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Companies now face the most significant re-engineering effort of the past two decades as a result of the global economic slowdown. Rightsizing, with reductions in force, will play out in multiple markets. Mergers and acquisitions, divestitures and outsourcing will dominate business headlines for months to come.

These changes pose challenges for the legal and human resources managers. Particularly at issue are companies whose U.S. work force includes visa holders and candidates for permanent residency (those the employer is sponsoring for a "green" card). These employees have limited-time work authorizations and are typically dependent on their sponsoring company to remain in the United States. Strategic planning for such employees means assessing the restrictions and requirements of immigration and employment laws that affect corporate restructuring.

What are the leading questions that employers face when managing major business change? Consider this hypothetical.

REDUCTIONS IN FORCE

BestIT Co. has offices in San Francisco and Amsterdam. In 2005, BestIT decided to launch BestCredit, a new line of enterprise software for financial institutions to manage their customers' credit lines.

To meet the demands of its top banking clients, it transferred 10 software engineers from its offices in the Netherlands on L-1 intra-company visas. The company also recruited laterally, bringing over 10 H-1B visa holders (specialty workers). Several of the visa holders requested that the company sponsor them for residency, which BestIT initiated in May 2008. Because of changing market conditions, BestIT must now reduce its head count in the BestCredit business unit.

There are several major issues to consider. First, the visa holders' L-1 and H-1B status will end the day they are terminated. Severance payments or "payroll protection" mechanisms will not extend beyond that date. There is no grace period. So the need to prepare these visa holders for their separation will be all the more compelling.

Most visa holders do not leave the country on the date of separation -- a reasonable period to organize belongings and arrange for relocation back to the home country is typical. In fact, H-1B holders who have not reached the maximum on their visa (six years, unless their residency application is fairly mature) may "port" to another job, provided the new employer files a visa petition before their current status ends (that is, before they are terminated). U.S. Citizenship and Immigration Services may even forgive a brief lapse (for example, 30 days) after a layoff.

L-1 visa holders cannot port to another employer because their status depends on the intra-company relationship between the U.S. visa sponsor and their former employer in the home country.

Second, the candidates who have been sponsored for permanent residency may have more to lose. If they are in the early stages -- either the initial "PERM" filing for certification of the job as one for which U.S. workers are unavailable or the follow-on petition (I-140) from the sponsoring employer confirming that the candidate meets the certified job's prerequisites -- their permanent residency case will end when their job ends.

Candidates approaching the end of their green card process have more latitude. They may move to another employer in their field if their immigrant petition (I-140) is filed and approvable and they have lodged a personal application to adjust to permanent residency status (I-485) at least 180 days before the layoff.

The best employer practice is to treat the visa holders consistently, providing the same notice and severance given to American workers. But information is critical, and so providing specialized communications that prepare visa holders for the impact of the separation and directing them to counsel can be highly valuable to limit anxiety in an already charged situation.

MERGERS AND DIVESTITURES

So, back to the hypothetical: BestIT Co. decides to sell the remaining business units dedicated to banking clients with BankTech, a company in Los Angeles. The remaining L-1, H-1B, and residency candidates will move to BankTech on Jan. 1, 2009. The deal is an asset purchase, and BankTech is absorbing most of the assets and liabilities of the financial services business operation.

The pivotal question for immigration purposes is whether BankTech becomes the successor in interest to BestIT. In a 100 percent stock purchase, the answer is clearly yes. In an asset deal, a closer analysis is needed. The issue depends on whether BankTech is absorbing a clearly definable business unit, line, or division, including virtually all of the assets and liabilities, including the immigration-related liabilities. If so, BankTech will be deemed the successor in interest to BestIT's employee visas.

In a succession case, nonimmigrant visas, U.S. work authorization, and residency cases of the transitioning employees will continue without interruption, provided that the underlying eligibility (for example, a professional job) is maintained.

Although BankTech will need to file amendments with CIS in certain cases to advise of the business change and the movement of employment from Oldco to Newco, the amendment filings will not be required until the acquisition and employee transfer occurs. For H-1B visa holders -- workers whose authorization is based on their professional standing and services in a specialty occupation -- BankTech could in fact transition the visa responsibility by including an express assumption of H-1B liabilities memorandum with its public access compliance files for the company's overall pool of H-1B workers.

Regardless of the visa category, BankTech needs to address the visa issues early in the acquisition process. Changes in job duties, compensation arrangement, or job location can call into question the continued validity of any visa. Residency cases typically hinge on these key criteria -- job function, salary, and location -- so the impact to the underlying residency case must be determined early.

Even if BankTech is not deemed a successor in interest, residency candidates who transition to BankTech after their case has reached the "portable" stage (i.e., their I-140 immigrant petition is approvable and I-485 adjustment of status application has been pending for 180 days), would be eligible to continue their cases after a transition.

Most other visa holders and residency candidates would need new visa sponsorship by Newco. Although some visa holders, such as H-1B visa holders, could file for a straightforward change of employer authorization through CIS, others, such as L-1 visa holders, would not have an immediate visa option available to them. Corporate advance planning may need to explore extended secondment or alternative visa approaches, so hitting the visa analysis early is key.

KEYS TO SUCCESS

It is important that immigration issues don't get overlooked in the pre-change planning. When a major business change occurs, employers face a complex array of issues. Ensuring that the company understands its obligations for employment issues, compensation and benefits, and taxes is critical. For mergers and acquisitions, pre-closing due diligence and post-acquisition employment integration are key to success. Reductions in force require significant planning and a well-thought-out communications plan. Outsourcing entails movement of some jobs and elimination of others. With visa holders, the immigration analysis needs to take place alongside planning of all the other issues any such change entails.

Similarly essential is a review of the employment eligibility of the transferring workforce. Both Homeland Security's enforcement agency, the U.S. Immigration and Customs Enforcement, and the Department of Justice have made worksite enforcement a top priority, holding corporate officers criminally accountable when "illegal" workers permeate the work corps. States have also passed a wealth of laws mandating enrollment in e-Verify, the government's electronic program to verify that all workers have lawful work permission, both for businesses that have contracts with the relevant state and, in some instances (Arizona, for example), any company doing business in the state.

A full audit of Oldco's I-9s is thus essential before Newco accepts the liabilities for the employment status of the transferring workers.

And, finally, an important general principle: Much of the way a company handles a major change successfully involves good communication. The workforce is the lifeblood of the organization. As employers adapt to a changing economy, the need for communication with their valued employees becomes more potent.

Although a specific change -- be it a reduction in force or a merger -- must remain confidential during the initial stages, outreach to visa holders and residency candidates can encompass basic details. Among them are identification of the company's immigration compliance team, inclusion of FAQs for visa holders on the nuances of their visa classification and the stages of the residency process, and key long-range planning policies for international workers.

Employers will need to make some clear decisions on when key benefits -- such as residency sponsorship -- are available. And, of course, they must ensure that the ground rules and policies for such sponsorship are clearly communicated to hiring leaders and employees.

Elizabeth Espin Stern is a partner at the D.C. office of Baker & McKenzie, where she heads the firm's global migration and executive transfers practice.

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