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Encouraging Entrepreneurship? - August 4, 2011

On August 2, 2011, Department of Homeland Security Secretary Janet Napolitano announced that her agency was paving the way for entrepreneurs to come to the United States to "spur job creation".


The initiative primarily consists of clarifications of agency policy, including guidance that an entrepreneur: (1) can be sponsored for H-1B temporary work status by her own company if a board of directors has the ability to "hire, fire, pay, supervise or otherwise control" her work; (2) can qualify for the EB2 immigrant category if she has an advanced degree or has shown exceptional ability  and has an approved labor certification; and (3) can qualify for a "national interest waiver" of the labor certification requirement in certain situations.

Additionally, the agency has committed to faster processing (for a fee) for EB5 investor petitions in regional centers and EB1 multinational executives and managers.

Other enhancements to the EB5 program were announced in May and are being implemented.

We laud this initiative, but cautiously.  Its success will depend on U.S. Citizenship & Immigration Service implementation.  If USCIS examiners take a real-world view of concepts like employer/employee "control" and "exceptional ability" it will be a welcome relief from recent tightening of such interpretations to the point of strangulation.

Applications for categories that require similar discretionary determinations have been greeted with skepticism that verges on paranoia.  Written testimony by experts with nothing to gain from the application is routinely ignored.  The applicable legal standard of proof, "preponderance of the evidence" (i.e., more likely than not), in practicality has become "beyond a shadow of a doubt".  The plain language of regulations is rejected in favor of tortured interpretations aimed at preventing alleged abuse by a few applicants.

Unless entrepreneurs are treated very differently than academic researchers, international executives and other highly-skilled professionals, these administrative clarifications will not create any new jobs.

Another complication is that DHS does not control the Department of Labor.  Obtaining a labor certification from DOL is impossible if the job is not open to U.S. workers.  An entrepreneur is typically essential to the functioning of her company.  Applicants must disclose their ownership interests when filing the labor certification. If DOL believes that the entrepreneur would not be replaced with a U.S. worker found to be qualified in the required labor market test, the labor certification will be denied.

Although the new guidance suggests that waiving the labor certification requirement will be easier if jobs will be created, to take advantage of this route, the entrepreneur must have either an advanced degree or prove "exceptional ability", which to date has been problematic because of strict agency interpretation mentioned above.

We hope this initiative signals a new era of real-world evaluation of reasonable evidence, and that the Department of Labor follows Homeland Security's lead to further encourage entrepreneurship.  If so, this initiative could open up exciting possibilities for U.S. start-up companies.