The law provides for a non-immigrant visa for a multinational executive or manager to be admitted in the U.S. for purposes of opening a new office or start-up entity. In recent years, the USCIS has made it increasingly difficult for small businesses to benefit from this visa option. The USCIS requests onerous evidentiary documentation which causes excessive delays and costs from the U.S. Petitioners. This article discusses the legal criteria for this non-immigrant visa benefit, the challenges faced by petitioners and practitioners, and provides practice pointers for preparing a successful L-1 petition in spite of the USCIS’s current bias and discrimination against businesses starting new offices in the US.
What are the L1 a visa requirements?
Before understanding the requirements, it is important know what is l1 a visa in accordance to USCIS. The Immigration and Nationality Act (INA) provides for a non-immigrant transfer visa for a multinational executive or manager of a foreign entity provided that certain conditions are met:
- The executive or manager must have been within three years preceding the application of qualifying petition, employed for at least one year by a firm, corporation, other legal entity, affiliate or subsidiary of a U.S. entity;
- Seeks to enter the United States temporarily to continue to render services to the same U.S. employer with a qualifying corporate relationship with the foreign entity;
- Will render such services in a capacity that is managerial or executive. 8 U.S.C. §1101(a)(15)(L).
The law and regulations define the terms “executive” and “manager” and provide the definitions of a qualifying “corporate” relationship and other terms such as “doing business.” However, USCIS is given wide latitude to determine which documentary evidence is deemed sufficient to prove all prongs of the L-1A petition in general, and of the L-1A new office in particular.
Challenges faced by petitioners to get L1-A Visa for new office
Here we discuss the challenges faced by petitioners to obtain an approval of an L-1A new office visa petition. It calls attention to the unfair treatment and abuse of discretion by USCIS which, without regard to substantive evidence, denies most of the L-1A New office petitions.
USCIS denial of L-1A petitions for new offices takes away the growth factor from the U.S. economy since new businesses are not given a chance to operate. The blog will attempt to suggest practice pointers for successful L-1A new office petition and will leave the question open to the readers whether the L-1A new office non-immigrant visa benefit is even worth advising clients to pursue.
What does “Executive” or “Managerial” capacity mean?
EXECUTIVE capacity means an assignment within an organization in which the employee primarily:
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.
(4) Receives only general supervision or direction from higher-level executives, the board of directors, or stockholders of the organization.
“Managerial capacity” means an employee who manages a department, a subdivision, a function or component of the organization; who supervises and controls the work of other managers, supervisors or professionals, has authority to hire and fire and exercises discretion over day-to-day operations of the function or department for which the employee has authority.
The same section of the INA provides that the numbers of individuals managed or to be managed by the employee will not be the sole basis of determination of whether the same employee is acting or will act in managerial or executive position.
The language in the section continues, stating that the Attorney General shall take into account the reasonable needs of the organization, component, or function in light of the overall purpose and stage of the development of the organization, component, or function.
This language has opened room for USCIS to abuse its power in reviewing documentation filed in support of the L-1A petitions in general and more specifically in adjudicating the L-1A New Office petition.
What are the new requirements issued by USCIS to get L1 A petition?
In recent years, USCIS increasingly has been issuing boiler-plate requests for Evidence (RFEs), creating a new standard of proof and new requirements to establish that either the “position abroad” or intended U.S. position qualifies as executive or managerial.
The USCIS began requiring a “detailed job description” with specific duties performed or to be performed by the “executive” or “manager.” The USCIS would refuse the standard job description of a “Chief Executive Officer” for example for being “too generic.” USCIS imposed a requirement to include the percentage of time spent on each duty or function.
In addition to requiring detailed job descriptions with specific duties performed day-to-day by employee and time allotted to each duty, the USCIS has gone too far by requiring additional evidence to ascertain that each duty performed is indeed managerial or executive and to show that the employee is relieved from performing non-managerial duties.
Additional Documents required to approve L1 A petition
USCIS will not accept an organizational chart that clearly places the employee in a managerial or executive role. The USCIS requests additional documents such as:
- Copies of the employee’s training records.
- Copies of performance reviews for the employee.
- Copies of foreign entity payroll records showing wages paid to all employees under the beneficiary’s direction.
- A detailed organizational chart listing all employees in the beneficiary’s immediate supervision, department, or team by name, job title, summary of duties of each employee with percentage of time, educational level; copies of diplomas, resumes and salary.
- Copies of work samples or product of the Beneficiary.
Some practitioners like myself, have adopted a strategy of anticipating the RFE requirements and providing as much documentation in the initial petition. However, it seems USCIS officers do not even take the time to review the documents or even review the index of exhibits before issuing the boilerplate RFEs.
For example, in most of the RFEs I receive, the USCIS indicates with regard to the Managerial or Executive Position abroad, “The evidence submitted is insufficient.” USCIS goes on to list only three out of perhaps twenty (20) documents submitted:
- Copies of the beneficiary’s pay records.
- Copies of the beneficiary’s personnel records.
- Copies of the beneficiary’s training records.
By doing this, the USCIS omits to list all other documents listed above that were provided and continues to request that those documents be submitted. The Petitioner, with the assistance of counsel, would resubmit the documents and a memo emphasizing that either the position abroad or the prospective U.S. position is Managerial or Executive.
Confusing RFE‘s (Requirement for Further Information)
Another confusing aspect of the lengthy RFEs is that USCIS asks the U.S. Petitioner or organization to prove eligibility for “Managerial” and “Executive,” whereas the Organization clearly requested classification under one and not the other as stated in the law.
The lack of training regarding the requirements for each of these specific categories has indeed resulted in confusing and lengthy Requests for Evidence and erroneous L-1A petition denials. USCIS’s fixation on the definition of a managerial position in both the context of the beneficiary’s qualifying year of job experience with the foreign entity and their prospective position as manager of the U.S. office, has resulted in the misapplication of statute and case law to these petitions.
Doing Business Criterion
The L-1A Non-Immigrant Visa category was created to allow foreign companies to easily transfer executives or managers to a US office, or to send a manager to the US with the purpose to establish a new office. One of the requirements for both the foreign entity and its affiliated U.S. entity is to show continuous business operations. This requirement is usually met by providing the incorporating documents; tax and financial statements; copies of the lease or property deed; copies of ongoing contracts, work orders, sales receipts, paid invoices, etc.
These documents are usually provided in the initial filing. However, USCIS includes this language in almost every RFE: “USCIS checks all petitions filed for this classification in its Validation Instrument for Business Enterprises (VIBE) System. Once USCIS does not find the information of the organization in the VIBE system, it is almost automatic that it will issue an RFE contending that there is no evidence that the organization is continuously doing business. USCIS imposes this business verification requirement through the VIBE system despite the fact that on its website, it clearly states that “doing business” is not proven by whether or not an organization is registered in the VIBE system.
USCIS does not require companies and organizations to create or update records with D&B; however, you may choose to create, verify, or correct your company or organization’s information with D&B.
Will a final decision be based solely on information obtained through VIBE?
A4. No. VIBE is an additional tool for USCIS officers to use in the overall adjudicative process. USCIS will not deny a petition, or an application solely based upon information from VIBE. USCIS will make a final decision based on the totality of the circumstances.
Requirements for an L-1A Manager or Executive in a New Office for the First Year
As discussed above, there are particular requirements for an L-1A Petition to classify an individual as an executive or manager transferee for the purposes of opening a new U.S. entity. The main requirements are to establish the qualifying relationship between the foreign entity and the newly formed U.S. company; to secure office premises necessary to carry on the operations of the organization and provide office space for the employees the company intends to hire; provide a five (5) year business plan which has studied the market; provides the structure, nature and mission of the organization; financial projections, and personnel projections.
The foreign entity must also show that it will have the financial ability to sustain a new office and compensate the transferee for an initial one-year assignment.
Congress enacted this provision with the recognition that not only big corporations are permitted to open new branches or subsidiaries, but also small investors or businesses can also open new start-up companies.
This means that it is unreasonable to expect small businesses to start up with a large staff and/or large budget. This is why the L-1A new office petition is approved for an initial one year to allow the executive or manager transferee to come to the U.S. and launch the operations.
USCIS Denial Notices
In adjudicating these cases, the USCIS also fails to allot the beneficiary one year, within the approval of the petition, to establish and support an executive or managerial position in the U.S. The USCIS has routinely contradicted itself by demanding documentation to demonstrate the beneficiary has already established a managerial or executive position in the U.S., including the documentation of the beneficiary’s subordinates and their job duties and qualifications, when the petitioner is only required to show that the beneficiary is well-positioned to occupy a managerial or executive position within one year of the petition approval.
The USCIS Denial Notices focus heavily on business organization and hierarchy and the qualifications and job duties of subordinate employees while failing to consider the manager’s performance of essential business functions to determine whether the beneficiary’s job qualifies as “managerial.”
However, the management of subordinate employees or departments is not a de facto requirement to qualify as a manager. According to a USCIS policy memo released in 2017, the regulatory definition includes that the L-1A beneficiary may qualify as a manager if their job includes managing an essential function within the organization, or a department or subdivision within the organization.
To fulfill the criteria requirements as a function manager, the beneficiary must demonstrate that they are responsible for planning and directing business activities, (however, that they were not the ones performing the activity) and that the beneficiary exercises discretion over the daily operations of the essential function that they manage.
Case Histories of L-1 A Visa denials
Below are several examples of L-1A denials which show the misapplication of the law and regulations governing the L-1A new office petition.
Real Life Scenario – 1 of L1 A Denial Notice
For a petition filed by a foreign property investment and development firm, the USCIS states, “The first issue to be evaluated is whether you have secured sufficient physical premises to house the new office.” Despite responding to the RFE with house ownership documents, photographs of the selected property and residence, business plan, letter of intent, copy of office floor plan and other documents, the evidence was declared insufficient.
In this case, the USCIS failed to consider documentation submitted regarding the nature of the property development firm’s business, whose employees would primarily be working in construction, property development, and other contracted positions, and would therefore not require “office premises.” In its analysis, the USCIS overlooked details in the submitted documents, which explained “that as Petitioner grows in size and revenue, it will make sure to move to a bigger office space as it will be needed to accommodate its personnel and material and equipment storage.”
The USCIS’s failure to consider the submitted documents, and its trivial fixation on the establishment of office premises for subordinate employees who firstly, would not require office space, and secondly, had not yet been contracted, directly contradicts the USCIS’s own criteria for the L-1A new office petition.
The same denial notice goes on to state, “the second issue to be addressed is whether the new office will support the beneficiary in a primarily managerial or executive position within one year of the approval of the petition.” To fulfill the definition of managerial or executive capacity, the applicant must show they will spend the majority of the time on specified responsibilities instead of “day-to-day functions,” which is defined in the denial notice as tasks to “produce a product or provide services.” The law and regulations provide the definition for managerial capacity, which is to be distinguished from “executive” capacity.
In an accommodation that is more lenient than the strict language of the statute, the “new office” regulations allow a newly established petitioner one year to develop to a point that it can support the employment of an alien in a primarily managerial or executive position. In creating the “new office” accommodation, the legacy Immigration and Naturalization Service (INS) recognized that the proposed definitions of manager and executive created an “anomaly” with respect to the opening of new offices in the United States since “foreign companies will be unable to transfer key personnel to start-up operations if the transferees cannot qualify under the managerial or executive definition.” 52 Fed. Reg. at 5740. The INS recognized that “small investors frequently find it necessary to become involved in operational activities” during a company’s startup and that “business entities just starting up seldom have a large staff.” Id.
Despite explicit descriptions of the beneficiary’s proposed job duties, business plan, and office location and ownership documents in the initial petition and response to the RFE, the USCIS failed to apply the relevant accommodations to be accorded a new office/start-up company. The USCIS’s fixation on what constitutes managerial/ executive duties and evidence thereof for a new established company more often than not results in erroneous denial decisions based on the conclusion that the petitioner would unlikely to support the beneficiary’s employment in a managerial capacity.
Indeed, USCIS L-1A petitions’ denials reflect clear errors of facts and gross and obvious misapplication of the relevant law by USCIS.
Real-time scenario 2 – How USCIS denies L1-A petition ?
In another instance, the USCIS denied a petition stating, “You only provided the supporting evidence to show that the foreign entity and owners sent funds to the U.S. entity; however, you did not provide any other documents to show the funds were transferred for the purchase of the other stock for U.S. entity’s capital balance.” This statement is erroneous and confusing because the USCIS recognizes that the foreign entity and owners have provided evidence of financial resources to opening the new affiliate office, specifically, evidence of initial wire transfers, deposit receipts and bank statements as requested in the RFE and in compliance with the evidence of ownership and control listed in USCIS Adjudicator’s Field Manual (“AFM”), which states:
New office: The petitioners’ statement of ownership and control should be accompanied by appropriate evidence such as evidence of capitalization of the company or evidence of financial resources committed by the foreign company, articles of incorporation, bylaws, and minutes of board of directors’ meetings, corporate bank statements, profit and loss statements or other accountant’s reports, or tax returns.
USCIS’s contention that the Petitioner in this case should have submitted additional documents for “the purchase of the other stock for U.S. entity’s capital balance” is erroneous because purchase of stock of the U.S. entity by the foreign entity is not required to establish the “affiliate” qualifying relationship. This demonstrates the biased manner in which the USCIS reviews L-1A petition in favor of big corporations.
USCIS Autocratic Rejections
Moreover, the USCIS arbitrarily rejects documents provided in support of the Petition and in response to the RFE without addressing deficiency thereof. For example, the USCIS failed to review the detailed job description and requested, without addressing any deficiencies of the foreign entity’s reference letter or organizational chart showing Beneficiary’s position at the top of the company, documents already submitted which, contrary to USCIS contention, clearly demonstrated the beneficiary’s ability and actual direct management of the company. The USCIS concluded that the foreign position did not qualify as an Executive position by incorrectly stating that the Petitioner did not provide other documents aside from the organizational chart and the job description.
Also, this denial was issued in part because a secretary, who was not a direct subordinate of the executive and who appeared in an organizational chart originally filed by the Petitioner on October 11, 2019, did not appear in the organizational chart filed with the RFE response on May 11, 2020.
The USCIS imposes new legal standards not established by either the statute or the regulations. A foreign company is not required to show it has maintained the same employees in the same positions. The U.S. petitioner must establish that the Beneficiary occupied an executive or a managerial position. Whether he/she kept the same secretary or has a secretary is not how this requirement is met. Also, USCIS fails to mention that in the Organizational structure submitted with the RFE response, the foreign entity lists the positions of Administrative Officer, Marketing Executive and Creative Executive with detailed job duties, salary information and educational requirements. The Administrative Officer supports the positions of Managing Director and General Manager, and the latter two positions are direct subordinates of the L-1A Beneficiary in his capacity as President/CEO.
Finally, on this point, the USCIS often, seems to confuse L-1A qualifications under INA 101 (a)(44)(A)- Managerial Capacity with those of under INA 101 (a) (44)(B)- Executive capacity. Petitioner submitted in all documents that the L-1A Beneficiary in this case had been employed in an Executive capacity under INA (a)(44)(B) and provided lengthy documents proving this qualification. The USCIS still denied the petition by stating: “In addition, you have not demonstrated in detail how the beneficiary’s education, training, and experience have resulted in your organization’s management, or an advanced level of knowledge or expertise in the organization’s processes and procedures.” The USCIS erred in its finding that the new office would not support an executive or manager position within one year. A meritless denial issued by USCIS without reviewing the submitted evidence, including detailed job descriptions of projected employees, projected personnel plan, a memorandum of understanding between U.S. Petitioner and Real Estate Consultant group to show that already US entity hired services to perform daily duties for the company.
The USCIS goes so far as to conclude that in this case, the projected new office expenses of $169,848 would not be achieved based on the foreign entity’s February 2020 bank statement, yet they acknowledged that Petitioner provided the latest bank statement with a balance of approximately $78,112. The USCIS failed to consider that the U.S. Petitioner had already invested $95,000 in the establishment of the new office, had rented office space for the past year (about $1,400 rent per month) and made expenses such as purchasing a vehicle worth $62,000. Those expenses alone amount to over $100,000, which shows that the U.S. Petitioner will more than likely realize the projected expenses of $169,848 within one year of approval of L-1A new office non-immigrant status for the Beneficiary.
USCIS Capricious Denials to the Eligible L-1 A Petitioners
The examples of unpredictable denials by USCIS at this point are overwhelming. The following example demonstrates this yet again, as the foreign entity has been operating since 1996, and submitted proper documentation to establish L-1A new office eligibility. The foreign entity is a well-diversified educational group with six campuses offering higher education courses, boarding K-12 schools, competitive preparation courses and finishing courses to over 4,000 students annually. It has become a robust education institution of significant scale, with healthy alumni base of over 35,000 students and a strong ability to attract domestic and international students. The foreign entity submitted to USCIS audited financial statements and an independent study of the U.S. business. The same entity incorporated a subsidiary in the U.S. with the mission to develop a premium K-12 IB school in Houston, whereafter the same could be developed in other locations such as New York and Los Angeles. The business direction of the US subsidiary is to explore commercial Real Estate developments as well. Their focus would be on large-scale Community Development Projects around Houston, New York & Los Angeles.
In this particular case, the U.S. Petitioner submitted a Letter of Intent (LOI) to purchase 730 acres of No restriction Land in Montgomery, Texas, with a purchase value of $4,745,000, and to secure a lease to host its other eye lash studio project. This alone should prove Petitioner and foreign entity have the financial ability to secure office premises for all employees to be hired in the course of the 5-year business plan. The Petitioner only has to prove that, within the one-year validity sought in this petition, it will have secured the office premises needed to support the executive position. The Petitioner has proven their credibility and qualifications based on the extensive financial documents, business plan, secured premises, and foreign entity organizational chart.
With regard to whether sufficient physical premises to house the new office had been secured, the Petitioner submitted a Warranty Deed and evidence of title for the Office Premises and Residence, which were bought for USD 430,000 in the name of U.S. Petitioner. The office premises hold two office rooms with one lobby, guest sitting area, one washroom and one toilet and one storeroom exclusive to the office. A copy of the floor plan, photos of the office premises, Title Deed, insurance, settlement statement, utility bills for electricity, gas, water & city services, and broadband internet were submitted as well. It was also noted that as Petitioner grows in size and revenue, it will move to a bigger office space as needed to accommodate its personnel and materials and equipment storage. In fact, as outlined in the projects to be undertaken by the U.S. entity in real Estate development financed by the foreign entity, the petitioner will have plenty of office space to house the personnel projected in the business plan in the course of 5 years.
In this case also, the Beneficiary has been employed by the foreign entity for over 25 years, with experience as a key member of the executive management team and head of finance including Corporate Finance and Accounts, Business Development, Marketing Strategy, new project development, approvals and top government liaison.
Without consideration of all the above-mentioned facts and supporting evidence, the USCIS denied this petition almost a year after it was filed. USCIS erroneously denied it by concluding that the office premises secured would not accommodate twenty-six (26) employees illustrated in the proposed organizational chart. This conclusion is erroneous because the initial petition filed covers one year.
Petitioner submitted that it would hire eight (8) subordinate employees in the first year. It cannot be emphasized enough that there is no legal requirement that all employees must work out of the office premises. A U.S. entity can hire employees and independent contractors as long as it is established that the L-1A Executive beneficiary will primarily perform executive position duties.
Indeed, USCIS erroneously concluded that the Petitioner in this case would not be able to support the beneficiary in an executive position within one year of approval of the petition. Family, Inc. v. USCIS, 469 F.3d 1313, 1315 (9th Cir. 2006). The organization’s small size alone does not support a finding that its employee is not acting in a managerial capacity. In addition, as provided above, the one-year “new office” provision is an accommodation for newly established enterprises, provided for by the U.S. Citizenship and Immigration Services (USCIS) regulation that allows for a more lenient treatment of managers or executives entering the United States to open a new office.
Again, the initial intended period requested of one year is to allow the foreign entity to establish the operations of its newly created entity. It is indeed undisputable that in this instance, the foreign entity had the financial ability to sustain a new executive position for one year. In light of this, the delay and financial loss suffered by the U.S. Petitioner due to the USCIS’s delay of over one year in adjudicating this petition highlights the USCIS’s bias against businesses starting up new offices in the US who elect not to pay the $2,500 premium processing service fee.
Delays in adjudication, a missed economic opportunity, who is the biggest loser?
The USCIS adjudication process for I-129 L-1A Petitions takes months unless, as stated above, the U.S. Petitioner pays an additional $2,500 premium processing fee. The regular process for the L-1A petition, which is almost always to establish a new office, most often leads to an RFE being issued and can take almost one year complete. This means that even if it is approved, which is rare, the validity period requested in the initial filing will be almost over. This leads to the Petitioner filing an extension petition and going through the same delays and extensive evidentiary requirements to finally be able to operate the new U.S. business.
In the 2019 fiscal year, the USCIS L-1A initial filing approval rate was 24.26%. This statistic does not separate the initial filings of regular L-1A or new office L-1A filings. If one had to guess based on experience, the approval rate for L-1A new office petitions is much lower than 24.26%.
So, who suffers the greatest loss as a consequence of the USCIS’s arbitrary delays and erroneous denials? Obviously, the Petitioners L-1A visas lose time, money and efforts put into filing the petition and replying to the USCIS RFEs. They also lose the opportunity to fully operate in the U.S. However, in big picture, the U.S. is losing many economic opportunities brought by new businesses to the U.S., including hiring new employees and enriching the local economy and culture. These arbitrary and biased denials most negatively affect smaller start-up businesses. Many start-up businesses bring new ideas or seek to fill gaps in technology, education, real estate development, etc. Once the door is closed on these businesses because an experienced and skillful executive or manager is prevented from coming to launch operations, that opportunity is likely lost forever. By shutting out foreign investment and business development, the USCIS is directly harming the U.S. economy and the prosperity of our local communities.
With everything discussed above, is the L-1A Visa Petition for Start-Ups Worth the Hassle Anymore?
This is a question every practitioner asks themselves as one advising visa options for individuals seeking to transfer an executive or manager to start a new business or investment entity in the U.S. Some practitioners have abandoned this option and instead advise filing E-2 treaty investor non-immigrant visas for individuals who qualify. Others decide, after explaining the lengthy process, onerous RFEs and delays to the clients, to fight.
They prepare L-1A initial petitions in anticipation of an RFE; drafting lengthy and detailed job descriptions and support letters and including substantive evidentiary evidence. Choosing to fight means practitioners must exhaust all appeals options, including filing APA complaints in the Federal District Courts. Fighting also includes writing articles like this one in the hopes that Congress realizes this particular benefit will soon enough become dead law! Congress and the Executive branch must decide whether to continue this benefit and clarify the eligibility criteria and evidentiary requirements of the same. Otherwise, it is unfair and an abuse of power for the USCIS to pocket the filing fees and continue issuing baseless denials for an overwhelming majority of the L-1A new office petition.