H-1B visas

Sometimes the best candidate for a
given position is not American-born.
In fact, in the never-ending quest to stay competitive, many U.S. companies
actively recruit worldwide for talent in a
diverse range of areas, such as IT, accounting, market research analysis and business
specialties.

“Companies that want to sponsor foreign
workers often procure H-1B visas to bring
them in,” explained Dr. Sara J. Coen,
esquire, director of the Immigration and
International Division for Rothstein
Rosenfeldt Adler. “If they wish to do so, the
time to act is now, in March, because it is a
time-consuming process. To the chagrin of
many, H-1B visas are subject to caps, and
there are only 65,000 available per year.
The H-1B visa is assigned on a first-come,
first-serve basis, and it can only be requested starting April 1 each year. Last year, the
quota was reached in less than 48 hours.”

What is an H-1B visa?

The H-1B visa is the most sought-after
employment visa for U.S. corporations. It is
used to bring a worker temporarily to the
United States to work in a ‘specialty occupation’ or a professional position.

In order to qualify, the foreign worker
must possess at least a bachelor’s degree
or its equivalent and state licensure, if
required. ‘Specialty occupation’ is defined
as requiring theoretical and practical application of a body of highly specialized
knowledge in a field of human endeavor,
including, but not limited to, architecture,
engineering, mathematics, physical sciences, social sciences, medicine and
health, education, law, accounting, business specialties, IT, theology, and the arts.

H-1B work authorization is strictly limited
to employment by the sponsoring employer.
The H-1B employee’s spouse and unmarried
children under 21 years old may be granted
a dependent H-4 visa, and they may live and
attend school in the U.S.

How long can the H-1B employee remain in
the U.S.?

The H-1B is a temporary status with specific limitations on periods of stay in the United States. The initial H-1B visa petition
is usually approved for three years; after
the initial period, three more years are
available. The employer must file an H-1B
petition extension after the initial three
years.

The law requires that after six years, the
H-1B worker must spend one year outside
the U.S. before he or she is entitled to have
another H-1B visa. However, upon securing
an H-1B visa, the employer has the option
to sponsor the foreign national for permanent residency, or ‘green card,’ and it is not
uncommon for workers on H-1B visas to
obtain permanent residency during their
initial three-year stay. Even if the green
card is not obtained in three years, usually
the H-1B visa holders pursuing a green
card are allowed to extend their stay
beyond the six-year limit upon compliance
with certain procedures.

What does the employer need to do?

The employer must make a bona fide job
offer to the foreign professional, complete
a Labor Condition Application with the
Department of Labor describing the position and salary, and upon its approval, file a
petition with the U.S. Citizenship and
Immigration Services (USCIS). The
employer must document that the position
requires a minimum of a bachelor’s degree
or its equivalent.

What does the employee need to do?

The employee must prove that he is qualified for the specialty occupation position
offered by the employer and must be able
to show that the university degree and/or
work experience is the equivalent of a U.S.
degree. This is usually done by an evaluation of credentials with a professional
organization.

What about if the position requires a master’s
degree?

In addition to the 65,000 yearly H-1B visas
for professionals with a bachelor’s degree,
20,000 visas are set aside for those individuals who hold a U.S. master’s degree. In
addition, individuals who will work for
organizations like universities and colleges
are exempt from the mandated quota.

When should a U.S. employer file for an H-1B
visa?

Since negotiating, preparing the position
description, evaluating and translating documents, and filing the Labor Condition
Application may take several weeks, the
best time to begin preparing the H-1B visa
package is at the start of the calendar year.

For the best chance of obtaining the H-1B
visa, the entire package must be ready to
mail by April 1, 2008. It is strongly recommended that employers file their H-1B petitions as soon as possible; there is nothing
more frustrating for an employer than to
find the ideal candidate and not be able to
hire that person because procrastination
and bureaucracy got in the way.

DR. SARA J. COEN, esquire, is the director of the Immigration and International Division for Rothstein Rosenfeldt Adler, Attorneys at
Law in Fort Lauderdale. Reach her at (954) 522-3456 or [email protected].

Employment enforcement

Immigration reform is a hot-button issue
with no easy answers, but its present situation requires vigilance on the part of employers.

“Of all issues in the domestic front, immigration is the one which denotes the most
emotional involvement and greater public
concern,” explains Dr. Sara J. Coen, Esquire,
director of the Immigration and International
Law Division at Rothstein Rosenfeldt Adler,
Attorneys at Law. “The inability of Congress
and the current administration to pass a comprehensive immigration reform bill has been
a detonator for the Department of Homeland
Security (DHS) to stride up immigration
enforcement in the workplace. Specifically,
DHS is enforcing existing laws and defending
the use of the E-Verify program and no-match
letters. The interior enforcement has instilled
apprehension in employers, who must now
be vicarious immigration law enforcers, as
the threats of fines and imprisonment loom.”

Smart Business asked Coen to help
employers understand and comply with
the current regulations.

What are no-match letters?

No-match letters are sent by the Social
Security Administration (SSA) to inform
employers that the Social Security number
provided by an employee does not match
SSA records. For years, employers ignored
the no-match letters without any consequence because the letter did not impute
any liability. However, on Sept. 15, 2007,
DHS issued a regulation that would treat
the receipt of a no-match letter as evidence
that the employer had ‘constructive knowledge’ of employing an undocumented
worker. The regulation sets out specific
safe harbor provisions for employers and
establishes that if the mismatch is not
solved within 90 days of receipt of the no-match letter, the employer must terminate
the employee.

On Oct. 10, 2007, a Federal Court granted
an injunction barring SSA from sending out
the no-match letters because, for the first
time, the letters were to include language
threatening possible immigration violations, including criminal and civil liabilities.
The next hearing on the matter will be on
March 1, 2008.

What is the E-Verify program?

The E-Verify program was established by
DHS to confirm whether an employee is
authorized to work in the U.S. and the
employer participation is voluntary. By signing up to the program, there is the presumption that the employer followed the safe harbor provisions; therefore, the ‘constructive
knowledge’ provision is not imputed on the
employer. However, the program has experienced many problems, including mismatches for many U.S.-born citizens and
legal permanent residents.

Employers must be aware that by signing
up to the E-Verify program, the employer
specifically authorizes the government to
come into the employer’s premises and
review its records without the need of a
warrant. Recommending participation in
the E-Verify program is like having an attorney tell his or her client to stop at the police
station and ask for a frisk.

What types of circumstances tend to lead to
DHS audits?

DHS looks for a pattern of behavior. Prior
to an audit, the employer receives a three-day notice. Upon receipt of the notice, the employer should immediately contact an
immigration and an employment attorney.

Raids happen impromptu and the employer should contact an immigration, employment and criminal attorney immediately.
The employer should try to record the raid
— video, camera, tape recorder, phone. The
employer should document the raid as
much as possible, including contacting the
media.

How can these consequences be avoided?

The operative words are prevention and
watchfulness. Four critical steps include:

 

  • A comprehensive compliance policy

     

     

  • Training program and other
    government programs

     

     

  • Internal audits

     

     

  • Corporate culture — Be more precise
    and respond promptly when you
    receive something from the
    government, but do not elaborate.

 

What should an employer who wishes to sponsor a foreign national do?

Initially, the employer can procure an
employment visa, which includes an
‘alphabet soup’ of visas: an H-1B visa for
Specialty Occupation, a TN visa for
Canadian or Mexican nationals only, an L
visa for Managers and Executives, and an
O visa for Exceptional Abilities. After
securing an employment visa, the
employer has the option to sponsor the
employee for permanent residency, or a
‘green card.’

The most sought-after employment visa
is the H-1B Specialty Occupation visa.
There are only 65,000 H-1B visas available
per year, and the earliest an employer can
file is April 1, 2008. Due to the popularity
of the H-1B visa, it is highly recommended that employers begin the process
immediately. Last year, the visa quota was
exhausted in two days. <<

DR. SARA J. COEN, Esquire, is the director of the Immigration and International Division for Rothstein Rosenfeldt Adler, Attorneys at
Law in Fort Lauderdale, Fla. Reach her at (954) 522-3456 or [email protected].

The perils within companies

It’s been said that even the best-laid
plans can go awry, and that definitely
holds true in the business world. If companies are formed correctly from
the start, you may be able to circumvent
lawsuits down the line, says attorney
Christina M. Kitterman of Rothstein
Rosenfeldt Adler Attorneys at Law in
Fort Lauderdale, Fla.

“I want new companies to avoid old
hassles,” she says. “I learned through litigating how to prevent the issues that
land them in court.”

Smart Business asked Kitterman
about how to set up agreements.

What is the difference between an operating agreement and a shareholder agreement?

A Limited Liability Company (LLC)
consists of members and managing
members who execute an operating
agreement. A sub-chapter S corporation
(S corp.) consists of shareholders, officers and directors who execute a shareholder agreement. The trend for most of
the companies I represent has been setting up LLCs and drafting the appropriate operating agreements.

What kinds of unanticipated problems have
you seen arise between partners?

The biggest problem I’ve run into is
when a member comes into a company
with only ‘sweat equity.’ If a company is
opened and one partner agrees to work
to earn his or her ownership interest and
another partner is providing the cash to
capitalize the business, both interests
need to be protected through the operating agreement.

The operating agreement should properly outline the agreement between the
partners as to when the ‘sweat equity’ is
earned and when the investing partner is
paid back, if at all. Failure to properly
outline these provisions in the operating
agreement will inevitably result in litigation between the partners.

Can you give a few examples?

A problem that I have seen arise is
when a partner who is supposed to work
to build the company to earn his ownership interest fails to live up to his promises. If the operating agreement is not
properly drafted and provides that the
working partner is immediately vested
with his ownership in the company and
there is no avenue to divest that partner
of the ownership interest that he has not
yet earned, the company is stuck with a
partner that has ownership that he did
not yet earn. As you can imagine, this
scenario will lead to litigation. That is
why it is imperative that all such eventualities are properly laid out in the operating agreement.

Basically, what I like to see is that if a
partner is brought in on ‘sweat equity,’
his percentage of ownership doesn’t vest
until certain criteria are met. The company must have a strategy to get rid of
the problem partner.

Another problem I have seen arise is
when a partner of the company is also a
manager of the company and there is no
provision in the operating or management agreement to properly discharge
the partner in the event of some intentional and illegal conduct on the part of
that partner. Generally, the company can
fire the partner from being a manager,
however, as an owner of the company,
the company may still be exposed to liability for the conduct of the partner. This
can be avoided if the operating agreement has specific language providing
that, in the event of such incidents, the
company and/or other partners may
force the problem partner to sell his
ownership interest to the company.

That being said, the operating agreement should specifically set forth limitations on to whom the partner may sell
his interest in the company. You do not
want a partner who was suppose to
work to build the company to sell his
interest to an unknown third party who
has absolutely no skill and/or training in
the operation of your company. The
operating agreement should include the
process for buying and selling interest in
the company, how disbursements will be
made and how to wind up the company.

Further, there should also be a provision on how to properly value the business to determine how much each share
is worth. One partner may suddenly
want to sell his 10 shares to a third party
for $85,000, and the company is only
worth $100,000.

Do you think it’s easier to accomplish these
goals in an LLC or S corporation?

While both operating and shareholder
agreements are basically the same type
of agreement, it is a little easier to deal
with an LLC because of its organization.
Unlike an S corp., with an LLC, your
interest in company A can be owned by
company B. My bar and restaurant
clients are definitely heading in that
direction because the owners like to
own their interest in the LLC through
another company.

CHRISTINA M. KITTERMAN is an attorney at Rothstein
Rosenfeldt Adler Attorneys at Law in Fort Lauderdale, Fla. Reach
her at (954) 522-3456.

Modern bankruptcy practice myths

Arthur C. Neiwirth, Esquire, has bankruptcy in his blood. Neiwirth utilizes
his bankruptcy knowledge and background to provide a well-rounded consultation of financial matters for his clients.
The Bankruptcy Abuse Prevention and
Consumer Protection Act of 2005 (BAPCPA) has significantly impacted most law
practices, and it should be considered
when viewing how to protect assets.

How has BAPCPA changed your business?

Because of the publicity regarding the
change in the bankruptcy law, a significant
number of people filed for bankruptcy
within the last few months prior to the
changes. Within the next eight to 15
months, very few were filed.

Part of the problem was that the public
and attorneys didn’t fully understand the
changes. You can never be certain how a
given fact pattern will be interpreted until
you get cases and decisions, of which there
were none. Also, attorneys that handle
‘consumer bankruptcy’ filings must designate themselves as ‘debt-relief agencies.’
While bankruptcy may be one practice
area in a firm, many firms find that they do
not want to have this designation as it may
impact the view of the firm’s other practice
areas and could cause a loss of business
and knowledgeable attorneys.

How does BAPCPA impact individuals filing
for bankruptcy?

Under the new law, a person filing for
bankruptcy has to meet various income
and expense limitations. Now, consumer
debtors who earn more than a set limit
and/or have expenses greater than those
permissible by the IRS guidelines and
allowable additional expenses can be
forced to convert a Chapter 7 liquidation
case to a Chapter 13 ‘repayment’ proceeding covering a 60-month span. An exception to these criteria is when the debts
owed are not consumer debts but are the
result of business obligations, guarantees
or transactions. Alternatively, the U.S.

Trustee’s office may file a motion to dismiss the proceeding as an abusive filing.
There are also additional obligations
imposed upon attorneys to undertake
inquiry and investigation regarding their
own client’s financial affairs prior to the filing of a proceeding under the new law.

What role do Florida laws play in modern
bankruptcies, and has BAPCPA or any subsequent rulings altered their importance?

One of the law’s most significant changes
was enacted because of states like Florida
that have unlimited homestead exemptions. Under the state law, the equity of a
homestead property is exempt from creditors in a bankruptcy preceding. Under the
new bankruptcy law, homestead equity
may be limited to $125,000 per person, or
$250,000 if the property is owned by a husband and wife, if you have not resided in
the state where you file for the 1,215 days
prior to the date you file for bankruptcy.

Another important issue is that of
Tenancy by Entireties. Under this type of
ownership, the husband and wife are one
entity, so under common law, if a creditor
is not a creditor of both, the creditor cannot execute and attach the assets owned in this manner. This is a significant protection
from creditors in both bankruptcy and federal law. Also, as a result of a 2001 Florida
Supreme Court case, the concept of
Tenancy by the Entireties extends to personal property and bank accounts, with
some exemptions. This is one of your more
significant asset protection vehicles. In
fact, the protection provided by this form
of ownership has been known to prevail
over the homestead exemption cap in at
least one recent case in the Southern
District of Florida Bankruptcy Court.

What has been BAPCPA’s effect on small
businesses?

There is starting to be a trickle-down
effect in regards to the economy, the ever-increasing recession in the housing market, the greater difficulty in qualifying for
mortgages and consumer price increases.
Small businesses and individuals of all
income levels are feeling the effect; it’s
important to evaluate the financial obligations of both the business and the principal
of the business.

You want to structure the ownership of
personal assets of the principal to preserve
and protect them should the economic
downturn become more significant. This
should always have been something people considered, but there has been such a
consistent and strong economy for a significant time and many principals may not
have considered the benefit and need to
undertake an evaluation of how to protect
their own assets from future claims, now,
before a situation or unexpected claim
might arise. Protection may be as simple as
keeping each spouse’s car in the name of
the driver rather than jointly owned — or
even in the name of an LLC.

ARTHUR C. NEIWIRTH, Esquire, is a partner for Rothstein
Rosenfeldt Adler Attorneys at Law in Fort Lauderdale, Fla. Reach
him at (954) 522-3456 or [email protected].

Audit letters

Audit letters may seem rather routine,
but there is much more to them than
meets the eye, says Les Stracher, shareholder for Rothstein Rosenfeldt
Adler, Attorneys at Law in Fort Lauderdale,
Fla. What most people don’t realize is that
what is contained in the letters is not protected by attorney-client privilege — and
that the letters themselves are not always
necessary.

Smart Business asked Stracher to discuss how business owners can avoid the
pitfalls that may come with providing audit
letters.

What are audit letters?

Audit letters are requested by accountants as tax time nears for tax purposes or
in connection with financing or other due
diligence. The letter is drafted by the
accounting firm but is sent on your letterhead. An accountant will request a letter
from your attorney with information
regarding ‘pending or threatened litigation’
and ‘unasserted claims and assessments.’

There was a time when the response to
such letters was, more or less, routine.
Parties responding to such letters were
guided by a ‘treaty’ between the American
Institute of Certified Public Accountants
and the American Bar Association. Under
the treaty, an attorney would provide a letter to the accountant that describes pending or overly threatened litigation, but only
where an outcome is ‘probable’ or ‘remote’
and where such an estimate presents only
a slight probability of inaccuracy. Of
course, this invites subjectivity on the part
of the writer and, as a result, while the
request for information is uniform, there
has been precious little consistency in the
responses. You should be conscious of the
process and gain some understanding of
what your attorney and accountants
believe the scope of their review and audit
letter should be.

It should be noted that corporate scandals, such as Enron, Tyco and WorldCom,
and the advent of the Sarbanes-Oxley Act
of 2002 have had a chilling effect on accountants and lawyers, causing them to
be far more circumspect in fully describing
liabilities. While the greater disclosure
requirements of Sarbanes-Oxley apply only
to publicly held companies, there can be
no doubt that accountants and attorneys
have leaned toward fuller disclosure, even
where the subject of the audit letter is a privately held company.

Are these letters confidential?

No. Everything in these letters is discoverable. Attorney-client privilege and attorney work product privileges as well as
trade secret privileges are all waived as a
result of communications between an
attorney and an outside auditor. This is due
to the fact that the communication
destroys the seal of confidentiality between lawyer and client.

In other words, it is your responsibility to
ensure that your attorney is aware of sensitive information that you do not want
included in the letter or, at a minimum, satisfy yourself that your attorney is sensitive
to the potential for waiver of privileges in
writing such a letter. The fact is, once the
letter leaves the lawyer’s hands, privileges
that relate to disclosures contained in the letter are gone forever. You can’t put the
genie back in the bottle.

Are there any types of businesses that are
particularly vulnerable?

Not really. Anyone doing business with
the public is vulnerable. For example,
while defending a claim for personal injury,
your lawyer might come across past cases
or incidents that are indicative of a certain
pattern of behavior where notice of a dangerous condition is inferred. Putting that
kind of information in an audit letter would
be extremely harmful should it be discovered by the other side. Similarly, businesses that issue extended warranties or offer
to service or maintain the goods they sell
would be required to disclose those obligations as liabilities. That’s not something
that your friendly lender wants to see when
you are looking for that bridge loan and/or
line of credit.

What can be done to mitigate this?

From a business standpoint, if you’ve
extended obligations and liabilities, be
aware that your attorney may reference
them in the response. Just one more good
reason that if you issue an extended warranty or service obligation, you should do
so through a third-party provider.

From a liability standpoint, have a conversation with your lawyer and make sure
he understands that, to the extent possible,
you want to preserve any and all privileges
and that he should frame his response with
this in mind.

In the final analysis, you should carefully
balance whether or not you need the letter,
and if so, what can and/or should be included. Being vigilant will avoid the inadvertent
waiver of privilege and otherwise protect
you from being prejudiced in a present or
future legal dispute by the contents of a
response to an auditor.

LES STRACHER is a shareholder for Rothstein Rosenfeldt Adler,
Attorneys at Law in Fort Lauderdale, Fla. Reach him at (954) 315-7240 or [email protected].