Financial services and insurance companies of all sizes require innovative immigration strategies and support to remain competitive in the global marketplace. From moving business leaders around the world to onboarding talent with cutting-edge data analytics capabilities, understanding key visa processes and compliance is essential.
This primer provides an overview of several employment and immigration compliance topics affecting the financial services and insurance industries operating in the U.S.
Employment-Related Compliance Considerations for the Financial Services and Insurance Industries
Hiring in the U.S.
Companies of all sizes in the financial services and insurance industries must consider appropriate ways to ensure compliance with antidiscrimination laws in the hiring process, specifically as it relates to immigration and visas. This section will focus on ways employers can proactively mitigate risk to their enterprise and prevent mistakes.
From an employer’s perspective, hiring the most qualified employees is critical to growing the business and sustaining that growth, as well as pursuing new areas of innovation. During interviews, employers may be eager to identify key skills and attributes to ascertain “fit.” Interviewing, though, can present a minefield of employment discrimination challenges. In addition to questions that run afoul of various federal and state antidiscrimination provisions, or questions that may violate the growing number of state and local laws prohibiting asking applicants about their criminal or pay histories, questions that focus on nationality or immigration status are similarly fraught.
According to the Department of Justice’s Immigrant and Employee Rights section, employers may ask the following two questions on job applications and during interviews (and should ask these questions uniformly of all applicants, regardless of citizenship):
Are you legally authorized to work in the United States?
Will you now or in the future require sponsorship for employment visa status (e.g., H-1B visa status)?
Work authorization and immigration questions beyond these two questions run the risk of violating the antidiscrimination provisions of the Immigration and Nationality Act. Employers should seek experienced counsel if sponsorship or other work authorization issues arise during an interview or other hiring conversation.
Employers with more experience in sponsoring employees for visas and navigating these types of hiring questions may want to evaluate their business strategy as it relates to sponsorship and proactively address immigration-related trends affecting applicants. This is an ever-evolving area — immigration counsel can partner closely with employers to help develop strategies that support business units and hiring managers in meeting talent needs while also monitoring costs and risk.
Work Authorization and I-9 Compliance
The two questions mentioned above are applicable in the interviewing context. Once an individual has accepted an offer of employment, an employer must verify her identity and U.S. work authorization. All U.S. employers have the obligation to confirm the work authorization and identity of all employees hired after November 6, 1986, by properly completing and retaining Form I-9. If an employee is working for pay in the U.S. and was hired after November 6, 1986, employers are required by law to retain a Form I-9 on file for that employee. Note that employers do not need to retain Form I-9 for contractors or international business visitors.
All U.S. employers have three primary obligations when completing a Form I-9 (for any employee, not just employees who are not U.S. citizens or permanent residents):
Ensure that the I-9 is completed accurately and thoroughly, including ensuring that the employee properly completed Section 1.
Ensure that the documents presented by the employee relate to that employee.
Ensure that the documents look reasonably genuine on their face.
In many cases, completing the Form I-9 is a straightforward process. Even sophisticated employers can get tripped up, however, when employees present expiring work authorization documents or documents that have unique auto-extension rules (like some Employment Authorization Cards for beneficiaries of Temporary Protected Status (TPS), discussed below, and others). Failure to retain an accurate, up-to-date and verified Form I-9 on file for every employee can be very costly in the event of an audit. Since January 2018, ICE has issued more than 5,200 Notices of Inspection to employers to audit Forms I-9. As of June 2019, ICE was involved in more than 4,000 other worksite investigations, many of which involve inspection of employers’ Forms I-9.
Financial services and insurance employers, especially those with remote workers, hourly employees or employees with temporary work authorization, can face steep fines for failure to follow I-9 regulations. Ensuring that the person or team responsible for completing I-9s completes regular I-9 training and has access to outside counsel for questions is critical to I-9 compliance. Even the most established financial services and insurance employers face challenges in complying with Form I-9 rules. Employers must not rely on a sophisticated electronic I-9 system to solve compliance challenges — the human factor in reviewing and completing I-9s can never be completely automated. Ongoing training, self-audits and staying up-to-date with Form I-9 (and, where applicable, E-Verify) rules are essential for compliance.
Organizations of all sizes need to be aware of the compliance issues affecting the entire workforce, particularly hourly workers. Some employees work pursuant to work authorization that is granted to them because of their status as refugees or asylees or because the government has granted them Temporary Protected Status (TPS) because their home countries have experienced a devastating natural disaster or civil war. Employers do not need to file applications or petitions in order for these individuals to work for them. It is often at the onboarding stage when employees present documents in connection with Form I-9 that their work authorization comes to light.
Note that employers may not refuse employment to employees who present work authorization documents that have a future expiration date. Although employers are not required to sponsor employees for visas, an employer may not discriminate against an employee simply because her work authorization indicates that she is an alien authorized to work only until a certain date. In those instances, the employer must re-verify Form I-9 to reflect ongoing work authorization, but it may not refuse to hire or continue to employ such an individual.
Relevant Employment-Based Visa Categories
Employers in the financial services and insurance industry may also need to consider sponsoring employees for visas. Again, although sponsorship is not required, hiring and moving employees may require that employers pursue employment-based immigration options for candidates who are not already U.S. workers. Although business immigration can get complicated, employers should not be deterred from exploring visa categories that require the business to sponsor workers for U.S. visas. Flexibility on sponsorship will allow employers to hire the best employees for the job, including new graduates from U.S. universities who are international students, researchers, investment professionals, actuaries, accountants, financial analysts, business operations analysts, executives and others.
H-1B – Specialty Occupation
The H-1B visa is one of the most common professional visas for businesses that need to hire professional, qualified non-U.S. citizen talent. The H-1B visa classification is for specialty occupations, which means occupations that require: (1) theoretical and practical application of a body of highly specialized knowledge; and (2) attainment of a bachelor’s or higher degree in the specific specialty (or its equivalent) as a minimum requirement for entry into the occupation in the United States. The foreign national employee must meet the requirements for the position, including having a bachelor's degree or higher. The employer must also demonstrate that it is offering the prevailing wage for the occupation in the proposed labor market.
Business analysts, financial specialists, IT professionals, engineers, executives and other professional positions typically qualify as “specialty occupations” under the H-1B rules. Financial services and insurance companies of all sizes are often looking to hire new graduates, either straight out of an undergraduate or graduate program. If a recent graduate has been studying in the U.S. on a student visa, she often will have a period of work authorization after she graduates, but eventually, she will need to secure a longer-term work visa, and the H-1B is a popular choice for these employees.
One main challenge for employers seeking to apply for H-1B visas for employees is timing. A limited number of new H-1B visas are available each year, and because more H-1B petitions are filed than are available, employers must file submissions for new H-1B visas in the first five business days in April for an individual to begin working in H-1B status in October. In recent years, U.S. Citizenship and Immigration Services (USCIS) has imposed a random lottery on all the new petitions submitted in April as a method to fairly determine which petitions get reviewed since so many more are submitted than there are spots available under the H-1B “cap.”
The cap is a limit of 65,000 new H-1B visas per fiscal year and an additional 20,000 new H-1B visas per fiscal year for individuals who have graduated with a master’s degree or above from a U.S. university (for a total of 85,000). Some types of organizations and applicants are exempt from this cap, meaning they may submit new H-1B petitions at any time during the year, without concern for whether the H-1B cap limit has been reached. Generally speaking, most financial services and insurance companies are not exempt from the cap but should check with immigration counsel to confirm.
Note that if a candidate for a professional position is already working in the U.S. in H-1B status, the new employer may submit an H-1B petition on her behalf at any time, with no lottery. Foreign national employees have a maximum of six years of H-1B status available to them, although that maximum can be exceeded if the employee has begun the green card process. Where possible, employers seeking to hire individuals who already hold H-1B status should determine how many years of H-1B status remain so they can factor strategies regarding the timing of starting the green card process into the hiring decision.
Scrutiny on all H-1B petitions — both cap-subject and cap-exempt — has increased dramatically since 2017. Requests for Evidence (RFEs) and even denials have been issued by the immigration service at an unprecedented rate, causing processing delays and headaches for businesses that require H-1B visas for professional staff. As of June 2019, the RFE rate on all H-1B petitions (whether for first-time applicants or for third and fourth H-1B extensions), is above 60%.
TN – Mexican and Canadian Professionals
The TN is a visa option for Mexican and Canadian professionals in certain occupational categories that allows for U.S. work authorization on a fairly straightforward basis. For financial services and insurance employers, common TN occupational categories include Accountant, Computer Systems Analyst, Economist, Engineer, Mathematician (including Statistician), and, in some specific circumstances, Management Consultant.
There is no limit on the number of years one can work in TN status, although applicants may get further questioning from the immigration authorities when multiple extensions are file. There are no limits on the number of new TNs available in a given fiscal year.
To qualify in many of the professional TN categories, a Canadian or Mexican national must meet the following requirements:
Be a citizen of Mexico or Canada.
Hold a related baccalaureate degree or, in some cases, equivalent years of experience in the field.
Have a job offer from a U.S. employer.
Canadian citizens may apply for TN status at the U.S.-Canada border or airport pre-clearance/pre-flight station and are admitted in TN status without the need for a visa stamp in their passport. Alternatively, a U.S. employer may choose to file a TN petition on behalf of a Canadian citizen who is outside the U.S. with USCIS. Once the petition is approved, the Canadian citizen will present the approval notice and supporting documentation at a designated U.S. port of entry or pre-clearance/pre-flight inspection.
Mexican nationals apply for a TN visa at a U.S. embassy or consulate in Mexico, where a TN visa stamp is issued. Once the TN visa is issued, application for admission to the U.S. in TN status is made at the port of entry.
The initial period of stay in the U.S. in TN status is up to three years. Individuals who wish to remain in the U.S. beyond the initial three-year period must either file for an extension of stay with USCIS or depart from the U.S. and reapply for TN status using the same application procedures outlined above. TN extensions of stay are usually granted in three-year increments.
O-1 – Extraordinary Ability
For companies launching innovative products, in R&D or otherwise in a highly specialized industry, some non-U.S. citizen candidates may qualify for an O-1 visa, which is reserved for individuals of “Extraordinary Ability or Achievement.” This visa requires evidence that the candidate meets three of the eight categories below to be eligible:
Receipt of nationally or internationally recognized prizes or awards for excellence in the field of endeavor.
Membership in associations in the field for which classification is sought which require outstanding achievements, as judged by recognized national or international experts in the field.
Published material in professional or major trade publications, newspapers or other major media about the beneficiary and the beneficiary’s work in the field for which classification is sought.
Original scientific, scholarly or business-related contributions of major significance in the field.
Authorship of scholarly articles in professional journals or other major media in the field for which classification is sought.
A high salary or other remuneration for services as evidenced by contracts or other reliable evidence.
Participation on a panel, or individually, as a judge of the work of others in the same or in a field of specialization allied to that field for which classification is sought.
Employment in a critical or essential capacity for organizations and establishments that have a distinguished reputation.
Individuals can hold O-1 status for an indefinite period of time, although extensions will need to be filed every three years.
The O-1 category may, on its face, appear to apply mostly to academics and researchers, but employers should be aware that the categories can apply to those who are at a high level in the business world as well. Creativity in this category can go a long way for financial professionals who are at the top of their field.
E-3 – Australian Professional
Australian citizen professionals who otherwise qualify under the H-1B standards described above may seek E-3 status. Although not used as frequently as the H-1B category, employers should keep the E-3 nonimmigrant visa category in mind for potential Australian hires.
H-1B1 – Chile and Singapore Professionals
Employees who are citizens of Chile and Singapore who otherwise qualify under the H-1B standards described above may seek H-1B1 status. Although infrequently used, employers should keep the H-1B1 category in mind for potential Chile and Singapore candidates.
F-1 – International Student
Most foreign students in the U.S. have F-1 student visas. F-1 students are allowed to work only in very narrow circumstances. F-1 students are generally allowed to work for one year after graduation in Optional Practical Training (OPT). They may work for any employer in OPT as long as the work is closely related to their field of study. For now, students in STEM fields may seek additional OPT work authorization for an additional 24 months if the employer uses the E-Verify employment verification system.
B-1 Visa - Business Travel
The B-1 visa is available to foreign nationals for temporary business visits to the U.S. The B-1 visa is available for business travel for a specific and limited period of time. Permissible business activities include, but are not limited to, consulting with business associates, participating in short-term training, attending professional conventions or conferences, or negotiating a contract. The maximum amount of time permitted in B-1 status on any one trip is one year. The B-1 visitor is prohibited from engaging in any hands-on, productive work. Individuals from certain countries may be eligible to enter the U.S. without a visa. In recent years, B-1 business visitors have come under scrutiny when seeking admission to the U.S. Customs and Border Protection. Officials are now seeking additional information to demonstrate that the nature of the business visitor’s visit complies with B-1 rules and may request meeting agendas, calendar appointments, and other evidence to prove the reason for the visit.
U.S. Businesses Established by Foreign Nationals
Much of what is discussed above applies to any U.S. business in the financial services and insurance industries. There are several additional visa considerations that apply to companies with subsidiaries or affiliates outside the U.S.
Outside of U.S., Looking to Establish Office in U.S.
As companies based in other countries expand markets and establish international sales and distribution, there may be a business need to establish an office located in the U.S. In addition to the typical business registration requirements, foreign entities sending employees to the U.S. to set up or support the new office need appropriate visas and work authorization.
L-1 Visa – Intracompany Transfer
The L-1 visa category is intended for individuals working in either a specialized knowledge or managerial/executive capacity abroad for at least 12 months in the previous three years to come to the U.S. to work for an affiliated entity in either a specialized knowledge or managerial/executive capacity. The L-1 worker must have an employer-employee relationship with the U.S. entity and cannot be self-employed (but can be the sole shareholder of the U.S. entity). USCIS has issued specific guidance on how a new U.S. affiliate office that has not yet established proof of extensive business activity can employ an L-1 manager or executive, which includes establishing sufficient office space, proving the employee’s one-year employment abroad, and providing details regarding the U.S. business that shows that, within a year, the U.S. business could support an executive or managerial position.
There are no numerical limits on L-1 visas. For L-1A managers and executives, the total period of authorized employment is seven years (three years of initial validity plus two two-year extensions). For L-1B workers, that total period of authorized employment is five years (three years of initial validity plus one two-year extension). Note that a “new office” petition only gives one year of validity, at the end of which the U.S. business must exhibit sufficient evidence that it is active and operating.
E-1/E-2 – Treaty Trader/Investor
For certain countries that have valid treaties of commerce or navigation with the U.S. (a list of which is available here), work authorization for an employee of a new U.S. entity can be established through preparing an E-1 or E-2 petition, submitting it to the relevant U.S. embassy, and securing a visa for an individual employee to establish a U.S. entity, develop U.S. business ties and otherwise work in the U.S. The E-1/E-2 employee must be coming to the U.S. to engage in substantial trade, principally between the U.S. and the treaty country, or to develop and direct the operations of a U.S. enterprise in which the employee has invested a substantial amount of capital.
For an E-1 (Treaty Trader) visa, the employee must be a citizen of the treaty country, the company abroad must be majority owned by nationals of the treaty country, there must be substantial trade (the volume of which depends on the type of industry/business), and the employee must be an essential employee, employed as a supervisor/executive, or possess highly specialized skills necessary to the efficient operation of the U.S. entity.
For an E-2 (Treaty Investor) visa, the employee of the U.S. entity must be a citizen of the treaty country, the company abroad must be majority owned by nationals of the treaty country, the investment must be substantial, with investment funds committed and irrevocable, and the committed funds must be sufficient to ensure the successful operation of the enterprise. For startups, the business plan is a critical piece of the petition and must forecast the expected growth of U.S. enterprise. The business enterprise must have possession and control of the funds (i.e., loans are not allowed), and the enterprise must result in more income than just to provide a living to the employee and his/her family. Finally, the E-2 visa holder must be coming to the U.S. to develop and direct the enterprise or must be considered an essential employee, employed in a supervisory, executive or highly specialized skill capacity. Ordinary skilled and unskilled workers do not qualify.
Other Immigration Considerations for Financial Services and Insurance Industry Employers
M&A and Impact of Corporate Deals on Work-Authorized Employees
Since most employment visas are tied to a company or entity, corporate deals that affect those entities can have a significant impact on employees working on certain visa types. Generally speaking, mergers, acquisitions (both stock and asset), consolidations, spin-offs, name changes, relocation of offices, changes in payroll, IPOs, reorganizations, downsizing and layoffs, and bankruptcy may affect an employer’s immigration-related liabilities.
Prior to entering into a merger, acquisition or similar transaction, a buyer will conduct an investigation of the target business, often referred to as a due diligence investigation, to gather information about the business and assets it is acquiring. The purpose of the buyer’s due diligence investigation is to make sure the transaction is a good investment for the buyer, and that there are no unexpected liabilities the buyer would be acquiring in the transaction. Based on what the buyer learns through its due diligence, it may decide to abandon the transaction, negotiate certain protections in the transaction documents, or take other measures to address any ongoing issues that may result from the consummation of the transaction.
From the buyer’s side, due diligence should uncover not only any employees who are employed pursuant to nonimmigrant visas (e.g., H-1B, TN, L-1, E-1/E-2, etc.), but should also disclose whether any of those employees have begun the permanent residence (green card) process. Relatedly, the buyer’s due diligence should incorporate a review of the target’s Form I-9s to ensure that the buyer is not assuming significant liability and possible financial penalty for substantive errors on those documents. The buyer can then determine whether to facilitate the completion of new I-9s for target employees coming to the new entity or whether to assume the risk of the existing I-9s and alleviate the administrative burden of completing new forms.
Employees on L-1 and E-1 or E-2 visas working for companies involved in corporate deals are particularly at risk. If the buyer acquires the employee’s U.S. employer but divests any foreign holdings, the L-1 employee will no longer have work authorization to remain and work in the U.S. under that L visa. Alternative visa categories need to be explored for that person. Often, L-1 employees are high-level managers and executives, so this should be explored at the outset of a deal. For E-1 and E-2 visa-holding employees, a change in ownership can impact the visa holders, particularly if the change in ownership results in a change of the owners’ nationality.
Employees working on H-1B status may not need employers to prepare and file new visa petitions on their behalf as a result of a corporate restructuring or a deal. Sometimes, a simple preparation of Public Access File documents will suffice to represent the change in employer, although sometimes a new H-1B petition will need to be submitted to USCIS to reflect the amended employment situation. If H-1B workers are part of the employee population for a corporate transaction, though, careful attention to the petitions, Public Access File documents and salaries needs to be paid in due diligence to ensure the buyer is not blindly assuming liabilities.
Finally, careful attention should be paid to the green card processes of employees in a target company. If new PERM applications or other filings need to be made to ensure continuity with the often-drawn out green card process, the costs and effort involved in those filings should be factored into the deal.
Caution for Employers With Sensitive Technologies
We note a special concern for financial services employers using sensitive technologies. This issue could affect any company that hires foreign workers or that interacts with foreign visitors or business partners.
The U.S. controls the export of products and related technology and software designed, manufactured or used for military and dual-use purposes. Exports of technology to persons who are not U.S. citizens and permanent residents (Foreign Persons) are treated like exports to the home country of such persons. Disclosures of export-controlled technology to Foreign Persons physically located in the U.S. may require an export license if the technology requires a license for export to the home country of that Foreign Person. This is called the “deemed export” rule.
In some cases, an employer may not hire an individual. For example, if the individual involved is listed on the Specially Designated Nationals List, then a U.S. company cannot hire that individual without having a specific license. In other cases, the employee may not be able to work in areas of the company where he or she would have unrestricted access to design, development or manufacturing technology. For example, if a U.S. financial services company allows an Iranian citizen in the U.S. to have access to sensitive technology, that is deemed to be an export of the technology to Iran. This access to technology would be subject to export controls just as if the technology were being physically transferred to Iran. The company may have to apply for an export license to employ the Iranian citizen in this capacity. Such a license may or may not be issued.
Finally, it is important for new businesses to stay on top of changing rules in international travel, including travel restrictions for individuals from certain countries, delays in visa issuance for employees obtaining new visas at embassies outside the U.S., and extreme vetting and scrutiny for all travelers into the U.S., regardless of citizenship. Financial services industry managers and employees are globally mobile, professionals travel to conferences around the world, and employees may have family members affected by changing immigration rules and policies.
The immigration landscape is shifting quickly, and U.S. businesses — established companies and U.S. field offices alike — need to be able to discern which shifts can impact their workforces so they can prepare, be compliant, and continue identifying, attracting and retaining highly qualified talent.