When does the EB-5 business need to hire workers?

Job creation is fundamental to the EB-5 program. An EB-5 applicant must not only invest the required $1,050,000 into a business enterprise ($800,000 if the business is located in a high unemployment or rural area); each EB-5 applicant must then show that the investment then created at least ten jobs for qualifying workers. For an overview of the EB-5 immigrant visa requirements and application process, see here.

The government requires that the investment in the EB-5 business must create full-time employment positions for at least ten qualifying employees per EB-5 investor. Full-time is defined as at least 35 hours per week.

Employment in a position can count as full-time even if individual workers in the position change. Also, a single full-time position can be filled by more than one worker. For example, a job sharing arrangement in which the workers combine to work more than 35 hours per week in a single, permanent, full-time position could qualify.

Note that a full-time job sharing arrangement is not the same as two part-time workers being combined to qualify a position as full-time. Part-time work does not count toward the job creation requirement. A job sharing arrangement, in contrast, requires evidence that the workers actually share the responsibilities of a permanent, full-time position, a written agreement specifying the details of the arrangement, and a weekly schedule showing the hours the workers fill the position. This can be difficult to show, and for that reason we tend to recommend that EB-5 applicants not rely on job sharing arrangements.

The ten full-time positions need to have been created as a result of the EB-5 investment. In other words, employees who were employed before the EB-5 investment was made do not count toward the job creation requirement, even if the EB-5 investment resulted in those existing employees being moved to a new location or facility. The EB-5 investment must clearly result in the creation of at least ten full-time positions.

The full-time positions must be filled by U.S. citizens or lawful permanent residents (including those with conditional lawful permanent resident status). Asylees and refugees also qualify. However, those with nonimmigrant visas (such as an H-1B or TN visa) do not qualify. Also, the investor and their spouse and children do not count toward the employment requirement – the business must hire outside the EB-5 applicant and their family.

Also, workers must be employees and cannot be independent contractors. An employee is typically issued an IRS Form W-2 for wages earned, whereas an independent contractor usually receives an IRS form 1099 and has more control over their hours and how they perform the work.

In general, employees must also be directly employed by the EB-5 business, meaning that there is an employer-employee relationship between the employee and the business that received the EB-5 investment.

In the regional center program, indirect jobs can be counted. Indirect jobs include jobs for those who are not directly employed by the EB-5 business, but whose job was created as a result of the EB-5 business. An example would be a construction company hiring workers to build a resort – if the resort is the EB-5 business (also called the new commercial enterprise, or NCE), the additional construction workers could count as indirect jobs, even if they are not directly employed by the resort. Again, indirect jobs can only be counted in the regional center context. EB-5 direct investment projects can only count direct jobs toward the job creation requirement. For an overview of this and other differences between the direct investment and regional center programs, see here.

Tax records and pay records are key to show not just that employees were hired by the business, but that they were actually employed full time and paid accordingly. I-9 forms alone are generally not sufficient. The government prefers paystubs and payroll records listing the workers’ names, hours, and pay, as well as tax forms such as the W-2, which show the wages paid to the worker and declared to the tax authorities.

What if the EB-5 company hasn’t met the job creation requirement before it submits the I-526? If the business has not created ten full-time jobs before the I-526 application is submitted, the government will accept a comprehensive business plan that shows that ten full-time positions will be filled within two years.

Technically, this two-year period starts six months after the I-526 is adjudicated. That date can be hard to pinpoint, especially since USCIS estimates that it needs more than five years to adjudicate the I-526. So it’s best for the business plan to show how the job creation requirement will be satisfied within a two-year period from the date the I-526 is submitted.

The business plan must show how the projected growth of the EB-5 business will require no fewer than ten qualifying positions within the next two years, and it must specify the approximate dates when these positions will be filled. Importantly, the business plan must be credible and comprehensive.

What “comprehensive” means is laid out in a 1998 Administrative Appeals Office decision called Matter of Ho. In Matter of Ho, the EB-5 investor’s application showed that the business had two employees, and would hire an additional eight employees within the next year. The applicant included a four-page business plan in support of its hiring projections.

The court rejected the business plan, saying it was not sufficient. The decision stated that the business plan must be “comprehensive,” meaning that it must be sufficiently detailed to permit to draw reasonable inferences about the job-creation potential.”  Specifically, a comprehensive business plan must be credible and must include, at a minimum:

• A description of the business, its products and services, and its objectives
• A market analysis with the names of competitors and their strengths and weaknesses
• A description of the target market and prospective customers of the EB-5 enterprise
• A list of the required permits and licenses for the business
• The manufacturing and production process and supply sources and materials
• Any executed contracts for the supply of materials and the distribution of products
• A marketing strategy, including pricing and advertising
• The business’s organizational structure and the experience of its personnel
• An explanation of the business’s staffing requirements, a timetable for hiring, and job descriptions for all positions.
• Sales, cost, and income projections, and the assumptions underlying these projections.

When the EB-5 applicant files the Form I-829 to remove the conditions on their permanent resident status, they must present evidence showing that the business created or will create the ten full-time positions.

If the applicant is at the end of the two-year conditional permanent resident period and still hasn’t created the required ten jobs, there is an option to request a one-year extension. There is also the possibility of extending the period even further if something outside the applicant’s control made the job creation impossible – such as a pandemic, for example. However, given that job creation is so fundamental to the EB-5 program, it is best to focus squarely on creating the ten positions as early as possible, and ideally well before the two-year conditional permanent resident period ends.