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The Effect of a Corporate Acquisition or Merger on the Employment-Based Immigration Process

For companies that sponsor non-immigrant work visas or the green card process for their foreign national employees, a merger or acquisition can have significant impacts on the visa status and/or permanent residency timeline of its employees, depending on how the agreement is structured. Involvement of immigration counsel early in the process can equip the company with its options and ensure a smooth transition for the foreign national workers who will continue their employment with the new entity.

Change in Ownership or Name vs. Change in Employer

An important initial distinction to make is the difference between a mere change in ownership, and a change that results in a new employing entity of the foreign national workers. If the sponsoring company undergoes an ownership change, but it will continue to exist and operate under its current federal employer ID number (FEIN), then the impact to its foreign national workers is very minimal. As long as the foreign nationals’ current employment terms (job title, duties, salary, work location(s)) and permanent job offers remain largely the same, there is essentially no effect on the immigration process as a result of an ownership change.

If the acquisition is accompanied by a change in the sponsoring company’s name (with the same FEIN), then future extension of status applications for non-immigrant visas will simply be filed under the new company’s name (with a note that it was “formerly known as” the previous name). I-140 petitions can similarly be filed under the company’s new name, even if the PERM labor certification lists its previous name, as long as the employer ID number is unchanged.

An acquisition or ownership change that will result in a change in the employing entity, however, will have more significant consequences. The change in employer (i.e., the change in the FEIN through which employees’ payroll is run) is the incident that will trigger the most potential ramifications for the company’s existing and in-process visa and permanent residence applications.

Successor-in-Interest

If the new employing entity is considered a “successor-in-interest” to the company that originally sponsored the workers’ non-immigrant visa and permanent residency applications, then the effects on the company and workers can be relatively small.

First, in order to qualify as a successor-in-interest, the new employing entity must agree to assume the previous employer’s obligations, liabilities, and undertakings under its existing Labor Condition Applications (LCAs) and PERM labor certifications in support of I-129 and I-140 petitions. This assumption agreement can be incorporated into the parties’ merger or acquisition contract, or in a separate addendum to that contract.

Effect on H-1B Workers

If the new employing entity qualifies as a successor-in-interest, and there are no material changes to the terms of the H-1B workers’ employment, then the H-1B employees who were originally sponsored by the predecessor entity can continue as H-1B employees of the new successor entity, without the need for transfer or amendment petitions to be filed with USCIS. The company must update the Public Access File of the H-1B workers with a memo confirming the terms of its successorship and actual wage system.

In this scenario, the H-1B workers simply continue as H-1B employees of the successor entity when the company’s payroll changes, according to the terms of their approved I-129 petitions. Their extension of status petitions will be filed under the new company’s name, with evidence of the merger or acquisition and the new employer’s status as a successor-in-interest. If the employee needs to travel internationally and/or apply for a visa at a U.S. consulate before the extension application can be filed, they will also carry evidence of the acquisition and documentation confirming the successorship along with the I-797 Approval Notice bearing the predecessor entity’s name.

Effect on the Green Card Process

If the new entity agrees to undertake the obligations and liabilities of the predecessor’s existing PERM labor certifications, and continues to offer the permanent positions described in the PERM labor certifications at the locations and wage level described, then it becomes a successor to those pending or approved labor certifications as well, and the PERM applications do not need to be re-filed. The new employer can file I-140 immigrant petitions in its own name based on PERMs approved under its predecessor’s name, as long as evidence of the successorship is submitted with the filing.

For I-140 petitions that have already been approved at the time the successorship occurs, the new entity is required to file an amended I-140 petition with USCIS, to update the name and FEIN of the petitioning entity. However, the I-140 amendment can be filed based on the existing PERM labor certification; the new employer does not need to re-start the labor certification process. When the employee becomes eligible to apply for adjustment of status, the new employing entity will provide the amended I-140 approval notice and an executed I-485 J supplement in support of the adjustment application.

Non-Successor

If the new employing entity does not assume the obligations of the previous company’s existing LCA and PERM applications, the potential for disruption to the employees’ immigration process is much greater, as there are several more steps required in order to employ the foreign national workers, and to sponsor their permanent residency. The new company would not be considered a successor-in-interest, and would essentially be treated as a new, separate entity. Change of employer (transfer) petitions would therefore need to be filed with USCIS in order to authorize the employees to work for the new entity. For H-1B workers, these petitions need to be filed prior to the change in payroll to the new entity, and for other non-immigrant visa workers, the petitions would need to be approved prior to the change in payroll.

Likewise, the previously-certified PERM applications would be unusable by the new entity if they are not considered a successor, and the labor certifications and I-140 petitions would need to be re-filed for any employees the company intends to sponsor (including new prevailing wage determinations and recruitment). While the employees could retain the priority dates from their previously-approved I-140 petitions, re-starting the sponsorship from scratch could add years to their green card process due to DOL’s lengthy PERM processing times.

The effect on the immigration process for foreign national workers can therefore differ significantly after a merger or acquisition, depending on whether the new employing entity qualifies as a successor-in-interest. Employers anticipating corporate restructuring are therefore encouraged to consult with immigration counsel early in the process so that it can take the necessary steps to ensure as smooth a transition as possible for its foreign national employees.

By: Rebecca Chen

Rebecca Chen is a Partner at Reddy & Neumann. Her representation includes advising clients throughout the non-immigrant and immigrant visa application process, from initial filing, responding to various requests for evidence, and processing at overseas consulates. Her years of experience in the immigration field have made her a knowledgeable resource for complex business immigration matters.