Dear Sophie: How can I transfer my H-1B to my new startup in 2023?

Here’s another edition of “Dear Sophie,” the advice column that answers immigration-related questions about working at technology companies.

“Your questions are vital to the spread of knowledge that allows people all over the world to rise above borders and pursue their dreams,” says Sophie Alcorn, a Silicon Valley immigration attorney. “Whether you’re in people ops, a founder or seeking a job in Silicon Valley, I would love to answer your questions in my next column.”

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Dear Sophie,

I am RESOLVED: This is the year I finally live my dream and create my startup! I currently have an H-1B for my full-time engineering role at another company.

How can I transfer my visa to my startup? How do we structure the startup for immigration success?

—Restless & Resolved

Dear Restless & Resolved,

Congrats on embarking on this exciting new adventure and taking the first step toward living your dreams!

H-1B transfer is tricky, but it’s possible!

The short answer to your first question is: Yes, you can transfer your H-1B visa to your new startup. However, it’s a tricky process, and it’s important to establish the correct, compliant foundation before proceeding.

This set-up process can take time (several months), but the peace of mind you’ll have from knowing that everything is correct will be priceless. You should talk to both a corporate attorney and an immigration attorney. A corporate attorney can help you set up your company, including drafting bylaws, and an immigration attorney can help you determine the best strategy for you and any co-founders based on your personal and business goals.

You will need to take steps to qualify your company to petition you for the H-1B transfer, such as taking on a co-founder and getting funding for your startup.

Structuring your startup

To transfer your H-1B to your startup, you may need to give up control of your startup, (sometimes but not always) give up a major stake in it and ensure it is structured to meet all immigration visa requirements.

To meet the sponsorship qualifications, you must demonstrate to U.S. Citizenship and Immigration Services (USCIS) that:

• Your startup and you have an employer-employee relationship. This often means you must not own more than 50% of your company, and someone else must formally hire you, supervise you and your work and have the ability to fire you.
• Your startup has the ability to pay you the prevailing wage based on your position and geographical location as well as cover operations for the term of the visa petition (usually up to three years for an H-1B transfer).

Start planning now and map out your role at your startup, how many co-founders you will have, how much equity everybody else would receive, the roles of your co-founders and prospective investors. This will enable your attorney to see if your plan is viable and offer any alternatives.

Consult a corporate attorney to determine how to structure your startup. Generally, U.S. investors want to deal with Delaware C corporations. Even though you incorporate in the state of Delaware, your startup can be based anywhere in the U.S. and register separately to do business there.

Once your company exists, is operational, has some runway or traction and has officially extended you a job offer, it can initiate the H-1B transfer process. Once you engage an immigration attorney, your startup needs to get its Federal Employer Identification Number (FEIN) verified by the U.S. Department of Labor’s Office of Foreign Labor Certification. That step typically takes about a week.

Next, your startup’s immigration attorney would need to file a Labor Condition Application (LCA) with the Labor Department. The LCA is meant to ensure no American workers are available to fill the position the prospective H-1B recipient is being offered and to prevent any negative impact on the wages and working conditions of American workers.

If the Labor Department approves the LCA, your startup can file the H-1B petition to USCIS. If you are currently maintaining valid H-1B status or are within the 60-day grace period, you can start working when your startup receives a receipt notice from USCIS.

Things to keep in mind

While you’re on an H-1B visa sponsored by another company, you are only allowed to work for that company. If you work for your startup — even without pay — before transferring your H-1B, you risk losing your status and your ability to remain in the United States. Talk to your attorney about what is and isn’t allowed.

While on an H-1B sponsored by another company, these ownership-type activities are often permissible:

• Create and register an LLC or C-corp. (Check your current offer letter and any intellectual property agreements with your current employer first).
• Be a shareholder of the startup without providing advisory services or labor.
• Be a passive investor.
• Serve on the startup’s board of directors without equity.
• Talk to investors and board members.

Another thing to keep in mind: The H-1B visa allows a maximum stay in the U.S. of six years, and that maximum does not reset by virtue of an H-1B transfer alone.

With your immigration attorney, make sure you’re on track for starting the green card process to extend your H-1B beyond six years, especially if you were born in India or China.

Your startup’s ability to sponsor you for a green card depends on how much equity you would hold, so you should check your eligibility for the EB-1A extraordinary ability and EB-2 NIW (National Interest Waiver) green cards, which do not require PERM.

Alternative option

Instead of the H-1B, I often recommend that qualifying early-stage startups invest their limited time, energy and funds into applying for an O-1A extraordinary ability visa for their founders if they meet the standards for extraordinary ability.

While startups must still demonstrate that they have an employer-employee relationship with their founder for an O-1A, this option does not have a wage requirement nor limits on how much equity a co-founder can hold, like the H-1B.

You will, however, have to invest time and energy into building your qualifications for the O-1A. You must meet at least three of the following criteria to qualify, but for a strong case, I usually recommend meeting at least four:

• Earned nationally or internationally recognized awards, which can include funding for your startup or being accepted into a highly competitive accelerator or incubator program with stringent selection requirements.
• Invited to join a group or association that demands outstanding achievements.
• Featured in professional or major trade publications or major media.
• Made significant contributions to your field, such as your work or achievements have generated widespread attention in the media or have been used by others through licensing patents or contracts, or are advancing your field.
• Judged the work of others in your field in hackathons or pitch competitions and other events.
• Written and published articles in major media or professional publications.
• You are a critical or essential employee for a company with a distinguished reputation.
• You command higher than the average pay at early-stage startups.

I typically find that early-stage startup founders can get an O-1A in a few months with a little focused effort and can reap great benefits if you’re seeking a CEO role. An O-1A visa can also put you in a great position to pursue an EB-1A or EB-2 NIW green card.

All the best to you in 2023 and beyond!

— Sophie

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The information provided in “Dear Sophie” is general information and not legal advice. For more information on the limitations of “Dear Sophie,” please view our full disclaimer. “Dear Sophie” is a federally registered trademark. You can contact Sophie directly at Alcorn Immigration Law.

Sophie’s podcast, Immigration Law for Tech Startups, is available on all major platforms. If you’d like to be a guest, she’s accepting applications!