Immigration Due Diligence in Merger/Acquisitions
We are often asked to advise on immigration issues and the hiring and retention of foreign personnel as a consequence of corporate mergers, acquisitions, reorganizations, and stock and asset purchases and sales.
A common question is would the new entity be required to complete Forms I-9 for these employees?
Employers who have acquired another company or have merged with another company have two options with regard to completion of I-9s for employees:
- Option A: Treat all acquired employees as new hires and complete a new Form I-9 for each and every individual irrespective of when that employee was originally hired Enter the effective date of acquisition or merger as the date the employee began employment in Section 2 of the new Form I-9
- Option B: Treat acquired individuals as employees who are continuing in their uninterrupted employment status and retain the previous owner’s Forms I-9 for each acquired employee.
If you choose Option B then you are liable for any errors or omissions on the previously completed Forms I-9.
If you choose to complete new Forms I-9 (Option A), in order to ensure that you do not engage in discrimination, you must do so for all of your acquired employees, without regard to actual or perceived citizenship status or national origin. Federal contractors with the FAR E-Verify clause have special rules relating to the verification of existing employees. For more information, see the E-Verify Supplemental Guide for Federal Contractors at www uscis gov/E-Verify
Mergers and acquisitions can be a very complicated area of the law and determining whether or not employees are continuing in their employment with the new entity for Form I-9 purposes is often not clear. For that reason USCIS strongly recommends that any business confronted with this issue should consider retaining private legal counsel.
In addition, acquisitions and restructuring also present additional issues with regard to updating the H-1B Public Inspection Folder and also requires a review of the immigration status of all non-immigrant employees as L and E status may no longer apply and material changes to the ob title and duties for H-1B will require amended petitions to be filed. Therefore proper advance notice to immigration counsel and a review of these issues is critical for compliance and should be part of any due diligence check list.