Sponsored Employee May Not Hold Substantial Ownership Interest in Employer

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With more and more foreign employees applying for employment-based visa, we have been asked whether a foreign employee can be sponsored by the company that he or she has ownership interest in. In a recent case, the Board of Alien Labor Certification Appeals (BALCA) upheld the denial of the employer’s application for permanent employment certification (ETA Form 9089), and once again confirm its position that a sponsored employee may not hold an ownership interest in employee. In the Matter of Step by Step Day Care LLC, BALCA Case No. 2012-PER-00737 (2015).

In this case, the employer, a closed-held corporation, sponsored the director position for the foreign employee. The foreign employee and her husband each owned a 50% ownership share of the corporation, and the foreign employee had the hiring authority. The employer’s ETA 9089 was denied.

The case was appealed to BALCA. In reviewing the case, BALCA asked whether a bona fide job offer existed in a closely held corporation, and determined that it did not meet the fair labor market test for the following reasons:

  1. the foreign employee’s 50% ownership;
  2. her involvement in the management of the corporation;
  3. her marriage with the co-owner;
  4. her authority in making hiring decision; and
  5. the employer having a small number of employees.

We have seen that cases in which an employer sponsors an employee who is an owner or is related to an owner of the employer are more likely to be audited. Thus, in regards to the ETA 9089 the lesson learned here is that, while a foreign employee can have ownership in the employer, the ownership may not be substantial, and the employee may not be in a managerial or executive position.

You may view the full text of the decision here.

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