Changes in corporate ownership through mergers, acquisitions (both stock and asset), IPO, or other corporate transactions can cause its nonimmigrant and immigrant employees to lose work authorization and can subject the employer to serious I-9 (mandatory employment eligibility verification) compliance violations. To avoid the possibility of losing essential foreign employees and facing possible civil and criminal liability, employers should carefully consider the implications of the transaction on foreign workers and plan accordingly before the closing of a transaction. Advance planning will, in most cases, enable the employer to retain its key workforce and avoid liability.

We have outlined some issues for employers to consider when negotiating a corporate transaction and when performing the due diligence process.

In a corporate transaction involving foreign national employees, one of the first concerns should be whether such affected foreign national employee will be able to retain his or her work authorization. Most work visas are employer-, job- and location-specific, so it is critical to evaluate how corporate changes due to the transaction will affect certain foreign national employees and to vet any possible issues before the closing of the transaction. Depending on the structure of the transaction, the new employer may be required to file new or amended immigration petitions or take other pre-closing steps. If such petitions are not timely filed or if actions are not taken, the employee faces the loss of work authorization and possible removal from the United States. In addition, the employer may face possible civil and criminal liability. if appropriate steps are not taken.

Like work visa cases, most employer-sponsored permanent residence cases are employer-, job- and location-specific. If, due to a corporate transaction, the foreign national’s employer changes, the new company might be able to argue that it qualifies as a “successor-in-interest.” If the new employer is not a successor-in-interest for immigration purposes, the new employer will likely be required to start the immigration process again, which can be costly and time consuming.

In some corporate transactions, the new employer might qualify as a successor-in-interest (if it has assumed all of the seller's immigration related assets and obligations) to the prior employer, which will preserve many permanent resident processes and could reduce filing obligations and filing fees for temporary work visas. To qualify as a successor-in-interest, the acquiring company should be made aware of successorship requirements and include necessary language in the purchase and sale documents before they are signed and before the deal closes.

In 1986 the Immigration Reform and Control Act ("IRCA") was passed to provide additional security measures to keep U.S. employers from hiring immigrants not authorized to work in the U.S. IRCA requires that all U.S. employers to document that each employee hired after November 6, 1986 (including U.S. citizen employees) has employment authorization and that each employee's identity is consistent with their employment eligibility documents. Since 2006, the Department of Homeland Security has increased its enforcement of the IRCA and has increasingly investigated possible violations.

It is important that companies engaged in corporate transactions be especially diligent with regard to the I-9 employment verification obligation. In instances where the employer can be considered a successor-in-interest, the employer should be careful when reviewing the predecessor company's I-9 files. The employer must ensure that the predecessor company responded to any Social Security Administration-issued "no match" letters that indicate a discrepancy between the employee’s social security number and the SSA database. If the new employer is not a successor-in-interest or simply wants added security, it will have to conduct a full, new I-9 process upon closing the deal.