Employment Creation Immigrants: A Potential Boon to Louisiana’s Economy

Immigration and nationality law is a highly specialized area of law that deals with international, federal, and state law issues, as well as with federal regulations and internal operating procedures dealing with labor, foreign affairs, immigration, and nationality. Immigration lawyers provide expertise to the business community in a number of ways. For example, they are involved in the temporary or permanent transfer of foreign personnel to work for affiliated U.S. companies; in bringing foreign nationals to the U.S. to work temporarily or permanently; in bringing persons involved in trade and investment to the U.S. from certain treaty countries in order to provide services or to manage their investments; and in the immigration to the U.S. of persons who have made substantial financial investments in the U.S. Although the ability of investors to reside permanently in the U.S. through investment has been little used, it affords a win-win situation for the investor and for the national and local economy. This short article provides an overview of the process.

EMPLOYMENT CREATION IMMIGRANT VISAS: In the Immigration Act of 1990 Congress passed a new law that provides 10,000 immigrant visas (resulting in permanent residence status) each year for persons (and their spouses and unmarried children under 21) who have invested or who are actively in the process of investing capital in a new U.S. business that will benefit the U.S. economy and create at least 10 new full-time jobs for American workers. The basic law requires a minimum investment of $1,000,000. However, new businesses that create at least 10 new ful-time jobs in “targeted” areas are required to invest only $500,000, a figure that derives from regulations. “Targeted” areas include rural areas and areas that have high unemployment rates (at least 150 percent of the national average). Rural areas are defined by this law as “any area other than an area within a metropolitan statistical area” (based on federal Office of Management and Budget determinations) or within the outer boundary of any city or town having a population of 20,000 or more (based on the most recent ten-year U.S. census figures).

HIGH UNEMPLOYMENT AREAS: Regulations provide that each state may determine high unemployment areas by designating particular geographic or political subdivisions located within a metropolitan statistical area or within a city or town having a population of at least 20,000. In the past the Louisiana Department of Labor, Office of Employment Security, has informally provided this sort of information. Where necessary for eligibility, regulations allow a state official to notify the U.S. Citizenship and Immigration Services (“USCIS” – formerly the Immigration and Naturalization Service) of the designated governmental body delegated the authority to certify that a particular geographic or political subdivision is a high unemployment area. To my knowledge no Louisiana state agency has been officially designated as responsible for this determination. However, the USCIS has stated in writing that it will also accept U.S. Department of Labor unemployment statistics for the location of the investment.

INVESTMENT CAPITAL: The definition of allowable “capital” for the investment is fairly broad. By regulation “capital” includes cash, equipment, inventory, other tangible property, cash equivalents, and indebtedness (so long as it is secured by assets owned by the alien investor and so long as the alien investor is personally and primarily liable and the assets of the new investment are not used to secure any of the indebtedness). Because “capital” does not include assets acquired, directly or indirectly, by unlawful means (such as criminal activities), the investor must affirmatively prove the source of the capital.

The investment must be a “commercial enterprise,” meaning a lawful for-profit activity engaged in the ongoing conduct of lawful business. It may have any form of business (sole proprietorship, corporation, etc.), and it may be publicly or privately owned. For purposes of proving the creation of 10 new full-time jobs, employees must work at least 35 hours per week, but two employees who share one full-time position may count as one employee. Qualifying employees include U.S. citizens, lawful permanent residents, or other immigrant lawfully authorized to be employed in the U.S. The investor and the investor’s immediate family do not qualify to be counted as “employees” for purposes of proving the creation of 10 new jobs. The investor must intend to be engaged in the management of the new commercial enterprise (either through day-to-day managerial control or through policy formulation), as opposed to maintaining a purely passive role.

QUALIFYING INVESTMENTS: Aside from “new” businesses, three other situations qualify: 1) The purchase of an existing business and restructuring or reorganization such that a new commercial enterprise results. 2) The expansion of an existing business through the investment, so that a substantial change in the net worth or number of employees results. “Substantial” change means a 40 percent increase either in the net worth or in the number of employees, so that the new net worth or number of employees amounts to at least 140 percent of the pre-expansion net worth or number of employees. 3) The purchase of a “troubled” business. “Troubled” means a business that has been in existence for at least two years that has incurred a net loss for accounting purposes during the 12 or 24 months before filing the immigrant visa petition. The loss for that period must be at least equal to 20 per cent of the troubled business’s net worth before the loss.

THE PROCESS: Requirements for proving eligibility under the employment creation statute are detailed in federal regulations. They are quite stringent, but very straightforward. It is much easier to prove eligibility for a new business that has already been established and that already has created ten new full-time jobs than to prove eligibility where the investor is only in the process of investing. Once the immigrant visa petition is approved, if the investor (and the investor’s immediate family) are already lawfully in the U.S. in some other category, the investor and his family can adjust status to (conditional) Permanent Residence here in the United States. Otherwise, notice of approval of the immigrant visa petition is sent to the U.S. Consulate abroad for issuance of visas for entry into the U.S. as immigrants. In either case the investor and his family become “Conditional Permanent Residents.” Within 21 to 24 months after acquiring that status, they must file certain papers with the USCIS to prove that the investment still qualifies. Once those papers are approved they are (unconditional) Permanent Residents. If they choose to do so, they may file applications to become naturalized U.S. citizens five years from the day they became Conditional Permanent Residents. Once they are (unconditional) Permanent Residents, they may dispose of their qualifying investment if they choose to do so.

Although 10,000 visas are allowed per year in the Employment Creation immigrant visa category, relatively speaking, very few people have taken advantage of the opportunity. Since Louisiana needs to attract new businesses and industries, it would be to our advantage to point out to potential foreign investors that this opportunity exists for them and their immediate families.

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