Fed up with working to make someone else's startup dream a reality, you've decided to leave your current job and devote all of your time to building your own company. You have a great idea for a product, a couple of intelligent, driven partners, the network to build a great team, and, most importantly, you have learned "what not to do" from your last company. However, there is one not-so-tiny obstacle in your way you will lose your H-1B sponsor when you leave your current employer. Well, you ask, what if I just had my co-founders sponsor my visa? Don't I need to be an actual employee to maintain my H-1B status?
USCIS Rules and Regulations
In 2011, the USCIS (U.S. Citizenship and Immigration Services) made some changes to the rules and regulations for H-1B visas. Because of these changes, founders are now allowed to have their company sponsor their H-1B visa, provided the owner can demonstrate in their petition that the company has the right to control his or her employment, i.e., that the founder has an "employer- employee relationship" with their company. In this context, an employer-employee relationship means the company can provide an external check on the founder's authority. This holds true even if the founder is majority stakeholder in a company.
Introducing the Board
As long as there is a Board of Directors, preferred shareholders, or investors who can control the terms and conditions of your employment, you are able to have the company you co-founded serve as your H-1B sponsor. Terms and conditions of employment include the right of the board of directors, shareholders, or other controlling party to hire and fire you and to control your compensation.
Term Sheets, Cap Tables, and more
According to the USCIS, in order to demonstrate that your company has this type of check on your authority, you need to provide additional evidence when you submit your H-1B application. This evidence can include things like term sheets, cap tables, stock purchase agreements, investor rights agreements, voting agreements, and organizational documents and operating agreements. Keep in mind that this is not an exclusive or exhaustive list, but these items are good examples of the kind of evidence the USCIS is looking for. Now, applying these requirements for sponsorship to your co-founders, you would need to have your co-founders on your company's Board of Directors, and they would need to have the authority to fire you and regulate your compensation. Giving this much control to your co-founders may be a daunting prospect, but you need to be able demonstrate to the USCIS through documented evidence that despite your co-founder status, you do have an employer-employee relationship with your company. If you submit adequate evidence of this relationship with your petition, you can successfully leave your employer and start your own company without losing your H-1B status.
If you have any questions about where your H-1B visa will stand if you leave your current job, we are happy to help. You can contact us here.
Content in this publication is not intended as legal advice, nor should it be relied on as such. For additional information on the issues discussed, consult a Bridge-affiliated partner attorney or another qualified legal professional.