Background Final rule reviewed Non-immigrant visa options for start-up entrepreneurs Comment

Background

In August 2016 US Citizenship and Immigration Services (USCIS) proposed a new rule which would allow "certain international entrepreneurs to be considered for parole (temporary permission to be in the United States) so that they may start or scale their businesses here in the United States".

USCIS Director León Rodríguez said in a recent statement:

"America's economy has long benefitted from the contributions of immigrant entrepreneurs, from Main Street to Silicon Valley. This proposed rule, when finalized, will help our economy grow by expanding immigration options for foreign entrepreneurs who meet certain criteria for creating jobs, attracting investment and generating revenue in the U.S."

The rule would allow the Department of Homeland Security to use its existing discretionary statutory parole authority under Section 212(d)(s)(A) of the Immigration and Nationality Act for entrepreneurs of start-up entities whose stay in the United States would provide a significant public benefit through the substantial and demonstrated potential for rapid business growth and job creation.

Under this proposed rule, the Department of Homeland Security may parole, on a case-by-case basis, eligible entrepreneurs of start-up enterprises:

  • who have a significant ownership interest in the start-up (at least 15%) and an active and central role to its operations;
  • whose start-up was formed in the United States within the past three years; and
  • whose start-up has substantial and demonstrated potential for rapid business growth and job creation. This can be demonstrated by:
    • the business having received a significant capital investment of at least $345,000 from qualified US investors, awards or grants of at least $100,000 from government entities or partially satisfying the investment or grant criteria; and
    • presenting additional evidence of the business's potential for rapid growth and job creation.

Under the proposed rule, entrepreneurs may receive an initial stay of up to two years to oversee and grow their start-up entity in the United States and may subsequently request for re-parole of up to three additional years if the entrepreneur and the start-up entity continue to provide a significant public benefit as evidenced by substantial increases in capital investment, revenue or job creation.

A memorandum of agreement between USCIS, Immigration and Customs Enforcement, and Customs and Border Protection explains that parole is an extraordinary measure which should be sparingly used only in urgent or emergency circumstances. The secretary of homeland security may permit an otherwise inadmissible alien temporarily to enter or remain in the United States. The memorandum explains that parole is not to be used to circumvent normal visa processes and timelines. As such, it can be inferred that the Entrepreneur Parole Rule will likely be seldom used and the entrepreneurs should still first evaluate possible visa options.

Final rule reviewed

On December 29 2016 USCIS sent the final version of the rule for international entrepreneurs to the Office of Management and Budget for review, signalling that President Obama seeks to carry out final immigration actions consistent with his executive action on immigration in November 2014, in line with current laws and immigration reform. Obama said: "Our tradition of welcoming immigrants from around the world has given us a tremendous advantage over other nations. It's kept us youthful, dynamic, and entrepreneurial. It has shaped our character as a people with limitless possibilities".

The Office of Information and Regulatory Affairs reviews hundreds of proposed and final rules before publishing in the Federal Register.

Non-immigrant visa options for start-up entrepreneurs

There are few non-immigrant visa options for start-up entrepreneurs. The USCIS website lists several options for immigrant entrepreneurs. Some of the options are summarised below.

F-1 OPT Foreign nationals can start a business while working on optional practical training under an F-1 student visa. The individual can work on his or her company if the work relates to his or her field of study.

H-1B The H-1B category has been used to facilitate entrepreneurship. However, there are issues with using the H-1B visa for entrepreneurs. Most specifically, establishing the employer-employee relationship can be difficult when the employee is also the majority owner of the company. If the petitioner shows there is a separate board of directors with the ability to control the beneficiary's employment, the petitioner may be able to establish an employer-employee relationship.

O-1 The O-1A visa, for individuals with an extraordinary ability in the sciences, arts, education, business or athletics, has been used for entrepreneurs. The O-1 visa applicant can be sponsored by his or her own company and does not impose a capital investment requirement. The beneficiary may own the corporation, but the petition must be filed by a US agent and the O-1 applicant may not petition for himself or herself.

E-2 Entrepreneurs may be eligible for an E-2 visa if they invest a substantial amount of money in a new US business. The investor must be from a country that has a treaty of commerce and navigation with the United States or a country designated by Congress as eligible for participation in the E-2 non-immigrant visa programme.

L-1A Finally, an entrepreneur may use the L-1A visa category if he or she is an executive or a manager of a company that has offices in his or her home country and in the United States and has worked at that foreign office for at least a year during the last three years. If the company does not have a US office, the foreign national can be the person who opens it.

Comment

The Entrepreneur Parole Rule has been long anticipated, as the United States has no option specific to start-up founders. After an agency issues the final rule, typically it takes at least 30 days to be effective after the date of the publication. As such, it is unlikely that the final rule will be effective before the Trump administration takes over.

For further information on this topic please contact Melissa B Winkler at Fakhoury Law Group PC by telephone (+1 248 643 4900) or email (melissa@employmentimmigration.com). The Fakhoury Law Group website can be accessed at www.employmentimmigration.com.

This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.