The PERM process refers to the process by which U.S. employers may sponsor a foreign national for a green card. As part of this process, the U.S. employer must obtain a prevailing wage determination (“PWD”) from the U.S. Department of Labor. The U.S. employer must be willing to pay the foreign national a wage that is equal to or higher than the wage listed on the PWD. This wage must be paid starting from the time the foreign national is granted the green card.
What is the “ability to pay” requirement?
The ability to pay requirement means that the U.S. employer must be able to prove that it has the ability to pay the offered wage from the time the PERM Labor Certification is filed, up through the time the foreign national receives their green card.
Which documents does the U.S. employer have to submit to prove it has the ability to pay the prevailing wage?
After the PERM Labor Certification has been certified, the next step in the PERM process is for the U.S. company to file the I-140, Immigrant Petition for an Alien Worker. As part of the I-140 petition, the employer must include copies of federal tax returns, audited financial statements or annual reports that demonstrate the company has the ability to pay the offered wage.
If the company has more than 100 employees in the U.S., the government has the discretion to accept a letter from the company’s financial officer that confirms the ability to pay the wage in lieu of the tax returns, annual report or audited financial statements. The company may also choose to submit supplementary documents such as personnel records, W-2s, bank statements or other evidence to demonstrate that it has the ability to pay the wage.
When reviewing the financial records, the government will look at the following to determine if the employer has demonstrated the ability to pay the wage:
- Net income – If the net income of the company is equal to or greater than the offered wage, this satisfies the requirement.
- Net current assets – If the net current assets of the company are equal to or greater than the offered wage, this satisfies the requirement.
- Employment of the foreign national – If the company is currently employing the foreign national and is paying them the offered wage, this will also satisfy the requirement.
If the employer does not meet these tests it can try to make an argument based on the totality of the circumstances, although this is a riskier approach. For example, if the company had one bad year due to market disruptions or issues like the global pandemic, it may be able to use prior financial records, bank statements or proof of contracts to show that the financial position will improve enough to pay the wage.
If the company cannot prove it has the ability to pay the prevailing wage, the I-140 cannot be approved so it is important to review these issues with an immigration attorney at the start of the PERM process and develop a holistic strategy to ensure the company can meet this requirement.
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