H-1B Visa for Entrepreneurs and Start-Ups

In 2011, the USCIS and Obama Administration created incentives to encourage start-up companies and increase job opportunities. Now, thanks to certain regulations, immigrants from all over the world can come to the U.S. under an H-1B visa as entrepreneurs to bolster the economy and make their businesses flourish.

The intention was to stimulate the United States economy and job market by making H-1B visas available to entrepreneurs and start-ups. However since then, installed regulations have made the process more challenging than expected. The USCIS took notice of the recent confusion and decided to address some of the misunderstandings.

IMPORTANT UPDATE: Premium processing has been suspended for all cap-subject petitions for the 2019 fiscal year. The suspension will take place April 2, 2018 and continue until September 10, 2018. To read more about this suspension and how it affects your case, read our premium processing suspension update.

H-1B Overview

To understand how things used to be for H-1B visa applicants, we must first take a brief look at what criteria are required for this visa.

The H-1B is a visa in the nonimmigrant category that allows workers with specialty occupations to work temporarily in the United States. By finding a U.S. employer and having them sponsor you for your visa and file an I-129 petition, qualified immigrants have been using the H-1B to work in the U.S. for decades.

However, there are some stipulations that, in the past, have prevented entrepreneurs and start-up founders from successfully petitioning for an H-1B. The requirements state that:

• You must have a sponsoring U.S. employer, you cannot petition for yourself.
• You must have at least a bachelor’s degree that is related to your field.
• You must occupy a specialty position that requires the use of your degree.

The problem is that an employer-employee relationship must exist between you and your sponsor. This means that the relationship must fall under the “conventional master-servant relationship as understood by common-law agency doctrine”. Essentially, the employer must be able to control the employee, which is proven through a combination of factors such as task delegation and supervision, wage control, and control over employment status.

In the past, this meant that business owners and entrepreneurs could not petition. the Obama administration sought to change that in 2011.

Background for H-1B Visas for Entrepreneurs and Start-ups

Previously, many foreign nationals had to leave the United States because visa options were stringent upon self-employed founders. Often the only options were to apply for an E2 investor visa, L-1A employee transfer visa, EB-5 green card, or an EB-2 green card with a National Interest Waiver. Though, to acquire an E2 investor visa the applicant must be a member of a E2 treaty country and the EB-5 requires the applicant to substantially invest in the business. In 2011, the Obama administration decided to re-interpret existing immigration laws in light of start-ups. The purpose was to bring highly skilled individuals from across the globe to benefit the U.S. economy and stimulate job creation. The immigration laws now authorize H-1B visas to entrepreneurs who possess a majority or 100% ownership in the businesses. The H-1B can also be extended to the sole employee if the applicant is able to demonstrate the employer-employee relationship.

The Challenges

Since 2011, the employer-employee relationship was difficult to establish for the H1B visa. However recent USCIS statements have defined the required documentation for this type of relationship. The USCIS has determined that it will allow sole employees under the employer-employee relationship if  “… the petitioner provides evidence that there is a separate Board of Directors which has the ability to hire, fire, pay, supervise or otherwise control the beneficiary’s employment, the petitioner may be able to establish an employer-employee relationship with the beneficiary” This means that there is a separate party within the company which controls the employee’s employment. Acceptable evidence for sole employees seeking H1B is providing documentation of:

• investors 
• preferred shareholders
• terms and conditions of employment

Even more recently, the USCIS has designed a specific portal to further distinguish the necessary documentation for employer-employee relationships in start-up businesses.

H1B visas to entrepreneurs may still have issues within the category. For applicants who have already started a business in the United States and did not receive H1B or EAD approval, their business functions may be seen as unauthorized employment.

Here is an example to illustrate:

Rateesh has a bachelor’s degree in web design and wishes to start his own company in the U.S. where he will have sole proprietorship and also be the sole employee. Without a separate entity that controls his employment, Rateesh’s petition for an H-1B would be denied.

However, Dina is the owner of a chain of retail stores and wants to open a branch in the U.S. Because she has a CEO that can control her salary, employment status, and duties, that CEO can successfully petition on her behalf for an H-1B visa.

H1B Entrepreneurs and Start-Ups Considering Permanent Residency

Applicants who are considering permanent residency status must understand the possible long term options. For most employment-based green cards, H1B entrepreneur applicants may file for PERM Labor Certification sponsorship. However, it may be difficult to obtain through the U.S. Department of Labor due to the applicant’s ownership interest in the sponsoring company. If the applicant wishes to stay in the United States permanently, it is likely the applicant will have to find other visa options.

Some viable solutions to this problem are the:

• EB-1A green card for those extraordinary ability
• EB-2 with a National Interest Waiver for those that can prove that their work is in the nation’s best interest.
• EB-5 for investors

The main advantage of these green cards for the entrepreneur is that they do not require a PERM or a sponsoring employer, allowing you to self-petition.