Foreign Founders and Workers in a Startup

When a company hires a worker who is not a citizen or permanent resident of the U.S., the worker is typically sponsored on a H-1B visa. A H-1B visa entitles a foreign worker to: – Bring their spouses and dependent children (under 21) to the U.S. – Attend school, college, or other educational program – Change employers, or have multiple employers – Petition for permanent residence in the US – Take leave of absences or vacations without jeopardizing status. H-1B visas are applied for on April 1st of every year. Before filing an application, a company must submit a Labor Condition Application that establishes: – The worker will be paid the prevailing wage for a worker in that position – The worker will receive the same benefits as other workers in that position – The worker will not negatively affect working conditions of other employees of the company – There is no labor dispute or other work stoppage in place at the the time of hiring Contrary to popular belief, the company does not need to certify that it was not able to find or otherwise hire a U.S. worker — a foreign worker can be the company’s first (or only) choice of employee, as long as all the other conditions in the Labor Condition Application are met. H-1B visa applications can be difficult for startups to get approved, as there are a few hurdles. First, there are only 85,000 H-1B visas available every year, 20,000 of which are set aside for workers with advanced degrees (Master’s degree or higher), in addition to certain numbers of visas that are set aside for workers from various certain countries per trade agreements. Typically, demand for H-1B visas is so high that all visas are usually granted within the first week of April. Second, more specific to startups, is that the company must show that it has the money to provide the worker with the prevailing wage. Unless a startup has strong cash flow over a period of a couple of years, this usually means being backed by venture capital or other significant investment. A startup may also be required by U.S. Customs and Immigration Services to provide other documentation establishing the legitimacy and viability of the venture. It may also be difficult to bring in foreign co-founders under a H-1B. The H-1B visa requires there be a employee/employer relationship between the worker and the company. A co-founder likely has significant authority over company operations, but if there is some sort of actual check over the foreign co-founder (such as a board of directors), it may be possible to establish an employee/employer relationship to the satisfaction of Customs and Immigration Services. There are alternatives to the standard H-1B visa. First, if a worker is currently in graduate school and will complete their program before the start of employment, the company may apply under the advanced degree cap (which tends to run out more slowly than the general pool). Second, if they are a student (graduate or undergraduate) in a STEM field, their current visa can be extended 17 months in a “optional practical training” program, allowing them to remain in the U.S. until the next H-1B visa application period. Third, Canadian and Mexican citizens in certain professions are able to obtain a Trade National visa under the terms of the North American Free Trade Agreement (NAFTA); however, the number of eligible professions is limited, and also requires at least a bachelor’s degree or significant training and licensure. There are also other visa categories that, while more restrictive, may be applicable for startups in certain industries. In any event, a startup looking to bring in a foreign co-founder or foreign worker should consult with an immigration attorney (particularly one with experience in business visas or working with startups) in order to explore all of their options.

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