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Consequences of Merger and Acquisition on PERM and I-140

Corporate merger and acquisition often bring up complex immigration issues. This article will address these complex issues that arise in connection with the PERM process and I-140 Immigrant Petition for Alien Worker.

PERM Labor Certification   
PERM labor certification is the first step of most employment-based immigration petitions. Under PERM, no amendment, modification or correction to a PERM application (ETA Form 9089) is permitted. Merger and acquisition may potentially invalidate a pending or approved PERM application. Therefore, when there is a change in the corporate structure, it is important to know where the case is in the PERM process when making the decision as to whether to restart the PERM application or proceed forward with the existing application.

Corporate Change Occurring BEFORE PERM Application is Filed with DOL

Often times, merger, acquisition, or other corporate changes take place in the midst of the PERM recruitment process. For example, Company A is bought out by Company B, but all the recruitment activities, including advertisements, Notice of Job Posting, were done in Company A’s name. The question turns to whether all the recruitment activities can be used despite the corporate change. The good news is that the Department of Labor (DOL) has published the following Q&A:

Q: After completing our recruitment, but before filing the ETA Form 9089, our company's name was changed after it was wholly acquired by another company. Does the company name used in the advertisements used for recruitment have to match the company name used on the ETA Form 9089?   
A:The employer must conduct recruitment using its legal name at the time of the recruitment. However, an Application for Permanent Employment Certification (ETA Form 9089) must be filed in the name of the employer's legal name at the time of submission. If a merger, acquisition, or any other corporate change in ownership occurs between the time of recruitment and the time of submission, resulting in a disparity between the employer's name shown on the advertising used to recruit for a job opportunity and the employer's name on the submitted ETA Form 9089, the employer must be prepared to provide documentation -- in the event of an audit -- proving that it is the successor in interest, a determination made based on the totality of the circumstances, including whether the current employer has assumed the assets and liabilities of the former entity with respect to the job opportunity.

In addition to the above Q&A, it is good practice to considering the following:

1. Has the employer laid off any employees in the occupation (i.e. Systems Analyst) or related occupation as a result of the corporate change?
2. Has the position (job titles/duties/requirements) changed as a result of the corporate change?

Corporate Change Occurring while PERM Application is Pending with DOL   

If the merger, acquisition, or other corporate changes take place after a PERM application is filed with the DOL, employers are not permitted to request an update to the PERM application to reflect the changes. Nevertheless, the employer should document the corporate change in anticipation of a PERM audit, such as stock transfers, Security Exchange Commission (SEC) Form 10-K, financial statements, etc.

I-140 Petition   
Regardless of whether the merger or acquisition takes place before, during, or after approval of a PERM application, an employer must prepare to make a successor-in-interest argument at the I-140 stage.

Before August 06, 2009, USCIS permitted a successor employer to continue with the original employer’s I-140 petition or approved PERM application only if the successor employer assumed all of the assets and liabilities of the original employer and continued to operate the same type of business as the original employer.

On August 06, 2009, Donald Neufeld, then Acting Associate Director for USCIS Domestic Operations Unit published a memorandum (hereafter the “Neufeld Memo”) that amended USCIS policy with respect to review of I-140 successor-in-interest amendments. Under the new policy, employers need not show that all of the assets and liabilities have been assumed. Rather, the adjudicating officers should focus on the following factors when determining whether a previously approved or pending PERM application remains valid for I-140 petition adjudications:

1. The job opportunity offered by the successor must be the same as the job opportunity in the original labor certification.
2. The successor company bears burden to establish continuing eligibility in all respects, including ability-to-pay.
3. The successor must fully document the transfer and assumption of ownership. The successor employer must present evidence of the merger or acquisition, such as:
   1. Contract of sale or similar document of the acquisition;
   2. Mortgage closing statements;
   3. SEC Form 10-K;
   4. Audited financial statements;
   5. Documentation of the transfer of real property and business licenses;
   6. Copies of financial instruments used to executed the transfer; an
   7. Media or other reports of the business transfer.

In conclusion, the Nuefeld Memo has relaxed the “successor-in-interest” standard from assumption of all assets and liabilities of the original employers to purchase of all assets with essential rights and obligations of the original employers.

It should be noted that I-140 petitions filed in connection with employment-based immigrant visa categories that do not require labor certifications (EB-1, EB-2 NIW) remain valid even if a business transfer has occurred. There is no need of I-140 successor-in-interest amendments in these cases. However, an employer seeking to classify the alien as an EB-1 Multi-National Executive or Manager or EB-1 Outstanding Professor or Researcher, must file a new I-140 petition and establish the alien’s eligibility under the requested category’s specific eligibility requirements.

If you have any question on how the corporate change will affect your PERM application or I-140 petition, please schedule a legal consultation.