Business Visitors from Abroad - Tips and Traps
for the HR Department
One of your company's directors is a citizen of France and needs to enter the United States periodically in connection with this role. Your company would also like to bring an employee of a Japanese affiliate to the United States to receive short-term training for a prospective position while the company prepares a nonimmigrant visa petition that would allow him to work in the United States. Another visitor is coming to do computer-related consulting and may be employed directly by your company or a contractor. What do you do?
Each of these individuals may be eligible for admission to the United States as B-1 or WB business visitors, and then again, depending on the facts, they may be considered by the Immigration and Naturalization Service ("INS") as working without a proper visa and may land your company and you, the HR director, in a heap of trouble.
This article will explore the factual situations that are suitable for the business visitor categories and consider relevant legal issues that recur in this area. This article will also outline ways to use the B-1 and WB categories to further your company's business objectives and to avoid unpleasant encounters with the federal agencies that enforce the immigration laws. Companies should note that the B-1 and WB categories are virtually identical in terms of the underlying substantive eligibility criteria that allow entry to the United States as business visitors. The special limits imposed on the WB category by the Visa Waiver Pilot Program ("VWPP") are discussed below.
Defining The Term "Business"
Although the INS regulations do not define "business," a definition has evolved. In Karnuth v. United States ex rel Albro, the U.S. Supreme Court held that the term "business" meant "intercourse of a commercial character" and did not include "labor for hire." In reaching this conclusion, the Court noted that one of the primary objectives of the 1924 Act was to protect the U.S. labor force from an influx of foreign workers.
Acknowledging that a B-1 visitor may not perform "ordinary labor for hire," the Board of Immigration Appeals ("BIA") has concluded that an individual may be classified as a business visitor if "the function he [or she] performs is a necessary incident to international trade." In Matter of Hira, the BIA set forth and the Attorney General affirmed the significant criteria required for business visitor classification: 1) the alien must be engaged in commercial activity; 2) the alien must have a clear intent to maintain a foreign residence; 3) "the principal place of business and the actual place of eventual accrual of profits, at least predominantly, remains in the foreign country;" 4) the alien's stay must be temporary in nature, although the business activity may be ongoing; and 5) the alien's salary must come from abroad.
B-1 visitors must demonstrate that they are visiting temporarily and that they can show a foreign residence which they "ha[ve] no intention of abandoning." The foreign residence requirement is generally consistent among nonimmigrant visa categories. However, the Immigration and Nationality Act makes a special exception to this requirement for H-1B, L-1, and O-1 nonimmigrants.
The DOS Foreign Affairs Manual ("FAM") provides a short laundry list of factors that consular officers may consider when reviewing an alien's application for a B-1 visa. Specifically, the FAM invites consular officers to consider whether it appears "with reasonable certainty that the departure from the United States will take place upon completion of the temporary visit." Additionally, consular officers may evaluate whether a B-1 applicant's business, family, social, cultural, or other associations "would impel departure."
Accrual Of Profits Abroad
The BIA has stated that the accrual of profits occurs outside the U.S. if the business visitor is paid when he or she returns to his or her home country. Even when a portion of a foreign company's goods are sold in the U.S. by business visitors, the accrual of profits may remain in the home country if the majority of the company's sales occurs in the foreign country.
For foreign employers that engage in limited business activities in the U.S., it may be relatively easy to demonstrate that the accrual of profits occurs in the foreign country. However, larger foreign companies with a significant presence in the U.S. may have greater difficulties. For example, does the accrual of profits requirement mean that a foreign corporation traded on an American stock exchange or involving American depository receipts would be unable to obtain B-1 status for employees coming to the U.S. as business visitors? While this requirement generates interesting theoretical concerns, the experience of practitioners suggests that the accrual of profits requirement has become less significant over time and that business visitor admission is not routinely refused on this basis alone.
A general requirement of the B-1 visitor category is that the alien's salary may not come from a U.S. source. However, the FAM states that a U.S. source may provide "an expense allowance or other reimbursement incidental to the alien's temporary stay." Compensation for services is prohibited. Thus, to avoid the appearance of unlawful employment, it must be clear that any reimbursement does not, in cash or in kind, amount to actual compensation. In determining what level of reimbursement is "reasonable," the FAM instructs consular officers to consider common sense factors such as the standard of living to which the applicant is accustomed and the relative cost of living in the U.S.
1993 Proposed Regulations
In 1993, the INS and the DOS issued proposed rules to amend the B-1 category. Although never implemented, these proposals illustrate the thinking of the relevant federal agencies. Along with codifying the categories of B-1 visitors enumerated in the OI's and the FAM, both sets of proposed rules (as discussed below) attempt to deal with perceived inconsistencies with the B-1 category.
Allowable Activities for Business Visitors
The DOS regulations state that for purposes of the B-1 classification, the term "business" refers to "conventions, conferences, consultations and other legitimate activities of a commercial or professional nature." The notes accompanying the FAM further elaborate that such conduct "generally entails business activities other than the performance of skilled or unskilled labor." However, in Matter of Neill, the BIA stated that, "an alien need not be considered a 'businessman' to qualify as a business visitor, if the function he performs is a necessary incident to international trade or commerce."
Specifically permissible B-1 activities include entry into the U.S. for the purpose of negotiating a contract. An alien may enter the U.S. in B-1 status to pursue investment that would qualify him or her for status as an E-2 investor, so long as the alien "does not perform productive labor or actively participate in the management of the business prior to receiving a grant of E-2 status." Moreover, an alien seeking to enter the U.S. "to open or be employed in a new branch, subsidiary, or affiliate of a foreign employer" may qualify for B-1 status if he or she would become eligible for L-1 status upon obtaining "proof of acquisition of physical premises."
Companies should note that the INS Office of Business Liaison addressed the issue of business visitors, offering guidance on permissible activities aliens admitted in these categories.
B-1 status may be appropriate for an alien seeking to enter the U.S. to "[e]ngage in commercial transactions which do not involve gainful employment in the United States (such as a merchant who takes orders for goods manufactured abroad)." In Matter of Hira, for example, an Indian tailor employed by a Hong Kong manufacturer of custom made men's clothing, who traveled to various U.S. cities to take measurements from clients whom he did not solicit, was entitled to B-1 visitor status.
While the DOS definition of "business" includes entry with the avowed intention to "consult," is this sparse reference sufficient to include the broad field of endeavor known as "consulting"? The BIA has found that employees of consultants who meet with clients in the U.S. to gather information and then return abroad to complete the project are admissible as B-1 visitors. In contrast, the BIA has found that the principal in a Canadian mechanical engineering firm who repeatedly entered the U.S. for short periods of time to consult with clients and then returned to Canada to perform design and drafting work was not entitled to B-1 status. According to the BIA, the engineer's services were not "performed as an incident to any international commercial activity, except to the extent that the performance of this service can, itself, be considered an international commercial activity." Rather, the BIA concluded that the engineer "appear[ed] to be in the process of extending his professional engineering practice to the United States."
The DOS proposed regulations sought to grapple with the terminology and distinguish between those who advise management and those who perform hands-on work in the U.S. Consistent with the BIA's view, the DOS proposed regulations provide a hypothetical example in which a U.S.-based company is preparing accounting documents for an international client and seeks to retain the services of a foreign-based business to prepare the necessary materials. The foreign-based accountant is coming to the U.S. to "advise, consult, and educate the U.S. based entity on the relevant foreign accounting principles" and will return to the foreign country to prepare the documents. According to the DOS, the alien is employed abroad and the accrual of profits occurs abroad, thus the alien is engaging in "classic B-1 activity."
Board of Directors Meetings
The FAM acknowledges that aliens may enter the U.S. in B-1 status for an employment purpose so long as employment is incidental to their professional business activities. Specifically, alien members of Boards of Directors of U.S. corporations may "attend a meeting of the board or to perform other functions resulting from membership on the board." The DOS proposed regulations note that an alien member of the board of an American firm may attend such meetings, even though he or she is, "in effect, [an] employee of the firm." In support of this interpretation, the proposed regulations speculate that it is highly unlikely that an election of additional U.S. Board members would be held as a result of the foreign Board member's ineligibility for admission.
Moreover, there is immigration "lore" to support the proposition that such board members may be paid a corresponding Director's Fee in the U.S. without compromising their B-1 status. Unlike domestic workers, however, directors are not among the list of those who must apply for employment authorization, so the issue remains uncertain.
In the situation where a foreign officer, such as the CEO, has been appointed prior to the initiation of the immigration process, this classification may be appropriate as a temporary measure. The officer should refrain from engaging in activities of an executive nature while in the U.S. in B-1 status. The board member could be instructed that executive activities are appropriate outside the U.S., but that he or she should engage only in directorial activities in the U.S.
A problem may also arise when a client issues a press release announcing the appointment of the foreign CEO before the immigration process has begun. Immigration counsel may wish to advise the client to publish a clarification or create a Board resolution stating that the officer's capacity in the U.S. will be exclusively directorial and not executive in nature.
Another situation arises when an executive "jumps the gun" by coming to the U.S. in B-1 or WB status in anticipation of a subsequent transfer to the U.S. Such conduct may be viewed as a material misrepresentation in an effort to procure an immigration benefit (a visa or admission to the U.S.) and thereby adversely impact the alien's later application for an E, L, or H visa.
Study Or Training
The INA bars from the B-1 category aliens entering the U.S. for the primary purpose of study. However, B-1 visitors may engage in incidental study. Additionally, there are other circumstances in which an alien may enter the U.S. in B-1 status for educational purposes. An alien who is classifiable as an H-3 nonimmigrant, is employed abroad, and will continue to be paid by his or her foreign employer may enter the U.S. as a B-1 visitor to undertake training (also known as "B-1 in lieu of H-3").
"B-1 In Lieu of H-1"
Aliens who qualify for H-1B visas may be classified as visitors for business under certain circumstances and may, therefore, render professional services. The INS and DOS' 1993 proposed regulations, however, would have eliminated the "B-1 in lieu of H-1" subcategory.
In 1982, a never-rescinded INS cable addressed the circumstances in which the "B-1 in lieu of H-1" classification is appropriate. In this cable, the INS considered Matter of Srinivasan, a case involving the denial of B-1 status to employees of an India-based computer company. The INS concluded that B-1 classification is proper under the following circumstances: 1) the alien receives no remuneration from a U.S. source; 2) he or she is a bona fide nonimmigrant; 3) the alien qualifies for H-1 status and will perform duties that "require distinguished merit and ability;" and 4) "[t]he services to be provided are necessary to the integrated international production, marketing, and service system of the corporation, its subsidiaries, and affiliates, and so [does] not involve the reassignment of an alien to an employer in the United States."
Use of the "B-1 in lieu of H-1" classification requires appropriate supervision by the foreign employer. If the B-1 visitor is supervised extensively by the U.S. customer, the U.S. company could be deemed the employer. Moreover, such oversight could be deemed a violation of IRCA's prohibition against using a contract to circumvent the federal law prohibiting the knowing employment of an unauthorized alien.
To reduce the risk that a U.S. customer is deemed the "employer" of a B-1 visitor, an appropriate chain of command leading to the foreign employer should be in place and be documented, possibly through the use of periodic e-mail or other written communication. Moreover, the U.S. customer's control over the business visitor's activities, including the order in which the visitor performs his or her work and the hours during which the work is performed, will influence whether the customer will be deemed the alien's employer for purposes of immigration law.
What if the B-1 visitor is self-employed? In such cases, it may be much more difficult for the alien to demonstrate that he or she is not supervised by the U.S. customer. Certainly, the more formal the business entity is in the foreign country, the more likely the self-employed individual will be able to meet the B-1 requirements. For example, an individual who works out of his or her home and has no employees may be a more difficult case than the alien who has an office in the foreign country and employees. Likewise, the nature of the self-employment may make a difference. For example, an alien who is a majority shareholder in a foreign corporation may be an easier case than a sole proprietor.
Visa Waiver Pilot Program
The Visa Waiver Pilot Program ("VWPP"), now in its eleventh year, allows citizens of certain countries to enter the U.S. in visitor status for business (or pleasure) for up to 90 days without obtaining a visa from a U.S. consulate abroad. The VWPP is an extremely restrictive category, however. Unlike the B-1 category, the VWPP does not permit a change of status to another category. Additionally, an alien who enters through the VWPP does not have the right to extend his or her authorized stay. Moreover, in exchange for the right to enter the U.S. without a visa, a VWPP alien forfeits the right to have a determination of ineligibility reviewed, and the right to contest an order of removal.
Although the VWPP expired on April 30, 2000, the INS has established interim procedures to continue the program while Congress considers making the program permanent. [Ed. Note: as of October 17, 2000, Congress has passed the legislation and it is awaiting the President's signature.]
Preparation of Alien
The U.S. company should consider preparing a letter of invitation for the alien to present at the port of entry. Companies should consider seeking the advice of immigration counsel regarding the contents of such a letter. Additionally, the company may consider scheduling a preparatory interview with the alien and immigration counsel to ensure that the alien understands the particulars of the B-1 category.
The temporary business visitor categories, when used properly, can be powerful tools to enable companies to conduct business successfully in this global economy. Companies should ensure, however, that aliens seeking admission to the United States in B-1 or WB status and engaging in activities on company premises are doing so with a proper purpose and have been properly prepared. Given the ambiguities in the government's interpretation of the eligibility criteria, companies may wish to seek the advice of a qualified immigration attorney.
Angelo A. Paparelli, Certified as a Specialist in Immigration and Nationality Law by the State Bar of California, Board of Legal Specialization, has been practicing business-sponsored immigration law for over 20 years. He is the managing partner of Paparelli & Partners LLP, a nine-lawyer firm in Irvine, California that practices immigration and nationality law. He can be reached at firstname.lastname@example.org . Susan K. Wehrer is an associate in the law firm of Paparelli & Partners LLP in Irvine, California. She can be reached at email@example.com