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.

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.

Lars Reed being sworn in as a California attorney

Martensen Wright congratulates Lars Reed, our former Law Clerk, on being sworn in as a California attorney.

The swearing-in ceremony took place in Alaska (notice the seal on the wall in the picture), because Lars is currently clerking there for Chief Justice Craig Stowers of the Supreme Court of Alaska.

Lars graduated in May 2017 from UC Davis School of Law and passed the California bar in November.

Martensen Wright is proud to have been part of the beginning of Lars’ legal career and we wish him the best of luck in the years ahead.

Finn Martensen, co-founder of Martensen Wright PC, passed away

It is with great sadness we announce that Finn Martensen, co-founder of Martensen Wright PC, passed away in Denmark on November 28, 2017.

Finn pioneered the concept of bringing Danish companies to the United States and helping these companies navigate through foreign legal systems and regulations.

Even after “retiring” to his native Denmark in 2009, Finn continued to assist companies get established in the United States and secure visas for their employees.

Finn worked until the very end and he will be greatly missed in the legal community of Danish-American commerce.

Our thoughts are with his wife Anne Grethe, his sons Jens and Rasmus and their families.

Peace be with his memory.