Not Business as Usual: H-1B Petitions for Startup Companies

In order to obtain an H-1B visa on behalf of a nonimmigrant worker, USCIS requires the Petitioner to meet a variety of factors. The Petitioner must prove it will maintain a valid employer-employee relationship with the nonimmigrant worker for the duration of the requested validity period, that the Petitioner will at all times retain the right to control over the nonimmigrant worker, that the position qualifies as a specialty occupation, and that the nonimmigrant worker is qualified to perform job duties in a specialty occupation position. The Petitioner must also show that the Petitioner has sufficient work available for the nonimmigrant worker and that the Petitioner can pay the proffered wages in compliance with the required Labor Certification Application (LCA).

These factors can be difficult to prove, even for very established companies. The burden is high and USCIS scrutinizes petitions very carefully, requiring each factor be met by substantial evidence before granting an approval. The burden can be even higher for startup or newly formed companies, who may have a harder time providing sufficient documentation to meet each factor. For this reason, when considering filing an H-1B petition, startup or newly formed companies need to be extremely diligent and allow sufficient time for the preparation of all required documentation.

For starters, a new company will need to provide a valid Federal Employer Identification Number (FEIN), which is assigned by the IRS. All H-1B petitions require a valid, certified LCA. Normally, the LCA process takes 7 days, but for a new company, this process may be longer because the Department of Labor will have to verify the business before issuing the LCA. Therefore, new companies need to allow more time for this stage of the processing.

The LCA will determine how much the company will be required to pay the nonimmigrant worker. Since the company must pay the wage certified by the LCA, the new company will need to have a business plan showing they are expecting sufficient revenue to pay the nonimmigrant worker, since the company will not be able to provide the company’s past tax returns to show their net income.

The company will also need to have sufficient documentation to prove it is a viable, operational company, such as incorporation documentation, a valid business license, a lease agreement showing office space, term sheet, capitalization table, stock purchase agreement, investor rights agreement, voting agreement, operating agreements, the company by laws, and the organizational chart.

Beyond the documentation required to establish the Petitioner is a viable company with sufficient projected revenue to support the nonimmigrant worker’s stay on H-1B, the Petitioner will also need to provide sufficient documentation regarding the position itself.

In order to prove a position qualifies as a specialty occupation, a Petitioner must show the a bachelor’s degree is the normal requirement for the position, that the degree requirement is common in the industry among similar organizations, that the employer normally requires a degree, or that the job duties are so specialized and complex that they require a bachelor’s degree.

Because a startup company or new formed company will not be able to prove a past hiring practice for the position, the company will need to prove one of the other elements to establish a specialty occupation. USCIS is very tough on the job duties requirement, routinely holding that job duties are too generic and vague to prove a specialty occupation. Therefore, the company will need to make sure the job description is extremely detailed and specific and that the job duties are sufficiently complex. If there is an end client, the company will need to obtain a detailed verification letter confirming the specialized job duties. If the project is in house, there will need to be substantial documentation of the project, outlining the specific nature of the work to be performed.

The company will also need to make sure the LCA is certified for an SOC code in Job Zone Four (a job zone which indicates a Bachelor’s degree is the normal requirement) and for a higher wage level, since weak SOC codes and low wage levels indicate entry level positions that USCIS does not consider as specialty occupations. Because the company will not be able to show a hiring practice for the position, it is especially important to have a strong LCA for specialty occupation purposes.

Finally, as with all H-1B petitions, the company will need to provide sufficient evidence that the nonimmigrant worker is qualified for the position. If the worker has a foreign education, this will require an education evaluation.

In sum, a startup or newly formed company can absolutely file an H-1B visa and should have no trouble in obtaining an approval, as long as the process is carefully planned and prepared for and the required documentation is available.

As with any successful immigration petition, an experienced attorney is a key part of the process. We recommend consulting with an attorney if you are considering filing an H-1B petition.