Job Creation Requirement: In-Depth

The chief requirement for the EB-5 visa is the end result of an alien applicant’s investment: the creation of at least 10 full-time jobs for qualifying U.S. employees.

Legal Lingo

Though some of the definitions may be self-evident, it’s worth revisiting how immigration law defines key terminology in the context of the EB-5 visa’s job creation requirement: employee, full-time, and qualifying employees.

An “employee” is defined as an individual who provides services or labor in exchange for compensation from an employer. “Full-time” employment is defined as an employee having a minimum of 35 working hours per week, and excludes independent contract work that meets or surpasses this minimal threshold. For EB-5 purposes, “qualifying employees” are U.S. workers. This category, however, excludes nonimmigrants such as E, H, L, or other temporary worker visa holders, and includes U.S. citizens, permanent residents, asylees, and refugees. Jobs occupied by neither EB-5 investors nor their relatives can be counted toward the employment opportunities created.

Time Constraint

EB-5 investors are not required to hire 10 or more U.S. workers right at the time they initially invest their capital. Rather, they can provide U.S. Citizenship and Immigration Services (USCIS) a comprehensive business plan evidencing the need for at least 10 full-time employees “within a reasonable time” after investment. (More on “business plans” below.) This business plan is typically a part of an EB-5 investor’s Form I-526 petition. USCIS considers “reasonable time” to amount to within two years after applying for an EB-5.

Why two years? EB-5 investors must demonstrate the requisite job creation before their conditional green card, which lasts for two years and cannot be renewed, expires. In effect, USCIS dangles the carrot of permanent residency in front of EB-5 investors, who must demonstrate the creation of their 10 or more jobs before USCIS awards them approved Form I-829, Petition by Entrepreneur to Remove Conditions on Permanent Resident Status. Note that the jobs claimed must be maintained through the I-829 adjudication process.

Evidence of Job Creation

In order to prove that their investment has led, or will lead, to 10 full-time employment opportunities for qualifying U.S. workers, immigrant investors must submit the following evidence to USCIS:

  • If the NCE has yet to support 10 full-time U.S. workers: A comprehensive business plan showing that, in light of the nature and projected size of the NCE, a need for no fewer than 10 qualifying employees will result within two years’ time; said plan must include approximate dates.

About that Business Plan

We’ve referenced a “business plan” twice above, and it’s important to understand where that aspect of an EB-5 petition originates. In a 1998 decision referred to as Matter of Ho, the USCIS Administrative Appeals Office (AAO) set the parameters for what a “credible” and “comprehensive” EB-5 business plan constitutes. The ruling, which has since been incorporated in USCIS’s EB-5 policy manual, concluded that such a plan should include the following:

  • At a minimum, a description of the NCE, its products or services (or both), and its objectives
  • A market analysis, including the names of competing businesses and their relative strengths and weaknesses vis-a-vis the investor’s NCE
  • A comparison of the products and pricing structures of the NCE’s competitors
  • A description of the target market of the NCE, including prospective customers
  • A description of the manufacturing or production processes, including the materials required as well as the sources of such materials, if applicable
  • A detailed list of any and all contracts executed for the supply of materials or the distribution of products for the NCE
  • A description of the NCE’s marketing strategy, if applicable; this should include pricing, advertising, and the like
  • An overview of the NCE’s organizational structure, including the business personnel’s experience
  • A description of the NCE’s staffing requirements, including job descriptions for all positions and a timetable for hiring
  • Financial data and inputs, including sales, cost, and income projections, and a description of the basis used therein

While a business plan that passes USCIS muster doesn’t have to contain each and every item listed above, it’s important for an EB-5 investor to include as many details as possible. USCIS adjudicating officers exercise discretion over determining whether or not a business plan is “comprehensive” and “credible.” Erring on the side of including more details thus helps an alien investor’s chances of submitting an acceptable business plan and ultimately proving that his or her investment will yield 10 full-time jobs.

Direct or Indirect? It depends.

For all EB-5 direct investments, which exclude the two special situations discussed below, the requisite 10 or more jobs created must be “direct” jobs. This means that the jobs are held by employees working directly within the NCE, and at the foundation of these positions is an employer-employee relationship between the NCE and them.

Not clear enough? Consider an example. Say you, as an EB-5 candidate, directly invest in a hotel. An example of a direct job that would count toward the requisite 10 or more created would be a full-time concierge or reservation manager.

For investments made in regional centers or “troubled” businesses, the requisite 10 or more jobs created can be direct, as exemplified above. But this requirement is rendered more flexible in light of the nature of investment.

Regional Centers

Investors in regional centers must create the same minimum number of jobs, with the caveat that these jobs can be created indirectly by the commercial enterprise, or otherwise induced by it. As defined by USCIS, “indirect” or “induced” jobs are those held outside of the commercial enterprise.

  • Indirect jobsare employment opportunities ancillary to the commercial enterprise but are created as a result of the enterprise. They include, for example, service provides or equipment manufacturers of the enterprise.
  • Induced jobs are employment opportunities created within the greater community where the commercial enterprise is located, which come about as a result of, for instance, income spent by EB-5 project employees.

 

Regional center investors can demonstrate indirect job creation by way of one of two methods:

  • They can base job creation off their infusion of capital into a regional center enterprise.

    -An example of the above is a construction loan to a developer.

  • They can base job creation off direct employment. In other words, directly hiring a qualifying worker can be demonstrated to indirectly lead to job creation elsewhere.

Regardless of the method employed, quantifying indirect job creation requires the use of input-output economic modeling. USCIS considers some of the more commonly utilized models in existence to be economically valid: IMPLAN, RIMS II, and REDYN. (For the economics-minded, or otherwise curious, readers out there: “input” refers to financial metrics like expenditures of investment capital, revenues generated by a business receiving investment capital, or increased spending in an area; “output” refers to the result of the calculation, i.e. the creation of full-time equivalent jobs on the basis of direct, indirect, or induced job creation.)

Troubled Businesses

The EB-5 program considers job preservation to be just as important to the U.S. economy’s health as job creation. Accordingly, aliens making investments in troubled businesses are allowed to count jobs that their investments saved toward the job creation requirement.

A business is characterized as “troubled” if it meets two basic conditions:

  1. It has been an existence for at least two years.

  2. It is declining, as measured by posting a net loss of at least 20 percent of the company’s net worth during the 12- to 24-month period prior to the alien’s submission of a Form I-526.

Note that investments in troubled businesses can satisfy the job creation requirement by preserving or creating 10 full-time jobs (or by doing so through a combination of the two).

Special Note on Construction (and Other Temporary) Workers

USCIS will count construction industry jobs created directly or indirectly toward the job creation requirement, provided that an EB-5 investor satisfies one condition: the jobs last for at least two years.

In general, the two-year benchmark is the standard for these and similarly temporary job positions. And so, if an EB-5 investor would like to count these jobs toward the requisite number, he or she must demonstrate convincingly that the NCE will require such temporary work for at least 35 hours a week over the course of at least two years prior to filing his or her Form I-829.

Note that this standard cannot be met with just any temporary job position. For instance, USCIS would generally not consider an electrician’s job as one lasting for at least two years.

(For the statutory source of the information presented in this article, refer to 8 C.F.R. § 204.6(e).)

For more detailed information about the EB-5 visa, refer to the following links:

Updated 06/09/2017