L-1B Visa (Specialized Knowledge Transfer Visa)

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On 8 December 8, 2004, the FY2005 Omnibus Appropriations Bill was signed into law. The new law contained several immigration-related measures, most notably, reforms to the L-1 program. The section dealing with the L-1 category is referred to as the “L-1 Visa Reform Act of 2004” (the “L-1 Reform Act”). Changes imposed by the L-1 Reform Act are reflected in this article.

The L-1B Visa Classification in General

The Specialized Knowledge Transfer L-1B Visa is a non-immigrant classification that allows foreign companies to temporarily transfer technical personnel having “specialized knowledge” to affiliates or subsidiaries in the United States. To qualify, the alien must establish that he or she has worked in a specialized knowledge capacity abroad. The alien must also establish that he or she is entering the United States to work for the same company or a parent, affiliate or subsidiary thereof, in a specialized knowledge capacity.

Specialized Knowledge Capacity Defined

“Specialized knowledge” is defined in the relevant immigration law as special knowledge possessed by an individual of the petitioning organization’s product, service, research, equipment, techniques, management, or other interests and its application in international markets, or an advanced level of knowledge or expertise in the organization’s processes and procedures. There is no need that the knowledge be proprietary. However, if the knowledge is proprietary, this makes an L-1B visa application all the more compelling.

The Required Corporate Relationship (“Qualifying Organization”)

In addition to the requirement that the individual seeking transfer be currently employed in a specialized knowledge capacity, the relevant law requires that the individual have been employed in a full-time capacity for the foreign parent, branch, affiliate or subsidiary for at least one year within the previous three years.

The following definitions are relevant:

  • Parent is defined as a firm, corporation, or other legal entity which has subsidiaries.
  • Branch is defined as an operating division or office of the same organization housed in a different location.
  • Subsidiary is defined as a firm, corporation or other legal entity of which a parent owns, directly or indirectly, more than half of the entity and controls the entity; or owns, directly or indirectly, 50% of a 50-50 joint venture and has equal control and veto power over the entity; or owns, directly or indirectly, less than half of the entity, but in fact controls the entity.
  • Affiliate is defined as: One of two subsidiaries both of which are owned by the same parent or individual; One of two legal entities owned and controlled by the same group of individuals, each individual owning and controlling approximately the same share or proportion of each entity; or certain international accounting firms.

The United States Citizenship and Immigration Services (“USCIS”) defines the term “qualifying organization” in part as a US or foreign entity which meets the requirements of a parent, branch, subsidiary, or affiliate and is or will be doing business:

“…as an employer in the United States and at least one other country for the duration of the alien’s stay in the United States as an intracompany transferee directly or through a parent, branch, subsidiary, or affiliate, and [o]therwise meets the [L-1 visa] requirements…”

This definition requires that the US employer continue to have a related entity doing business abroad. That entity, however, need not be the alien’s former employer. There is nothing in the definition to prevent the dissolution or sale of the former employer so long as another affiliate continues to do business abroad.

Required Period of Employment Abroad

The alien transferee must have been employed by a related entity abroad for at least 1 year within the 3 years prior to the transfer. An exception to this rule was previously provided for L-1 visa beneficiaries filing under blanket petitions. However, the L-1 Reform Act has since rescinded this exception. Thus, under the present law, all L-1 visa aliens (including those filing under blanket petitions) must now have been employed abroad for at least one year.

Independent Contractors v. Employment or De Facto Employment

Working as an independent contractor of the foreign affiliate or subsidiary is generally insufficient for the purposes of satisfying the 12-month employment requirement. The relationship must be one of employer-employee, although it may be possible to establish this relationship even without formal payroll records. USCIS looks at the degree of control that the company has over the alien to determine if he or she is really a de facto employee or an independent contractor. To determine whether an individual is an employee, the traditional rule under common law is the “control test”. This test applies basic agency principles in determining whether an employment relationship exists. USCIS has also adopted the common law control test for the purposes of determining employment in L-1 visa cases.

New US Offices and L-1B Transferees

Even where a foreign company does not have a pre-existing subsidiary or affiliate operating in the United States, it is possible for individuals to be transferred to the United States under L-1B visa status for the purpose of opening a new office. However, special regulations will apply to persons being transferred as new office L-1B visa holders. The most significant of these regulations limit the initial approval period to one year, after which additional evidence will have to be filed to evidence the US office’s need for a “specialized knowledge” employee.

Worksite Restrictions Imposed by the L-1 Reform Act

The L-1 Reform Act now prevents an L-1B visa alien from being primarily stationed at the worksite of another employer in cases where:

  • The L-1B visa holder will be controlled and supervised by an unaffiliated employer; or
  • The placement of the L-1B visa holder at the third party site is part of an arrangement to provide labor for the third party rather than placement at the third party site in connection with the provision of a product or service involving specialized knowledge specific to the petitioning employer.

Qualifying for an L Blanket Petition

Blanket petitions permit some large multinational companies to obtain a blanket L-1 visa approval for its employees. With an approved blanket petition, the alien may simply apply for an L-1 visa at a consulate abroad and does not need to first obtain an individual petition approval from USCIS. A petitioner may file a blanket petition on behalf of itself and some or all of its branches, subsidiaries, affiliates, or its parent, if the following conditions are met:

  • The petitioner and each of the included entities are engaged in commercial trade or services (non-profit entities are not permitted to file blanket petitions);
  • The petitioner has an office in the United States that has been doing business for one year or more;
  • The petitioner has three or more domestic and foreign branches, subsidiaries or affiliates;
  • The petitioner and the other qualifying organizations have obtained approval of petitions for at least ten “L” visa managers, executives, or specialized knowledge professionals during the previous twelve months; or have U.S. subsidiaries or affiliates with combined annual sales of at least $25 Million; or have a work force of at least 1,000 employees.

Blanket petitions may be used by L-1B visa Specialized Knowledge professionals. L-1B visa Specialized Knowledge workers who are not considered professionals are not permitted to apply pursuant to a blanket petition.

Validity Period of L-1B Visa Status

L-1B visa status is granted initially for 3 years with an extension of 2 years being permitted, up to a maximum of 5 years. After a stay of 5 years, the foreign worker must depart and remain physically present outside the United States for at least 1 year before becoming eligible for L visa status again. Note: Time spent in H-1B visa status is also counted against these limits. These time limits do not apply in the case of aliens who do not reside continually in the United States and whose employment in the United States is seasonal, intermittent, or consists of an aggregate of six months or less per year. Additionally, the time limits do not apply to aliens who reside abroad and regularly commute to the United States to engage in part-time employment.

Dependents of L-1B Visa Principal Aliens

Dependents of L-1B visa holders are given L-2 visa status. L-2 visa holders are permitted to attend school. A further benefit is that the spouses of L-1B visa holders are now able to apply for a general work permit.