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Jul 25 Attorney Articles

From H-1B Worker to Start-Up Entrepreneur – Strategies to Make it Happen

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Many U.S. tech companies, including some of the nation’s top H-1B employers (Amazon, Meta/Facebook, Google, etc.), have been laying off thousands of workers in 2022 and 2023.  Among those laid off are foreign workers in H-1B and other work visa statuses.  While losing one’s job isn’t easy for anyone, it is particularly difficult for foreign workers on visas, who now have to scramble to find a solution within the provided grace period. This grace period allows them to remain inside the U.S. for 60 days past their last date of employment to hopefully find new H-1B sponsorship, figure out some other solution, or depart the country long-term.

Some are able to use the 60-day grace period to find new H-1B employment, with a new U.S. company filing an H-1B petition before the grace period expires. For those who manage to get this done, the problem may well be solved. However, finding new H-1B employment fast can be challenging in this climate. A high number of U.S. and foreign workers are looking for jobs in the tech sector at the moment, and the competition is stiff!

Others use the 60-day grace period to file a B-2 change of status application to buy themselves an additional 6 months inside the U.S. While this doesn’t provide work authorization, it at least provides additional time to hopefully find a new H-1B job. USCIS is seeing many of these B-2 applications that are used as a bridge between the prior H-1B job, from which the person was laid off, and a new H-1B job that will hopefully materialize right in time.

Others again may have a spouse, who is also on a U.S. work visa. Based on that, the laid off worker can apply for a dependent visa (i.e., H-4, TD, L-2, O-3, E-3S.) Some of these dependent visa options even come with work permits, though not all of them.

And yet others may be playing with the idea of starting a business of their own. In our practice, one question that repeatedly is being asked by some laid-off H-1B workers is whether they could found or co-found their own start-up. Many software engineers, data scientists, and others in tech have innovative ideas, cutting-edge skills, and entrepreneurial spirit. Some may already have had plans for a new start-up in the back of their heads for some time, and others may even be passive investors in a start-up they feel passionate about already.

The thing is, for some individuals, becoming an entrepreneur in the U.S. after being laid off by their H-1B employer could very much be within reach. Here are some ideas for making it happen:

1. H-1B Sponsorship By Your Own Start-Up

If you are an H-1B worker with a minority interest in a U.S. start-up and there’s a job waiting for you, the company can sponsor an H-1B for you. You can’t be a majority owner, because self-employment isn’t possible under the H-1B. Depending on the ownership percentage, it may need to be clearly established that a proper employer-employee relationship exists. However, that is very doable in cases involving minority shareholdership by the H-1B worker.

2. Change of Status from H-1B to O-1 Extraordinary Ability Worker

If you have enough outstanding skills under your belt, and if you have a minority interest in a U.S. start-up with a job waiting for you, then the company could sponsor a change of status to O-1 for you.

While extraordinary ability does require a certain level of industry achievement, the bar may not be as high as you may think. For example, if you’ve held critical or essential roles at reputable companies before, served as a judge at hackathons, published articles or blog posts online, developed popular open-source work, created an original app people liked, perhaps spoken at some industry events, or maybe won some awards or recognitions in your field, you may already have what it takes to get the O-1 visa status approved.

Some of the O-1 benefits are:

  • The O-1 employer wouldn’t be bound by the prevailing wage requirement that comes with the H-1B. Start-ups can’t always pay six-figure salaries right away, but that wouldn’t be an issue under the O-1.
  • The O-1 covers a wide variety of fields and industries, including sciences, technology, business, arts, or athletics.
  • The O-1 is initially approved for a 3-year period and can be extended in 1-year increments without a maximum (unlike the H-1B’s 6-year maximum.)
  • If you wanted to work at multiple start-up companies at the same time, then you could have a U.S. agent sponsor the O-1 visa for you. You’d need to have at least one work offer from a U.S. entity to show that you’ll be working in your field of expertise. Additional entities could be added even after O-1 approval. The agent could be anyone able and willing to market your work in your field.

3. Change of Status from H-1B to E-2 Investor

If you have sufficient financial resources of your own that you wish to invest in a new or existing U.S. business, you may qualify for the E-2 investor visa. One thing to note is that the U.S. investment enterprise must be majority-owned by you or by people of your nationality. Not all countries have an E-2 treaty with the United States, which means that not all nationalities qualify for the E-2; but many of them do.  You could be the sole owner of the E-2 business or a part-owner.  No field or industry is off-limit. If you meet the E-2 requirements, you could submit a change of status self-petition from within the United States, or you could apply for and E-2 visa directly at the U.S. Consulate in your home country.

4. The International Entrepreneur Parole

You may have heard of the relatively new International Entrepreneur Parole (IEP) program that’s available to entrepreneurs who possess a substantial ownership interest in a U.S. start-up entity created within the past five years and that has substantial potential for rapid growth and job creation. The IEP is a way for international entrepreneurs to temporarily live and work in the United States. It is not a visa, but a period of authorized stay. Through this rule, the Dept. of Homeland Security may use its parole authority to grant – on a case-by-case basis – a period of authorized stay up to 30 months, with the potential to renew for an additional 30 months. Please note that, for now, the IEP looks better on paper than in reality. The wait times are long with no option for premium processing, and there’s a great deal of uncertainty surrounding its execution.

All in all, H-1B visa holders – laid off or not – who want to become entrepreneurs within their own start-ups do have some options. Any of the above-listed strategies require competent immigration counsel to guide you through the process and help avoid potential pitfalls along the way. At HFM, we routinely advise H-1B employers and workers in these matters. Feel free to contact us for smart employment-based immigration strategies.