We Need Better Immigration Policies for Startups and Entrepreneurs

We Need Better Immigration Policies for Startups and Entrepreneurs

– Tahmina Watson

“USCIS intends to revoke your H-1B visa because we have discovered you are a co-founder.” Yes. That is indeed what my client learned one morning. USCIS learned during the renewal process of my client’s previously approved H-1B case that he was an original co-founder. While my client never intended to hide it, the information was not specifically mentioned in the initial filing. After a series of requests for further evidence, the final request was regarding the relationship between my client and his company.

My client, a co-founder of his company – who has garnered much praise in the tech industry, employs seven full-time American workers, and has helped create several indirect jobs by virtue of those who use and sell his product – was facing imminent departure from the U.S. His business, business partner, employees, and clients all were also put into limbo as a result.

Why? Don’t we want companies to start here? Well, currently, U.S. immigration law does not have a specific visa category for Startup founders, and the available visa options are far from ideal. A very strict policy was laid down in a memo on January 8, 2010 by Donald Neufeld, Associate Director of Service Center Operations of USCIS. That memo made some drastic changes in the way H-1B cases would be adjudicated and put immense restrictions on the employer-employee relationship, causing adverse effects to petitions by founders.

To successfully apply for an H-1B as a co-founder, one must categorically prove that the company controls the founder’s employment. To prove such control, the USCIS expects an onerous amount of corporate documentation, including articles of incorporation, board meeting minutes, shareholder agreements, stock ledgers, etc.

It was my privilege to help my client win this case. As a team, we brainstormed the type of documentation he would be able to provide. We decided to send many internal, otherwise confidential, documentation to demonstrate he was always given direction in his work and he was not the one making decisions. We submitted emails, client contracts, employee information, payroll evidence, references and much more. It was a challenging request to say the least.

Startups by their nature operate lean and mean. Startup founders/entrepreneurs are known to work around the clock to ensure their products are successful. In the efforts to have a successful company, they have employees to supervise and clients to keep happy. Instead of using all his energy to build the business, my client was anxious and worried about providing enough of the right kind of information to respond to a challenging and burdensome request. I am sure that during this intense period, my client suffered loss both emotionally and financially.

Lessening the efficiency of a person while they’re trying to get a business off the ground makes no sense. One should not have to defend oneself for being a founder of a company; it should be a matter of pride. Luckily we were able to successfully demonstrate that his employment was controlled by the company. Many founders are not so lucky and end up cut off from the start up they helped create by our irrational immigration laws.

We cannot have rhetoric from our government that calls for entrepreneurs and the need to keep high-skilled workers in the U.S., while that same government acts against implementing that ideology.

In the absence of a Startup Visa, I suggest that two changes are made to existing policy with immediate effect. Firstly, eliminate the use of the Neufeld Memo, at least for founders and co-founders of startups utilizing H-1B visas. Founders need to operate their businesses. Often they will have many roles in addition to their primary H-1B job description. For example, as a business owner, I am not only a lawyer, but a human resources manager, marketing manager, bookkeeper, supervisor and countless others. To have my company control my job would impede my success.

Secondly, allow the use of cash substitutes such as stock valuation, convertible notes, and other such regularly used methods instead of cash wages. Startups generally cannot afford high wages, particularly in the early stages. They need the opportunity to get their companies to the stage where funding can be obtained from investors. While the policy argument against cash substitutes may be fear of the entrepreneur becoming a public charge, USCIS should impose policy to prevent that and revoke someone’s visa if he or she resorts to public assistance. Entrepreneurs are resourceful people who do not want handouts from the system. Give them the chance to start their companies, contribute to the economy, and create jobs for American workers. After all, America is a nation of immigrants.