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Corporate Restructuring and its Potential Impact on H-1B
Workers

Posted by Alexandra Crandall | Nov 2,
2020

Facing the financial distress caused by the COVID-19 pandemic, many companies
may be contemplating corporate restructuring. With all of the considerations
surrounding a corporate merger, acquisition, or spin-off, often the last item on
an executive’s mind is the impact of corporate restructuring on its foreign
national workforce. While business motives may be at the forefront of the
practical considerations in finalizing a precarious deal, corporate counsel
should be sure to consult with immigration counsel in advance of any corporate
change in order to preserve the immigration status of H-1B workers.

Before taking any immigration action to preserve the H-1B status of its
workers in light of anticipated corporate restructuring, legal counsel for the
company should first ask two questions:

Will the deal close? At the outset, it is important to
note that the mere announcement of a corporate restructuring has no legal
effect on foreign national employees. It is not until the deal actually closes
that the company will need to take any action.

Has the employer changed? Not all corporate
reorganizations require action to maintain the immigration status of H-1B
workers. A simple name change or ownership change should not require any
action at all.[1]

If the answer to both of the above questions is yes, then additional analysis
is required to determine whether any immigration action is required.

Is the New Employing Entity a “Successor in
Interest”?

If the employer is “different,” then the next question that legal counsel for
the company should ask is whether the new employer is a “successor in interest.”
The new employer is a “successor in interest” where “a new corporate entity
succeeds to the interest and obligations of the original petitioning employer
and where the terms and conditions of employment remain the same but for the
identity of the petitioner.” [2]

If the New Employing Entity is a “Successor in Interest,” No
Amended H-1B Petition is Required.

If the new employer is indeed a “successor in interest,” then the employer is
not required to file an amended H-1B petition. This is true whether the
corporate restructuring took the form of a merger, acquisition, consolidation,
spin-off, or any other entity reorganization, even if there is a change in the
employer’s federal tax identification number.[3]

Rather than filing new H-1B petitions and accompanying Labor Condition
Applications (“LCAs”) after the corporate restructuring, the regulations require
the employer to place a document in the required public access file
acknowledging the new employing entity.[4]
The document must state:

the affected LCA number and its date of certification;

a description of the new employing entity’s wage system applicable to the
employee;

the federal employer identification number (FEIN) of the new employing
entity; and

a sworn statement by an authorized representative of the new employing
entity expressly acknowledging the entity’s “assumption of all obligations,
liabilities and undertakings arising from or under attestations made” in the
certified LCA.[5]

The authorized representative must explicitly agree to maintain a copy of the
statement in the public access file and make the document available to the
Department of Labor or any member of the public upon request. The document
should be placed in the public access file before the corporate
reorganization is finalized.

What Happens When the New Employing Entity Seeks to Extend its
H-1B Workers’ Status?

The new employing entity must file new LCAs and H-1B petitions when it hires
any new H-1B nonimmigrants or seeks extensions of H-1B workers who were hired
prior to the corporate restructuring.[6]

About the Author:

Alexandra
Crandall is an attorney at Dickinson Wright in Phoenix. She practices
business immigration, successfully assisting employers with the preparation of
immigrant and non-immigrant petitions to maintain their foreign national
workforce. Prior to joining the firm, Ms. Crandall served as a Judicial Law
Clerk to the Honorable Jennifer B. Campbell at the Arizona Court of Appeals.

[1]
See, letter from Efren Hernandez III, Acting Director, Business and Trade
Services, HQ 70/6.2.8 (June 7, 2001), AILA Doc. No. 01062832 (Posted June 28,
2001) referring to 8 CFR §214.2(h)(2)(i)(E).

[2]
INA § 214(c)(10); 8 U.S.C. § 1184(c)(10).

[3]
20 CFR § 655.730(e)(1).

[4]
20 CFR § 655.730(e)(1) (“Where an employer corporation changes its corporate
structure as the result of an acquisition, merger, “spin-off,” or other such
action, the new employing entity is not required to file new LCAs and H-1B
petitions with respect to the H-1B nonimmigrants transferred to the employ of
the new employing entity (regardless of whether there is a change in the [FEIN])
. . . .”).

[5]
20 CFR § 655.730(e)(1)(i)–(iv).

[6]
20 CFR § 655.730(e)(2).

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