Seyfarth Synopsis: This is the first installment in a series of recommendations to the Biden Administration on immigration reform previously published by the Cato Institute in “Deregulating Legal Immigration: A Blueprint for Agency Action.” A total of five installments will be published on a weekly basis. Please stay tuned for additional updates.
Eliminate Bars to Entrepreneurship
The Department of Labor (DOL) should affirm that an owner of a company is legally distinct from the company itself and should define entrepreneurship as a Schedule A occupation not needing a labor certification. USCIS should rescind its currently enjoined H-1B interim final rule, which restricts self‐sponsorship by owners, and the Justice Department should stop defending it.[i]
Even though immigrants are disproportionately likely to start businesses or be self‐employed,[ii] DOL and USCIS make it all but impossible for immigrant entrepreneurs to establish companies that can sponsor the entrepreneurs for green cards or other work visas, a prohibition that hampers job creation and entrepreneurship. The law requires employers sponsoring most foreign workers for green cards to first obtain a permanent labor certification from DOL that finds no qualified U.S. workers were available for the position.[iii] But DOL can pre‐certify certain jobs as Schedule A occupations if no harm to U.S. workers would result from them being filled without a rigorous and time‐intensive labor market test.[iv] A job that was created through a foreign worker’s commercially reasonable investment should automatically qualify as such a job.
DOL has also created a strong presumption against granting a labor certification in situations where there is any “alien influence and control over the job opportunity” on the dubious assumption that no job opportunity can be “bona fide” if the sponsored immigrant has any significant ownership role in the company.[v] DOL should rescind this regulation and formally recognize the distinction between the corporate entity and the owner of the company. These changes would allow immigrant entrepreneurs to start businesses and have those businesses sponsor them for green cards.
Unlike DOL, USCIS claims to respect the centuries‐old distinction between a corporate entity and the owner of that entity, yet USCIS still makes it difficult for entrepreneurs to have their companies sponsor themselves for nonimmigrant visas (e.g., H-1B and O visas). In 2010, USCIS announced that self‐employed workers could not receive nonimmigrant work visas because a company they own cannot possibly “employ” them as the law requires—a conclusion that flouts its own binding and well‐settled legal precedents.[vi] While litigation forced USCIS to rescind this policy in 2020,[vii] it is currently attempting to place this standard into its H-1B regulations in a rule that a federal district court enjoined in December 2020.[viii] USCIS should rescind the rule—and the Justice Department should cease defending it—to allow immigrant entrepreneurs to have their companies more easily sponsor them. Once the rule is rescinded, USCIS should explicitly recognize eligibility to grant employment‐based immigration benefits to entrepreneurs.[ix]
[i] For more background, see Angelo Paparelli, “Hey, Immigration Bureaucrats: Corporations Are NOT People!,” Nation of Immigrators (blog), October 14, 2012.
[ii] Robert W. Fairlie, “Immigrant Entrepreneurs and Small Business Owners, and Their Access to Financial Capital,” Small Business Administration Office of Advocacy, May 2012.
[v] 20 CFR § 656.17(l) (2019). For instance, see Department of Labor, Matter of Step by Step Day Care LLC, 2012-PER-00737, September 25, 2015.
[vi] Donald Neufeld, “Determining Employer‐Employee Relationship for Adjudication of H-1B Petitions, Including Third‐Party Site Placements,” U.S. Citizenship and Immigration Services, January 8, 2010. Contradicting: Matter of Aphrodite Investments Limited (1980), Matter of Tessel (1980), Matter of Allan Gee, Inc. (1979), and Matter of M– (1958).
[viii] 85 Federal Register 63918, (October 8, 2020); and Chamber of Commerce v. DHS, 20‐cv‐07331‐JSW (N.D. California, 2020).
[ix] U.S. Citizenship and Immigration Services, “Entrepreneur Visa Guide,” 2013; U.S. Citizenship and Immigration Services, “Employment‐Based Second Preference Immigrant Visa Category, Frequently Asked Questions regarding Entrepreneurs and the Employment‐Based Second Preference Immigrant Visa Category,” August 2, 2011; and Alejandro Mayorkas, “Encouraging Entrepreneurs and High Skilled Workers to Bolster the U.S. Economy and Spur Job Growth,” The Beacon (blog), U.S. Citizenship and Immigration Services, August 2, 2011.