On March 15, 2023, U.S. Citizenship and Immigration Services announced it is updating its guidance on how the agency interprets the regulatory requirement that U.S. employers must demonstrate their ability to pay prospective employees the proffered wage listed in an employment-based first, second or third preference I-140 immigrant petition. Ability to pay must be demonstrated from the date on which the relevant PERM or I-140 petition was filed, up until the date the sponsored foreign national employee becomes a permanent resident. This can sometimes be a period of over a decade in the case of Indian nationals who are subject to significant backlogs in visa number availability.

By way of background, immigration regulations found at 8 C.F.R. §204.5(g)(2) require I-140 petitioners to demonstrate the company’s ability to pay a foreign national beneficiary upon the granting of his or her permanent residency, stating:

Ability of prospective employer to pay wage Any petition filed by or for an employment- based immigrant which requires an offer of employment must be accompanied by evidence that the prospective United States employer has the ability to pay the proffered wage. The petitioner must demonstrate this ability at the time the priority date is established and continuing until the beneficiary obtains lawful permanent residence. Evidence of this ability shall be either in the form of copies of annual reports, federal tax returns, or audited financial statements. In a case where the prospective United States employer employs 100 or more workers, the director may accept a statement from a financial officer of the organization which establishes the prospective employer’s ability to pay the proffered wage. In appropriate cases, additional evidence, such as profit/loss statements, bank account records, or personnel records, may be submitted by the petitioner or requested by the Service.

It should be noted that the reference to “annual reports” is generally understood to refer only to Forms 10-K, annual reports filed with the Securities & Exchange Commission.

USCIS Policy Guidance on Ability to Pay

In addition to the regulatory guidance, William R. Yates, associate director for Operations of USCIS, issued policy guidance on May 4, 2004, in the form of an Interoffice Memorandum entitled, “Determination of Ability to Pay under 8 CFR 204.5(g)(2),” noting USCIS adjudicators should make a positive determination with regard to the petitioner’s ability to pay when the petitioner’s net income exceeds the prevailing wage; when its net current assets exceed the prevailing wage; or where “the petitioner not only is employing the beneficiary but also has paid or currently is paying the proffered wage.” (Emphasis added).

Net income is considered the company’s taxable income as reported on its federal income tax returns. Net current assets can be calculated by subtracting the total current assets minus total liabilities as reported in Schedule L of the petitioner’s federal income tax return. According to the Yates memo, an employer may establish ability to pay by showing at least one of these figures exceeds the proffered wage. Alternatively, the memo states that if the petitioner is already paying the foreign national the prevailing wage, the petitioner may submit evidence this is the case. This would typically consist of W-2 year-end wage statements for all relevant years.

Precedent Decision on Ability to Pay

It should also be noted that in a precedent decision, Matter of Sonegawa, 12 I&N Dec. 612 (Reg. Comm’r 1967), the Regional Commissioner applied a totality of the circumstances test for ability to pay rather than applying a rigid reading of 8 C.F.R. §204.5(g)(2). Specifically, Sonegawa states:

The fact that petitioner was able to show only a net profit of $280 for the calendar year of 1966 does not in itself preclude the beneficiary from establishing that she will be able to meet the conditions of the certification in the “Job Offer”. After careful consideration of all the above circumstances, we find that the petitioner’s expectations of continued increase in business and increasing profits are reasonable expectations and that it has been established that she has the ability to pay the beneficiary the stipulated wages and meet the conditions of the certification.

This holding leaves open the possibility that if a petitioner has one or two bad years but overall has maintained ability to pay the proffered wage, the petitioner may still establish it has the ability to pay.

New Guidance from Citizenship and Immigration Services

The new USCIS Policy Manual guidance provides additional information regarding acceptable evidence of ability to pay. Specifically, it notes the following:

  • While a Financial Officer’s attestation of ability to pay is typically accepted by the agency when the employer has 100 or more workers, it may not be accepted in certain situations, including, but not limited to, the following:
    • The petitioner has filed petitions on behalf of multiple beneficiaries to the extent the ability to pay all of the salary obligations may be in question;
    • Evidence in the record reflects the petitioner may have fewer than 100 employees;
    • The document is a copy of a letter dated several years before the filing date and has been submitted in support of other previously-filed petitions;
    • The letter is inconsistent with other evidence in the record or publicly available information, such as when the petition (or financial documentation, if submitted) shows large losses, or the petitioner is in bankruptcy proceedings;
    • The petition is filed by a successor-in-interest to the company that obtained the labor certification and the only evidence is a letter from a financial officer of the predecessor company to establish the successor’s ability to pay; and
    • The statement does not indicate that the signatory is a financial officer of the petitioner.

(Internal citations omitted).

  • Where the petitioner is a sole proprietorship or a general partnership in which the partners have personal liability for the obligations of the partnership, the owners’ personal tax returns may be relevant;
  • Bank statements standing alone are not probative of ability to pay and the petitioner must demonstrate the funds in the bank account are not already considered elsewhere, such as in a calculation of the petitioner’s net current assets;
  • Personnel records may be accepted as corroborating evidence of an employees’ dates of employment and salary, and/or the number of employees and overall payroll;
  • Tax returns or audited financials for a parent company may not be accepted as proof of ability to pay if the subsidiary’s financial data is not presented separately within the document;
  • Lines of credit may be considered, in the totality of the circumstances, as evidence of ability to pay. In such cases, USCIS must evaluate the “overall financial position of the petitioner to determine whether the employer is making a realistic job offer and has the overall financial ability to satisfy the proffered wage.” The Policy Manual cites Matter of Great Wall, 16 I&N Dec. 142 (Acting R.C. 1977) for this proposition.

The new guidance from USCIS helps to address the additional types of evidence the agency may consider as proof of the company’s ability to pay the proffered wage in cases where the company’s net income and/or net current assets fail to establish ability to pay.

If you have questions about this subject or relate matters, please reach out to Harris Beach immigration attorney Danielle M. Rizzo at (716) 200-5149 and drizzo@harrisbeach.com, or the Harris Beach attorney with whom you most frequently work.

This alert is not a substitute for advice of counsel on specific legal issues.

Harris Beach has offices throughout New York state, including Albany, Buffalo, Ithaca, Long Island, New York City, Rochester, Saratoga Springs, Syracuse and White Plains, as well as Washington D.C., New Haven, Connecticut and Newark, New Jersey.