Tag Archives: immigration

E-2 Treaty Investor Visa Available to Citizens of Israel

On May 1, 2019, the E-2 visa will be extended to Israeli citizens for the first time. The E-2 Treaty Investor is a nonimmigrant visa that allows an individual to invest in a U.S. business and then enter the U.S. to develop and direct the business. The E-2 visa holder must demonstrate a minimum of 50% ownership of the enterprise or “operational control through a managerial position or other corporate device.”

While roughly the same size as the U.S. state of New Hampshire, Israel boasts a successful high-tech industry. According to the U.S. Embassy website for Israel:

“U.S. firms have been a big part of the Start-Up Nation story, with U.S. companies establishing two-thirds of the more than 300 foreign-invested research and development centers in Israel.  Israeli firms, meanwhile, represent the second-largest source of foreign listings on the NASDAQ after China – and more than Indian, Japanese, and South Korean firms combined.”

Similar to the EB-5 investment requirements, the E-2 requires the investor’s funds to be “at risk” or subject to loss if the investment is not successful. Unlike the EB-5 Immigrant Investor visa, the E-1 and E-2 visas allow foreign nationals of certain treaty countries to invest in the United States without a set minimum investment, as long as the investment meets several criteria to determine if it is substantial.

In addition to the substantiality test, the enterprise must exceed the marginality test and the E-2 visa applicant must be in a position to develop and direct the enterprise, through special qualifications that make the employee’s services essential to the efficient operation of the business.

Visit our website for an introduction to the E-2 Treaty Investor visa and determine if your intended U.S. investment plan meets the E-2 requirements. Contact us at info@challalaw.com if you have any questions.

An Introduction to the E-2 Treaty Investor Visa: Marginality, Substantiality, Essentiality & Other Key Tests

The E-2 Treaty Investor visa allows an individual to invest in a U.S. business and then enter the U.S. to develop and direct the business. The E-2 visa holder must demonstrate a minimum of 50% ownership of the enterprise or “operational control through a managerial position or other corporate device.” Similar to the EB-5 investment requirements, the E-2 requires the investor’s funds to be “at risk” or subject to loss if the investment is not successful.

Essentiality of E-2 Employee

The E-2 visa also emphasizes that an applicant should have “special qualifications” or “skills which make the employee’s services essential to the efficient operation of the business.” The application must demonstrate that the individual not only that possesses the necessary special qualifications, but also establishes the length of time those skills may be needed for the successful and efficient operation of the U.S. enterprise. This essentiality of the potential E-2 employee may be measured by:

  • The degree of proven expertise in the employee’s area of operations
  • Whether others possess the employee’s specific skills
  • The salary that the special qualifications can command
  • Whether the skills and qualifications are readily available in the United States.

Impact of U.S. Workers

While the E-2 visa does not require a labor certification from the Department of Labor, USCIS does take into consideration the availability of U.S. workers when determining the degree of specialization and essentiality of the employee to the business. For example, an individual bringing a new technology to the U.S. may have specialized skills directly relating to the manufacturing, sales, and distribution of that technology, qualifying him or her for an E-2 visa. Additional evidence to support this narrative could be requested from U.S. labor organizations, industry trade groups, local or state chambers of commerce or other organizations with access to data on labor availability. It is important to note that there is no regulatory requirement that an essential employee have previously worked with the E-2 treaty enterprise. The only instance that previous employment has an affect on the application, is if the claim is being made that the necessary skills can only be obtained through that particular employment.

Short Term vs. Long Term Essentiality

When crafting the narrative of your E-2 visa application, we will consider your intended involvement in the ongoing operations of the U.S. entity. There may only be a need for the E-2 employee to come to the U.S. for a short period of time to direct the start-up operations or to train and supervise employees with specialized functions. For a short term need, the application might demonstrate that an employee is essential based on his or her knowledge with overseas operations or technologies. Evidence should demonstrate that these short-term employees are initially involved in the effort to train U.S. workers within a year or two as their own replacements.

The E-2 visa can be granted at a maximum initial stay of two years, but is renewable in various time increments depending on the nature of the underlying treaty with the country of the visa holder. Since there is no maximum limit to the number of extensions that can be granted, many business owners utilize the E-2 for a longer-term stay to continue to direct the enterprise. As long as the application demonstrates the individual has special qualifications that require his or her continuous presence in business activities, such as product development or providing a service not commonly available from U.S. workers, there is no requirement for training a U.S. worker replacement.

Case Study: Matter of Walsh and Pollard

In the 1980s, General Motors needed automotive engineers to design a new fleet of vehicles. After first attempting to meet their labor needs within the U.S., the company realized an additional need for engineers and turned to overseas for help. A British contractor made an investment as part of a strategy to open a U.S. office and then funnel designers for GM’s temporary labor needs using E-2 visas and establishing the designers’ essential skills. After the visas were approved, the then-INS (Immigration and Naturalization Service, now part of USCIS or United States Citizenship and Immigration Services) denied the engineers when they attempted to enter the U.S. The case made it to the Board of Immigration Appeals (BIA), which ruled on two key aspects of the E-2 visa:

  1. A small investment does not preclude the issuance of an E-2 visa as long as it is sufficient to “establish a viable enterprise of the nature contemplated” and
  2. The applicants whom were “highly trained, specially qualified, and essential to the corporation’s efficient operation” were qualified for the E-2 visa despite the fact they were not involved in “developing and directing the qualifying investment.”

The BIA determined that the automotive engineers had essential skills necessary to the long-term success of the enterprise and that the employees were not replacing U.S. workers in the near future, due to the extensive training that would be required to match the designers’ level of specialized skills.

Substantiality of the Business

The Foreign Affairs Manual points out some key aspects of the case when determining whether the business might meet the substantiality test, stating that “sometimes an investment of only a small amount of money might meet the requirement.” There is no standard investment amount, but the investment must meet the following:

(1)  Substantial in a proportional sense, as determined through the application of the proportionality test outlined below;

(2)  Sufficient to ensure the treaty investor’s financial commitment to the successful operation of the enterprise; and

(3)  Of a magnitude to support the likelihood that the treaty investor will successfully develop and direct the enterprise.

Proportionality of the Business

               The substantiality of the business is partly determined by using the proportionality test by weighing the amount of funds invested against the total cost of the business. The Foreign Affairs Manual describes the appropriate investment as an inverted sliding sale, with lower cost business requiring a higher percentage of the investment and a higher cost business requiring a lower percentage of qualifying investment. The manual also defines the cost of an established business as its purchase price and the cost of a new business is the sum of costs required to establish an operational business. When applying for the E-2 visa, this figure includes the investments already made and the estimates for the additional assets needed to run the business.

Marginality of the Business

The EB-5 visa clearly outlines the required job creation for visa attainment, but the E-2 visa applicant must prove that the investment is not in a “marginal” enterprise, i.e. the business must have the present or future capacity to generate income above that for the treaty investor and his or her family. This capacity to make a “significant economic contribution” should be “realizable within five years from the date the alien commences normal business activity of the enterprise,” according to the Foreign Affairs Manual.

Contributions of E-2 Visa Holders

As with any nonimmigrant or immigrant visa, the fundamental premise of the E-2 visa is that individuals who are granted these visas will provide value to the United States. For investment-type visas, often this value is quantified by the number of jobs created or the monetary contribution to the U.S. economy. While there are no specific numeric requirements for job creation or continued investment levels, an E-2 renewal application that demonstrates these accomplishments is more likely to establish the essentiality of not only the employee to the enterprise, but of the enterprise to the continued economic health and growth of the United States economy.

Request a copy of the E-2 qualifying countries by emailing us at info@challalaw.com.

Changes Imminent to H-4 Dependent Form I-539: USCIS Announces Updated Implementation Plan

USCIS recently announced their intent to publish a new version of Form I-539, Application to Extend/Change Nonimmigrant Status. Form I-539 is commonly used by individuals residing in the U.S. temporarily, such as dependents of H-1B, L-1, E-1, E-2, J-1, etc. F-1 students and B-1/B-2 visitors may also use the form to extend their stay in the U.S.

USCIS originally stated that the revised version will be available on March 11, 2019; the same day only that version of the form will be accepted. The supplemental Form I-539A was also scheduled to be updated on that date.

Stakeholder Concern

The American Immigration Lawyers Association (AILA) and other stakeholders expressed concern that there is no grace period and that the form and instructions are being released the same day that it becomes mandatory to use. The timing is difficult for beneficiaries and companies attempting to file for H-1B employees and H-4 dependents by the April filing deadline. AILA sent a letter on February 21 to USCIS Director Cissna requesting a delay for the March 11 effective date and suggesting a 90-day grace period for the updated form.

USCIS Revises Form Implementation Plan

The Office of the Citizenship and Immigration Services Ombudsman considered the concerns stakeholders articulated over the transition and hosted a teleconference on March 1, 2019 to discuss the revised forms. During that call, USCIS announced some modifications to the original timeline and implementation plan:

  • USCIS stated the revised forms I-539 and I-539A would be posted three days early.
  • There will be a 10-day grace period for those filing with the old versions of the forms: the previous version with edition date 12/23/16 will be accepted if received at a USCIS Lockbox by close of business on March 21, 2019.
  • The new forms with edition date of 2/4/19 will be accepted starting March 11, 2019.

USCIS also stated that during the grace period, the new forms will be held for processing until March 22, 2019 with the receipt date based on when the USCIS Lockbox actually received the filing.

Highlighted Updates

Below are the major changes to the form I-539 and I-539A:

  • Every co-applicant on the primary Form I-539 must submit and sign a separate Form I-539A. Parents or guardians may sign on behalf of children under the age of 14.
  • Every applicant and co-applicant must now pay separate $85 biometric services fees (except certain A, G, and NATO nonimmigrants).
  • Every applicant and co-applicant will receive biometric services appointments, regardless of age, containing an individual receipt number. The appointments will be scheduled at the Application Support Center (ASC) closest to the primary applicant’s address. (Co-applicants who wish to be scheduled at a different ASC location should file a separate Form I-539.)

Implications for H-1B Cap Season

Challa Law Group has determined that only select H-4 filings will be sent with the initial H-1B petition due to the uncertainty and timing surrounding the updated forms. We will only file in cases in which the principal or the H-4 dependent will fall out of a valid immigration status without a pending application or petition. For example, if the principal visa holder has Optional Practical Training through an F-1 student visa, he or she can utilize the “cap gap” to continue working until October 1. The individual can then stay in the U.S. based on the pending H-1B but cannot continue working beyond October 1 without another work-authorized status. The dependent should file for the H-4 application to also maintain his or her stay in the U.S. while the USCIS is adjudicating the cases. (For F-1 students with OPT expiring before October 1, if an OPT STEM extension is available, the student should first file for the STEM extension instead of an H-4 visa until an H-1B or another independent status can be obtained.)

By deferring the H-4 applications until after the cap filing deadline, we will mitigate some of the additional confusion surrounding a form update with no grace period. When an individual is selected in the H-1B visa cap, then the H-4 application can be submitted at that time. This will allow biometrics fees and additional signatures to be collected from H-4 dependents separately from the H-1B documentation, streamlining the process for employers and beneficiaries.

 Trump Administration’s Intent to Rescind H-4 Work Authorization

In 2015, DHS published a final rule extending eligibility for employment authorization to certain H-4 dependent spouses of H-1B nonimmigrants seeking employment-based permanent residence. That rule is now being reconsidered as the Trump administration signaled its intent to remove work authorization for H-4 dependents in late 2017. The proposed rule has moved forward to review by the Office of Management and Personnel. While the proposed regulation is not available for public review yet, some have predicted that the rule could be published in the Federal Register before a March 18 deadline in a lawsuit: Save Jobs USA v. DHS. The lawsuit, brought by U.S. technology workers, purports that DHS had no authority to issue work authorization to H-4 spouses in the first place and that the program should end immediately.

Possible Timeline for H-4 Work Authorization Rescission

While the final rule will not be available until it is published in the Federal Register, we expect that the rule will provide a timeline for no longer accepting H-4 EAD applications and determine when current H-4 EAD holders will need to stop working (unless obtaining an alternative work-authorized status). If the rule is rescinded, there could be additional litigation to challenge the ruling. Individuals currently working on the H-4 EAD should consider an independent work-authorized status if available.

Note: Attorneys Challa and Millburn at Challa Law Group are members of the American Immigration Lawyers Association.