Recently,
some of my physician clients, who are in H-1B status, have asked whether they
can becomepart owners in the practice that employs them. Many foreign
physicians in the United States, are working in H-1B status, while they wait to
become U.S. permanent residents, and ultimately U.S.Citizens. Any physician
who came to the U.S. as a J-1 exchange visitor to engage in post-graduate
medical education, and who received a Conrad 30 type waiver of their two-year
foreign residence requirement, are required to work at least 3 years in H-1B
status, before they can obtain U.S. permanent residence. Due to visa backlogs,
many H-1B physicians from India and China may have to wait 7-8 years before
they can conclude the permanent residence process, and many of these work in
H-1B status.
It is common
for H-1B physicians to receive a “buy-in” offer from their employer, especially
if their practice is thriving and the employment relationship is beneficial to
both employer and physician. Thus, many H-1B physicians want to know if they
can enjoy the benefits of ownership in their employer entity.
Due to the
nature of the H-1B classification, and USCIS regulations, H-1B employee ownership
is not easy, but it is not impossible, under the appropriate circumstances. The
H-1B statute and USCIS regulations require that H-1B eligibility depends on a “employer/employee”
relationship. USCIS regulations define an employer as an entity that has an:
employer-employee relationship with respect
to employees under this part, as
indicated by the fact that it may hire, pay, fire, supervise, or otherwise control
the work of any such employee[1]
To qualify as an H-1B petitioning employer, the employer must
retain the control or authority to supervise the activities of the H-1B
employee, and it must retain the authority to hire or discharge the H-1B
employee.
If an H-1B physician wishes to buy-in to his or her employer,
or if he or she wishes to start-up a new entity, which will act as an H-1B
employer, it must be clearly and genuinely provided in the corporate by-laws or
minutes, that someone other than the H-1B employee will have the authority to
hire, fire, supervise and pay the H-1B employee/physician. These elements
should also be clearly set out in the H-1B employee/physician’s contract. It is
usually wise to provide for a board of directors, independent of the corporate
officers, which retains the authority to set the overall policies of the
corporation, and which retains the authority to discharge the H1-B
employee/physician. The H-1B employee/physician should not serve as a corporate
officer or director of the corporation, nor should he/she own a majority of the
outstanding shares of stock.
The USCIS has approved H-1B petitions for H-1B employee/physicians, when it has been provided evidence that demonstrates that a true employer/employee relationship exists, between the physician and the petitioning employer.
When setting up these types of arrangements, it is typically
necessary to employ both a qualified corporate attorney and an immigration
attorney, experienced in employment-based immigration. It is typically wise for
each of the parties to employ independent counsel, in the corporate formation
or purchase transaction.
