Rules on Multinational Workers & Entrepreneurs

Want to work with a non-U.S. citizen? Investor? Or obtain an entrepreneur visa? Here's what you need to know.

By Cliff Ennico

Opinions expressed by Entrepreneur contributors are their own.

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.

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

Cliff Ennico is a syndicated columnist and author of several books on small business, including Small Business Survival Guide and The eBay Business Answer Book. This column is no substitute for legal, tax or financial advice, which can be furnished only by a qualified professional licensed in your state.

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