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Multinational Executives and Managers

Written by Henry J. Chang

As a result of the Immigration Act of 1990 ("IMMACT 90"), the Immigration and Nationality Act ("INA") currently permits multi-national executives and managers to apply for permanent residence under the employment-based first preference category.

Normally, employment-based permanent residence categories are subject to a labor certification requirement. Labor certification is discussed in detail here. First preference beneficiaries are spared the inconvenience and expense of this requirement.

The first preference category actually consists of three subcategories, each with different eligibility requirements:

  1. aliens of extraordinary ability in sciences, arts, education, business or athletics;

  2. outstanding professors and researchers; and

  3. multi-national executives and managers.

The first two subcategories are discussed elsewhere at this web site. Therefore, only the subcategory relating to multi-national executives and managers will be discussed.

General Requirements

The requirements for multinational executives and managers under the first preference are substantially similar to those for executives and managers under the L-1A non-immigrant subcategory. A non-immigrant worker under L-1A status will generally qualify under the first preference category without serious difficulty. However, there is no permanent residence equivalent for the "specialized knowledge" L-1B worker.

The basic requirements for multinational executives and managers under the first preference are as follows:

  1. the alien must have been employed outside the United States in a managerial or executive capacity for at least one year in the three years prior to the filing of the petition (if the worker is currently in the U.S. working for the same prospective U.S. employer, the three year period preceding the worker's entry to the U.S. as a non-immigrant);

  2. the alien's foreign employer must have been the same employer, an affiliate or a subsidiary of the prospective U.S. employer;

  3. the alien must be coming to the U.S. to work in an executive or managerial capacity; and

  4. the prospective U.S. employer must have been doing business for at least one year.

Multinational Relationship

The corporate relationship between the foreign employer and the prospective U.S. employer must be a qualifying one. The immigration regulations provide the following definitions:

  1. "subsidiary" means a firm, corporation or other qualifying entity of which a parent, owns, directly or indirectly, more than half of the entity and controls the entity; or owns, directly or indirectly, half of the entity and controls the entity, or owns, directly or indirectly, 50 percent of a 50-50 joint venture and has equal control and veto power over the entity; or owns, directly or indirectly, less than half the entity, but in fact controls the entity. This suggests that a subsidiary relationship is based more on control than actual majority ownership. A subsidiary relationship will exist even if the parent owns less than half the subsidiary entity, so long as the parent exercises de facto control over the subsidiary. Obviously, where the parent owns less than half of the subsidiary, more extensive documentation must be shown to establish such de facto control.

  2. "Affiliate" is defined to include one of two subsidiaries both of which are owned and controlled by the same parent or individual, or one of two legal entities entirely owned and controlled by the same group of individuals, each individual owning and controlling approximately the same share or proportion of each entity. This definition therefore includes situations where a group of individuals collectively control each entity and where the each individual in the group owns shares in approximately the same proportion for each entity. Not all shareholders have to own shares in the other entity, as long as the control group meet the requirements under this definition. The meaning of "affiliate" also includes certain international accounting firms. Where such firms market accounting services under the same internationally recognized name under an international partnership or similar organization, the foreign partnership is considered an affiliate of the U.S. partnership.

Executive or Managerial Positions

Managerial and executive capacity are defined as follows:

  1. "Executive capacity" means an assignment within an organization in which the employee primarily:

    1. directs the management of the organization or a major component or function of the organization;

    2. establishes the goals and policies of the organization, component or function;

    3. exercises wide latitude in discretionary decision-making; and

    4. receives only general supervision or direction from higher level executives, the board of directors, or stockholders of the organization.

  2. "Managerial capacity" means an assignment with the organization in which the employee personally:

    1. manages the organization, department, subdivision, function or component;

    2. supervises and controls the work of other supervisory, professional or managerial employees, or manages an essential function within the organization or department or subdivision of the organization;

    3. has authority to hire and fire or recommend personnel actions or, if no other employee is directly supervised, functions at a senior level within the organizational hierarchy or with respect to the function managed; and

    4. exercises discretion over the day-to-day operations of the activity or function for which the employee has authority.

First-line supervisors are not considered acting in a managerial capacity unless the employees who are supervised are themselves considered professional.

The definitions of executive and managerial capacity prior to IMMACT 90 contained an exclusion for individuals who spent a substantial proportion of their time actually producing the product or service marketed by the employer. This exclusion has been omitted from the current version of the INA. The definitions of managerial capacity and executive capacity include management of a function and the beneficiary need not directly manage other personnel. If staffing levels are used as a factor, the reasonable needs of the organization, component or function, in light of the overall purpose and stage of development thereof, must be taken into account.

The first preference category clearly creates new opportunities for certain executives and managers of multi-national companies to establish permanent residence in the United States. Even executives and managers of Canadian companies without existing subsidiaries in the U.S. may be able to take advantage of this category by first establishing U.S. subsidiaries under L-1A status and then applying for first preference status once their subsidiary has been in business for the required one year period.

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