Common US immigration consequences of mergers and acquisitions

With increasing federal scrutiny and the risk of raids, fines and even prosecution, businesses engaged in mergers and acquisitions must ensure that violations of US immigration law are minimized through due diligence and planning.

In the midst of a merger or acquisition, US immigration matters are often an afterthought to be addressed by in-house counsel lacking immigration expertise or by outside immigration counsel potentially engaged late in a transaction.

Failure to adequately consider USA immigration consequences can prove costly as foreign employees may face inconvenient limitations or outright termination of their ability to work in the USA on the basis of changes in corporate structure, ownership or occupation.

While there are a number of US immigration consequences that flow from a merger or acquisition, critical considerations include the effect on current employees; ease of future global mobility in hiring and transferring personnel; and compliance to avoid fines and other sanctions.

Foreign employees holding non-immigrant visas are typically beholden to an employer to maintain their status. Common categories of non-immigrant visas include the H-1B, L-1A/L-1B and E-1/E-2 visas. In contrast, employees with a legal permanent resident (LPR) status are not affected by mergers and acquisitions, as these employees possess the right permanently to reside in the USA, irrespective of employment status. However, mergers and acquisitions may profoundly affect current employees in the process of acquiring LPR status.

Ensuring I-9 compliance

Employers must verify the eligibility of employees to work in the USA through the completion of the I-9 – employment eligibility verification form. Caution and due diligence are critical to avoid civil or even criminal sanctions associated with inheriting I-9 compliance violations or employing foreign employees who are not legally permitted to work in the USA.

A business emerging from a merger or acquisition may treat employees as continuing already existing employment and opt to retain completed I-9 forms, or an employer may treat employees as new hires and require completion of a new I-9.

Opting to keep existing I-9 forms is perilous, as the business may be held to the errors of a predecessor employer and risk fines typically ranging from $100 to $11,000 per violation. Criminal sanctions may apply in rare circumstances.

Given the harsh federal scrutiny and the risks associated with...