Immigration Consequences of Mergers and Acquisitions

Categories: Immigration Lawyer Blog San Diego

Many companies and even corporate lawyers fail to perform the necessary due diligence of analyzing the immigration consequences of a merger and acquisition. All of the workers should be analyzed individually, to examine what immigration liabilities and responsibilities the surviving entity will take on. In some cases this may even effect how the deal will be structured. The immigration consequences of such a deal can have devastating effects on all the entities and individuals involved, and we cannot stress enough the importance of doing the due diligence and consulting with an immigration attorney before entering into such a transaction.

One of the first questions to ask in the due diligence period is how will the deal be structured?
Is it a merger? A spinoff? an acquisition? A stock sale? An asset purchase? A successor in Interest where liabilities are to be assumed?

This article will first examine the potential effect on H-1B workers.
The first question to ask is whether the corporate change results in a new employer, and if so what liabilities are being assumed? A new LCA does not need to be filed for H-1B workers provided that the new entity agrees to assume the predecessor’s obligations and liabilities under the LCA with an appropriate memorandum to the public access file. There is also no need to file an amended H-1B petition to USCIS if the successor in interest assumes all the predecessor’s immigration liabilities. However, if the reorganization results in different job duties and requirements or the worker will be at a new location, then a new LCA and a new petition to USCIS will probably be required.

Another important consideration is if one of the entities involved is categorized as “H-1B dependent”. Employers are classified as such if they have a certain percentage of H-1B workers (this varies depending on employer size). If an “H-1B dependent” employer is involved extra care should be taken to ensure compliance and knowledge of the additional restrictions on the employer and possibly the surviving entity.

Is one of the entities a non-profit? This is another important consideration that will affect whether the H-1B visas will continue to be cap-exempt.