When businesses merge or are acquired, or undergo any other form of restructuring, it is not uncommon for the immigration implications of mergers and acquisitions to be overlooked until after a deal has closed or restructuring is complete, even by seasoned attorneys. Below we highlight some key immigration implications of mergers and acquisitions, from the potential impact on individual employees to the potential impact on the new employing entity.

 

How can mergers and acquisitions impact individual migrant workers?

 

Mergers and acquisitions, without advance planning and careful consideration, can give rise to serious risks when it comes to the rights of foreign nationals to continue to work for a company, some of whom may be key to the daily and strategic operations of the business.

For those working in the States under nonimmigrant classification, any form of corporate restructuring or new ownership can adversely impact their lawful status. Nonimmigrant visas are often company-specific, where an employer is required to file a petition that identifies the sponsored employee, providing specific information about the job role, title, worksite location, salary and requirements. A corporate restructure or change of ownership can also impact the validity or, at the very least, the procedural requirements for any member of staff of the previous employer applying for permanent resident status, commonly known as a green card.

When the corporate structure or ownership of the petitioning company changes, the new employing entity may need to take additional compliance actions for an employee to retain their nonimmigrant work status or to progress their application for immigrant status. In some cases, the company may no longer be allowed to continue sponsoring certain employees, or an employee’s application for a green card could be put in jeopardy, potentially resulting in the loss of valuable members of staff and the potential deportation of the individuals involved.

Below we look at some of the risks involved for specific categories of visa:

 

L-1 visas for intracompany transferees

 

For employees working under L-1 classification, working for a US branch of their overseas employer, often in high-level managerial or executive roles, or as employees with specialised knowledge, they can be adversely affected by a corporate restructuring. This is because employees in L-1 nonimmigrant status rely entirely upon a qualifying relationship between their previous foreign employer and their US employer. Following a corporate restructuring, US immigration law only allows an employee to continue to maintain L-1 status if the successor company is part of a multinational group and maintains a related company, for example, a subsidiary, parent, affiliate or branch, outside the United States.

Where a corporate restructuring will impact L-1 visa holders, this means that a pre-close detailed analysis of the transaction is usually required to determine whether the restructure will terminate the qualifying relationship. Even when L-1 status is not terminated, an amended petition may still need to be filed with US Citizenship and Immigration Services (USCIS) to alert the US government of the change in corporate structure but, at the same time, to reaffirm that an ongoing qualifying relationship exists. If the succeeding company does not maintain a qualifying related company outside of the United States, it may no longer be possible to continue sponsoring the L-1 visa-holder, leaving certain executive, managerial and essential employees without lawful visa status and work authorisation.

 

H-1B visas for specialty occupation workers

 

US immigration regulations provide that when a company changes its corporate structure as the result of an acquisition or merger, if the new employing entity qualifies as a ‘successor in interest’ to the predecessor company, it will not be required to file new labor condition applications and H-1B petitions on behalf of transferred H-1B nonimmigrants.

This is permissible, but only if the newly formed company agrees to take on the responsibilities arising from the applications originally filed ‘and’ if it completes the appropriate documentation prior to close. This would permit transferred employees to continue employment without interruption as per the existing H-1B approval, provided there are no other material changes to their employment, such as a change in location or job duties.

If the successor company fails to update the H-1B public access file documents prior to the close of the deal, it will be required to file new H-1B amendment petitions with USCIS in respect of the relevant changes in corporate structure. Timing is therefore important here. If the new employing entity is not a successor-in-interest, the H-1B employee may rely on the “portability” provisions that allow them to start work for the newly formed or restructured entity, although these can be difficult to navigate, and employees may be treated by the authorities as having violated their status if the proper procedures are not followed.

 

E-1 and E-2 visas for treaty traders and investors

 

As with other nonimmigrant classifications, these visas can be dependent upon the nationality of a foreign entity, where E-1 and E-2 visa holders include executives, managers and essential skills employees who come to the States under a treaty of commerce and navigation between the US and the country of which the visa-holder is a citizen or national.

Although issues relating to E-1 and E-2 visa recipients do not often arise often during mergers and acquisitions, restructuring and new ownership can occasionally impact the nationality of a successor company. This will then sever the ability for an E-1 or E-2 visa holder to maintain their lawful nonimmigrant status. A key due diligence consideration in respect of E-1 and E-2 visa-holders is therefore whether ownership of the succeeding company will change because of a restructure or acquisition. For example, if an E-1 visa-holder is a Spanish national working in the United States for a Spanish-owned company, and a US company purchases the Spanish-owned employing entity, the nationality of the successor company will have changed, and will no longer be Spanish, severing the ability for that individual to continue in E-1 visa status.

 

Employment-based immigrant visas for lawful permanent residents

 

A merger, acquisition or corporate restructuring can affect an employee’s permanent residency or green card application, depending on the stage at which that application has reached and whether the newly formed entity is considered a ‘successor-in-interest.

If a Form I-140 petition is either pending or approved, but an adjustment of status (Form I-485) has not been filed at the time of the merger or acquisition, then the new employing entity must file a Form I-140 petition with USCIS and prove that it is a successor-in-interest to the former employer. Also, where an adjustment of status application is pending, “portability” laws permit the employee to transition to a new employer, provided Form I-485 application has been pending at the time of a merger or acquisition for more than 180 days and the employee’s function and duties are the same or similar to those with the previous employer. However, if Form I-485 has been pending for less than 180 days, then the new entity will need to file an amended Form I-140 petition with USCIS.

 

How can mergers and acquisitions impact the incoming employer?

 

Mergers and acquisitions not only give rise to immigration status risks in relation to individual migrant workers, but also immigration compliance risks for the incoming employer in the context of employment verification checks for the workers that they have acquired.

 

US employment verification checks

 

By law, all employers are required to verify the identity and employment eligibility of every individual they hire. They must complete and retain an Employment Eligibility Verification form (Form I-9) for each employee on the payroll and keep it for a certain period after their employment ends. Form I-9 records must be maintained for three years after the date of hire or one year after the date employment ends, whichever is later.

When a company merges or is acquired, the acquiring or successor employer generally has two options for employment verification:

• Treat Acquired Employees as New Hires – The new employer may choose to treat all acquired employees as new hires, requiring them to complete a new Form I-9. In this case, the employer must enter the effective date of the merger or acquisition as the employee’s first day of employment in Section 2 of the new Form I-9.
• Retain Existing Form I-9s – The new employer may retain the previous employer’s completed Form I-9s and treat the acquired employees as continuing in their employment. In this case, no new Form I-9s are required, and employees are considered to have uninterrupted employment.

While retaining existing Form I-9s avoids the administrative burden of re-verification, it comes with significant legal risks. The new employer assumes full liability for any errors, omissions, or non-compliance issues in the acquired Form I-9 records.

Since an employer can inherit non-compliance issues from an acquired company, due diligence is critical before finalizing a merger or acquisition. Even if a company’s personnel files appear complete and compliant, hidden issues such as missing documentation, incorrect verification procedures, or expired work authorization records can lead to violations of US immigration laws.

If Form I-9s are incomplete, missing, or improperly filled out, the new employer may face:

 

• Fines and penalties for non-compliance
• Increased scrutiny from US Immigration and Customs Enforcement (ICE) or the Department of Homeland Security (DHS)
• Potential legal challenges affecting business operations

 

To mitigate these risks, a full audit of existing Form I-9 records should be conducted as part of the due diligence process. Employers should verify that the records are complete, accurate, and compliant with federal immigration laws.

Form I-9 records can be retained in paper, microfilm, microfiche, or electronic format, but they must be readily available for inspection by government authorities if requested. Maintaining accurate and compliant records is essential, as failure to do so can result in legal and financial consequences for the acquiring company.

 

Non-compliance penalties

 

By law, US employers are required to verify the identity and employment eligibility of all individuals that they hire, and maintain for inspection original Form I-9 records for all current employees, where any failure to properly conduct these checks or properly maintain these records can result in significant civil fines following a Form I-9 compliance review.

US immigration laws specifically authorises DHS, and other officials, to inspect Forms I-9, including any copies of employees’ documents retained with the corresponding Form I-9. Officers only need to provide a business a minimum of 3 working days’ notice before commencing an inspection. The employer will also be required to make Forms I-9 available upon request at the location where the officers request to see them.

If a US employer fails to comply with the employment eligibility verification requirements — for example, by failing to properly complete, retain, and/or make Forms I-9 available for inspection as required by law — they may face civil financial penalties for each violation. In determining the amount of any penalty, the DHS will consider the size of the business, the employer’s good faith, the seriousness of the violation in question, whether the individual was an unauthorised migrant and the history of any previous violations.

 

Post-completion compliance

 

It is still possible to address the potential immigration implications of mergers and acquisitions post-completion when it comes to employment verification checks. This can be done by treating all acquired employees as new hires and completing a new Form I-9 for every individual, entering the effective date of the acquisition or merger as the employee’s first day of employment. In this way, provided the paperwork is completed correctly, and complete records retained, even if the DHS discover that an employee is not actually authorised to work, the employer cannot be charged with a verification violation.

However, to re-verify the employment authorisation of the entire workforce is potentially a huge undertaking, involving time and expense that the new employer may not have. It is not even possible to narrow the process down. To avoid discrimination, every employee, without regard to actual/perceived citizenship status or national origin, would need to be re-checked.

 

How can immigration implications of mergers and acquisitions be avoided?

 

Any failure to ensure that the previous employer has followed the correct employment verification checks, and that clear and complete records have been retained, can lead to significant financial penalties. Equally, any failure to complete a pre-close assessment of impacted foreign national workers, including work visa statuses and lawful permanent resident processes, can have serious consequences for both the business and its workforce.

In some cases, there may be ways of addressing these issue post-completion, but when it comes to avoiding the immigration implications of mergers and acquisitions, the best way to minimise any risk is to carefully identify and address any risks in advance. With proper planning and immigration-focussed due diligence, the incoming employer can ascertain where any risk lies — from impacted foreign workers to the accuracy of verification checks. In this way, the impact on the business can be adequately assessed, without surprises at a later date.

 

Need assistance?

 

NNU Immigration are dedicated US immigration attorneys based in London. We provide specialist advice and guidance on all aspects of US immigration including guidance on the immigration implications of mergers & acquisitions on compliance and also advising on the immigration status and maintaining lawful status of foreign workers based in the US. For expert advice and support for your organisation, contact us.

 

US Immigration Consequences of M&A FAQs

 

How do mergers and acquisitions affect US visa holders?

Mergers and acquisitions can impact employees on work visas by changing their employer sponsorship status potentially requiring amendments or new filings with USCIS.

 

Do H1B visa holders need to file a new petition if their company is acquired?

If the acquiring company is a successor in interest and assumes all rights and obligations of the original employer an H1B visa holder may not need a new petition but USCIS must be notified of the change.

 

What happens to L1 visa holders when their company is acquired?

L1 visa holders may need to provide evidence that the new company maintains the qualifying relationship with the original foreign employer to retain their visa status.

 

Can an acquisition affect employment-based green card applications?

If an employer-sponsored green card application is in process and the company undergoes structural changes it may require a new PERM labor certification or I-140 petition.

 

What should employers do to remain compliant with US immigration laws during a merger?

Employers should conduct a thorough review of visa holders affected by the merger file required amendments with USCIS and ensure compliance with Department of Labor regulations.

 

Does an E2 visa holder lose status if their company is acquired?

E2 visa holders may lose status if the acquisition results in a change of majority ownership by a non-treaty country investor in which case a new E2 application may be required.

 

How do mergers impact I-9 compliance for foreign workers?

Employers must update I-9 forms to reflect new company details and in some cases may need to reverify work authorization depending on the nature of the acquisition

 

Can TN visa holders continue working after a merger?

TN visa holders can generally continue working if their job duties remain the same and their new employer meets the qualifications for TN sponsorship but a new letter may be required at the border or with USCIS.

 

What happens if my employer-sponsored visa is no longer valid after an acquisition?

If your visa sponsorship becomes invalid you may need to change status transfer to a new employer or depart the US if no alternative visa options are available

 

Are there immigration risks if a company lays off foreign employees after a merger?

Layoffs of foreign employees may trigger obligations such as notifying USCIS or providing a grace period for visa holders to find new sponsorship before losing status

 

Should foreign employees consult an immigration attorney during a merger?

It is highly recommended that visa holders seek legal guidance to understand their options rights and any necessary steps to maintain lawful status in the US

 

Glossary

 

Term	Definition
H1B Visa	A nonimmigrant visa that allows US employers to hire foreign workers in specialty occupations
L1 Visa	A visa that allows multinational companies to transfer employees from a foreign office to a US office
E2 Visa	A visa for investors and employees of a business owned by nationals of a treaty country
TN Visa	A visa for Canadian and Mexican professionals under the USMCA trade agreement
USCIS	US Citizenship and Immigration Services the agency responsible for processing visa petitions and green cards
PERM Labor Certification	A process required for employer-sponsored green card applications to prove no qualified US workers are available for the job
I-140 Petition	A form used by employers to petition USCIS for an employee’s green card based on employment sponsorship
Successor in Interest	A legal concept where the new employer assumes the immigration obligations of the original employer after a merger or acquisition
I-9 Form	A document used by US employers to verify the identity and work authorization of employees
Visa Sponsorship	The process by which a US employer petitions for a foreign worker’s visa or green card
Grace Period	A period of up to 60 days given to visa holders after job termination to find a new employer or change visa status
Notice to USCIS	A legal requirement to inform USCIS of material changes such as employer name or business structure after a merger
Employment Termination	The end of an employee’s job which may impact their visa status and ability to remain in the US
Immigration Compliance	Ensuring that all visa sponsorship and employment-related immigration processes follow US regulations