Companies that undergo entity changes resulting from merger, acquisition, consolidation, spin-off or other corporate restructuring may face important immigration consequences related to their newly acquired foreign employees. This complex area is often overlooked, but thoughtful planning is essential for a smooth transition to minimize business interruption and avoid inadvertent violations of immigration laws and regulations.


During a merger, acquisition or entity change, employers must have a comprehensive plan to ensure that a former entity’s foreign employees do not fall out of their current immigration status, recognizing that these employees may be in different visa categories each with its own restrictions, work eligibility rules and validity dates.

This backgrounder covers some of the implications of mergers and acquisitions on three common nonimmigrant visa categories and on pending applications for employment-based green cards.

Due Diligence 

A company seeking to acquire another company or its assets or stock should research and review the following:

• Job details of all employees

• The target company’s policies regarding I-9 forms and how closely the former employer adhered to those policies

• E-Verify enrollment

• Changes in payroll, relocations, and other changes to employment structure

• The dates and results of any internal or external audits

The above list is a starting point and is not exhaustive. Please consult with your BAL Attorneys for a more detailed list of issues.


Employers who fail to assess immigration consequences of mergers and acquisitions risk business disruption or loss of employees due to visa lapses and possible flagging by immigration authorities. In recent years, Immigration and Customs Enforcement has stepped up audits of employers, as well as fines and criminal penalties for immigration violations ranging from errors in I-9 paperwork to knowingly employing undocumented workers.


A newly formed company should understand its obligations as the sponsoring entity of foreign national employees holding nonimmigrant visas or awaiting pending employment-based permanent resident applications. Below are considerations for employers retaining H-1B, TN, and L-1 visa holders and green card applicants. The new entity’s I-9 obligations are also explained.


A new entity that is a “successor in interest” to the acquired entity and will continue to employ H-1B employees in the same job function and duties located in the same Metropolitan Statistical Area (MSA), are not required to file amended H-1B petitions or new Labor Condition Applications. The employer must, however, update the Public Access Files for each Labor Condition Application with a corresponding H-1B employee who will continue to be employed by a new entity after the merger or acquisition. Determining whether the new entity is a successor-in-interest can require complex analysis based on whether the new entity assumes the assets and liabilities of the acquired entity.

If the terms and conditions of employment will change after the merger or acquisition (i.e. new job function, duties or worksite location), the employer should file amended H-1B petitions and new Labor Condition Applications.

The new entity should also conduct an assessment of its workforce to determine if it is an “H-1B dependent employer” based on its proportion of H-1B workers. A company is H-1B dependent if it employs eight H-1B workers of its total full-time employees of 25 or fewer, or 13 H-1B employees of 26-50 full-time employees, or 15 percent H-1B employees out of a total of 51 or more full-time employees. Employers deemed to be H-1B dependent must comply with additional recruitment and other requirements.


If an employer is going to continue to employ the former company’s TN employees, the employer may be required to file new TN applications. While NAFTA does not explicitly mandate new TN filings, if a TN employee will change job functions or duties, then a new TN application, petition or visa is recommended. If the job duties and functions remain the same, then it may only be necessary to update the new employer information when an extension application/petition is filed (or a new visa is sought for Mexican TN-2s).


Employees holding L-1 intracompany transferee status may be seriously impacted by the merger or acquisition depending upon the structure of the transaction. Because employees qualify for L-1 status based on the qualifying relationship (parent, branch, affiliate or subsidiary) of their previous foreign employer to the U.S. employer, a detailed analysis of the corporate transaction is required to determine whether the merger or acquisition terminates the qualifying relationship or if the relationship survives. For example, where the acquisition includes only the U.S. entity and the employee’s previous foreign employer is not part of the transaction, then the employee will lose L-1 status. Similarly, asset purchases and spinoff transactions may also limit the continuity of L-1 eligibility, so a careful and thorough review of the new corporate structure is required to determine continuing L-1 eligibility.

Additionally, following a merger or acquisition, an employer that has a Blanket L-1 petition should analyze whether an amended petition is needed to update the petition with any new or changed entities. its validity.


A merger or acquisition may affect an employee’s permanent residency application, depending on whether the newly formed entity is considered a successor-in-interest to the former employer. Three factors determine if the new entity is a successor-in-interest employer, three factors are required:

1. The job opportunity offered by the successor must be the same as the job opportunity offered on the PERM Labor Certification.

2. The successor has proven its ability to pay the proffered wage from the date of filing the PERM until the date of the transfer of ownership to the successor-in-interest employer, and

3. The successor has fully described and documented the transfer and assumption of ownership of the predecessor.

If the new employer entity does not qualify as a successor-in-interest, it may be required to re-start the green card process on behalf of the employee.

The employer’s obligations will also depend on the stage of the green card application process. If the PERM Labor Certification is pending at the time of a merger or acquisition, it will remain valid assuming that the new entity is a successor-in-interest and the employee continues to have the same job function and duties. Otherwise, the new entity must file a new PERM Labor Certification application.

If the I-140 petition is pending or approved but the I-485 Adjustment of Status has not been filed at the time of the merger or acquisition, then the new entity must file an I-140 petition with USCIS and prove that it is a successor-in-interest employer.

Where an I-485 Adjustment of Status application is pending at the time of the merger or acquisition, the portability provisions of the American Competitiveness in the 21st Century Act (AC21) permit the employee to transition to a new employer if the I-485 application has been pending for over 180 days and the employee’s job function and duties are the same or similar to those with the original employer. If the I-485 has been pending for less than 180 days at the time of the merger or acquisition, then the new entity should file an amended I-140 petition.


A company acquiring or merging with another entity may either assume the risks and liabilities of the acquired company’s I-9 forms or elect to have all employees of the acquired company complete new I-9 forms following the corporate restructuring. Conducting an I-9 compliance audit prior to the close of the transaction is a critical component of the M&A due diligence process.


Employees who are not retained or hired by the successor employer or newly created entity should be aware of potential implications for their visa status, right to remain in the U.S. or pending green card applications.

USCIS requires all nonimmigrant workers to maintain their visa status in order to be eligible for extensions or change of status. When terminated, a nonimmigrant worker is no longer maintaining status and loses work authorization under the current visa. Below is a brief description of the implications of termination and options for maintaining status.


When H-1B employees are terminated, a new employer may file an H-1B Change of Employer petition prior to the termination so the worker may continue employment. Depending on the timing of the filing of the new petition, the petition may be “portable” to the new employer or the petition may be adjudicated as a consular petition requiring the employee to exit the U.S. and return with the new H approval notice (for those holding a valid visa) or a newly issued visa.

USCIS has overlooked gaps in employment of less than 30 days, even though no regulatory or statutory provision covers these situations. Thus, H-1B employees who have been terminated prior to the filing of a petition by a new employer should aim to have the new H petition filed within 30 days of termination to support the request for portability. For longer periods of unemployment, it is important to discuss options with legal counsel to consider consular notification rather than portability extension of stay.

Those who stay in the U.S. after termination are at risk of being viewed as failing to maintain status.


When TN employees are terminated, in order to maintain status, they must file a petition for a change of employer prior to termination. It is important to note that TN status is reserved for specific occupations listed in the North American Free Trade Agreement.

As with H-1B employees, USCIS has overlooked gaps in employment of less than 30 days, even though no such grace period is authorized understatute or regulations . For longer periods of unemployment, it is important to discuss options with legal counsel to avoid a denial of a TN renewal or change in status.


L-1 employees who are terminated must carefully evaluate whether there are any available visa categories that allow for a change of status to be filed prior to termination. As with H-1B and TN employees, USCIS has overlooked gaps in employment for less than 30 days, despite the lack of an explicit statutory or regulatory provision. For longer periods of unemployment, it is important to discuss options with legal counsel to avoid a denial of a change of status petition.

An L-1 employee may change status to H-1B, if the H-1B quota has not been met or if the employee previously was approved for H-1B status under the annual cap.


Upon termination, employees with pending green card applications will have different options depending on the stage of their application.

A pending Labor Certification application for a terminated employee will likely be withdrawn. Where a Labor Certification application is approved but the I-140 petition has not yet been filed, the employee does not benefit from the approved labor certification; a new employer will need to file a new Labor Certification application and I-140 petition for the employee.

Where the I-140 is pending or approved, the newly created entity may allow the petition to be completed and for the former employee to retain his or her priority date should another employer wish to sponsor the employee.

Where an I-485 Adjustment of Status has been pending for at least 180 days and the I-140 petition has been approved or is approvable at the time of termination, the employee may continue the application and seek benefits from the portability provisions of the AC21 regulations.