L-1 Visas and the Trump Administration

By Becky Sigmund and John Hill

International companies that choose South Carolina to establish a new location frequently rely on the L-1 intracompany visa program as the means to transfer key employees within their multinational organization to the United States.  The L-1 work visa category allows multinational companies to transfer experienced managers and employees with company-specific specialized knowledge (such as engineers and technicians) from a foreign affiliate of the organization to the U.S. operations.

In recent months, this column has examined potential changes being pursued by the Trump Administration with regard to U.S. immigration processes, including changes to commonly used work visa categories, and the limitations those changes may impose on employers’ access to needed foreign workers.  Two months ago, this column examined potential changes to the H-1B work visa category (see https://midlandsbiz.whosonthemove.com/h-1b-visas-change-coming/), and last month’s blog considered concerns with the TN visa category (see https://midlandsbiz.whosonthemove.com/trade-agreements-impact-business-immigration/).  Now, even the L-1 visa category appears to be at risk of potential changes.

Not long after the H-1B column, the Trump Administration issued its most recent immigration-related Executive Order (EO), entitled “Buy American and Hire American.”  Although the EO does not specifically mention the L-1 visa category, the EO does instruct the Departments of Justice, State, Labor, and Homeland Security to “propose new rules and issue new guidance, to supersede or revise previous rules and guidance if appropriate, to protect the interests of United States workers in the administration of our immigration system …”  Such comprehensive review of the U.S. visa system would necessarily include the L-1 visa program.  Some U.S. Government officials have expressed concerns about the L-1B program and believe that the program does not adequately protect U.S. workers.

Even before that EO was issued in April, the Trump Administration leaked a separate draft Executive Order in January entitled “Protecting American Jobs and Workers by Strengthening the Integrity of Foreign Worker Visa Programs.”  Its provisions include directives to the Department of Homeland Security (DHS) to (i) review all regulations that allow foreign nationals to work in the United States and determine which are not in the national interest and should be rescinded or modified; (ii) propose regulations or policy changes to restore the integrity of employment-based nonimmigrant worker programs and better protect U.S. workers; (iii) perform site visits at worksites of L-1 workers, including third-party worksites; and (iv) analyze the impact of immigration policies on U.S. society, economy, workers, and national security and provide recommendations to move toward a merit-based system.  Again, this EO is a draft and is unsigned, but it does reflect the Administration’s priorities.

Certain Congressional representatives have also expressed concern about the L-1 program.  Earlier this year, Senator Grassley (R-IA) introduced the H-1B and L-1 Visa Reform Act (S.180).  The S.180 bill includes provisions that would restrict the definition of “specialized knowledge” creating a higher and more difficult standard; impose a prevailing wage requirement for L-1 workers employed in the United States for more than one cumulative year; limit L-1 specialized knowledge workers to one-year approvals if they are stationed primarily at the worksite of a third party employer; prohibit an employer from replacing a U.S. worker with an L-1 worker; increase the standards for new U.S. subsidiaries seeking to use the L-1 program; authorize DHS to investigate employer compliance with the L-1 program; require DHS to audit at least one percent of the L-1 employers each year; require L-1 employers to send a copy of each L-1 worker’s W-2 to DHS; increase the civil penalty levels for L-1 violations; move the authority to adjudicate Blanket L-1 petitions from the State Department to DHS; and penalize employers that have 50 or more employees with more than 50% having L-1 and/or H-1B visas.  If enacted, these provisions could seriously impact employers, particularly those employers that rely on the “Blanket L” program, employers that leave their L-1 workers on the foreign payroll, and multinational companies needing to staff new U.S. subsidiaries with key L-1 transferees.

The L-1 visa program clearly benefits the success of international companies operating in the United States.  An organization’s proprietary knowledge held by employees can be imperative to the success of the U.S. operations.  The L-1 visa program enables such companies to bring employees with the expertise of the company’s technology, products, or processes to the U.S. operations.  In turn, such intra-company transfers promote the overall success of the U.S. affiliate thereby creating more jobs for U.S. workers.

Because of the usefulness of the L-1 program and its benefits to economic development in South Carolina, it is hoped that Washington will impose changes to the program only after careful evaluation of the potential detriment to the U.S. economy.

Ogletree Deakins has one of the largest business immigration practice groups in the Carolinas with eight immigration attorneys in South Carolina alone.  Contact John Hill at [email protected] or Rebecca Sigmund at [email protected].