INS on Corporate Changes and LCA Requirements for H1Bs
Posted Aug 03, 2001

In response to a letter from three immigration attorneys, INS Director for Business and Trade Services, Efren Hernandez, issued a letter in June 2001 clarifying LCA obligations when there is a corporate change such as a merger.

The example given in the attorneys' letter was that of a merger of "Company A" into "Company B," with over 5000 employees being transferred over from Company A to Company B. As required by current U.S. Department of Labor (DOL) regulations, Company B issued a sworn statement that it would assume all liabilities and responsibilities of certified labor condition applications (LCAs) for 244 H1B employees from Company A. However, the LCAs for the remaining 100 H1B workers could not be located prior to completion of the merger.

The DOL regulations indicate that in the case of a successor-in-interest, where the successor company in a corporate transaction assumes the assets and immigration-related liabilities of the prior company, new LCAs do not have to be filed and neither are amended petitions needed, provided certain requirements are followed. Briefly, those requirements are: the company needs to keep a list of the transferred H1B employees; the company issues a sworn statement that it will assume full responsibility for prior certified LCAs; and various other requirements specified in the DOL regulation. The sworn statement must be made prior to employing the H1B employee. However, INS pointed out that the requirement of such a statement is part of DOL regulations, so INS could not comment on what to do about the 100 employees who were transferred over to Company B before it could issue the sworn statement.

Ultimately, INS determines who can be employed in the U.S. The attorneys asked whether amended H1B petitions needed to be filed for the 100 workers not covered by the sworn statement. INS pointed out that even though DOL regulations required both a new LCA and a new H1B petition, if the sworn statement is not issued before the employment of the H1B worker, DOL does not have the authority over requirements for filing H1B petitions. Rather, filing requirements are within the province of INS and INS regulations do not require a new H1B petition in this situation.

Mr. Hernandez noted that it is still possible for DOL to impose consequences for failing to file the new H1B petition, even though INS does not have any such requirement. [We at The Law Office of Sheela Murthy, P.C., believe one could argue that if DOL has no legal authority over the H1B petition filing, there is then no legal basis to impose consequences for failure to comply. Any DOL attempt to enforce this requirement may well result in litigation.]

In the situation described by the attorneys, the INS letter indicated that the new H1B petition would apparently not be required. Of course, in cases where there are material changes in the employment, such as location, nature of the work, or terms of employment, then an amended H1B petition would be required. However, the corporate transaction itself would not appear to necessitate an amended H1B petition.

Mr. Hernandez also noted that if no H1B amendments are filed, then the H1B employees would not have approval notices with the name of the successor company. To facilitate travel, he suggested that many companies choose to file the amended H1B petition anyway, so that the employees would be able to carry documentation reflecting the correct company name, to avoid delays or problems with the INS officers at the port of entry.

In order to avoid the time and expense of an H1B amendment, many attorneys instead recommend that the employees carry with them documentation describing the corporate change, and indicating that the new company is assuming all immigration-related liabilities. Also, it is helpful to carry a copy of the 2000 law called the Visa Waiver Permanent Act (VWPA), which indicates that no H1B amendment is needed in the case of corporate restructurings, such as mergers and consolidations, etc. That may provide some help, though there is a possibility that the H1B employee would be delayed at the INS port of entry if the officer is not familiar with the VWPA.