Chapter 6 - Key Concepts
A qualifying organization for L-1 purposes is a U.S. or foreign firm, corporation, or other legal entity which:
Meets exactly one of the qualifying relationships specified in the definitions of parent, branch, affiliate, or subsidiary;
Is or will be doing business as an employer in the United States and in at least one other country directly or through a parent, branch, affiliate, or subsidiary for the duration of the L-1 beneficiary’s stay in the United States as an intracompany transferee; and
Otherwise meets the statutory definition of a nonimmigrant intracompany transferee.
A qualifying relationship exists when the U.S. employer is a branch, affiliate, parent or a subsidiary of the foreign firm, corporation, or other legal entity. To establish a qualifying relationship, the petitioner must show that the beneficiary’s foreign employer and the proposed U.S. employer are either the same employer (for example, a U.S. entity with a foreign branch office) or related as a parent and subsidiary or as affiliates.
In situations where the petitioner has submitted documentation of a qualifying relationship through possession of proxy votes, the petitioner must show that the proxy votes are irrevocable from the time of filing through the time of adjudication.
Further, any approval is conditioned on evidence demonstrating that the qualifying relationship will continue to exist during the approval period requested. Any changes of ownership and control of the organization post-adjudication require the petitioner to file an amended petition, as such changes may constitute a material change in circumstances or represent new, material information.
Stock certificates or other evidence of ownership interests, standing alone, generally are not sufficient to establish that a qualifying relationship exists. For instance, in the case of a corporation, documents such as the corporate stock certificate ledger, stock certificate registry, corporate bylaws, and the minutes of relevant annual shareholder meetings when appropriate, should also be examined to determine the total number of shares issued, the exact number issued to the shareholder, and the subsequent percentage ownership and its effect on corporate control.
When appropriate, officers should ask a petitioning company to provide all agreements relating to the voting rights of owners, the distribution of profits, the management and direction of the petitioning company, and any other factor affecting actual control of the entity. Without full disclosure of all relevant documents, officers may be unable to determine the elements of ownership and control. Officers may require evidence of the acquisition of the actual ownership interest (such as capital investment, wire transfers, stock purchase agreements, or others) as additional supporting evidence.
The most common types of business relationships that are not qualifying under the L category are those based on contractual, licensing, and franchise agreements. Additional non-qualifying relationships include arrangements such as less than 50-50 joint ventures and charter membership arrangements.
Publicly traded companies regulated by the U.S. Securities and Exchange Commission (SEC) may submit copies of annual reports, where probative, as evidence of their affiliates and subsidiaries. Most annual reports list the company’s foreign affiliates and subsidiaries, along with the company’s ownership interest (for example, controlling, not controlling, and joint venture). Annual reports are frequently prepared by major accounting firms and include audited financial statements. Evidence may also include copies of SEC Forms 10K and 10Q.
Where one or both of the qualifying entities has undergone or will undergo a corporate reorganization (such as merger, spin-off, or acquisition), officers must determine whether the qualifying relationship between the entities will exist following the reorganization. Officers should therefore review standard documents from the merger, including but not limited to: the letter of intent, minutes from shareholder meetings, the Hart-Scott-Rodino antitrust filings (if applicable), as well as the ultimate merger agreement. Unless the company is publicly traded, officers may encounter privacy concerns regarding proprietary or confidential transactional and financial information. In such a case, if a petitioner is unable or unwilling to provide information, adjudicators should determine whether the existing record leads to a finding that the petitioner’s burden has been met.
A parent is a firm, corporation, or other legal entity that owns another firm, corporation, or other legal entity that qualifies as its subsidiary. A parent owns a subsidiary when it:
Owns more than 50 percent (directly or indirectly) of the entity and controls the entity;
Owns 50 percent (directly or indirectly) of the entity and controls the entity;
Owns 50 percent (directly or indirectly) of the entity that is a 50-50 joint venture and has equal control and veto power over the entity; or
Owns less than 50 percent (directly or indirectly) of the entity but in fact controls the entity.
Therefore, ownership and control are two of the factors that officers must examine in determining whether a qualifying L-1 relationship exists between the foreign employer and the U.S. employer.
Ownership means the legal right of possession with full power and authority to control. Control means the right and authority to direct the management and operations of the business entity.
An affiliate meets one of the following:
One of two or more subsidiaries, all of which are owned and controlled by the same parent;
One of two or more legal entities owned and controlled by the same person;
One of two or more legal entities owned and controlled by the same group of persons, each person owning and controlling approximately the same share or proportion of each entity; or
In the case of a partnership organized to provide accounting or management consulting services, an entity inside the United States is an affiliate of an entity outside the United States if:
The entities market their accounting or management consulting services (directly or indirectly) using the same internationally recognized name, under an agreement with the same worldwide coordinating organization; and
The worldwide coordinating organization is collectively owned and controlled by the member accounting or management consulting entities or by their elected members (that is, partners, shareholders, members, employees).
Once these entities meet this definition of affiliate, they continue to be affiliates even if they subsequently enter a plan of association with a successor worldwide coordinating organization that is not collectively owned and controlled by its member entities or their elected members.
Branch means an operating division or office of the same organization housed in a different location. Probative evidence that the U.S. employer is a branch office may include but is not limited to one or more of the following:
A state or territorial business license establishing that the foreign corporation is authorized to engage in business activities in the United States;
Copies of the U.S. Income Tax Return of a Foreign Corporation (IRS Form 1120-F);
Copies of the Employer’s Quarterly Federal Tax Return (IRS Form 941) listing the branch office as the employer;
Copies of the Wage and Tax Statement (IRS Form W-2) listing the branch office as the employer; or
Copies of a lease for office space in the United States.
If the petitioner seeks to transfer the beneficiary from a foreign branch office, the petition should include comparable evidence to establish that the foreign employer is a branch office of a qualifying entity.
Doing business is the regular, systematic, and continuous provision of goods or services by a qualifying organization. Therefore, the mere presence of an organization’s office or agent in the United States does not, in and of itself, constitute doing business. Both the U.S. employer and at least one qualifying organization abroad must be doing business for the entire duration of the beneficiary’s stay in the United States as an intracompany transferee. Doing business requires activity, not just registration of the business or office or presence of an agent.
An exception exists for petitioners filing for an L-1 beneficiary coming to be employed by a U.S. organization that has been doing business for less than 1 year. Such a petitioner does not have to be actively engaged in doing business at the time of filing the petition. Instead, the petitioner must submit evidence that it has secured sufficient physical premises to house the new office, and the intended U.S. operation, within 1 year of the approval of the petition, will support an executive, managerial, or specialized knowledge position.
There must be a qualifying organization abroad that continues to engage in the regular, systematic, and continuous provision of goods and services for the entire duration of the L-1 beneficiary’s stay for a qualifying relationship to exist.
The presence of a dormant corporation, an agent, or a holding company abroad is not sufficient to establish a qualifying relationship for L-1 purposes. However, the organization does not have to be the same organization that employed the beneficiary abroad.
While the petitioner must show the organization is involved in the continuous provision of goods or services, there is no statutory or regulatory minimum level of business activity that must be conducted for the U.S. and the foreign organizations to meet this eligibility requirement.
However, the organization must be conducting business in a manner that would require the services of a person primarily engaged in a managerial, executive, or specialized knowledge capacity.
In order to make a determination that the organization is conducting sufficient business to require the services of a managerial capacity, executive capacity, or specialized knowledge employee, the organization’s personnel structure and the beneficiary’s stated duties must be placed in the context of the level of business that is being conducted by the organization.
Managerial capacity means an assignment within an organization in which the employee primarily:
Manages the organization, or a department, subdivision, function, or component of the organization;
Supervises and controls the work of other supervisory, professional, or managerial employees, or manages an essential function within the organization or a department or subdivision of the organization;
If another employee or other employees are directly supervised, has the authority to hire and fire or recommend those as well as other personnel actions (such as promotion and leave authorization) or, if no other employee is directly supervised, functions at a senior level within the organization hierarchy or with respect to the function managed; and
Exercises discretion over the day-to-day operations of the activity or function for which the employee has authority.
This means that the definition of managerial capacity has two parts:
The petitioner must show that the beneficiary will perform certain high-level responsibilities; and
The petitioner must prove that the beneficiary will be primarily engaged in managerial duties, as opposed to ordinary operational activities alongside the petitioner’s other employees.
The statutory definition of managerial capacity allows for both personnel managers and function managers.
Personnel managers must primarily supervise and control the work of other supervisory, professional, or managerial employees. A first line supervisor is not acting in a managerial capacity merely by virtue of the supervisor’s supervisory duties unless the employees supervised are professional.
If a beneficiary directly supervises other employees, the beneficiary must also have the authority to hire and fire those employees, or recommend those actions for HR personnel to take, and take other personnel actions.
If staffing levels are to be used as a factor in determining whether the beneficiary has acted or will be acting in a managerial capacity, officers must consider the reasonable needs of the organization, component, or function in light of the overall purpose and stage of development of the organization, component, or function.
Officers should evaluate a position that is primarily supervisory in nature as a personnel manager.
As noted above, an L-1 beneficiary may qualify for L-1A classification as a manager based upon their management of an essential function or a core activity. This is known as a function manager.
If a petitioner claims that a beneficiary will manage an essential function, the petitioner must clearly describe the duties to be performed in managing the essential function. That includes identifying the function with specificity, articulating the essential nature of the function, and establishing the proportion of a beneficiary’s daily duties dedicated to managing the essential function.
In addition, the petitioner’s description of a beneficiary’s daily duties must demonstrate that the beneficiary will manage the function rather than perform the duties related to the function.
To qualify as a function manager, the petitioner must demonstrate that:
The function is a clearly defined activity;
The function is essential (that is, core to the organization);
The beneficiary will primarily manage, as opposed to perform, the function;
The beneficiary will act at a senior level within the organizational hierarchy or with respect to the function managed; and
The beneficiary will exercise discretion over the function’s day-to-day operations.
Executive capacity means an assignment within an organization in which the employee primarily:
Directs the management of the organization or a major component or function of the organization;
Establishes the goal and policies of the organization, component, or function;
Exercises wide latitude in discretionary decision; and
Receives only general supervision or direction from higher level executives, the board of directors, or stockholder of the organization.
All four criteria must be met to qualify as an executive.
An L-1 beneficiary is not acting in an executive capacity merely based on the number of employees that the beneficiary directs or has directed. However, if staffing levels are used as a factor in determining whether an L-1 beneficiary has acted or will be acting in an executive capacity, officers must consider the reasonable needs of the organization, component, or function in light of the overall purpose and stage of development of the organization, component, or function.
An executive directs the management of the organization, major component, or essential function of a given organization by controlling the work of managerial or lower-level executive employees. This control could either take the form of direct supervision of those managers or executives or could be more indirect under some circumstances. For example, a chief financial officer may not have managerial or executive subordinates, but still may have authority over the company’s financial function that is binding on managers elsewhere in the company and affects their work.
Like managerial capacity, the definition of executive capacity has two parts. To demonstrate executive capacity, the petitioner must:
Show that the beneficiary will perform certain high-level responsibilities; and
Prove that the beneficiary will be primarily engaged in executive duties, as opposed to ordinary operational activities alongside the petitioner’s other employees.
Reciting the beneficiary’s vague job responsibilities or broadly-cast business objectives is not sufficient – the petitioner must provide a detailed description of the beneficiary’s daily job duties. The actual duties themselves will reveal the true nature of the employment.
Specialized knowledge means:
Special knowledge of the petitioning organization’s product, service, research, equipment, techniques, management, or other interests and its application in international markets; or
An advanced level of knowledge or expertise in the organization’s processes and procedures.
The corresponding regulation similarly defines specialized knowledge in terms of special or advanced knowledge: “[S]pecial knowledge possessed by an individual of the petitioning organization’s product, service, research, equipment, techniques, management, or other interests and its application in international markets, or an advanced level of knowledge or expertise in the organization’s processes and procedures.”
Because the statute and regulations do not define the terms special or advanced, USCIS refers to their common dictionary definitions, as well as the agency’s practice and experience in this context. The term special is defined in leading dictionaries as “surpassing the usual,” “distinct among others of a kind,” “distinguished by some unusual quality,” “uncommon,” or “noteworthy.”
The term advanced is defined in various dictionaries as “greatly developed beyond an initial stage,” or “ahead or far or further along in progress, complexity, knowledge, skill, etc.”
Applying these definitions to the statutory and regulatory text, a beneficiary seeking L-1B classification for certain specialized knowledge persons and professionals should, as a threshold matter, possess:
Special knowledge, which is knowledge of the petitioning organization’s product, service, research, equipment, techniques, management, or other interests and its application in international markets that is distinct or uncommon in comparison to that generally found in the industry; or
Advanced knowledge, which is knowledge of or expertise in the petitioning organization’s specific processes and procedures that is not commonly found in the relevant industry and is greatly developed or further along in progress, complexity, and understanding than that generally found within the employer.
A new office is an organization that has been doing business in the United States through a parent, branch, affiliate, or subsidiary for less than 1 year.
Because the term organization in the definition of new office is not separately defined, it can be either a U.S. or foreign corporation or other legal entity. The requisite less than 1 year limitation applies to the new offices that meet any of the four individual entity types – parent, branch, subsidiary, or affiliate. Among the factors to be considered are the amount of investment, intended personnel structure, product or service to be provided, physical premises, and viability of the foreign operation.
To qualify for L-1 nonimmigrant classification, among other requirements, the L-1 beneficiary must have been employed abroad by the qualifying organization for 1 continuous year out of the preceding 3 years.
The 1-year foreign employment requirement is only satisfied by the time a beneficiary spends physically outside the United States working full-time for the petitioner or a qualifying organization. A petitioner cannot use any time that the beneficiary spent in the United States to meet the 1-year foreign employment requirement, even if the qualifying foreign entity paid the beneficiary and continued to employ the beneficiary while the beneficiary was in the United States. Furthermore, the continuous year of foreign employment must be qualifying; that is, the petitioner must demonstrate that the beneficiary worked abroad during that period in a managerial, executive, or specialized knowledge capacity.
The beneficiary must meet the 1-year foreign employment requirement at the time that the petitioner files the L-1 petition.
The 1-year foreign employment requirement ensures the continuity of a beneficiary’s lawful employment with the same international qualifying organization, consistent with the purpose of the intracompany transferee nonimmigrant classification. Therefore, the proper reference point for determining the 1-year foreign employment requirement is the date the petitioner files the initial L-1 petition on the beneficiary’s behalf, the starting point in the noncitizen’s application for admission in L-1 status.
When the petitioner requests an extension of L-1 status (including a change from L-1A to L-1B status, or a change from L-1B to L-1A status), the 1-year requirement must have been met at the time of the filing of the initial L-1 petition.
Brief visits for business or pleasure in B-1 or B-2 status do not interrupt the 1-year foreign employment requirement. While a qualifying foreign entity employs a beneficiary abroad, brief trips to the United States for business or pleasure in B-1 or B-2 status toll the one continuous year of employment abroad. Therefore, in such cases, officers should subtract the number of days the beneficiary spent in the United States from the time the qualifying foreign entity employed the beneficiary abroad.
For example, if the qualifying foreign entity began employing the beneficiary on January 1, 2016, and the beneficiary made brief trips to the United States that year for a total of 60 days, the beneficiary would need to accrue at least an additional 60 days of qualifying employment abroad after January 1, 2017 to meet the 1-year foreign employment requirement.
Time a beneficiary spent working in the United States for a qualifying organization does not count towards the 1-year foreign employment requirement; however, this time does result in an adjustment of the 3-year period, in that the running of the 3-year period is tolled during that period.
USCIS considers a nonimmigrant in the United States to have come to this country to work for the qualifying organization if the nonimmigrant is employed by that organization as a principal beneficiary of an employment-based nonimmigrant petition or application, such as H-1B or E-2 executive, supervisory, or essential employee. If the beneficiary was admitted to work for the qualifying organization, their U.S. employment for the qualifying organization need not be in a managerial, executive, or specialized knowledge capacity to affect the dates of the relevant 3-year period used to determine whether the 1-year foreign employment requirement has been satisfied.
For example, if a beneficiary worked in the United States in valid H-1B status for a qualifying organization from January 2, 2017 through January 2, 2018, and the petitioner filed for L-1 nonimmigrant status for the employee on January 2, 2018, the relevant 3-year period is from January 1, 2014 to January 1, 2017.
On the other hand, the time a beneficiary spent working while in a dependent status does not result in an adjustment of the 3-year period. For example, time spent by a beneficiary in L-2 status does not result in an adjustment of the 3-year period, because the beneficiary was admitted as an L-2 to join the L-1 principal and not to work for a qualifying organization.
Likewise, if a beneficiary was admitted as an F-1 nonimmigrant and later applies for optional practical training (OPT) employment with the qualifying organization, the time spent in F-1 nonimmigrant status does not result in an adjustment to the 3-year period, because the purpose of admission was for study and not to work for the qualifying organization.
The time a beneficiary spent in the United States working for an unrelated employer, or not working at all, also does not result in an adjustment of the 3-year period. A break longer than 2 years in employment with the qualifying organization during the 3 years preceding the filing of the L-1 petition renders the beneficiary unable to meet the 1-year foreign employment requirement.
Periods the beneficiary spent in the United States without working (except for brief visits for business or pleasure in B-1 or B-2 status), or while working for an unrelated employer, interrupt the 1-year continuous foreign employment requirement, and officers should not adjust the 3-year period.
An otherwise eligible beneficiary may again qualify for the L-1 classification following a new 1-year period during which the beneficiary is employed by the qualifying organization abroad in a managerial, executive, or specialized knowledge capacity.
The relevant point in time for an officer to determine whether a beneficiary satisfies the 1-year foreign employment requirement is the date on which the petitioner filed the initial L-1 petition, regardless of when the beneficiary was, or will be, admitted to the United States.
Officers should take the following steps when determining whether the petitioner has established the 1-year foreign employment requirement. Officers should always look back 3 years from the date the initial L-1 petition was filed and then follow the steps listed in the table below.
Determining Whether Petitioner Established 1-Year Foreign Employment Requirement
Step 1: Determine the dates the beneficiary worked for the qualifying organization abroad.
Step 2: Determine lengths of any breaks in the beneficiary’s qualifying employment during the 3-year period immediately before petitioner filed the L-1 petition. If the beneficiary has lawfully worked for a qualifying organization in the United States as a principal beneficiary of an employment-based nonimmigrant petition or application, adjust the 3-year period accordingly.
Step 3: Subtract the total length of all the breaks identified in Step 2 from the relevant 3-year period. If the result is a continuous 1-year period within the relevant 3-year period, then the petitioner has met the 1-year foreign employment requirement.
[^ 6] See discussions of various qualifying and non-qualifying relationships in Matter of Schick (PDF), 13 I&N Dec. 647 (Reg. Comm. 1970); Matter of Del Mar Ben, Inc. (PDF), 15 I&N Dec. 5 (Reg. Comm. 1974); Matter of Aphrodite Investments, Ltd. (PDF), 17 I&N Dec. 530 (Comm. 1980); Matter of Tessel, Inc. (PDF), 17 I&N Dec. 631 (Acting Assoc. Comm. 1981); Matter of Barsai (PDF), 18 I&N Dec. 13 (Reg. Comm. 1981); Matter of Hughes (PDF), 18 I&N Dec. 289 (Comm. 1982); and Matter of Siemens Medical Systems, Inc. (PDF), 19 I&N Dec. 362 (Comm. 1986).
[^ 9] See Matter of Church Scientology International (PDF), 19 I&N Dec. 593 (Comm. 1988). See Matter of Siemens Medical Systems, Inc. (PDF), 19 I&N Dec. 362 (Comm. 1986). See Matter of Hughes (PDF), 18 I&N Dec. 289 (Comm. 1982).
[^ 10] Ownership and control are two of the factors that officers must examine in determining whether an affiliated relationship exists.
[^ 13] No single piece of evidence listed, or lack thereof, necessarily establishes the existence or non-existence of a branch office in all cases. Accordingly, the probative value of the evidence submitted varies on a case-by-case basis.
[^ 19] See Family Inc. v. USCIS, 469 F.3d 1313, 1316 (9th Cir. 2006). See Champion World, Inc. v. INS, 940 F.2d 1533 (9th Cir. 1991) (unpublished table decision).
[^ 22] See Champion World, Inc. v. INS, 940 F.2d 1533 (9th Cir. 1991) (unpublished table decision).
[^ 23] See Family Inc. v. USCIS, 469 F.3d 1313, 1316 (9th Cir. 2006). See Champion World, 940.F.2d 1533 (9th Cir. 1991) (unpublished table decision).
[^ 29] An organization may have more than one core activity.
[^ 35] See Champion World, Inc. v. INS, 940 F.2d 1533 (9th Cir. 1991) (unpublished table decision).
[^ 36] See Family Inc. v. USCIS, 469 F.3d 1313, 1316 (9th Cir. 2006). See Champion World, Inc. v. INS, 940.F.2d 1533 (9th Cir. 1991) (unpublished table decision).
[^ 37] See Fedin Bros. Co., Ltd. v. Sava, 724 F. Supp. 1103, 1108 (E.D.N.Y. 1989), aff'd, 905 F.2d 41 (2nd Cir. 1990).
[^ 45] The regulations separately define parent, branch, subsidiary, and affiliate in 8 CFR 214.2(l)(1)(ii) (8 CFR 214.2(l)(1)(ii)(I), (J), (K), and (L), respectively). The regulations define a branch as “an operating division or office of the same organization housed in a different location,” illustrating that the organization is not limited to only one location in the United States.
[^ 47] The term toll means that the beneficiary’s time in the United States will count neither towards nor against the 1-year foreign employment requirement.