The Employer’s Obligation to Establish “Ability to Pay” During the Green Card Process

The process to obtain a green card based on employment typically consists of three steps: (1) A labor certification from the Department of Labor; (2) a I-140 petition filed by the employer, and (3) an adjustment of status application filed by the employee.

The first step, the labor certification, often looms the largest because of the challenges involved in this step (proving that there is no qualified U.S. worker for the position). Because this step is technically the most challenging, it often overshadows step (2), the I-140 petition.

For many employers and employees, the I-140 petition is relatively simple. The company merely needs to prove their ability to pay the salary of the foreign national when the person becomes a legal permanent resident, and prove that the foreign national meets the requirements for the position. However, some companies are surprised to discover that this step can be more challenging than anticipated, even when their business is well-established and successful.

This results from tension between tax strategy and immigration strategy. From a tax standpoint, companies are incentivized to reduce their net income as much as possible in order to reduce tax liability. This might involve recognizing large tax write-off items in a given year that are unrelated to their cost of sales, but that still greatly reduce net income. This can result in having minimal or even negative net income for a given year.

Consequently, the fact that a company clearly has the “practical” ability to pay the employee’s salary does not necessarily mean they can easily prove this at the I-140 stage.

Let’s turn to what immigration requires from the employer to prove ability to pay at the I-140 stage.

USCIS Ability to Pay Requirements

An employer’s ability to pay must be shown from the priority date (the date the labor certification is filed) until the foreign national employee obtains legal permanent resident status.

The Test

To meet the ability to pay requirement, an employer must meet one of the three tests below:

• Net income exceeds the annual salary of all foreign nationals currently seeking green cards at the company;
• Net current assets (defined as current assets minus current liabilities) exceed the annual salary of all foreign nationals currently seeking green cards at the company; or
• The employer has already been paying the employee at or above the salary for the position.

The Evidence

Ability to pay can be established by the following evidence:

• Copies of annual reports
• Federal tax returns
• Audited financial statements
• The employee’s W-2s and recent paystubs to show that they have been paid at or above the prevailing wage for the position since the filing of the labor certification.
• If the employer has more than 100 employees, DHS may accept a statement by a financial officer that establishes ability to pay.
• In appropriate cases, DHS may also consider other relevant evidence of ability to pay such as profit and loss statements, bank account records, or personnel records.

It is imperative to discuss with the employer how they will meet this test BEFORE you begin the labor certification process. Nothing is more disappointing than successfully navigating the challenging labor certification process only to discover that the employer has a serious issue with establishing ability to pay.

SHAFTEL LAW has obtained approved I-140s for companies that have faced numerous challenges relating to the ability to pay requirement. If you have questions about ability to pay or about the employment green card process in general, give us a call and an attorney will answer your questions: (303) 872-6985.
 
 
 
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