Options for Multinational Organizations Transferring Personnel to the U.S. from Abroad: The L-1 Visa and the Blanket L Program

In recent months we have observed countless companies and particular business sectors cutting back on their workforce due to the downturn in the economy. As a result many employers are no longer utilizing the H-1B program to employ foreign nationals. However, for companies with multinational operations, the global transfer of personnel continues and perhaps is expanding, as a result of these economic trends. In some cases the correlation increases as companies are merged and acquired, and as organizations restructure, downsize and regroup, thereby leading to a greater transfer of foreign personnel to close down, retrain and establish existing and new operations in the U.S.

While the B-1 visitor for business visa can be utilized for some purposes, the limitations placed on the type of activity personnel from abroad can engage in can be frustrating and can impede operations. For multinational organizations with affiliates, subsidiaries and branch companies in the U.S., the L-1 visa program and the Blanket L program can be essential to the efficient and cost-effective transfer of personnel to the U.S.

What is the L-1 Visa Category and why is it better than an H-1B or a B-1?

The L-1 visa also known as the intra-company transferee visa, is designed to facilitate the transfer of key employees, including top level managers and employees with specialized knowledge of the company to the U.S. from a foreign branch, parent/subsidiary or affiliated entity.

In comparison to the H-1B visa classification, the L-1 category provides the U.S. organization with more flexibility and less burdensome regulations and obligations. In particular, the L-1 classification does not subject the employer to the standards and requirements of the Department of Labor (DOL) as they relate to H-1Bs. Some of the key differences include:

• The L-1 is not subject to prevailing wage requirements as is the H-1B.
• Filing an L-1 does not require a DOL certified Labor Condition Application (LCA) for each location where the transferred employee may work.
• There is no requirement that the transferred employee hold a Bachelor’s degree that correlates to the job being performed in the U.S. or that the position be a professional one requiring a Bachelor’s degree (exception for Blanket L transfers of specialized knowledge employees).
• In L-1 status the transferred employee may work part time or full time without having to amend the I-129 petition. With an H-1B such a change would require amending the I-129 and the LCA.
• The transferred employee can work part-time for more than one subsidiary of tithe same international corporation.

Any time a transferred employee is expected to be "gainfully employed" by the U.S. entity, then the L-1 should be considered in lieu of the B-1. This applies even if the transferred employee remains on the payroll of the company abroad.

For example, if there is a pending merger between a U.S. and German company, or an existing U.S. company is negotiating a purchase by a Germany company, the German company may initially need to send top executives and managers to negotiate the deal. The need for their presence will also be important as the deal is being finalized. It is appropriate for these persons to enter the U.S. on a B-1 visa. Once the sale or merger is complete, if these individuals remain to manage the company or the transition, then their status will need to be changed from a business visitor to an intra-company transferee in L-1 status.

In addition, if the individual initially entered as a B-1 visitor to attend meetings or conduct other activities at affiliate offices, and through the course of his activities, the nature of his stay changes, the U.S. company should definitely consider filing for a change of status for the employee to L-1. Generally, activities the INS deems acceptable for individuals who enter the U.S. as business visitors include:

• Engaging in commercial transactions that do not involve gainful employment in the United States.
• Negotiating contracts.
• Consulting with business associates.
• Litigation.
• Participating in scientific, educational, professional, or business conventions, conferences, seminars.
• Undertaking independent research.

What companies and international personnel qualify for this category?

Any type of business in any industry can qualify for this classification, as long as the activities are not illegal. Interestingly enough, the U.S. and foreign entity do not have to be in the same line of business. However, the foreign entity must have been in existence for at least one year.

For the company to qualify, the U.S. entity will need to be one of the following:

• A branch office of a foreign company.
• A parent or subsidiary of a foreign company meeting the INS’ definition of such a relationship.
• An affiliate of a foreign company (both companies owned by the same entity or same group of owners in similar proportions).

For the employee abroad to qualify he/she:

• Must have worked in an executive, managerial or specialized knowledge capacity for the foreign entity for at least one year in the past three years (6 months if transferring under a blanket L program discussed below)
• Will be sponsored to work in the same capacity for the U.S. entity.

For individuals who are transferred as executives and managers, their L-1A status can be granted for an initial three year period and extended for a total of seven years. For those transferring as specialized knowledge employees, their L-1B status can be extended for up to a total of five years, and in some cases where this individual switches to L-1A status it may be possible to extend for up to seven years.

What if the Company abroad is establishing a new company or a new office in the U.S.?

The L-1 is also available for employees who are being transferred to set up new offices, subsidiaries or affiliates. In such a case the L-1 is valid for an initial one year period and can be extended as noted above if the need is justified. There is no minimum investment requirement. However, there must be enough revenue to pay the salary of the company's officers and other startup and projected expenses.

The request for the transfer can be made as soon as the new organization is formed. Although, the regulations require a four week adjudication, the L-1 visa can take two months or longer to be approved after it is filed with the INS, however, for an additional premium processing fee, the petition can be expedited and a determination received within 15 days.

What is the Blanket L and how does it help?

Multinational companies transferring large numbers of employees in L-1 status can take advantage of special procedures that make it easier for their employees and for them to obtain L-1 visas. Companies that qualify can receive a "blanket approval" for all of their employees to avoid filing individual petitions with INS for each employee. The blanket approval certifies the affiliated company(ies) relationships. Through the blanket program, multinational companies can transfer employees to the U.S. in a much more efficient and cost-effective manner. The process cuts down and often eliminates INS processing times and fees, and at the same time saves the company money by ensuring the transfer of key personnel in a timely manner avoiding loss and unnecessary expenditures arising when individuals are stuck outside of the U.S. for prolonged periods of time.

To qualify for a blanket petition, the U.S. company must meet the following criteria:

• The U.S. and foreign offices must be engaged in commercial trade or services.
• The company abroad and the company in the U.S. must have been in operation for at least a year.
• The U.S. company must have at least three domestic or foreign branches, subsidiaries, or affiliates.
• The U.S. company must establish one of the following:
  1. At least ten L-1 visas were approved in the last year;
  2. The company had U.S. sales of at least $25 million; or
  3. There is a U.S. work force in excess of 1,000 workers.

Once the U.S. company is able to obtain a Blanket L approval from the INS, any future intracompany transferees will only need to establish their qualification in L-1 status as managers and executives or specialized knowledge employees. For those outside of the U.S., this means that they do not have to wait for a petition to be filed and approved by the INS. They will only need to submit their L-1 visa applications to the U.S. consulate abroad to be issued an L-1 visa. This procedure bypasses the two to three month processing times of the INS and results in the ability of an intracompany transferee to obtain an L-1 visa and begin employment in the U.S. within weeks rather than months.

Of course, it is also important to note that some applicants are subject to additional security checks which will inevitable affect and control how quickly or how slowly the L-1 visa application will be processed at the consulates abroad. In addition, it is also expected that all nonimmigrant visa applications will eventually be required to appear for visa interviews, which is also expected to slow down the processing times at the consulates.

Are there any other considerations?

In addition to consulting experienced corporate immigration counsel, it is imperative for the foreign national as well as the U.S. and foreign entities to seek the advice of corporate and tax counsel, as well as certified public accountants. For new entities and offices, these professionals will be able to assist in structuring the U.S. entity so as to minimize tax liabilities in the U.S. as well as abroad. Once the entities are established and in operation, care must also be taken to ensure that appropriate and required reports are filed with the IRS as well as local and state agencies.

Using the L-1 program and the Blanket L program allows various industries to take advantage of a more efficient and less costly way to achieve their goals and exchange information, skills and knowledge through the transfer of their employees to the U.S. When utilized in combination with established resources in the U.S., individuals who are transferred among affiliated companies on a global scale are valuable resources that are essential to companies in their efforts to improve their economic stance and increase their chances of survival.

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