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.
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:
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:
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.
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.
Regional center investors can demonstrate indirect job creation by way of one of two methods:
-An example of the above is a construction loan to a developer.
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.)
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:
It has been an existence for at least two years.
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: