Introduction

In the intricate processes of mergers and acquisitions, the focus often lands squarely on financials, asset management, and strategic alignments. However, an equally crucial aspect that demands attention is the impact of these transactions on the workforce, particularly where that workforce includes foreign nationals employed under various visa conditions. This oversight can lead to severe compliance issues, risking legal penalties and operational disruptions.

As business immigration attorneys, it is our role to ensure that companies navigate these complexities effectively, ensuring a smooth transition and compliance with immigration laws post-M&A.

Compliance

Immigration compliance should be a priority during the M&A process. Early identification of any red flags, such as the visa status of foreign employees and understanding the immigration policies of the involved jurisdictions, is crucial. Proper planning for visa reapplications or transfers is necessary to avoid disruptions in workforce and compliance issues.

Significant liability risks arise from neglecting immigration compliance during M&A. These include legal penalties and fines, reputational damage, and operational disruptions. Conducting thorough due diligence, including a comprehensive review of all foreign employees' immigration status and the potential impact of the M&A transaction on these statuses, is vital.

Systems Integration

Post-M&A, developing robust compliance and systems integration processes is critical. This includes setting up an immigration compliance team, integrating immigration compliance into HR processes, and maintaining clear communication with foreign employees. Having legal counsel with immigration expertise is invaluable in navigating the complexities of visa transfers and applications.

“Successor in Interest” and Its Importance

A central concept in M&A impacting nonimmigrant visa holders is the “successor in interest.”

For a company to qualify as a successor in interest, it must demonstrate that a specific portion of the business has been acquired as a whole, and that it retains the essential immigration-related rights and obligations of the original employer. This could ensure the continuation of sponsorship for nonimmigrant visas under new corporate ownership without the filing of a new petition if the roles and locations of the sponsored employees remain fundamentally unchanged.

If the new employer does not qualify as a successor in interest, it may be necessary to re-start the immigration process for particular employees.

Strategic Due Diligence

Effective management of nonimmigrant work visas in M&A transactions requires a strategic approach encompassing:

• Comprehensive Due Diligence: Assessing the visa status and compliance of all foreign national employees early in the transaction process.
• Successor in Interest Analysis: Determining whether the new corporate structure will qualify as a successor in interest to avoid extensive re-filings.
• Role-Based Visa Assessments: Evaluating if the roles and locations of visa-sponsored employees will remain consistent post-transaction.
• Evaluation of I-9 Compliance: Reviewing how the sellers have approached I-9s and whether there has been a culture of policies, training, and compliance to determine the potential for penalties and risks of audits post-M&A.

Key Visa Categories and Considerations

When companies merge or one acquires another, the changes in corporate structure can jeopardize the immigration status of foreign employees.

A large-scale corporate merger or acquisition can also produce unintended consequences for foreign employees at all levels of the corporate food chain. Employment-based visa classifications can be impacted by a change in corporate structure, particularly the L-1, E-1/E-2 and the H-1B visas.

A change in corporate structure can also have a significant impact on foreign employees going through the green card process. These employees, often integral to the company’s operations, might hold visas that are employer-specific.

L-1 Visa for Intracompany Transferees

L-1 visas are issued to managers, executives, or specialized knowledge employees transferring within multinational companies. Post-restructuring, the successor company must maintain a qualifying corporate relationship with an entity outside the U.S. to continue the sponsorship of L-1 visas.

If the restructuring disrupts this international relationship, the affected employees might lose their visa status and work authorization, making it essential to reassess and potentially refile L-1 petitions to reflect the new corporate structure.

E-1 and E-2 Visas for Treaty Traders and Investors

The continuity of E-1 and E-2 visas, which are based on treaties of commerce with the U.S., depends on the nationality of the company's ownership. Changes in ownership that affect the nationality profile of the company can invalidate these visas, necessitating careful evaluation during the due diligence phase of any M&A activity.

H-1B Visas for Specialty Occupation Workers

For H-1B visa holders, a corporate restructuring does not necessitate new Labor Condition Applications (LCAs) or visa petitions if the new entity qualifies as a successor in interest. This provision allows for a seamless continuation of employment, provided there are no significant changes to the employment terms. It is crucial for the successor entity to update the H-1B public access file documents before the deal closes to avoid the necessity of filing new amendment petitions.

TN Visas and F-1 Student Visas

TN visas, granted under NAFTA to Canadian and Mexican nationals, require careful handling to ensure that job duties remain substantially the same post-M&A. Similarly, F-1 student visa holders employed under Optional Practical Training (OPT) must update their employment information through their Designated School Official to reflect changes in employer identity.

Conclusion

Corporate changes in mergers and acquisitions can have significant impacts on the employment eligibility of foreign national workers. Particularly, the roles of “successor-in-interest” and compliance with I-9 verification standards are crucial in maintaining uninterrupted employment authorization for foreign employees. Comprehensive immigration assessments should therefore be a top priority in the due diligence checklists for any corporate transaction.

Navigating the complexities of nonimmigrant work visas in mergers and acquisitions demands meticulous planning, expert legal counsel, and proactive compliance strategies. By prioritizing these considerations, companies can mitigate risks, avoid legal pitfalls, maintain a compliant, effective workforce to ensure continuity of status for foreign national employees post-M&A.