 60% and Mr. Jones owning 40%. In the United States, they own company XYZ on a 50%/50% basis. The Service has taken the position that these companies would not qualify as “affiliates” under the definition, because negative control is only recognized in joint venture situations, and joint ventures are only permissible in “subsidiary” situations.
In another example, ABC Company in the United States is owned 50% by Mr. X and 50% by Mr. Y. XYZ Company in Portugal is owned 50% by Mr. X, 35% by Mr. Y and 15% by Mr. Y’s immediate family members. The Service does not recognize these companies as affiliates, because they are not owned and controlled by the “same group of individuals” in accordance with regulatory definitions.
B. Nature of the Beneficiary’s Employment
Another area of potential difficulty relates to the nature of the employment services rendered by the beneficiary. Particularly in “specialized knowledge” cases, where the beneficiary has been employed by the overseas company for little over one year, the USCIS will often question how the employee could have been utilizing specialized knowledge of the company’s product, service, etc. during that year, since presumably it would take some time to acquire the proprietary knowledge.
Another problem area recently has been the reluctance of some USCIS officers to grant L-1 cases to beneficiaries as managers of a function where the beneficiary has some involvement in performing that function him/herself.
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