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

Dickinson Wright

Dickinson Wright

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:

  1. 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.
  1. 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]

[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).

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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