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EB5-FAQ9
USINFO | 2013-12-04 11:08
Q: If an EB-5 investor/petitioner uses a professional employer organization (PEO) to administer payroll for his employees, does this meet EB-5 job creation requirements? As a general matter, a PEO exists only to administer payroll, benefits, communications policies and other administrative employer functions. The petitioner-established commercial enterprise controls the work of the employees, and provides the funds to the PEO to pay the employees.
The EB-5 regulations define an "employee" as one who receives wages "directly from the new commercial enterprise." 8 C.F.R. § 204.6(e). Because the PEO's wage payment to employees comes directly from compensation paid by the commercial enterprise, arguably the commercial enterprise is still "directly" paying the employees. But in another sense, the payment may be deemed indirect in that it is made through the PEO. We urge you to look through the PEO to find that in fact, the employees are paid by the commercial enterprise into which the petitioner has made the required investment. Form should not be elevated over substance.
USCIS previously addressed this issue in the H-1B context. In a December 20, 2000 letter to Kary Ann Woodward, Esq., Efren Hernandez opined that "it is clear that an entity can file an H-1B petition on behalf of an alien even though the alien's salary is paid from another source, provided that an employer-employee relationship exists. The existence of the employer-employee relationship can be demonstrated by evidence establishing that the entity has control over the H-1B nonimmigrant even though the alien's salary is paid from another source." Again, the EB-5 commercial enterprise and only the commercial enterprise controls the employee's work. The EB-5 commercial enterprise is also solely providing the payroll funds.
The USCIS letter in the H-1B context makes sense. We urge USCIS to adopt the same view in the EB-5 context. Many companies find it more economical to hire PEOs to handle the administrative/personnel side of running the company, so that it can focus on the company's core business and technologies. As a result, an industry of PEOs has arisen. By using a PEO, a commercial enterprise can expand more efficiently, having outsourced an aspect of management to professionals specializing in that particular function. Please see the list of benefits provided on the National Association of Professional Employer Organization's (NAPEO) website: http://www.napeo.org/peoindustry/benefits.cfm.
We also understand that some USCIS employees receive pay checks issued by the Department of Agriculture, and that many of the employee management functions are administered by professionals in CBP. Such employers are still clearly USCIS employees, however.
A: The PEO concept may possibly be acceptable within the EB-5 context in certain instances. However, as the scope and nature of PEO contractual relationships vary greatly, the approvability of such an arrangement for EB-5 purposes would have to be decided on a case-by-case basis through a review of the specific evidence of record.
The EB-5 regulations define an "employee" as one who receives wages "directly from the new commercial enterprise." 8 C.F.R. § 204.6(e). Because the PEO's wage payment to employees comes directly from compensation paid by the commercial enterprise, arguably the commercial enterprise is still "directly" paying the employees. But in another sense, the payment may be deemed indirect in that it is made through the PEO. We urge you to look through the PEO to find that in fact, the employees are paid by the commercial enterprise into which the petitioner has made the required investment. Form should not be elevated over substance.
USCIS previously addressed this issue in the H-1B context. In a December 20, 2000 letter to Kary Ann Woodward, Esq., Efren Hernandez opined that "it is clear that an entity can file an H-1B petition on behalf of an alien even though the alien's salary is paid from another source, provided that an employer-employee relationship exists. The existence of the employer-employee relationship can be demonstrated by evidence establishing that the entity has control over the H-1B nonimmigrant even though the alien's salary is paid from another source." Again, the EB-5 commercial enterprise and only the commercial enterprise controls the employee's work. The EB-5 commercial enterprise is also solely providing the payroll funds.
The USCIS letter in the H-1B context makes sense. We urge USCIS to adopt the same view in the EB-5 context. Many companies find it more economical to hire PEOs to handle the administrative/personnel side of running the company, so that it can focus on the company's core business and technologies. As a result, an industry of PEOs has arisen. By using a PEO, a commercial enterprise can expand more efficiently, having outsourced an aspect of management to professionals specializing in that particular function. Please see the list of benefits provided on the National Association of Professional Employer Organization's (NAPEO) website: http://www.napeo.org/peoindustry/benefits.cfm.
We also understand that some USCIS employees receive pay checks issued by the Department of Agriculture, and that many of the employee management functions are administered by professionals in CBP. Such employers are still clearly USCIS employees, however.
A: The PEO concept may possibly be acceptable within the EB-5 context in certain instances. However, as the scope and nature of PEO contractual relationships vary greatly, the approvability of such an arrangement for EB-5 purposes would have to be decided on a case-by-case basis through a review of the specific evidence of record.
