In the last two weeks, the Houston Business Journal has broken stories about multiple Houston-area employers expanding (Spanish-based Repsol taking over Canadian-owned Talisman Energy, Kinder Morgan’s buyout of Hiland Partners), and downsizing (Schlumberger laying off 9,000 employees).
Some companies, like Schlumberger are even acquiring overseas offices while downsizing their US operations. As these changes take place, employers have to be ready for the employment-related consequences of layoffs, mergers and acquisitions. Employers should always conduct due diligence before agreeing to a merger or acquisition, and it is important to include an immigration status evaluation of all employees in any pre-M&A due diligence. This evaluation is not simply to determine if there are any undocumented employees at the company, or ones who cannot prove that they are authorized to work in the United States. It also includes a review of the actual employment authorization, including the following questions:
- What type of work visa does an employee have?
- Does it place any restrictions of the employee’s work location?
- Are there wage requirements the employer must meet?
- If the employee is laid off, is the employer obligated to pay the employees travel back to his home country?
Many employers do not consider these issues in the process of negotiating to acquire a company, but depending on the status of some of the employees, employers can save a lot of trouble (and money) learning this information during the negotiation process and planning accordingly. For example, when a company acquires another company with employees with H-1B visas (for college-educated individuals in professional occupations), the successor-in-interest company must prepare documentation to indicate that it understands and will assume all of the wage obligations of the employees’ H-1B visas – the new employer has to effectively step into the shoes of the old employer for purposes of the H-1B obligations and document this. Taking the time to be sure all of this is in order as a merger occurs takes time, but failing to do this can result in fines from the Department of Labor or a sub-section of the Department of Homeland Security (DHS), such as Immigration Customs Enforcement (ICE).
Moreover, some employees may not be able to remain employed with their current work visa status after a merger or acquisition occurs. A knowledgeable immigration attorney with experience in business and employment-related immigration can assist a company in conducting immigration due diligence, preparing any records and documentation to ensure compliance with DOL and DHS requirements, and advising of any hidden costs of laying an employee off, such as the requirement to pay return transportation.
For employers considering corporate restructuring, an acquisition, or downsizing, addressing the immigration consequences of any actions at the outset can save a lot of trouble – and money. Regardless of where your company is in these processes, getting specialized immigration advice about your liabilities is essential for protecting your company from legal scrutiny and sizable fines for noncompliance.