American business experienced a near record number of mergers and acquisitions in 2016, and this trend is likely to continue in 2017. Such corporate transactions raise a number of legal issues, including employment issues. During its due diligence review, the buyer considers whether the seller’s workforce is covered by collective bargaining agreements, what benefits are offered, what policies are in place, and related matters. The buyer, however, often fails to consider the immigration issues that may arise as a result of an acquisition, merger, or other corporate restructuring. The Form I-9 compliance is always a key concern in such corporate transactions, but there also are other significant immigration law concerns. For example, the transaction may cause some of the seller’s employees to lose the ability to work in the United States because their employer is changing. Many temporary immigration classifications are specific to the employer, the worksite, and the job. A sudden change in the identity of the employer or material changes in the job may lead to the loss of employment authorization. Another consideration is whether the buyer is purchasing the stock of the target company (becoming the new owner through the purchase) or buying only the assets of the seller. An asset purchase is more likely to trigger a loss of employment authorization among the foreign nationals following the corporate restructuring.
These issues must be identified prior to the closing. Waiting until after the deal is final may result in periods of unauthorized employment or the loss of skilled employees, which lowers the value of the corporate transaction. Either outcome is bad for the buyer. Thus, the buyer’s due diligence must include a review of employment authorization issues.
During this review, the buyer should gather information such as the following:
After gathering and analyzing this information, the buyer should develop a plan for how to maintain authorization to employ the foreign nationals after the corporate transaction is completed. This plan may include a period during which the seller will continue to employ the foreign nationals to allow the buyer time to commence new immigration cases.
Below is a list of the most likely temporary classifications that the buyer will encounter in a corporate restructuring.
These are just a few of the immigration issues that arise in corporate restructuring. Will your company soon be involved in an acquisition, merger, or similar corporate transaction? If so, before the transaction closes, identify and develop a solution to the immigration issues. With enforcement of the immigration laws now a top government priority, expanding the due diligence review to include immigration concerns will serve the company well.