This week I'd like to deal with the highly sensitive issue
of foreign nationals who want to work or set up business in the
United States.
Q: I own a retail store in a college town and am always
looking for part-time student workers. A lot of foreign students
have been responding to my ads lately. What do I need to know
before I can legally hire them?
A: Immigration law expert Gabe Selig says that before you
hire any foreign students, you should confirm their visa status
with the college faculty members who act as the "international
student advisors." "The advisors are responsible for
making sure foreign students comply with their visa requirements,
so they are extremely knowledgeable about the immigration
rules," says Selig, who cautions that you should get written
permission from a foreign student before contacting the
advisors.
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Whenever you hire anyone as an employee, you must fill out Form
I-9 certifying that they have a Social Security number. "If
you have a visa that permits working in the U.S., you have a Social
Security number," says Selig, "so if a foreign student
has a Social Security number, it's a pretty good indication
that he or she has the right kind of visa."
Because some foreign students lie about having a Social Security
number, Selig advises asking students for photocopies of their
visas, confirm the information with the college's international
student advisors, and trust your instincts. "You absolutely
have the right not to hire someone you think is here
illegally," says Selig.
Maybe so, but if you refuse to hire foreign students altogether,
aren't you engaging in employment discrimination? Selig says
that an alien on a temporary visa does not get the same amount of
legal protection as a U.S. citizen or Green Card holder would have,
so a "citizens and Green Card holders only" hiring policy
probably would not be discriminatory. Still, there's a risk. If
you routinely hire foreign students from some countries (for
example, northern Europe) and not others (for example, Asia or
Africa), you may be indirectly practicing racial, religious or
other forms of prohibited discrimination.
Q: I have a small real estate investment company. I was
recently approached by a Russian national who wants to invest $1
million in my business. Can I do this?
A: In 1990, Congress created the EB-5 (entrepreneur)
visa, hoping to attract foreign capital to the United States. To
obtain an EB-5 visa, a foreign national must invest at least $1
million in a U.S. business and create full-time employment for at
least 10 U.S. workers. The investor must remain involved with the
business for a two-year probationary period before he will qualify
for permanent resident status.
So there is nothing illegal about the Russian's offer. Just
be mindful of the fact that EB-5 visa holders must be
"actively involved" in the business, so by accepting his
offer you are taking on a full-fledged business partner who may
second-guess your every decision. Also keep in mind that:
- If your business is a subchapter S corporation, selling shares
to a foreign national may cause you to lose your favorable tax
status.
- Because your company is investing in real estate, your investor
may be subject to the Foreign Investment in Real Property Tax Act
of 1980 (FIRPTA), which taxes certain foreign investments in U.S.
real estate. (For more information, go to www.firpta.com.)
Q: I am a foreign national who wishes to obtain an
entrepreneur visa. If I buy a franchise in the United States, will
that be enough for me to qualify?
A: This is a tough one. To qualify for the EB-5 visa, the
investor must be the active manager of an enterprise by day-to-day
managerial control or through policy formulation. When you buy a
franchise, you run your own business but are following someone
else's business plan, often down to the finest details.
The immigration attorneys I called about this were split evenly
down the middle. Some of them said buying a franchise would satisfy
this requirement, since you would be in charge of running the
day-to-day operations and would ultimately be responsible for your
franchise location's success or failure. Others thought that
buying a franchise with a detailed operating manual or
"cookbook" would not qualify you for the EB-5 visa.
The attorneys I spoke to agreed that buying a "business
opportunity," essentially a franchise where you have much more
freedom to operate the business the way you want to, would probably
qualify you for an EB-5 visa. Just make sure you are putting in the
minimum investment required--$1 million in most cases, $500,000 if
the business is located in a "targeted employment area"
such as an inner-city neighborhood--and are creating at least 10
new jobs for U.S. workers (not counting you and your family
members).
Cliff Ennico is host of the PBS TV series MoneyHunt
and a leading expert on managing growing companies. His advice
for small businesses regularly appears on the "Protecting Your
Business" channel on the Small Business Television Network at
www.sbtv.com.
E-mail him at cennico@legalcareer.com.