Startups often seek to hire highly educated employees with degrees in STEM (science, technology, engineering and science) fields in order to compete with their established competitors. Post-graduate international students have emerged as the leading source of talent for startups as nearly 1/3 of all international students (or over 330,000 such students) are enrolled in STEM degree programs at U.S. Universities. However, the lack of a true “startup visa” makes hiring post-graduate international students and other foreign nationals alike difficult. Generally speaking, the three most common employment-based visas used to staff emerging companies are the H-1B, E-2, L-1 visa categories. This article briefly describes the three most common pitfalls related to the above-mentioned employment-based visa categories as they relate to startups.

Timing of transfer: The H-1B visa category requires the petitioning company to file a petition for the foreign national beneficiary on April 1 of a given year for employment beginning on October 1. This rigid window often does not allow companies flexibility in making personnel decisions. For example, if your company identified a candidate on April 2, 2014, you would have to wait until April 1, 2015 to petition for an H-1B visa and until October 1, 2015 to formally hire that employee if the petition is accepted in the H-1B lottery.[1] U.S. Citizenship and Immigration Services has attempted to resolve this problem by grating employment authorization to international students in STEM fields for 17 months after they graduate. In theory, the 17 month extension gives employers two bites at the apple (i.e. – the chance of having their petition selected in a subsequent H-1B lottery if it is not selected the first year) to hire a STEM degree graduate. However, startups are increasingly exploring alternative visa options and not leaving their personnel decisions to chance.

L-1 visas may be filed at any time, but require the foreign national to work at an affiliate of the U.S. company for a period of one year prior to the transfer to the United States. If the startup does not have a foreign affiliate, the L visa category is not an option.

Owner as Employee: The H-1B and L-1 visa categories may all prove fruitful for staffing a U.S. startup with highly educated international students and foreign talent. However, a special consideration must be made when a visa is sought for the owner of acompany. The H-1B visa category expressly prohibits a startup from petitioning for its owner with certain exceptions. The L-1 category requires that an owner’s employment with the U.S. startup company be “temporary” in nature.

Administrative functions: Regardless of the type of employment-based visa, emerging companies are often required to prove that the foreign national beneficiary will be relieved of performing “non-qualifying administrative functions” around the office. A task that is often difficult for startups to prove when staffed with only a handful of employees.

While the E visa category seemingly cures the common pitfalls referenced above, its availability is also limited to nationals of certain countries upon a qualifying investment from a national of that county.

Eligibility for each one of the employment-based visa types requires advanced planning and an in-depth case by case analysis. Make sure your team is educated on the processes and procedures involved before deciding if employment-based visas are right for your startup.

[1] The H-1B program currently operates as a lottery due to the volume of H-1B petitions that are filed and numerical restrictions.  As a result, a petitioning employer has roughly a 50% chance of securing a visa for an intended foreign national employee.