The PERM process allows U.S. employers to sponsor a foreign national for lawful permanent residence (i.e. a green card). During this process, the employer must obtain a prevailing wage determination (PWD) from the U.S. Department of Labor (DOL). The PWD will be based on factors such as the geographic location where the employee will work, duties, minimum requirements, and other details regarding the position. Where the wage for the position is already set by a collective bargaining agreement, the employer will submit proof of this to the DOL. The employer must be willing to pay the foreign national a wage that is equal to or higher than the wage listed on the PWD once he/she/they becomes a lawful permanent resident (i.e. green card holder).

• What is the “ability to pay” requirement?

It is not enough for the employer to be willing to pay a wage equal to or higher than the PWD. The employer must be able to show it has the ability to pay the wage from the time the ETA Form 9089, Application for Permanent Employment Certification (ETA Form 9089) is filed with DOL through the time the foreign national receives his/her/their green card.

• Why is the “ability to pay” so important?

An employer filing a Form I-140, Immigrant Petition for an Alien Worker (Form I-140) must show the job offered to the foreign national is bona fide (i.e. a realistic opportunity). The employer’s ability to pay a wage equal to or higher than the PWD is a key consideration in evaluating whether the job offer is realistic.

• What documents does the employer submit to prove it has the ability to pay the prevailing wage?

After the ETA Form 9089 has been certified by the DOL, the next step in the PERM process is for the company to file a Form I-140 on behalf of the foreign national. The employer must submit copies of its federal tax returns, audited financial statements, or annual reports to demonstrate the company has the ability to pay the offered wage. For companies with over 100 employees in the U.S., U.S. Citizenship and Immigration Services (USCIS) has the discretion to accept a letter from a company’s financial officer confirming the ability to pay the wage in lieu of the tax returns, annual report, or audited financial statements. 

USCIS will determine if the employer has the ability to pay the offered wage by looking at the following:

• Net Income: If the company’s net income is equal to or greater than the offered wage, the ability to pay requirement will be satisfied.
• Net Current Assets: If the company’s net current assets are equal to or greater than the offered wage,  the ability to pay requirement will be satisfied.
• Employment of the Foreign National: If the company currently employs the foreign national and pays him/her/them the offered wage or higher, the ability to pay requirement will be satisfied.

However, where the initial evidence does not show the employer has the ability to pay the offered wage, USCIS will issue a Request for Evidence (RFE) requesting more evidence to meet the ability to pay requirement. 

• What is the totality of the circumstances approach to determining ability to pay?

What if the company had a bad year due to a global pandemic, restructuring, or supply chain issues? The company may still be able to establish the ability to pay based upon the totality of the circumstances. This approach allows the employer to use prior financial records, bank statements, or proof of contracts to show that the financial position will improve enough to pay the offered wage. USCIS Policy Guidance encourages adjudicators to review all relevant evidence regarding the employer’s financial strength and the significance of its business activities. Evidence that may be considered under the totality of the circumstances approach includes:

• The owners’ personal tax returns where the employer is a sole proprietorship or a general partnership in which the partners have personal liability for the obligations of the organization;

• Personnel records as evidence of the foreign national’s dates of employment and salary, or to show the company’s number of employees and overall payroll;

• A parent company’s tax returns or audited financials if the subsidiary’s financial data is presented separately within the document;

• Lines of credit;
• Bank statements if the funds were not already considered elsewhere, such as the calculation of the employer’s net current assets;
• Tax returns with “poor” numbers combined with a “better” unaudited financial statement; 
• Contracts for services and/or goods; and
• Combination of wages as indicated on the employee’s Form W-2, Wage and Tax Statement and the company’s income or assets.

Do you Need Assistance with the PERM Process?

The PERM process can be difficult to navigate. An experienced immigration lawyer can help employers to successfully navigate the PERM process to hire foreign nationals to fill important roles in their company.

The skilled team at Cohen, Tucker + Ades law firm has been helping immigrants live, work, and thrive in the United States for over 40 years. We provide corporate solutions for companies seeking to fill valuable roles with the best and brightest minds in their industries worldwide. Contact us for a consultation if you need assistance with a PERM case.

Sources:

Employment-Based Immigration: Second Preference EB-2 | USCIS

Employment-Based Immigration: Third Preference EB-3 | USCIS

20 CFR § 656.17 | Code of Federal Regulations

USCIS Policy Manual, Chapter 4 – Ability to Pay | USCIS