L-1 Visa Roadmap

The L-1 classification is granted to foreign nationals coming temporarily to the U.S. to perform services in an executive, managerial, or specialized knowledge capacity. The L‑1 category is further broken down into L-1A for managers and executives and L-1B for specialized knowledge employees, depending on what type of duties the individual will perform in the U.S.

U.S. Immigration often categorizes the L-1 as “multinational transfers.” This gives the perception that L status may only be granted to executives, managers, and specialized knowledge individuals from large, multimillion-dollar, multinational corporations. This is a misconception. L status is also available to expanding startups and entrepreneurs acquiring a small business in the U.S. to plant a toehold.

L-1 Requirements

  • The L-1 employee must have worked with the foreign company abroad in an executive, managerial, or specialized knowledge capacity for one continuous year within the three years immediately before filing the petition and come to the U.S. to work in an executive, managerial, or specialized knowledge function. However, there is no requirement that the L-‑1 employee perform the same work in the U.S. as abroad.
  • The foreign company must be related to the prospective U.S. employer in a “qualifying relationship.” Qualifying relationship consists of parent/subsidiary, affiliate, 50/50 joint venture, or branch office.
  • The foreign company and the U.S. employer must continue business operations during the entire time the employee is in L-1 status.
  • The L-1 petitioner must have control and authority over the L‑1 employee’s work.
  • The L-1 petitioner must demonstrate physical premises for the place of employment in the U.S.
  • The U.S. transfer must be intended to be temporary, although permanent immigrant intent does not preclude obtaining L status.

Types of Qualifying Relationships Between Foreign and U.S. Entity Defined

Parent or Subsidiary

A parent company is a corporation, partnership, sole proprietorship, or other legal business entity that has subsidiaries. U.S. Immigration frowns upon granting L‑1 status to sole proprietors and their employees. However, U.S. Immigration recognizes four distinct business structures as subsidiaries:

  1. Any legal entity of which a parent company owns, directly or indirectly, more than 50 percent and which the parent controls.
  2. A business 50 percent owned by a parent company which also controls the entity.
  3. A 50-50 joint venture directly or indirectly owned by the parent company and equally controlled by the parent company.
  4. Any entity of which, directly or indirectly, a parent company owns less than 50 percent but over which the parent company exercises actual control.

The common element in all four cases is control by the parent company of both the alien employee’s present foreign employer and future U.S. employer. Control is almost always represented by ownership of voting shares.

Affiliate

An affiliate is defined as one of two entities owned and controlled by an individual or a common group of individuals each owning and controlling approximately the same percentage of each entity. For example, the foreign national may own 100 percent of the foreign company and 100 percent of the U.S. company. The entities may also qualify as affiliates where the foreign national owns at least 51 percent of both entities.

50-50 Joint Venture

A joint venture is an entity owned only 50 percent by each company rather than by 51 percent or more. U.S. Immigration has agreed that 50/50 joint ventures qualify for L‑1 purposes provided no venture partner has veto power. The 50/50 joint venture relationship is an excellent strategy for two separate and distinct foreign companies that want to share the opportunities and risks involved in starting a business in the U.S.

Branch

Any office or division of the same organization located in another country is considered to be a branch. For example, if a company has, only a sales department in the United States, with all other functions located outside the U.S., the sales department is considered to be a branch and employees can be transferred there with L‑1 status.

Documentation

The L-1 petition must contain evidence of a qualifying corporate relationship and ongoing foreign operations, along with detailed descriptions of the employee’s foreign job duties and prospective responsibilities in the U.S.

The L-1 petitioner must demonstrate physical premises for the place of employment in the U.S. The “physical premises” test can be met by showing a purchase contract or lease agreement for the U.S. office space or commercial building. The test is also met by showing that the L‑1’s home is being used as an office, or that the L-1 will be working in an “executive office suite” renting shared office space. Again, a lease, deed, or purchase contract is required to show physical premises.

An L-1 petition for a new U.S. office should also include a detailed business plan with a description of the new entity’s scope, purpose, and organizational structure including projected staff levels, as well as business formation documents and evidence of the new office’s financial viability. Employment of U.S. workers may strengthen the case but is not an absolute requirement.

Admission

L-1 employees coming to the U.S. to open a new office or to be employed in a U.S. office that has been in operation for less than one year are granted an initial one-year period. Before the end of that one-year period, the petitioner must be able to demonstrate that the U.S. business is operating, generating business, and moving forward on its business strategy. L-1 employees coming to work for qualified companies already operating in the U.S. for at least one year are eligible for an initial three-year period of L-1 status. Extensions of L-1 status are granted in two-year increments, up to a total of seven years. Specialized Knowledge employees are generally limited to five years.

Family

The L-1 worker’s spouse and unmarried children under the age of 21 are eligible to apply for spousal L‑2S or dependent L-2Y status to accompany or join the L-1 principal in the U.S. L-2 spouses and children may attend school part-time or full-time. L-2 spouses are automatically authorized to work incident to their status, and any valid I-94 Arrival/Departure Record is considered proof of work authorization.

Strategies/Options

The L-1 category is especially useful and highly recommended for small and midsize businesses whose owners, executives, and managers may want to come to the U.S. to “test the water” on conducting business in the U.S. without investing a substantial amount of money.

With the L-1, there are no minimum investment or capital requirements and no set number of U.S. employees that must be hired. The L-1 route is also the most straightforward strategy for foreign business owners to obtain a U.S. green card.

Continuing Foreign Operations

The L-1 requires that the foreign company continue to conduct business in a location outside the United States. A qualifying organization must continue its foreign business for the entire time the employee is in L-1 status. In the case of small business owners and entrepreneurs following L‑1 strategy to obtain U.S. permanent resident status, once the business owner is granted green card status, the foreign company may be liquidated and closed, if desired.

Foreign Employment Capacity

The transferring employee must have been in an executive, managerial or specialized knowledge capacity on a full-time basis with the foreign entity for at least one out of the prior three years before transferring to the U.S. entity.

Executive Capacity

This means an assignment within an organization in which the employee primarily: (1) Directs the management of the organization or a major component or function of the organization; (2) Establishes the goals and policies of the organization, component, or function; (3) Exercises wide latitude in discretionary decision-making; and (4) Receives only general supervision or direction from higher level executives, the board of directors or stockholders of the organization.

Managerial Capacity

This means an assignment within an organization in which the employee primarily: (1) Manages the organization or a department, subdivision, function, or component of it; (2a) Supervises and controls the work of other supervisory, professional, or managerial employees, (2b) Alternatively, manages an essential function within the organization, or a department or subdivision of it; (3a) If other employees are supervised, has authority to hire and fire, or recommend those or other personnel actions like promotions and leave, (3b) If no other employees are supervised, functions at a senior level within the organizational hierarchy or for the function managed; and (4) Exercises discretion over day-to-day operations for the function for which the employee has authority. A first-line supervisor is not considered a manager merely by having supervisory duties unless the employees supervised are professional.

Specialized Knowledge

U.S. Immigration has identified the following characteristics of an employee with specialized knowledge, all of which should be present to ensure success. The employee must: (1) Have knowledge that is valuable to the employer’s competitiveness in the marketplace; (2) Be especially qualified to contribute to the U.S. employer’s knowledge of foreign operation conditions; (3) Have been a key employee somewhere other than in the United States, with significant assignments that have enhanced the employer’s productivity, competitiveness, image or financial position; and (4) Have special knowledge that can usually be gained through extensive prior experience with the employer.

Full-time Basis

The L-1 employee must have worked on a full-time basis for the foreign entity. However, being paid is not a requirement. Therefore, directors, board members, and nonpaid executives can qualify for the L-1 visa provided full-time work can be proven.

One Out of the Prior Three Years

The L-1 employee must have worked for the foreign entity a total of one year out of the three years prior to entry to the U.S. in a nonimmigrant capacity. Therefore, the transferring employee could have worked two years ago for over one year total, then went to work for another, unrelated company, and still qualify for the L-1 provided evidence of the employment during the specified time is demonstrated.

U.S. Employment Functions

The L-1 employee must perform executive, managerial, or specialized knowledge functions at the U.S. location, as those terms are defined above under “Foreign Employment Capacity.” The employee’s U.S. position does not have to be identical to the one held previously; however, that person must be transferring into a position that is executive or managerial or requires specialized knowledge. The employee must be shown to be qualified to fill that position by having the appropriate education, training, and employment experience.

Temporary Transfer to the U.S.

U.S. Immigration regulations make clear that L-1 status must be temporary in nature. However, L-1 holders are not required to maintain a residence outside the United States to demonstrate temporary intent. L-1 holders are allowed to demonstrate an intent to live and work permanently in the U.S. This is called the concept of “dual intent” allowing L‑1 (and H-1B) visa holders to simultaneously have temporary (nonimmigrant) intent and permanent (immigrant, or green card) intent to live and work in the United States.

Legal and policy sources:

Immigration policies and regulations are complex and frequently subject to change. The information contained in this roadmap is intended to provide you with a general overview and may not address your particular circumstances and needs. Serotte Law will assist you with the application and documentation process and answer any questions you may have about the L‑1 classification. Request a consultation or give us a call at 888-875-8110.

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