With H-1B season fast approaching, we are beginning to receive inquiries from small start-ups asking if they can qualify as H-1B sponsors for their employees. The short answer is “Yes,” with the caveat that a start-up-based H-1B case has additional issues to consider when compared to an H-1B case for a larger, more established company.
We have helped numerous start-ups acquire H-1B’s for their employees, and over time, we have observed certain issues that the USCIS is particularly interested in when the petitioning employer is a small start-up. While an H-1B case for a start-up employer can be more challenging, as long as these certain issues are addressed, it is entirely possible to receive approvals from start-ups with as few as 2 employees. Below is a list of some of these issues and our observations of how to best address them:
Conducting Business and Ability to Pay H-1B wages
Oftentimes, the USCIS is concerned that the new start-up may not be conducting actual business and may not have enough funds to pay the required H-1B wages to its employees. To alleviate these concerns, we will usually submit documentation to demonstrate actual business is being conducted, or at least evidence that there is enough funding to pay the H-1B wages. This can come in the form of venture capital agreements, bank statements showing seed funding, or any initial service contracts demonstrating that business will be conducted. Additionally, any other evidence that demonstrates potential success, such as patents or even news releases regarding the company will also be included.
Many of our start-up clients begin their life in an incubator/shared office space, or they may even have a residence as their initial office. This can cause potential issues since one of the strategies USCIS employs when adjudicating H-1B’s is to perform an internet search on the company address. If that company address is associated with another business name, such as the name of the incubator, or if the address is a residential address, the USICS will almost certainly send an Request for Evidence (“RFE”) expressing their doubts as to the legitimacy of the business.
In these cases, our office employs the following tactics to prevent this type of RFE: If the employer is in an incubator or shared office space, we will provide a website printout from the incubator/shared office space company (such as We Work or Regus) showing that the address is in fact a shared office space business with the aim of renting to start-up businesses like the employer. Thus, when the USCIS officer performs an Internet search and a different company name is associated with the company address, he or she will understand why.
For cases where the business is located at a residential address, we will provide documents demonstrating that actual business is being conducted at the residence. This evidence might include: approved municipality permits allowing for a business within the residence, leases which demonstrate the landlord agrees to the business use, pictures of the workspace in the residence, or employment agreements that allow for working and living in the residential premises.
Need or the Position
Another challenge we often face is demonstrating to the USCIS why such a small company is in need of a specialty occupation position. For example, the USCIS may ask why a 4-person start-up needs a full-time marketing analyst in the company. To address this issue, we will provide a strong narrative from the company founder that discusses the need for the H-1B position and how vital the position is to the young start-up. To supplement this narrative, we will often provide the degrees and educational backgrounds of the other employees at the company and evidence of similar-sized small companies needing similar positions in the same field (such as job postings).
Overall, an H-1B that is sponsored by a small start-up employer can be a more challenging case but as long as the correct strategies such as the ones recounted above are employed, it is possible to get start-up H-1B approvals without an RFE.
For questions or comments regarding this article please feel free to email Attorney Fok at: firstname.lastname@example.org