Sindell Law Offices E-Min Newsletter (Vol. 9) - English Article #38

    When an employer seeks to qualify an immigrant worker for a green card, that employer must show that it has the ability to pay the prevailing wage offered to the potential employee upon the filing of a labor certification or when there is no labor certification, upon the filing of the immigrant petition.

Additionally, the employer must be able to prove that it has the ability to pay the salary until the potential employee obtains permanent residence.

The problem with a small business is that showing this ability can be very complicated and cumbersome.

When seeking to prove ability to pay, the regulations state that acceptable evidence includes "copies of annual reports, federal tax returns, or audited financial statements." In the case where the employer employs more than a hundred workers, the Service Center will accept a statement from the financial officer of the organization stating that the company has the ability to pay. If the tax returns are not sufficient to prove the criteria, the sponsor may provide "evidence such as profit/loss statement, bank account records, or personnel records.

In general, there are three ways that can be used to establish a petitioner's ability to pay in the year of filing: (1) the petitioner's net income in the year of filing was equal to or greater than the proffered wage: (2) the petitioner's net current assets in the year of filing were equal to or greater than the proffered wage; and (3) the petitioner paid the beneficiary a salary equal to or greater than the proffered wage in that year.

If the company has a sudden downturn and has a net loss, you can first try to figure out if the company has net positive assets. This can be done by subtracting the business' liabilities from its total assets. If the remaining sum is equal to or greater than the proffered wage, the petition should be approved.

If the company has employed the applicant, the company can submit proof of employment in the form of W-2s or payroll statements. The salary paid can be deducted from the amount of the prevailing wage. If the salary paid is above or equal to the prevailing wage, the case should be approved. If not, it can be used to show partial payment of the prevailing wage.  Unfortunately, the fact that an alien has been employed by the business in the past does not always mean that the employer will have proof of payment since some employers pay employees in cash and don't keep records.

Other alternatives include deducting depreciation from the tax return to show the ability to pay the wage.

There have been cases where the service has added taxable income, depreciation and cash on hand at the end of the year to find that the petitioning business had the ability to pay the proffered annual wage to the alien beneficiary.

In many cases, the Service will deny a petition even where it appears that the sponsor had sufficient funds to pay the wage, since they have refused to consider depreciation as well as year-end cash balance as relevant sources of income. This doesn't make sense since depreciation is not a true expense but a expense usually incurred in prior years and should be deducted out of the expenses.

Another source of income which is often ignored by the USCIS is year-end cash balance. This form of income is particularly useful, because it represents funds which would have been immediately available to the business during the fiscal year. If there is a large cash balance at the end of a fiscal year, it can be used to show that the petitioner had sufficient funds available to pay the wage.

It is sometimes helpful to submit an accountant's letter outlining the employer's arguments.

On May 4, 2004, a Memorandum from William R. Yates, Associate Director of Operations, stated that a petition could be denied without a request for additional evidence. As a result of this memo, the USCIS has started issuing denials on immigrant worker petitions where the initial evidence supplied with the petition does not convince the adjudicator that the employer had the requisite ability to pay, which makes it essential that all arguments be put forth, be well documented and explained initially.

Every year, I tell clients that things are getting worse and the pendulum should be swinging back the other way in favor of a more liberal and pro-immigrant immigration policy. I am sad to report that the pendulum still seems to be swinging in the direction of strict interpretation of the regulations, little flexibility, and increasing inconsistency in adjudications. I hope some day I can report on a more positive turn of events, but it seems like I haven’t been able to do that for years now.