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Proving financial ability to pay the proffered wage for an I-140

One of the requirements to obtain an I-140 approval is that the Employer demonstrates the financial ability to pay the proffered wage from the priority date until the foreign national receives their green card.

The priority date for EB-2 and EB-3 is established based on the date the PERM/Labor certification is filed.  For EB-1 filings, where there is no requirement to go through the PERM/Labor certification process, the priority date is the date of the I-140 filing.

Financial ability should be reviewed at the outset.  For EB-2 and EB-3 filings because the financial ability dates back to the date when the PERM/Labor certification is filed, it is necessary to ensure that the Employer can demonstrate the financial ability before embarking on the PERM.  Otherwise, an Employer may find themselves obtaining a PERM approval but then having difficulties obtaining I-140 approval.  By examining this issue prior to the PERM an Employer can determine whether it’s even worth starting the PERM process.  If the evidence for financial ability is not strong an Employer may decide not to start the PERM process or at least delay it until better financial evidence is available.

When filing the I-140 Employers will generally have to submit one of the following types of evidence to demonstrate their financial ability to pay the proffered wage:

  • A complete copy of their annual reports;
  • A complete copy of their audited financial statements; or
  • A complete copy of their U.S. Federal Tax returns, with all accompanying schedules.

How to prove financial ability

There are typically three ways to prove an Employer’s financial ability to pay the proffered wage.  We will look at each one in turn:

  1. By providing evidence that the Employer has paid the foreign national the proffered wage from the priority date onwards.

This is only an option if the Employer already employs the foreign national.  As the PERM/I-140 is for future employment sometimes the foreign national will not be working for the Employer.  In this case please refer to Options 2 and 3 below.

Example: Employer A has employed the foreign national as a Software Developer and is currently paying him $90,000.00.  If the prevailing wage is determined at $85,000.00 then the Employer can submit copies of the foreign national’s W2 and paystubs to demonstrate the financial ability to pay the wage because the Employer is paying an amount at least equal to the proffered wage.

If the foreign national works for the Employer, but remotely from their home country then the Employer can submit evidence of payments made to the foreign national.  Although not strictly paystubs this evidence should be given the same weight as actual paystubs.

  1. By reference to the net income on the Employer’s tax returns.

An employer can rely on their most recently filed tax returns to demonstrate financial ability.  Therefore, if the Employer either doesn’t employ the foreign national or isn’t paying the proffered wage the Employer can reference the net income on their tax returns.

What this means though is that if the Employer doesn’t employ the foreign national and the proffered wage is $90,000.00 then the net income on their tax returns would have to be at least $90,000.00.

If an Employer is paying an actual wage of $60,000.00 against a proffered wage of $90,000.00 then a net income of $30,000.00 would suffice.

Important: Employers need to be careful when filing I-140s for multiple beneficiaries around the same time, as USCIS may issue an RFE asking an Employer to demonstrate the financial ability to pay the proffered wage of ALL beneficiaries. 

  1. By reference to the net assets on the Employer’s tax returns.

Net assets generally refer to the difference between current assets and current liabilities and demonstrate the amount of cash equivalents which an Employer has available.  Therefore, if the net assets are equal or greater to the proffered wage an Employer can demonstrate the financial ability to pay the wage.

However, as is often the case when reviewing tax returns the current assets and current liabilities are the same number, meaning the net assets are zero.  For this reason, most Employers reference net income.

Final thoughts

Employers need to ensure they are reviewing the financial ability aspect of the I-140 before they even embark on the PERM.  If the PERM gets approved and the Employer cannot demonstrate the financial ability at the I-140 stage then the Employer will have wasted thousands of dollars on the PERM Process, that could have been avoided.

Employers often run into difficulties when they are paying less than the proffered wage and they do not have strong tax returns.  However, there are arguments that can be advanced to overcome these hurdles.  Employers only have to demonstrate the financial ability to pay the wage based on the preponderance of the evidence standard which means showing that it is more likely than not that they can pay the wage.  If an Employer has paid millions of dollars in salaries, despite having a low or negative net income and has never received any wage complaints, then these arguments can be advanced to show it is more likely than not that the Employer can pay the wage.  If in doubt speak to an experienced Immigration Attorney.  Feel free to reach out to our Partner, Chris Prescott cprescott@patellegal.com or our Immigration Attorney, Monique Mutombo at Mmutombo@patellegal.com

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