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E Visas: A Viable Pathway to U.S. Work Visas for Entrepreneurs and Companies

By: Olga Quinones, LL.M. Martensen Wright PC, and Anne Grethe Martensen, MBA, HA (Jur.) 

Getting a U.S. work visa can be challenging for individual foreign entrepreneurs and for foreign companies that wish to send their personnel to work in the U.S.

Most U.S. work visas require a job offer from a U.S. company. This requirement cannot be met by individual entrepreneurs. As far as the companies are concerned, they often have to comply with ever tightening requirements of Intra-Company Transfer L-1 visas or face the limitations of the Specialty Occupation H-1B visas before they can employ foreign personnel in the U.S. The E visa option is frequently the only viable option for individual entrepreneurs, and it is often the best solution for companies who need to relocate some of their key employees to the U.S.

There are two types of E visas: E-1 Treaty Trader Visa and E-2 Treaty Investor Visa. Both types of E visas are based on Treaties of Commerce and Navigation between the U.S. and foreign countries (“Treaty Countries”). Denmark, Norway and Sweden are three of the countries which maintain the above Treaties with the U.S., which allows citizens from these countries to apply for E-1 and E-2 visas. A full list of Treaty Countries can be found on the website of the U.S. Department of State:
https://travel.state.gov/content/travel/en/us-visas/visa-information-resources/fees/treaty.html

Benefits of E visas:

  • E visas allow foreign entrepreneurs to come to the U.S. to start a business or to purchase and develop an existing U.S. business.
  • E visas can be extended as often as needed, potentially indefinitely, as long as all the requirements continue to be satisfied.
  • It is important to note that the E visa itself does not lead to permanent resident status (a.k.a. Green Card), irrespective of how long the individual has lived and worked in the U.S. in E status.
  • The validity period of E visa stamp issued by the U.S. Embassy is determined by reciprocity agreements between the U.S. and the Treaty Country. Citizens of some countries may have an E visa validity period of 18 months whereas citizens of other countries may have up to five years. It is important to check the reciprocity schedule prior to applying for an E visa as the validity period may change. This can be done via the State Department website (https://travel.state.gov/content/travel/en/us-visas/Visa-Reciprocity-and-Civil-Documents-by-Country.html)
  • E visas allow for the transfer of essential employees to the U.S., including employees who have been employed with a foreign parent or affiliated company for a short period of time (less than a year) or have not been employed with the foreign company at all prior to the transfer
  • Spouses of the E visa holders are automatically authorized to work for any U.S. Company once the dependent spouse is admitted to the U.S. in ‘E2S’ dependent status.
  • E visa allows the visa holder to travel to the U.S. from abroad during the validity period of the visa stamp in their passport. The validity period of the visa stamp does not determine how long time the individual is allowed to stay in the U.S. The period of allowed stay in the U.S. is determined by the U.S. Customs and Border Patrol authorities (CBP) upon the individual’s entry to the U.S. E visa holders are typically allowed to stay in the U.S. for two years from the day of their last entry, regardless of the visa stamp expiration date.
  • If an E visa holder does not plan or want to travel outside the U.S. after their E visa stamp expires, they can apply for an extension of their E status in the U.S., without having to apply for a new E visa stamp at the U.S. Embassy. Extensions of stay in the U.S. are processed by the U.S. Citizenship and Immigration Services (USCIS) and are typically granted in two-year increments. Extension of stay in the U.S. can be granted even after the expiration date of an E visa, as long as the extension application is filed before the expiration date of the admission period on the I-94 arrival/departure form.
    • However, if an extension of stay is granted, it is only valid while the individual is in the U.S. If this individual travels outside the U.S. after their E visa stamp expires, they will need a valid visa stamp before they can travel to the U.S.
    • The visa stamp renewal process requires a new E visa application processed by a U.S. Embassy abroad. The U.S. Embassy is not bound by the USCIS approval of E status extension.

The Basic Requirements for Both E Visa Types:

  •  The U.S. Company must ultimately be at least 50% owned by citizen(s) of the same Treaty Country as the visa applicant’s country of citizenship. It is important to note that ownership is traced to the ultimate individual owners of the business.
    • Foreign citizens who are permanent residents of the U.S. (Green Card holders) cannot serve as qualifying owners for the purposes of E visa applications.
  • The visa applicant must demonstrate an intent to leave the U.S. after the termination of their E visa status. Note: This does not preclude the applicant from ultimately applying for a Green Card if a separate basis for the Green Card application exists, but it does mean the visa application cannot complete the Green Card process from within the U.S.

E-1 Treaty Trader Visa

The specific requirement for an E-1 visa is that the Treaty Trader (individual or company) must have established “substantial trade” in goods or services between their country of nationality and the U.S. To be considered substantial, this trade must constitute at least 50% of the company’s or individual’s total international trade. This trade requirement may be fulfilled either by the foreign individual, foreign company or by the U.S. subsidiary that will serve as the employer of the intended visa holder.

Notes regarding Qualifying Trade:

  • Trade between the foreign country and the U.S. must be in existence before the visa application can be submitted for processing. Trade includes both export and import of goods and/or services.
  • If the company is trading goods, the goods must be manufactured in the applicant’s country of nationality (Trade Country), shipped to the U.S. from the Trade Country and invoiced in the Trade Country to count as trade for E-1 visa purposes. Alternatively, the goods can be manufactured in the U.S., shipped from the U.S. to the Trade Country and invoiced in the U.S.
  • Substantial trade is determined by the number of transactions over time, not only by the dollar amounts. For example, one transaction will not qualify as substantial trade, even if it involves a large sum of money.
  • Typically, US Embassies require substantial and detailed documentation in regard to the company’s international trade to satisfy the E-1 visa requirements. Such documents include, but are not limited to, bills of lading, invoices, bank account statements and other documentation showing transactions between the two countries.

Note Regarding the Visa Applicant’s Position in the U.S. Company

The visa applicant must be coming to the U.S. to be employed in a supervisory, executive or specialized capacity.  Ordinarily skilled or unskilled workers do not qualify for E-1 visas.

E-2 Treaty Investor Visa

As the name suggests, an E-2 visa is based on investment. This type of visa requires a substantial investment to be made in the U.S. Company by a foreign individual (often, but not always, the visa applicant) or a foreign company that has the same nationality as the visa applicant.

Notes regarding qualifying investment:

  • Qualifying Investment must be “substantial,” and the funds have to be irrevocably committed. “Substantial” is not defined in the visa regulations. Typically, if the U.S. Company is new, we see success with an initial investment of $80,000 – $100,000.
    • The investment must be sufficient to ensure the successful operation of the U.S. enterprise, and this amount is typically relative to the type of enterprise.
  • The investment must be made into qualifying categories of expenses related to the U.S. Company. Uncommitted funds in a bank account or mere ownership of undeveloped land are not considered an investment.
    • Specific types of qualifying expenses often depend on the type of business.
    • Examples of expenses for E-2 visa purposes include, but are not limited to, U.S. office infrastructure, inventory on hand, equipment, company cars, marketing expenses, recruiting expenses, and one-month’s office rent.
  • The investment may not be marginal, meaning that the U.S. enterprise must have the present or future capacity to generate more than just the income needed to provide a minimal living for the treaty investor (or the employee of the investor) and their family.
    • The U.S. business must demonstrate a realistic need and plan to hire U.S. employees and a realistic potential for a financial return that significantly exceeds what is necessary to support a living for the visa applicant and his/her family.
    • While there is no specific mention of job creation in the visa regulations, this requirement is the core of why the E-2 visa exists.
  • The investment must be ‘at risk’ in a commercial sense. If the investment funds are not subject to partial or total loss if business fortunes reverse, then the investment does not qualify to support an E-2 visa application. Loans secured with the assets of the U.S. enterprise do not qualify for E-2 visa purposes, nor does simply transferring money to a U.S. bank account

Note Regarding the Visa Applicant’s Position in the U.S. Company:

If the visa applicant is the principal investor, this individual must be coming to the U.S. to develop and direct the U.S. enterprise. If the applicant is a prospective employee of the U.S. company, this applicant must be employed in a supervisory, executive, or specialized capacity. As with the E-1 visa, ordinarily skilled or unskilled workers do not qualify for E-2 visas.

If you have questions or would like further information on E visas, please feel free to contact Martensen Wright PC at info@usa-eurolaw.com.

Employment Guide for Foreign Companies Entering the US Market

By Dylan T. Rupchock, Associate Attorney

As an expanding European or Scandinavian business, you may find yourself exploring the possibility of establishing a presence within the United States. Our team specializes in cost effectively setting up new and foreign businesses in the U.S. Outside of the general corporate formalities involved in such an endeavor, one of most important things you will encounter as a new U.S. business is … hiring. Somewhat complicating this process is the inability to adopt a “one size fits all” approach to employment in the U.S. The United States is best thought of as a body of land made up of 50 different countries (States), with some exceptions, those States operate independently and have differing laws. Due to the higher-than-average litigious nature of U.S. citizens and businesses, it is important that you have sound legal counsel and at least a threshold understanding of the laws and issues at play. This article serves to highlight some key employment laws where the U.S. differs from its foreign counterparts.

Wage & Hour:
It is important as an employer in the United States to ensure you are complying with the wage laws of the state in which you hire employees. Companies such as Wells Fargo, McDonald’s, Uber, Walmart, FedEx and others have fallen victim to multi-million-dollar wage & hour lawsuits in recent years due to the nuanced nature of U.S. wage laws. For smaller businesses, such suits can be crippling. Foreign companies are especially at risk given the differences in their countries’ employment regulations as compared to the U.S. It is therefore crucial that one of your first steps in establishing yourself in the U.S. is ensuring you are complying with the relevant employment laws.

Minimum Wages:
In the U.S., federal law sets a mandatory minimum wage, which operates as the bare minimum a U.S. employee can be paid for their services. However, many States provide differing minimum wage requirements which mandate a higher wage rate to be provided to employees within that State, even further so, some counties within those States mandate increased minimum wage rates. This differs significantly from the Scandinavian Peninsula, where there is no federally mandated minimum wage.

Minimum wages are typically based on where your employee performs work, whether that be their home or your office. Therefore, the relevant minimum wage requirement can change depending on where the work is performed, in some cases two or more requirements could apply to the employee. Make sure you research and review the relevant minimum wage requirements in your State or county.

Overtime Laws:
Foreign labor laws are often more protective of employees in terms of the number of hours they can work and the kinds of breaks that companies are required to provide. For example, in the European Union, the number of working hours is limited by Council Directive 93/104/EC, as amended by Directive 2000/34/EC, also known as the “Working Time Directive”. Generally speaking, the Working Time Directive provides that average working hours during a seven-day period may not exceed 48 hours, including overtime, calculated over a period of four months. As opposed to disallowing how much a U.S. employee can work, U.S. law instead requires workers be paid an additional sum of money for work in excess of a certain threshold.
Minimum wage laws work hand in hand with overtime laws, which define how much employees need to be paid if they work in excess of a specified number of hours. While most States mandate that all hours worked in excess of forty (40) hours be paid at an overtime rate of pay, some States require daily overtime to be paid for hours worked in excess of eight (8) in the day. This differs from many other countries in the world, such as Denmark and the United Kingdom, which do not mandate overtime pay. Litigation over violation of U.S. overtime laws is another common area of exposure of doing business in the U.S and thus should be respected accordingly.

Exempt & Non-Exempt Employees:
The United States offers differing degrees of protection to its workers depending on a number of factors. Employee’s fall into one of two categories, Exempt or Non-Exempt. These are terms of art in the U.S. which define whether or not an individual worker is or is not exempt from certain U.S. employment regulations. In short, Exempt workers are excluded from minimum wage, overtime regulations and other rights and protections afforded to nonexempt workers.

Properly classifying your employees can make a world of difference for your business. To be clear, you must do so properly. Some businesses attempt to avoid the added obligations beholden to non-exempt employees by giving their workers inflated job titles and paying them a salary, claiming they are exempt from minimum wage and overtime laws. These types of practices create significant risks to the business in the form of misclassification claims.

In the U.S., to be properly classified as exempt, the worker must be paid a salary, the required salary varies from state to state and generally changes each year. Additionally, and most importantly, the worker has to be employed in a Executive, Administrative, Professional, or Outside Sales capacity. Each of these exemptions have their own requirements and caveats that need to be met in order to properly classify the employee as such. A common theme for the exemptions is the general requirement that the worker’s job duties involve the use of discretion and independent judgment.

At-Will Employment:
One of the biggest conceptual differences between the U.S. and European employment practices, is the unique at-will employment doctrine. The term “at-will employment” is a legal term meaning that an employer can terminate an employee for any reason and with or without notice. There are no regulations requiring employer’s provide varying notice lengths depending on the employee’s length of service. The limited restriction placed on employers in this regard is only that you cannot fire an employee if the reason for doing so is illegal or discriminatory, such as firing someone because of their gender, race or religion.
The at-will concept provides both employee and employer abundant freedom should either party want to move on from the employment relationship. At the same time, the U.S. also recognizes the parties’ freedom to contract, meaning employers and employees can delineate conditions or exceptions to the at-will doctrine through an employment contract or employment agreement.

Pay Frequency:
Unlike many foreign countries, such as Denmark, Italy, France, and Sweden where monthly payment of employee wages is standard, most states in the United States require employees to be paid at least twice a month. Some states go further to define certain periods or dates in which you need to pay employees by. It is therefore essential, that you as a business, consult the local regulations to ensure you are paying your employees in the proper intervals.

Termination and Final Pay:
In line with the at-will doctrine highlighted above, there are currently no requirements in the United States requiring businesses to pay employees a specified severance. However, unlike many European countries, the U.S. has strict regulations relating to final payment to employees who are separating from employment. Common with the theme of this article, each state has a different requirement which you will need to be aware of when terminating an employee or if they are resigning. Some states mandate that you pay all wages owed to the employee, including accrued unused vacation time, on the final day of employment. Other States provide that final payment may occur several days after the last date of employment. It is important that your business be aware of these regulations as you will find that more often than not, payment upon separation of employment occurs outside of your usual payroll cycle. If your employee is located in one of the states imposing stricter regulations, you may be exposed to penalties for each additional day you are late in providing timely payment to the departed employee.

Non-Compete Agreements:
Depending on where you hire or do business in the United States, non-compete agreements may be banned outright or strictly scrutinized and limited to a reasonable scope. However, unlike countries like Sweden and Denmark, the U.S. generally, does not require compensation be provided to the employee during the non-compete period for those states that do allow such agreements. Most states allow slightly lessoned restrictions on other restrictive covenants such as covenants not to solicit employees or customers. If you want your employees to be subject to any restrictive covenants make sure to research your State’s laws relating to such agreements or consult legal counsel.

Vacation:
In the United States, there is no requirement that employees be provided with paid or unpaid vacation time. Meaning it is the employer’s choice how much vacation time, if any, it wants to provide to its employees. Vacation time is often a persuasive bargaining chip in employment negotiations in the U.S. as most U.S. workers employed at a non-executive level are usually only provided with two weeks or 10 days of vacation a year. This is quite different from other foreign countries. Denmark for example, via the Danish Holiday Act, entitles employees to 25 days’ holiday every year, and to take 15 of the 25 days consecutively between 1 May and 30 September.

Other Considerations

Medical Insurance:
Talking about medical insurance in the employment context may seem odd if you are from the U.K. or Scandinavia, where healthcare is free to residents and funded entirely by public funds. In America, citizens, employers, and the government are responsible for healthcare. For most Americans the most common way to obtain medical insurance is through their employment. Offering medical coverage to your U.S. employees is a general expectation and business cost you should anticipate, as the people you will be seeking to hire will more than likely expect it to be offered. Although providing medical insurance to employees is considered a benefit which may make you more or competitive in the hiring market, at a certain point you are required to provide health insurance to your workforce. Under the Affordable Care Act (ACA) employers with 50 or more full-time employees (or the equivalent in part-time employees) must provide health insurance to 95% of their full-time employees or pay a penalty to the IRS.

Key Takeaways

As highlighted above, doing business in the U.S. can be complex. As a new business in the U.S., you will need to navigate the different, and potentially conflicting, laws of several states. This is often a consideration overlooked by many foreign companies who make the move.

Our dedicated team of experienced professionals at Martensen Wright focus almost exclusively on assisting European based businesses establish themselves in the U.S, working to simplify the process so that management can focus on revenue generation.

Trademark News

By Allison Post Harris, Attorney at Law

As of August 3, 2019, the United States Patent and Trademark Office (“USPTO”) requires all non-U.S.-headquartered businesses and non-U.S. domiciled persons who apply, register or are involved in U.S. trademark proceedings to be represented in those proceedings by an attorney who is licensed to practice law in the United States. No filing with the USPTO by a foreign-domiciled trademark applicant will be deemed complete until the applicant has, on the application form, provided the USPTO with the name of the U.S. licensed attorney that represents the applicant. The attorney must be an active member in good standing of the bar of the highest court in any state in the U.S. and must provide his or her bar information to the USPTO.

The USPTO effected this rule to ensure that filings are accurate and comply with the USPTO’s rules. Previously, the foreign patent attorneys or patent agents could seek reciprocal recognition to practice law in USPTO trademark matters. As of August 3, 2019, this reciprocity is no longer available to non-U.S.-licensed attorneys and agents.

Trademark applicants have six months to respond to a rejection of their trademark applications then they are rejected for lack of representation by a U.S.-licensed attorney.

Our team has attorneys licensed to practice law in California, U.S.A., which qualifies us to provide the necessary representation to overseas companies under the new USPTO rule. We also have experience advising businesses on their trademark proceedings. Please contact us if we can be of assistance with U.S. trademark proceedings.

Danes and Dual Citizenship

Danish Nationals living in the United States now enjoy the option of having dual citizenship.

This means that Danes can apply to become US citizens via naturalization in the USA without losing their Danish citizenship. The Application for Naturalization, form N-400 is available here: https://www.uscis.gov/n-400passports

Danes who lost their Danish citizenship when they became citizens of another country prior to September 1, 2015, can apply to have their Danish citizenship reinstated. The deadline for submitting an application is August 31, 2020.

The application, Erklæring om Generhvervelse af Dansk Indfødsret for Tidligere Danske Statsborgere, is available here.

For more information about Citizenship [in Danish statsborgerskab og indfødsret] please see Tidligere Danske Statsborgere.

Questions about the application should be directed to the Office for Indfødsret at phone no.: 011 45 7226 8700 or via e-mail: uim@uim.dk

Martensen Wright welcomes Pernille and says goodbye to Sandra

Our team is saying  goodbye to Sandra who has interned with us for a year and welcoming Pernille, our new intern from Denmark.

Dorthe Mikkelsen Wright awarded the knighthood

On Monday 20 August 2018 Dorthe Mikkelsen Wright had an audience with the his Royal Highness Crown Prince Frederik of Denmark to thank him for the knighthood she was awarded for her services as Honorary Consul of Denmark in Northern California. Dorthe continues to serve as Honorary Consul, assisting Danes in need in Northern California.

Employee vs. Independent Contractor: Avoiding Misclassification and the New California “ABC Test”

By Nancy E. Miller, PHR, JD

Most small business owners in the U.S. realize the importance of classifying workers correctly, whether as an employee or an independent contractor. However, business owners not familiar with the risks of misclassification may be tempted to simply label a worker as an “independent contractor,” without examining the worker’s true role in the company. After all, where a company retains the services of an independent contractor, the business can avoid payroll taxes and certain labor laws otherwise applicable to employees. This can prove a costly mistake.

The risks arising from misclassifying an employee as an independent contractor can be considerable. The hiring entity may find itself responsible to the employee for back pay for overtime, retroactive employee benefits, and even payment of the employee’s back income taxes. Insurance companies may require retroactive insurance premium payments and the federal and state governments can assess significant penalties and interest in addition to the payment of back taxes. For example, California provides for new penalties of between $5,000 and $25,000 for the “willful misclassification” of independent contractors. If the employee retains counsel and brings a civil suit against the business, the business may become liable for the attorneys’ fees incurred by the employee in bringing the lawsuit. Such fees can be significant.

How do you know if your worker is rightfully an independent contractor or an employee? It depends on where the employee is working, as each state can treat the issue differently. The Internal Revenue Service (“IRS”) gives guidelines for federal tax purposes and many, but not all, states follow the IRS guidelines or have enacted similar rules. However, the California Supreme Court recently strengthened the California guidelines for determining if a worker is an independent contractor or an employee.

The New California “ABC Test”

            On April 30, 2018, the California Supreme Court handed down its decision in Dynamex Operations West, Inc. v. Superior Court, which clarified the standards that employers should use when determining whether their California workers should be classified as employees or independent contractors. The Court held that workers are presumed to be employees unless the hiring entity can prove that the worker qualifies as an independent contractor under the “ABC test” that is already being used in some other states.

In order to satisfy the requirements of the ABC test, the hiring entity must prove each of the following three factors:

  1. That the worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact; and
  2. That the worker performs work that is outside the usual course of the hiring entity’s business; and
  3. That the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.

The application of this new test will require many companies to reevaluate the employment status of many of their workers. Some workers who may have qualified as independent contractors before this ruling may have to be converted to employees going forward.

Federal IRS Guidelines

Many states do not have specific guidelines for determining whether a worker is an employee or an independent contractor. In these situations, hiring entities must look to federal law for guidance. The IRS guidelines state that this determination is made through examining the relationship between the worker and the hiring entity. It is important to consider all evidence of the degree of control and independence. The IRS divides this evidence into three categories: 1) Behavioral Control, 2) Financial Control, and 3) the Type of Relationship of the parties.

Under Behavioral Control, it is important to determine whether the hiring entity has a right to direct and control what work is accomplished by the employee and how the work is completed. If the right to control and direct work exists, more likely than not, the worker is an employee.

Financial Control covers whether or not the hiring entity has a right to direct and control the financial and business aspects of the worker’s job, including reimbursement of business expenses, whether the worker uses his own or the company’s facilities or tools, whether the worker performs services for other companies, how the worker is paid, whether the worker receives paid vacation or other benefits, and whether or not the worker experiences a profit or loss. Again, where the business exercises financial control or offers benefits that shift risk from the worker to the employer, the more likely it is that an employment relationship will be found to exist.

In the Type of Relationship category, it is important to consider written contracts describing the relationship, although the label placed on the relationship by the parties will not be determinative of whether the worker is, in fact, an employee or independent contractor. And even in instances where the contract for services does not provide employee-type benefits (such as insurance, pension plan, and paid time off) to a worker, that worker can still be found to be an employee. The trier of fact will consider the permanency of the relationship and whether or not the worker’s services are key to the regular business of the company.

The “take away” for business owners is simple: be honest in your characterization of the worker and seek the assistance of a qualified attorney if there is the slightest question that the characterization may be challenged.

More information can be found on the IRS website or in Publication 1779, “Independent Contractor or Employee.”

 

Each state may have different rules for avoiding misclassification of employees. Please contact us if you would like assistance conducting an analysis of your current workers.

Link for download of this publication as a printable PDF: Employee vs. Independent Contractor

Kobelco

I have worked with the immigration team at Martensen Wright for 8 years and they have always provided me with great service. Martensen Wright has helped us smoothly navigate the complex American immigration process. With their help we have successfully been able to transfer key employees to the U.S. market.”

Norma Sanchez, Kobelco, Inc..

YouFly

We just successfully entered the U.S. market and we are so pleased we chose Martensen Wright to assist us. They handled everything to perfection. My company is properly registered and they secured a 5-year visa for me, so I can now focus on growing the business. I give Martensen Wright my highest recommendation.”

Frank Riedel, YouFly, Inc.

Netsoft

Martensen Wright PC recently assisted Netsoft LLC with a software license and an E2 visa application. Their team worked professionally, defined the rules and guided me through the entire process.  I was impressed that the agreed-upon schedule was followed.  Now that the visa is granted, I can continue running the business in the U.S and I give Martensen Wright my highest recommendation.”

Lars Bondergaard, Netsoft LLC.