Sale of Business During LC

Posted on July 25, 2006 by Warren Wen | Category: Immigration

Effects of Substitution of Employer upon Labor Certification

In today’s fast-paced economy, change of ownership of companies is pretty common through mergers, acquisitions and other corporate transactions.  However, the immigration consequences of such occurrences and transactions are often complicated and confusing.  We often receive calls from clients asking how the change of ownership of companies affect will affect their pending or approved application for labor certification.

In general, a new application need to be filed when the ownership of the company changes.  The DOL permits the substitution of a successor employer only if it occurs before a final determination and the particular job opportunity is preserved in the same area of intended employment.  In other words, when the ownership of company changes, a current labor certification could still be valid when the following two conditions are met: 1) The change of the ownership of the company occurs before a final determination is made upon the labor certification; and 2) The particular job opportunity stated in the labor certification is preserved in the same area of intended employment.

As to “successor in interest”, a new employer is considered to be a “successor in interest” when the new employer has taken over all of the obligations, liabilities, rights and assets of the original business and continues to operate the same business operated by the original employer.

I will use the following two examples to help the readers understand how the change of ownership of companies affects the status of an immigrant who has a pending labor certification.

Example 1:

Mr. Chung’s employer has filed an application for labor certification on his behalf just last month. While the application is pending, his employer now wants to sell the business to a friend.  His employer’s friend who will be taking over the business will continue to operate the same business operated by his original employer. The new owner-to-be is also willing to sponsor him for his application for labor certification.

Example 2:

Mr. Kim’s labor certification was approved last year, and his I-140 petition is pending.  The employer who is sponsoring for Mr. Kim’s immigration visa has been sold to another person.  The new employer is still willing to take over the sponsorship of his immigration visa application.

In Mr. Chung’s case, he does not need to file a new application for labor certification because the original application has not been approved yet, and the newly proposed employer is a “successor in interest” to his original company; that is, he agrees to take over all legal obligations of the original employer.  In his case, the new employer needs to submit a copy of the employer’s articles of incorporation, business license, state registration, or other official documents that establish the employer as a bona fide business entity and establish the legal buyout or “successor in interest” position.
For Mr. Kim, the employer has been replaced after his application for labor certification has been approved.  Thus, a new application for labor certification needs to be filed by the new employer.  Not only this will result in more time and fee involved with the new labor certification process, but this may also delay Mr. Kim’s immigration visa application process as whole, since this will result in a later priority date for  Mr. Kim’s immigration process.

Since the change of ownership of a company has significant impact upon a pending labor certification and the legal status of aliens, prior to the proposed transaction,     the employer needs to consult with an experienced immigration attorney in order to avoid unexpected immigration consequences when change of ownership of a company is on the horizon.

This article is only for your reference. Please do not apply mechanically to any exact cases. You are welcome to consult our attorneys at Liu & Associates, P.C. For contact information, please click here.