Q: I am considering purchasing a small company that employs foreign national employees. What should I be concerned about from an immigration standpoint?
A: You should be concerned about the company’s compliance with immigration laws and the transaction’s impact on the foreign national employees’ immigration status. Accordingly, you should perform a due diligence review of the company’s records to assess any liability from noncompliance, each employee’s immigration status, and any immigration-related responsibilities after the business purchase transaction is completed.
Firstly, you should review each employee’s work authorization. You should request the Form I-9s completed by each current employee and any employee terminated within the past three years. If an employee is not a U.S. citizen or a permanent resident, you should make sure that the employee’s work authorization is not expired.
Next, you should confirm that the Form I-9s were properly completed and maintained. U.S. Immigration and Customs Enforcement (ICE), the government agency tasked with Form I-9 compliance, has the discretion to audit and fine U.S. employers for failing to complete and maintain Form I-9s. If the company has not complied with ICE’s Form I-9 recordkeeping requirements, you may end up assuming the liability for such noncompliance unless you elect to treat the employees as new hires and complete new Form I-9s for each employee.
Then, you should assess the immigration status of the applicable foreign national employees to determine if the transaction will affect their status. For example, if an employee is in H-1B status, this transaction may constitute a change in employment requiring you to update the employee’s U.S. Department of Labor-mandated public access file. If an employee is in L-1 status, such status requires a qualifying relationship between the company and an overseas employer.
If after the transaction no such qualifying relationship exists, the employee may lose his or her work authorization. If the company is sponsoring any employees for permanent residency, you may need to obtain a new permanent labor certification from the DOL. Obtaining this certification involves determining the prevailing wage that you must pay the employee and testing the market to ensure that no U.S. workers are qualified and able to accept the job opportunity offered to the employee.
Due to the complexity of immigration laws and business purchase and sale transactions, you should engage an attorney to review the company’s records and fully assess the immigration considerations in this transaction.