On March 15, 2023, USCIS issued policy guidance to explain how it analyzes an employer’s ability to pay the proffered wage in certain employment-based I-140 immigration petitions, including PERM labor certification-based cases. This article will discuss this policy guidance as well as the general rules for employers to document their ability to pay the proffered wage where they do not meet the primary requirements.
Employers who want to classify prospective employees under first (EB-1), second (EB-2), and third (EB-3) preference employment-based immigration classifications that require a job offer must demonstrate their continuing ability to pay the proffered wage to the beneficiary from the priority date of the immigrant petition until the beneficiary obtains lawful permanent residence.
These classifications are as follows:
- EB-1B outstanding professors or researchers;
- EB-1C certain multinational managers or executives;
- EB-2 professionals holding advanced degrees or aliens of exceptional ability (excluding National Interest Waivers)(PERM-based); and
- EB-3 skilled workers, professionals holding a bachelor’s degree, and other workers (PERM-based).
The priority date is the date that the PERM labor certification application is filed. For petitions filed pursuant to the categories of EB-1A (only for those filed by an employer), EB-1B and EB-1C, where no PERM labor certification is filed, the priority date is the date that the Form I-140 immigrant visa petition is filed.
Employers that have fewer than 100 employees must submit either annual reports, federal tax returns, or audited financial statements for each year since the priority date of the Form I-140 immigrant visa petition.
- Annual reports
Publicly traded companies of a certain size must submit annual reports to the US Securities and Exchange Commission (SEC) on Form 10-K, which also includes the company’s audited financial statements. These companies must also issue an annual report to shareholders, which contains the company’s audited financial data. USCIS will accept either Form 10-K or the annual report to shareholders. USCIS will also accept annual reports of private companies, but more persuasive reports contain audited financial data.
- Federal tax returns
The applicable Internal Revenue Service (IRS) tax return form and filing deadline vary depending on the petitioner’s business structure or entity classification election. However, any employer submitting federal tax returns as evidence of their ability to pay the employee should submit the complete tax returns with all schedules to USCIS.
If the tax return shows a loss or a net profit that is lower than the proffered wage then please see below for a discussion of secondary evidence that USCIS may consider.
- Audited financial statements
If submitting audited financial statements as proof of their ability to pay, the employer must also submit an auditor’s report certifying that the financial statements have been audited. There are four types of auditor’s reports that accompany audited financial statements: unqualified opinion, qualified opinion, adverse opinion, and disclaimer of opinion. USCIS prefers reports that include an unqualified opinion.
USCIS will then analyze these financial documents and determine whether they demonstrate that the employer has the ability to pay the employee the proffered wage.
Employers that have 100 or more employees can submit a statement signed by their financial officer attesting to the petitioner’s ability to pay the employee the proffered wage, instead of any of the three forms of evidence described above. The letter should include a detailed explanation of how the financial officer made the conclusion regarding the company’s finances. USCIS will then determine if the statement is sufficient evidence of the employer’s ability to pay.
All employers can submit additional evidence if they think it will help their case and this is recommended where the employer is providing the ability-to-pay letter from the chief financial officer instead of the other primary documents (tax returns, annual report or audited financial statements). This additional evidence includes profit and loss statements, bank account records, or personnel records. USCIS will consider all evidence submitted as evidence of the petitioner’s financial abilities. Many employers prove their ability to pay by submitting payroll records and IRS Forms W-2 that prove that they have been paying the employee at least the proffered wage since the priority date. These records are submitted in addition to the required documents listed above, not in place of them.
ALTERNATIVE EVIDENCE WHERE THE PRIMARY REQUIREMENTS ARE NOT MET
If the employer cannot provide any of the primary documents evidencing their ability to pay (tax returns with a net profit equal to or exceeding the proffered wage, annual report, audited financial statements, financial officer letter), the employer can still establish its ability to pay the required wage through other evidence. USCIS recognizes this and has stated: “Sometimes companies operate at a loss for a period to improve their business position in the long run. For example, a company may not expect research and development costs on a product line to generate revenue for several years. In those instances, the documentation should fully explain the sources of funding for the entity (or unit) and the expected profit potential. Whether the employer can demonstrate it has the ability to pay the beneficiary the wages described in the petition depends on the specific facts presented and consideration of all of the circumstances.”
- Payment of wages: USCIS can rely on the employer’s current or previous payment of the wage to the beneficiary to determine the company’s ability to pay.
- Net assets
- Profit and loss statements
- Bank account records
- Personnel records
- Credit lines
- Totality of the circumstances: USCIS can also consider other factors in its totality of the circumstances analysis, including the employer’s gross sales and revenue, the total wages paid to the employer’s current employees during the most fiscal years, and the historical growth of the employer’s business.
Employment-based immigration petitions are complicated, costly, and take months, if not years, to adjudicate. It is critical that the employer satisfies every requirement in order to employ the beneficiary, which includes demonstrating their ability to pay the beneficiary the proffered wage from the priority date until they obtain legal permanent residence. Attorney Monique Kornfeld has helped employers obtain approved immigrant visa petitions and applications for legal permanent residence for their employees. Contact her today to request her expert guidance.