The Financial Crisis and the Effect of Corporate Restructuring on Foreign Visa Workers

The current global economic slowdown has caused many companies to undergo reductions in force (“RIFs”) or corporate mergers. It is critical for companies facing corporate reorganizations that employ foreign visa workers, or workers being sponsored for US permanent residency (“green cards”), to understand how RIFs or other corporate changes will affect the immigration status of those employees. Employers undergoing corporate restructuring must analyze the immigration issues that impact foreign workers early in the reorganization process.

Multinational companies often transfer managers or professionals from overseas subsidiaries or affiliates to their US entities under L-1 intra-company transfer visas. US companies also sponsor foreign professionals to work in the United States under H-1B “specialty professional” work visas. Other commonly used visas for U.S. employment are the TN Canadian/Mexican work visa and the E-3 Australian professional work visa. Some US companies sponsor foreign workers for green card status for permanent employment in the United States. Companies that will terminate or transfer foreign workers because of downsizing or corporate reorganizations must plan and assess the effect that such a transfer will have on an individual’s visa status, right to remain in the United States, or ability to continue the green card sponsorship process.

Corporate Downsizing

• Individuals on certain work visas (H-1B, L-1, TN) have no grace period if their employment in the United States ends - their visa status ends on the day of termination.
• H-1B visa holders can transfer employment to another US sponsor if the new employer files a visa petition with the US Citizenship & Immigration Services (“USCIS”) before the worker is terminated.
• L-1 employment is directly tied to the intra-company relationship between the U.S. company that sponsored the worker and the worker’s former employment with a corporate affiliate of the company abroad. If the L-1 worker cannot be transferred to another US branch, subsidiary, joint venture or parent of the sponsoring company, the L-1 worker’s visa status ends on the day of termination.
• TN Canadian/Mexican professionals can transfer employment to another sponsor, but the new employer must file and receive approval of a TN transfer petition from the USCIS before the TN worker can begin employment with the new company. Because there is no grace period for a TN individual to legally remain in the United States if the worker’s employment ends, a TN transfer must be filed and approved before the TN worker is terminated. TN employment is limited to a specific group of occupations under the North American Free Trade Agreement (“NAFTA”). TN professionals transferring employment must work in a new job that is on the NAFTA list of occupations.
• E-3 Australian professional visa holders can transfer employment to another sponsor, but the new employer must file and receive approval of an E-3 transfer petition from the USCIS before the E-3 visa holder can start work with the new company.

The ability for foreign workers to continue green card processing depends on the stage of the green card process the worker has completed and must be assessed on a case-by-case basis. If an individual recently began the green card process at the time of termination, it is likely that the worker’s green card application will be nullified when employment ends.

“Successor in Interest” Corporate Mergers

In “successor-in-interest” corporate mergers (new entity assumes all of the obligations and rights of the predecessor company), the U.S. work visas and green card applications of the individuals employed by the new company will not be affected by the merger. The workers can continue employment as long as the terms and working conditions of employment of the workers remain the same.

At the time that the merger is completed, the new company must file amendments to the work visa petitions and green card applications with the USCIS to report the business change and transition of employment from the predecessor company to the new company.

Other Corporate Mergers or Acquisitions

Corporate reorganizations that are not successor-in-interest transactions will affect the visa status of foreign workers or their ability to continue green card sponsorship. Employers will need to analyze such corporate reorganizations carefully before the merger or acquisition is completed to determine how the corporate change will affect the ability of foreign nationals to continue working and explore whether other methods for preserving the workers’ visa status or green card applications are available.