A startup can have all the makings of a successful business plan, but the wrong team can make or break the company’s future. With that in mind, startups take the hiring process very seriously, with multiple rounds of interviews and work assignments for prospective employees. Despite the diverse talent pool in the United States, sometimes the best fit for a company is a foreign national, but bringing an employee to the United States is a challenge for companies of all sizes and especially for startups.

Most employers choose to sponsor employees through an H-1B visa for expediency’s sake (the turnaround time for non-immigrant visas are generally quicker than U.S. Green Cards). But the application process is fraught with challenges for startups, and companies with smaller budgets are often at a disadvantage.

Bringing an employee to the United States can be a challenge for startups, but it’s not impossible

Congress caps available H-1B visas at 85,000, with 20,000 of those reserved for workers with a master’s degree or above, and for more than 10 years, accepted proposals were decided by lottery. For the third year in a row this year, the U.S. Citizenship and Immigration Services (USCIS) reached the cap in the first week. In fact, the USCIS received a record 233,000 petitions in 2015, meaning that more than two-thirds of applications for H-1B visas were denied.

With that kind of statistic, needless to say it’s important to get your H-1B visa proposal right the first go around.

What are the Requirements for an H-1B Visa?

An H-1B visa is the most common way for employers to sponsor professional workers in the U.S. In order to qualify for sponsorship, the employee must hold a position that requires at least a bachelor’s degree or equivalent experience in the field. Once approved, an H-1B visa allows employees to stay and work in the U.S. legally for up to three years. After those three years, the visa can be renewed for up to six years.

What are the Costs for an Employer to Sponsor an H-1B Visa?

H-1B visas cost employers about $5,000 (including government fees) per employee. Immigration lawyer fees cost on average $2,000 to $3,000, while filing fees are usually about $3,000. Employers must also have enough money in the bank necessary to pay the H-1B employee’s salary for a reasonable period of time. The analysis is on a case-by-case basis.

How to Petition for an H-1B Visa

Employers must file the petition for the visa on behalf of employees, who are not allowed to self-petition, and cannot petition more than six months before new employees’ start dates. Every company, regardless of size or maturity, must petition for one of the only 85,000 H-1B visas made available every April 1 by USCIS. Note that 20,000 H-1B visas are reserved for workers with advanced degrees (a master’s degree or above).

Every company, regardless of size or maturity, must petition for one of the only 65,000 H-1B visas made available every April 1

Before filing an initial petition, every company must file a Labor Condition Application (LCA) with the U.S. Department of Labor. The LCA is a series of statements that attest to the fact that hiring the H-1B employee will not adversely affect any U.S. citizen workers. This includes the following statements:

  • the employee will be paid the average wage for the role
  • the employee will receive the same benefits as others in the role
  • the employee will not negatively affect the working conditions of other employees
  • there is no active labor dispute or work stoppage in place at the time of hiring the employee

Within 24 hours of filing, the LCA must be made available in a Public Access File to any member of the public who requests it, meaning the H-1B employee’s wage is obtainable by anyone.

Next Steps: the Challenges for Startups

For startups, the difficulties associated with obtaining an H-1B visa hardly stop there. After the LCA is filed, things can start to get sticky.

In order for an H-1B visa to be approved, the USCIS must determine that a company is properly established and has the cash flow necessary to provide the H-1B employee the average wage for the role as established in the LCA. While this is normally not a problem for large corporations, early-stage startups often aren’t yet profitable, and for a startup employer to sponsor an H-1B visa, they must be able to show evidence of financial stability. Startups usually achieve this by filing information about any funding rounds, but other evidence to prove viability may also be necessary. Other forms of proof startups should consider includes a business plan, employee contracts and/ or leases for office space. An annual report or U.S. tax return may also do the trick.

Startup employers must be able to prove financial stability in order to sponsor an H-1B visa  

Sponsoring an H-1B Visa for Startup Founders or CEOs

Things become even more muddled when the employee you’d like to sponsor is the startup co-founder or CEO because of USCIS provisions that an H-1B employee have a demonstrable employee-employer relationship with the sponsoring company. This can be a difficult task for a co-founder or CEO who is effectively his own boss.

But startups may still be able to attain an H-1B visa for a CEO or co-founder by providing evidence of a board of directors with the power “to hire, fire, pay, supervise or otherwise control” the employment of the CEO or co-founder. USCIS just wants to see that there is another entity that acts as a check on an employee’s authority, even if he or she is a majority shareholder.

Conclusion

Any startup interested in hiring foreign nationals should consult an immigration attorney

In 2015, Google Executive Chairman Eric Schmidt sarcastically called the U.S. immigration process “a brilliant strategy,” adding, “We take very, very smart people, bring them into the country, give them a diploma and kick them out where they go on to create companies that compete with us.”

Since 2011, there have been various passes at creating a “Startup Visa” specifically designed to encourage foreign entrepreneurs to establish their businesses in the U.S., but so far Congress has yet to pass any reforms.

With increased scrutiny of current immigration laws, change is certainly in the future, but in the meantime, any startup employer interested in hiring foreign nationals should consult an immigration attorney with experience with the H-1B process.

About the author

Matt Faustman

Matt Faustman

Matt is the co-founder and CEO at UpCounsel. Matt believes in the power of online platforms to change antiquated ways of life and founded UpCounsel to make legal services efficiently accessible. He is responsible for our overall vision and growth of the UpCounsel platform. Before founding UpCounsel, Matt practiced as a startup and business attorney.

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