Ignoring Worker VisasIs Dangerous for Mergers

At a time of increased vigilance on immigration and homeland security, merging companies are asking for big trouble if they don’t check out the immigration status of major employees, according to veteran immigration lawyer Mark Ivener. Failure to catalog and update visas and other documents that may be changed by the deal not only risks serious violations of immigration law but also can cost the combined company the services of important executives and tarnish the records of those individuals. While a review of immigration papers seems most pressing in cross-border deals, Ivener warns that it may be no less critical in deals linking two U.S. companies that have overseas operations. Yet, he says, immigration matters often don’t get priority consideration during due diligence. “This is the most missed issue in due diligence involving large multinational companies,” Ivener said in a phone interview. “There may be major people who are key to the operations who went out of status and are actually working illegally both on the U.S. side and overseas. In some countries they are more aggressive about people who go out of status than they are in the United States.” Ivener, a Partner in the Los Angeles-based law firm of Ivener & Fullmer, cited a couple of merger-related problems in a recent issue of Immigration Daily. A French company with a U.S. division headed by a French national is acquired by a U.S. firm. The division president holds an E-2 investor visa, issued under commercial treaty provisions to people working for foreign interests investing in the U.S. However, the visa is no longer valid because the parent no longer is French-owned, and “traveling on the visa could be classified as entry fraud or, at a minimum, unauthorized employment.” Another example involves the president of the subsidiary of a foreign company who works under an L-1A intra-company transferee visa issued to executives who have worked for an overseas parent for at least a year before transfer to the U.S. After an acquisition, Ivener says, the employer company is no longer a subsidiary, and the visa loses validity “in the eyes of U.S. Citizenship and Immigration Services (USCIS).” To counter those types of problems, Ivener urges merging companies, for openers, to check out all employees of the target and verify that their I-9s, or employment eligibility verification forms, are complete. He says that the immigration status of all non-immigrant workers must be reviewed and, depending on the post-deal structure of the company, their forms should be amended or new petitions should be filed with USCIS. Ivener further advises care on seemingly minor details such as changes in a company’s name, tax I.D. number, and job duties, which could “immediately invalidate a foreign executive’s employment authorization.” He notes that two factors will determine whether the merged company must file new petitions for the ubiquitous L-1 visa used by multinationals in transferring overseas managers and professionals to U.S. operations. One is a change in a “qualifying relationship” between the U.S. and foreign entities and the other involves change of the worker’s job classification. Similar analyses should be used for E-1 and E-2 commercial visas. (c) 2006 Mergers and Acquisitions Journal and SourceMedia, Inc. All Rights Reserved. http://www.majournal.com http://www.sourcemedia.com