Foreign Workers Guide to Avoiding Disaster during a Corporate Merger

United States Immigration Series Post No. 12

 Francisco A. Laguna & Rolanzo White

Picture this: you are a skilled Mexican citizen who is working for a United States company. For the holiday season, you and your family go to Mexico City, to spend time with your parents and upon return to the US, you are denied access because your H-1B visa has been invalidated because the employer that originally sponsored your visa is no longer in existence due to a merger. You work for the new, merged company, but the company that sponsored you is no longer your employer.

By Gulbenk - Own work, CC BY-SA 3.0, https://commons.wikimedia.org/w/index.php?curid=23445038

By Gulbenk – Own work, CC BY-SA 3.0, https://commons.wikimedia.org/w/index.php?curid=23445038

This denial of entry results from the fact that most work visas are employer-specific.  Therefore, changes in a company’s structure could affect the validity of a foreign national employee’s nonimmigrant visa status or a pending green card application. Determining whether a corporate restructuring affects the employer that filed the visa petition with the U.S. Citizenship and Immigration Services (USCIS) or Department of State (DOS) is essential. The consequences of a merger or acquisition depend upon the type of nonimmigrant visa the company’s employees hold. In this post, we focus on the H-1B visa because it is the most common temporary work visa and the rules applicable to H-1Bs are echoed by many of the other forms of visas. For the sake of comprehensiveness, non-immigrant workers normally fall within the H-1B, L, E and TN visa categories as well as on training tied to J-1 and F-1 visas.

H-1B Visa

The problem arises because an employee must have a valid H-1B visa annotated with the petitioning employer’s name.  In the event a company is absorbed by another entity during a merger, the petitioning employer, essentially, no longer exists.

By United States Department of Labor (DOL) - http://www.loeser.us/flags/, Public Domain

By United States Department of Labor (DOL) – http://www.loeser.us/flags/, Public Domain

H-1B visas are the most common temporary visa for U.S. companies that hire foreign national workers for specialty jobs. Workers are required to have at least a bachelor’s degree, and they must work in a specific geographic location in a specific position for a specific salary. When a company hires an H-1B worker, it is required to make an attestation to the U.S. Department of Labor (DOL) they will comply with the H-1B requirements. This attestation is made as part of a Labor Condition Application (LCA).

The USCIS requires an amended H-1B visa petition to be filed if there are any “material changes” in the terms and conditions of an H-1B worker’s employment or eligibility. However, USCIS does not automatically require the filing of a new LCA and amended H-1B petition where a new corporate entity keeps the employee on in the same position and accepts the LCA and H-1B requirements and obligations, in other words, becomes a “successor-in-interest.” Here, the successor-in-interest, must make available for public inspection a sworn statement that it accepts all the obligations and liabilities of the LCAs filed by the predecessor entity, a list of affected LCAs, their dates of certification by DOL, a description of the new entity’s actual wage system and the federal employer identification number (EIN).

By AgnosticPreachersKid - Own work, CC BY-SA 3.0

By AgnosticPreachersKid – Own work, CC BY-SA 3.0

The filing of the new LCA and must be done before the H-1B workers can work for the new company, or, in our example, return to the country legally. When there is a material change, like location change, then a new LCA or amended H-1B petition must be filed with DOL prior to the relocation of the employee in order to avoid filing an amended H-1B visa petition. Similar rules apply for L-1 (executives, managers and specialized knowledge employees), E-1 (treaty traders) and E-2 (investor) visas.

There are now expensive consequences for non-compliance with the requirement to notify USCIS of material changes, including:

  • At the federal level, the Department of Homeland Security is aggressively targeting employers for I-9 and work visa compliance audits; failed audits can result in significant fines and even jail time.
  • At the state level, new laws in dozens of states allow authorities to fine employers, revoke business licenses and eliminate access to state contracts for immigration law violations.
  • Employees on work visas are suing companies for negligence when employees fall out of legal status, have problems pursuing permanent residency, and face bars on coming back to the United States as a result of the companies’ actions.
  • Major companies now include strong immigration compliance provisions in their vendor contracts, violations of which can result in the termination of the contract in question.
  • Bad press that can impact the company’s economic performance and stock price.

These matters are often complicated, and there are strong laws protecting employees, even foreign workers. Call TransLegal with your questions concerning immigration filing requirements in the event of corporate mergers and acquisitions.

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Investing in Jamaica

Francisco A. Laguna & Rolanzo White

After rebounding form the financial crisis of 2008, Jamaica is now welcoming foreign investors. The government has turned its attention to bolstering the economy and continuing impressive performance in tourism, logistics, and manufacturing.

The Jamaican Government, led by the Jamaica Promotions Corporation (JAMPRO), is creating an environment conducive to foreign direct investment. JAMPRO is an Agency of the Ministry of Industry, Investment and Commerce that promotes business opportunities in export and investment to the local and international private sector. With the debt to GDP ratio declining as a result of debt restructuring and fiscal contraction (estimated 140% at the end of fiscal year 2014/15), Jamaica is ripe with opportunity.

"Karibik Jamaika Position" by Raymond de - Raimond Spekking - Own work. Licensed under CC BY-SA 3.0 via Wikimedia Commons

“Karibik Jamaika Position” by Raymond de – Raimond Spekking – Own work. Licensed under CC BY-SA 3.0 via Wikimedia Commons

The Jamaican economy is driven by foreign direct investment (FDI). Jamaica received an estimated US$ 551 million in FDI inflows for 2014. The country has a strong relationship with the United States and the United Kingdom, and the levels of FDI can be partly attributed to these relationships. The World Bank has also been extending credit and development assistance to Jamaica through several projects in various sectors.

In May 2013, the Jamaican Government implemented the Growth Agenda Reform Program, supported by a four-year loan arrangement under the International Monetary Fund’s Extended Fund Facility (EFF), which provided Jamaica with Special Drawing Rights (SDR) of US$ 932.3 million. The program’s goal is to improve the business environment and facilitate strategic investments.

The Jamaican Government has made a point to create a legal atmosphere that supports private enterprise. Jamaica has an independent judicial system that is based in English Common Law which upholds the sanctity of contracts. Jamaica gives “National Treatment” to the profits foreign investors make on the island, and they do not put limits on the foreign control of companies nor do they restrict non-residents from buying real estate. Under the Omnibus Tax Incentive Framework, all investors benefit from a non-discriminatory and consistent tax incentive regime that seeks to catalyze foreign direct investment. As a result, Jamaica has jumped 27 places to achieve an overall ranking of 58 out of 189 economies, according to the 2015 Doing Business Report: the highest ranking in the Caribbean.

The most dynamic sectors in Jamaica have been tourism, logistics, and manufacturing.

TOURISM

"Doctors Cave Beach" Licensed under Public Domain via Commons

“Doctors Cave Beach” Licensed under Public Domain via Commons

Jamaica received just over 2.08 million stay-over tourist arrivals in 2014, according to newly-released data from the Ministry of Tourism. That represented a 3.6 % increase over 2013, when the country topped 2 million visitors for the first time and added US$ 2 billion to the local economy. Potential investors are invited to explore the opportunities that exist for the development of boutique, large scale and city hotels. The government is also working to complete Casino Gaming and Timeshare legislation, which will add new dimensions to Jamaica’s dynamic tourism industry.

LOGISTICS

"Kingston Harbour (cmakin) 2004-09-19" by Carey Akin (cmakin) from Manvel, Texas, USA Licensed under CC BY-SA 2.0 via Wikimedia Commons

“Kingston Harbour (cmakin) 2004-09-19” by Carey Akin (cmakin) from Manvel, Texas, USA Licensed under CC BY-SA 2.0 via Wikimedia Commons

Jamaica is home to the Kingston Harbor, the world’s seventh largest natural harbor. With the expansion of the Panama Canal, Jamaica is set to benefit from innovative and advanced commercial ventures in logistics. Jamaica will look to offer better logistic efficiencies to markets in the region by leveraging their existing infrastructure. The island enjoys a prime location in proximity to major East-West shipping lanes and direct connections to all regional ports, which has impressed other countries, including China. According to Prime Minister Portia Simpson Miller, China Harbor Engineering Company Limited and its parent company will invest between US$ 1.2 and 1.5 billion in the development of a transshipment port in Jamaica.

MANUFACTURING

Jamaica’s manufacturing sector is important to the national economy, accounting for 8.4 % of GDP and generating export earnings of US$ 772.5 million in 2013. The country boasts over 300 companies in the sector engaged in a varied range of manufacturing enterprise that include agro-processing, bedding, leather, stone and clay products.  Jamaica is also showing growth in mining, agriculture, and business process outsourcing (BPO).

Jamaica has shown resiliency and impressive growth to become an investor paradise. Investors may want to take a second look at the land of wood and water. They will be surprised by their economic growth.

With offices in Jamaica and throughout the Caribbean, contact TransLegal to learn more about FDI in Jamaica and the region.

What is the Importance of Trade Adjustment Assistance?

Francisco A. Laguna & Rolanzo White

After months of an internal Democratic battle, which pit House Minority Leader Nancy Pelosi against President Barack Obama, Congress passed the Trade Promotion Authority bill (“TPA”) which will give the president a “fast track” to negotiate deals with foreign nations. The TPA is characterized as “fast track” authority because it gives the president the ability to negotiate trade deals with foreign states without interference from Congress. Legislators can only vote yes or no when these deals reach the floor.

"A hot June summer afternoon on Capitol Hill. (9136720373)" by USCapitol - A hot June summer afternoon on Capitol Hill.. Licensed under Public Domain via Wikimedia Commons

“A hot June summer afternoon on Capitol Hill. (9136720373)” by US Capitol. Licensed under Public Domain via Wikimedia Commons

For months, the TPA was the center of a debate among Democrats: whether to give the president this authority; or to demand a part in trade negotiations. Republicans supported the bill because they saw it as necessary for promoting the recently agreed-to Trans-Pacific Partnership (“TPP”). Rand Paul believes that the bill actually affords Congress more control over the negotiations and the last word. Even with the divide in the Democratic Party, on June 24, 2015, Senate Republicans gathered the 60 votes needed to pass the TPA with the help of 13 democrats.

The TPA certainly facilitated the negotiation of the TPP, an agreement among Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam. All potential member states required the passage of the TPA to ease their fear that Congress would overturn the agreement after a deal was struck. President Obama and proponents of the bill advocate that the TPP will lower the cost of imported goods, open overseas opportunities for America businesses and establish the first American trade agreement with Japan. Those who oppose the TPP, including Massachusetts Senator Elizabeth Warren, fear it will kill jobs in the US and give the president too much unilateral power in trade negotiations.

"US Dept of Labor" by Ed Brown. Licensed under Public Domain via Wikimedia Commons

“US Dept of Labor” by Ed Brown. Licensed under Public Domain via Wikimedia Commons

As a way to protect people that may lose their job as a result of trade agreements, Congress voted to reauthorize the Trade Adjustment Assistance (“TAA”) program through 2020 and renew the program’s 2009-2010 eligibility and benefit levels. Democrats believe that Congress needed pass the TAA to assist those hurt by job loss.

 

The TAA program is a federally funded program that provides necessary assistance for workers, with no cost to employers, whose jobs are lost or threatened due to trade-related circumstances as determined by a Department of Labor investigation. The TAA program provides assistance to eligible workers in the form of reemployment services, training, job search, relocation, and support benefits in the form of Trade Readjustment Allowances (TRA) and / or Alternative/Reemployment Trade Adjustment Assistance (ATAA/RTAA) for older workers. The Department of Labor estimates that since 1975 over two million workers have relied on the TAA program to receive benefits to make ends meet and obtain the training necessary to find new jobs.

"Vincent Thomas Bridge aerial view" by United States Coast Guard, PA3 Louis Hebert - U.S. Coast Guard Visual Information Gallery. Licensed under Public Domain via Wikimedia Commons

“Vincent Thomas Bridge aerial view” by United States Coast Guard, PA3 Louis Hebert – U.S. Coast Guard Visual Information Gallery. Licensed under Public Domain via Wikimedia Commons

In response to the TPA decision, the US Conference of Mayors voiced their support for the bill and urged congress to pass the TAA as well. Newly appointed US Conference of Mayors (USCM) President, Baltimore Mayor Stephanie Rawlings-Blake, issued the following statement: “The nation’s mayors now call on Congress to pass reauthorization of Trade Adjustment Assistance that will provide resources to US workers who may need re-training and employment services due to foreign competition. TAA has helped over 2.2 million workers since its inception and is an important safety net for them.”

As trade agreements like the TPP and the Transatlantic Trade & Investment Partnership are negotiated and implemented, it will be interesting to contrast the number of workers who require TAA assistance with overall trade numbers to determine whether fast track negotiating authority is, indeed, worthwhile.

TransLegal is available to answer questions concerning regional and other trade agreements as well as the availability of benefits under the TAA.

Alibaba: The Scandal You Should Know About Before Investing

Francisco A. Laguna & Rolanzo White

For those unfamiliar, Alibaba is an e-commerce company based in China. Founded in 1999 by Jack Ma, this giant has grown into one of the most valuable technology companies in the world.  It raised US$ 25 billion from its United States IPO, and in 2014, transactions on their sites totaled US$ 248 billion.

"Alibaba Group Logo" by Source (WP:NFCC#4). Licensed under Fair use via Wikipedia

“Alibaba Group Logo” by Source (WP:NFCC#4). Licensed under Fair use via Wikipedia

Alibaba does not warehouse, ship or sell products, instead they offer sales portals and platforms whereby third-party merchants can sell their goods to third-party buyers. The company began as an online business-to-business wholesale company operating as Alibaba.com. Over the next decade, Alibaba launched a variety of businesses including Taobao, an online payment system called Alipay, an online marketing technology platform called Alimama, Tmall, and Alibaba Cloud Computing. The Company derives the vast majority of its revenue – 81.6% for FY2014 – from its China retail marketplaces, Taobao, Tmall, and Juhuasuan.

The sale of counterfeit and contraband goods over its platforms has long been an issue that could potentially impact Alibaba’s business significantly. Alibaba has always claimed to be against the counterfeiting on their sites.  On April 14, 2014, Alibaba’s proprietary news website, Alizila, published an article entitled “Fight against Online Sale of Fakes Goes on for Alibaba Group.” Alibaba claims to have removed an estimated 114 million listings for suspected fake goods from their giant Taobao marketplace during the first ten months of 2013. Their stated goal was to curb the infringement of intellectual property rights on its websites. The company has implemented measures to correct the problem which include searching their sites for merchants selling counterfeits and opening communication with government authorities and major brand owners. That being said, their current measures to stop counterfeiting have failed according to the recent complaints. The site rife with counterfeits is Taobao. Taobao is Alibaba’s largest shopping platform, hosting millions of merchants. Taobao offers buyers the ability to purchase unusual items and services like boyfriends for hire, live scorpions, and plenty of counterfeit merchandise.

"Jack Ma 2008" by World Economic Forum at en.wikipedia. Licensed under CC BY-SA 3.0 via Commons

“Jack Ma 2008” by World Economic Forum at en.wikipedia. Licensed under CC BY-SA 3.0 via Commons

Recently, Alibaba, Jack Ma and company executives have been hit with three class action law suits. The first was a derivative suit led by a common stock holder named Steve Surray (United States District Court for the Southern District of California). The second was a class action suit led by Gucci America Inc. who is joined by Balenciaga, Bottega Veneta, Yves Saint Laurent, Luxury Goods International (L.G.I.), and Kering (US District Court for the Southern District of New York). The last class action was filed by Myrtle Chao; the plaintiffs consist of people who bought the publicly traded ADSs of Alibaba on a U.S. stock exchange during the Class Period of 10/21/2014 – 01/28/2015 (United States District Court for the Central District of California).

Overall, these complaints accuse Alibaba of being untruthful about the counterfeiting problem on their sites and aiding and abetting the assailants. In other words, Alibaba is not only accused of allowing the sale of items like fake cigarettes, alcohol, restricted weapons and counterfeit luxury goods, it is also accused of providing an “ecosystem” for this type of behavior. In the Gucci complaint, the class claims that Alibaba knowingly encourages, assists and profits from the sale of counterfeits by providing online marketing, credit card processing, financing and shipping services. For example, Alibaba knowingly continued to allow the Hangzhou Yanbei Trading Company, a “Gold Supplier” and “Assessed Supplier” to sell counterfeit Gucci bags after inspecting them and concluding that they were, indeed, counterfeit. Alibaba is also accused of helping customers find counterfeit goods. For instance, they allow for keyword searches like “Gucci replica” and suggested terms like “cucci” and “guchi” when “Gucci” is typed into the search bars on their various platforms to intentionally drive customers to merchants of counterfeit products.

"Alibaba Binjiang Park" by Danielinblue, designed by HASSELL (architects)[1] - Own work. Licensed under CC BY-SA 4.0 via Commons

“Alibaba Binjiang Park” by Danielinblue, designed by HASSELL (architects)[1] – Own work. Licensed under CC BY-SA 4.0 via Commons

Alibaba is being sued for, among other things, trademark infringement, counterfeiting under the Lanham Act and violations of the Racketeer Influenced and Corrupt Organizations Act (“RICO”). The plaintiffs want Alibaba to stop aiding counterfeiters and take down any infringing product currently on their sites and have asked the court for statutory, punitive, and court-determined damages that could cost Alibaba millions.

Alibaba’s actions, if true, are illegal and could mean a severe drop in market value, which could further disrupt the Chinese economy and investor confidence.  The prudent investor may wish to consider waiting until the lawsuits are resolved, at least at the district court level.

TransLegal has offices throughout Asia, including China.  We assist our clients with enforcement of IP rights in the region.  Call us with your questions.