Immigrant Entrepreneurs: Options Without Work Authorization

So you want to get in on the ground floor of a start- up but have no work authorization from USCIS. Is that the end of the dream?

Since we are located in the heart of Silicon Valley, we get frequent inquiries from F-1 students not on OPT, visitors, and even H-4 visa holders – none of whom has work authorization – who want to get into the start-up world and engage in some sort of business activity without jeopardizing their visa status. These clients often ask:(1) is volunteering permissible and (2) is investing in stocks or business opportunities in the U.S. permissible?

Volunteering for a Start-Up

As a foreign national subject to US immigration laws, it is often a mistake to believe that if you are not getting paid money for volunteer work, then you are not an “employee” or “worker” engaging in unauthorized work for immigration purposes. However, the reality is that this is a gray area of immigration law that intersects heavily with U.S. labor laws. If you are interested in volunteering your services, it is a good idea to be familiar with what activities could get you unknowingly penalized.

USCIS defines an “employee” to be “an individual who provides services or labor for an employer for wages or other remuneration (emphasis added).”[1] In other words, you could be “paid” or remunerated for services with benefits such as housing, clothing, food, gifts, etc. As such, accepting payment in any way could be interpreted as unauthorized employment resulting in visa status violations if you do not have work authorization.

According to the relevant labor laws, “volunteers” are individuals “who volunteer or donate their services, usually on a part-time basis, for public service, religious or humanitarian objectives, not as employees and without contemplation of pay, are not considered employees of the religious, charitable or similar non-profit organizations that receive their service (emphasis added).”[2] The non-profit nature of organizations is important as the same guidance specifies, “employees may not volunteer services to for-profit private sector employers (emphasis added).” Even in situations where you are volunteering for a non-profit organization, you cannot be doing work that displaces a genuine employee. In other words, the work that you are doing should not be the same as what you (or someone else) could be hired and paid for in the future.

Under these rules, volunteering for a private-sector start-up would probably not be considered “volunteer work” and would most likely lead to a visa status violation.

Investing in a New Business

On the other hand, you are permitted to invest passively in the U.S. without specific USCIS work authorization. Investment options run the gamut and can include stocks, properties, running businesses, etc. However, please note that you must remain an entirely passive party, meaning that you may not provide any labor or services to the business you are investing in. So, if you come across an investment opportunity you cannot pass up, you can do so as long as you are not pulling the strings behind the scenes as an active owner. For example, while you could invest and establish a new business in the United States, you cannot work for the company. Activities that would be considered permissible include limited preparation and planning for the business, but should not include meeting with potential customers or actively creating the product/services to be rendered as part of the business or signing documents on behalf of the business.

In terms of return on investment from the business, stock dividends paid out to you at the end of the year along with all other investors would also seem to be allowed.

If you choose to invest in stocks, be mindful that you do not engage in numerous transactions per five business days that might be considered day-trading which is classified as work. This is because the Financial Industry Regulatory Authority (FINRA) defines day-trading to include “any margin customer that day trades (buys then sells or sells short then buys the same security on the same day) four or more times in five business days.”[3]

Passive investment would seem to offer many opportunities to get into a new business on the ground flour without violating visa status. Even as a passive investor in a new enterprise it would still be possible for that new enterprise to serve as an employer sponsor for an H-1B visa down the road.




Article categories: Entrepreneurs and Business Start-ups

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