I originally wrote about this last Fall, but given the current events in Washington, the general chaotic environment that my colleagues and I are practicing in, and the great concern that clients are showing about their future prospects of remaining in the United States (whether they are here lawfully or not), I thought it appropriate to provide a positive update for the alien entrepreneurs out there.
On January 17, 2017, the Department of Homeland Security (“DHS”) published a final rule to improve the ability of certain alien start-up founders to begin growing their companies within the United States and help improve our nation’s economy through increased capital spending, innovation and job creation.
Under the new rule, effective July 17, 2017, DHS may use its “parole” authority to grant a foreign national a period of authorized stay (that is, temporary permission to be in the United States), on a case-by-case basis, to those alien entrepreneurs who demonstrate that their stay in the United States would provide a significant public benefit through the potential for rapid business growth and job creation. Those who are eligible may be granted a stay in the United States for up to 30 months, with the possibility to extend the period for an additional 30 months if they meet certain criteria, and in the discretion of DHS.
Here are the specifics. An applicant for parole would need to demonstrate that he or she meets the following criteria.
1. First, that the applicant possesses a substantial ownership interest in a start-up entity created within the past five years in the United States that has substantial potential for rapid growth and job creation.
2. Second, that the applicant has a central and active role in the start-up entity such that the applicant is well-positioned to substantially assist with the growth and success of the business.
3. Third, that the applicant can prove that his or her stay will provide a significant public benefit to the United States based on the applicant’s role as an entrepreneur of the start-up entity by:
A. showing that the start-up entity has received a significant investment of capital from certain qualified U.S. investors with established records of successful investments;
B. showing that the start-up entity has received significant awards or grants for economic development, research and development, or job creation (or other types of grants or awards typically given to start-up entities) from federal, state or local government entities that regularly provide such awards or grants to start-up entities; or
C. showing that they partially meet either or both of the previous two requirements and providing additional reliable and compelling evidence of the start-up entity’s substantial potential for rapid growth and job creation.
Under the rule, parole eligibility may be extended to up to three entrepreneurs per start-up entity, as well as their spouses and children. It is important to note that alien entrepreneurs will be only be eligible to work for their start-up business.
This recently published final rule is a legacy of former President Obama. Some of you will recall that back in 2014, because of Congressional inaction, former President Obama vowed to take whatever steps he could, short of legislation, to advance his immigration agenda, and in this case, to make it easier for alien entrepreneurs to start up or scale up their businesses. Well, he made good on his promise. (Let’s hope our current president keeps this in place, or even improves upon it. There has been a smattering of news that suggests that he may try to kill it.)
A few other important points related to all of this. First, and significantly, there is no required wage obligation for the alien entrepreneur parole beneficiary. However, to maintain parolee status, the alien entrepreneur must maintain a household income that is greater than 400 percent of the federal poverty line for his or her household size as defined by the U.S. Department of Health and Human Services (“HHS”). HHS revises these guidelines annually.
The new rule also requires the alien entrepreneurs to immediately notify U.S. Citizenship and Immigration Services (“USCIS”) of any material changes that could reasonably affect USCIS’s determination that the alien entrepreneur provides, or continues to provide, a significant public benefit to the U.S.
Finally, USCIS has indicated that the required investment and revenue amounts will be automatically adjusted every three (3) years by the Consumer Price Index and USCIS will post the required amounts on its website.
As I have previously mentioned, the investment thresholds appear not to be overly-burdensome. The rule also seems to recognize that new businesses are not all funded the same way, and provides flexibility for entrepreneurs using new or novel funding models.
So that’s the good news. The bad news continues to be that there’s no “next step” for when the entrepreneur’s parole period comes to an end. That is, unless a foreign national has a vehicle in place to become a lawful permanent resident (i.e., a Green Card holder), under the rule, they will not be allowed to change their status from their parole status to some other type of lawful nonimmigrant status while they’re in the United States. That means the entrepreneur would have to leave the United States, try to apply for a temporary visa abroad, and then re-enter the United States (assuming that’s even a viable option).
So, progress? Yes. Panacea for foreign national entrepreneurs? Not totally, but it is for sure a step in the right direction. Let’s hope it stays in place and Congress and our President improve upon it.