Dear Sophie: My co-founder’s a green card applicant who just got laid off. Now what?

Here’s another edition of “Dear Sophie,” the advice column that answers immigration-related questions about working at technology companies.

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Dear Sophie,

My co-founder and I were both laid off from Big Tech last week, and it’s the kick we needed to go all-in on our startup.

We’re both first-time founders, but my co-founder needs immigration sponsorship to maintain status with our startup.

Do we look at an O-1A in the 60-day grace period? Thanks!

— Newbie in Newark

Dear Newbie,

It’s been a crazy couple of weeks and we have more Big Tech (and startup) layoffs coming. We have lots of educational resources for what to do if you were laid off and you need non-immigrant visa sponsorship or a green card. As explained in last week’s article, there are ways for laid-off immigrants to seek additional time in the U.S. to make their next move.

Apparently, almost 25% of laid-off tech workers start their own companies, but I am sure the number has historically been lower for international folks because the ball and chain of the U.S. immigration system can feel weighty.

However, there are a lot of ways that you and your co-founder can take to successfully navigate the layoff, the grace period and sponsorship at the new startup. Here’s how:

Deadlines and pathways

The 60-day grace period is discretionary. We advise conservatively that the grace period begins from the date of termination, although some laid-off individuals will continue to get paychecks for many months. Many of the layoffs are public and WARN Act notices are issued, so the Department of Homeland Security is on notice.

That said, if you need more time to set things up properly for your new startup to exist and sponsor your co-founder’s immigration, your co-founder can apply for a change of status to B visitor. As a B-1 business visitor, your co-founder can engage in certain activities legally, such as business formation and fundraising meetings, and request an additional six months of time beyond the 60-day grace period. This application process can run in parallel with immigration sponsorship by a new company.

Sometimes, you can qualify to sponsor a co-founder for an H-1B transfer so they can work at your startup if you meet the requirements. Additionally, many individuals will use the runway provided by the six months of B-1 status to build their portfolio of accomplishments to qualify for an O-1A visa for extraordinary ability. The O-1 status is available to many professionals, including founders who can demonstrate they are at the top of their field.

An O-1A is particularly advantageous for startup founders, because it can be sponsored by an agent for an itinerary of services, including advising other startups for equity, being a venture scout for a VC firm and getting paid as a contractor for speaking engagements in your field. Founders born in India or China are subject to the green card backlogs for individuals, and the O-1A can be a great stepping stone to qualify for and self-sponsor the faster EB-1A green card pathway.

Incorporate

For either an H-1B, TN, E-3 change of employer or a change of status to O-1A, you should be aware of the importance of setting up your company to successfully sponsor your co-founder and other hires for visas and green cards while also attracting funding from investors.

I typically see that most VCs prefer investing in a C-corporation created in the state of Delaware, which is often referred to as a Delaware C-corp. Delaware laws protect investors, and these C-corps can distribute two or more classes of stock and stock options to employees, board members and investors. Talk to your attorney about registering your company in the state where you will base your business, apply for any business licenses and make sure you comply with all state regulations. I recommend you consult both an immigration attorney and a corporate attorney for the most effective strategies and recommendations.

U.S. Citizenship and Immigration Services (USCIS) considers many aspects of a new startup petitioning for a founder’s non-immigrant status based on the status of the non-immigrant visa. In general, for an H-1B, USCIS wants to see that there is an employer-employee relationship between your startup and your co-founder.

That means you or someone else at your startup, such as your board of directors, must supervise your co-founder and have the ability to hire them, set their salary and fire them. Demonstrating that your co-founder holds 50% or less of the shares in your startup also helps.

USCIS also wants to ensure your startup employs or will employ people and conduct business. Before submitting any petitions, it’s generally good to first:

• Fully establish your company legally and have at least a couple of months of records of compliance such as:
  • Articles of incorporation.
  • State certificate of registration.
  • Company bylaws.
  • Partnership agreements.
  • Any other relevant legal formation documents.
• Obtain a federal Employer Identification Number (EIN) from the IRS and keep the IRS SS-4 letter assigning your company’s EIN as evidence.
• Set up a U.S. bank account, provide some initial funding and keep your statements.
• Set up your branding and web presence, including logo and letterheads, a website, one-pager PDFs and other marketing materials, and a pitch deck to help USCIS understand your business.
• Talk to your immigration lawyer about how much physical office or coworking space you’ll need depending on the visa type, and make sure you have a reliable mailing address to receive snail mail correspondence from government agencies.
• Save evidence of your company’s funding and operations, including:
  • Funding documentation.
  • Wire transfers.
  • Cap tables.
  • Term sheets.
  • Contracts.
  • Letters of intent.
  • Employment records.
  • Records of payments to contractors.
  • Organization chart.

Specifically for your co-founder’s non-immigrant petition, start thinking now about what their detailed job description should include as well as the terms you want to be reflected in your ultimate offer letter.

Set them up for success

Your co-founder must gather the following documentation:

• A valid passport.
• Any expired passports if they were ever used for entry into the U.S.
• The most recent I-94, which can be downloaded here.
• Any previous immigration documents, such as Form I-797 Notice, Form I-20, DS-2019, any Employment Authorization Document cards.
• Diplomas and official transcripts.
• Certified translations of any document into English.
• Current resume or CV.

Ready for O-1A?

Retain an immigration attorney to prepare and file your co-founder’s O-1A petition. Together with counsel, you’ll need to determine which of the eight O-1A criteria your co-founder can establish as evidence of their success. To present a strong case, I typically recommend aiming to establish at least four of the following:

Nationally or internationally recognized awards

Received at least two awards for excellence, such as:

• A Ph.D. scholarship or doctoral dissertation award.
• Securing VC funding.
• Winning a startup pitch competition or hackathon.
• An award from a professional association or conference.

Exclusive, invitation-only membership

Joined a group or association that requires outstanding achievements that are judged by recognized experts. This cannot be a membership that only requires paying a fee. Memberships that qualify include:

• Fellow-level membership in the Institute of Electrical and Electronics Engineers (IEEE) or the Association for the Advancement of Artificial Intelligence (AAAI).
• Acceptance into accelerator or incubator programs, such as: Y Combinator or Techstars, or an invitation to be an adviser or mentor at an accelerator or incubator.

Featured in professional trade publications or major media

Your co-founder and their work have been featured in ideally six or more articles in high-profile publications. Press releases that were not published or posted don’t count. Student-run university publications don’t count either, and neither do posts on Medium unless they go viral.

Judge the work of others

Judged the work of others in their field or a related field at least once, such as at a hackathon or pitch competition.

Significant contributions

Your co-founder has made significant contributions to their field. This requirement often overlaps or ties in with the other criteria, such as achievements or contributions that have generated widespread commentary or media attention, or their work has been used by others through licensing patents or contracts.

Published articles

Your co-founder can fulfill this criterion by writing scholarly articles in journals or articles for professional or major trade publications, or major media in their field of expertise. Book chapters and books also count, but probably not if they are self-published and only sold 15 copies.

Blog posts don’t count unless they’ve generated a significant amount of views and comments. Generally, five or more articles in well-known publications are sufficient.

Critical employee

Your co-founder has played a “critical or essential” role at an organization with “a distinguished reputation,” which is typically one of the easier criteria for startup founders to meet. Recommendation letters, media coverage and company metrics are the most common evidence used.

Commanding higher than average pay

Your co-founder currently or previously has commanded a salary, equity or other compensation that’s higher than the industry average based on the geographical area. Bonuses may be considered if they’re included in the total wage calculation for tax purposes, but benefits such as stock options, 401(k) contributions and profit-sharing incentives do not count.

Generally, a salary should be above the 90th percentile of comparable wage data based on your location. We can also use their equity plus evidence of company valuation from fundraising to establish they have received high remuneration.

Once your co-founder gets their change of status to O-1A through, the EB-1A extraordinary ability green card and the EB-2 NIW green card will be within reach as well.

You’ve got this!

— Sophie

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The information provided in “Dear Sophie” is general information and not legal advice. For more information on the limitations of “Dear Sophie,” please view our full disclaimer. “Dear Sophie” is a federally registered trademark. You can contact Sophie directly at Alcorn Immigration Law.

Sophie’s podcast, Immigration Law for Tech Startups, is available on all major platforms. If you’d like to be a guest, she’s accepting applications!