Green Card Ability to Pay And Covid-19 Downturn
For any company wishing to sponsor an employment-based green card, that company must show an “ability to pay” the offered wage of the sponsored employee. Practically, this “ability” must be shown from the day the Labor Certification is filed (i.e. priority date) until the approval of the I-140. Typically, that ability can be shown in a number of ways: 1) Net Income in excess of the offered wage liability, Net Assets in excess of the offered wage liability, or actual wages paid in excess of the offered wage liability. If an individual is on payroll and/or the company can show healthy tax returns (income and/or assets in excess of ~$100k), generally a company will have no issues demonstrating an ability to pay thereby obtaining an I-140 approval.
Under the law, an “ability to pay” must be shown from the priority date. Therefore, for the year in which the priority date falls, actual “wage liability” is not actually the entire offered wage but rather a proration of that offered wage vis-à-vis the priority date. For illustration, let’s assume an offered wage of $100k and a priority date of July 1, 2019 (halfway through year). Instead of being liable to show an “ability to pay” $100k in 2019, a company must only demonstrate an ability to pay the prorated proffered wage of $50k in 2020. For 2020 and years thereafter, the company must show an ability to pay the full $100k offered wage liability.
For the purposes of this discussion, we can use the following formula as a general guideline to “ability to pay”:
W-2 Wage Paid + Net Income OR Net Assets > Offered Wage Liability
Unfortunately, the economic uncertainties created by the on-going COVID-19 pandemic–layoffs, furloughs and wage reductions–have turned what is typically an academic discussion of “ability to pay” into a nuanced, case-by-case analysis. However, operation of law and extensive experience provide our firm measured optimism that employers are not likely to face daunting issues in demonstrating an ability to pay for the current or future fiscal years.
Of primary note, we should recognize that ability to pay adjudications are generally retrospective, meaning that USCIS will be looking completed, past years and not the current year or future years when adjudicating a company’s “ability to pay” the offered wage. As such, if we filed a case with a 2019 or earlier priority date, experience indicates USCIS will not be concerned with or question an ability to pay for 2020. Therefore, for cases with priority dates earlier than 2020, there should be little to no concern about ability to pay as they relate to any COVID-19 losses of company revenue or employment wages.
For cases with 2020 or later priority dates, attention must be paid but generally there should be no concern about ability to pay as they relate to any COVID-19 losses of company revenue or reduction in employment wages. If there is a reduction in wages paid to an I-140 beneficiary this year, demonstrating an ability to pay the wage liability should not present a concern to a Petitioner. In the same respect, if we assume a reduction in net income for this year, those numbers won’t be reflected in the company’s tax returns until at least May 2021 at the absolute earliest. Because a company can offset the “wage liability” with any wages paid before comparing it to a company’s net income or net assets, the actual wage liability will generally be overcome by the company’s net income or net assets from their most recent tax returns (See above formula).
From a practical standpoint, USCIS will be looking at 2018 Tax Returns for at least another 6 months. Regarding 2019 Tax Returns, we can safely assume that document and the financial numbers therein pre-date any COVID-19 economic downturn and therefore these documents will almost always show a net income or net assets greater than whatever “ability to pay” wage liability exists for years 2020 and 2021.
Finally, USCIS is bound to recognize a “totality of circumstance” when adjudicating a company’s ability to pay. Generally, if we can’t show the ability to pay in black and white as discussed above, we press USCIS to consider that under the “totality of circumstances” it would be reasonable to assume the company’s ability to pay by examining the company as a whole, not simply on the tax returns and/or wages paid.
Generally, our clients show continued fiscal growth year over year. Under a totality of circumstances argument, but for the COVID-19 downturn, a company can present a collection of its financial documents to demonstrate it is entirely reasonable to expect that ability to pay would have existed.
As each day passes, our continued and growing understanding of the virus and its impact will enable us to plan for today and tomorrow. As we learn more, we will continue to update our clients and the immigration community at large as to what they can expect and how they can plan to address company growth today and in the years to come.
By Ryan Wilck
Ryan is an attorney at Reddy & Neumann PC. Ryan began with the firm in 2012 as a law clerk and has continued with the firm as an attorney from 2014. His main practice covers immigrant visa petitions with skills and experience in various non-immigrant petitions as well as criminal issues.