Combination of Net Income and Net Current Assets Cannot Satisfy Ability to Pay  Posted Aug 01, 2008
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In a recent published decision, the Administrative Appeals Office (AAO) affirmed the denial of an I-140, Immigrant Petition for (foreign national) Worker based upon the employer's failure to demonstrate its ability to pay the proffered wage. The AAO decision specifically addressed whether the employer's ability to pay the employee the proffered wage can be based upon a combination of the employer / petitioner's net income and net current assets. The AAO held that the net income and net current assets cannot simply be combined to meet the test of the employer's ability to pay. Long-time MurthyDotCom and MurthyBulletin readers may recall a detailed discussion of ability-to-pay issues published in our May 21, 2004 article, USCIS Memo on Ability to Pay. Meeting this requirement is fundamental to obtaining approval of an I-140 Petition. This information is provided to help employers and sponsored foreign nationals better understand the requirements for obtaining employment-based green cards. The Murthy Law Firm did not provide representation in connection with this case. This non-precedent AAO decision (PDF 648KB) is available to the public online.
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Initial Denial of I-140 Petition by TSC
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The petitioner in this case is a convenience store that sought to employ the beneficiary as a manager. The Director of the U.S. Citizenship and Immigration Services (USCIS) at the Texas Service Center (TSC) found the petitioner did not demonstrate the ability to pay the proffered wage from the priority date onwards. It is necessary to demonstrate that the job offer described in the labor certification is a realistic job offer at the time it was made, continuing thereafter, until the employee obtains permanent residence in the United States. Absent the employer's ability to pay the proffered wage, the job offer does not meet the "realistic" requirement. Based on this single issue and finding, the I-140 petition was denied.
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Failure to Pay Full Proffered Wage
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The Labor Certification, Form ETA 750 in this case, listed the proffered wage as $18.00 per hour ($37,440 per year). The ETA 750 was filed in March 2001, thus establishing the priority date. The I-140 petition was reviewed and initially denied in 2006. In order to obtain the I-140 petition approval, the employer needed to demonstrate that the company had the ability to pay the proffered wage from the priority date in 2001 and through 2005, as that was the last tax year prior to the review of the I-140 in 2006. As part of its appeal, the petitioner submitted a large number of corporate tax and other financial documents. The evidence showed the petitioner to be an S corporation established in 1999. The petitioner did not pay the full proffered wage to the beneficiary from 2001 until 2005. When the petitioning employer fails to pay the foreign national beneficiary the proffered wage during any year under consideration, the USCIS will then review the company's federal tax returns, annual reports or audited financial statements for proof of ability to pay the proffered wage. (If the employee is paid a portion of the proffered wage, the employer generally will only need to demonstrate the ability to pay the difference between the actual and proffered wage.)
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Net Income of the Employer Standard
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The AAO stated that net income figures from federal tax returns are a standard way to establish ability to pay. The USCIS does not rely upon gross receipts or wage expenses paid to other employees making this determination. This petitioner's net income ranged from $10,962 in 2001 to $16,434 in 2004 and never equaled or exceeded the proffered wage of $37,440. Thus, the net income was not sufficient to demonstrate the ability to pay the proffered wage.
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Net Current Assets
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As an alternate means of determining ability to pay, the USCIS may review a petitioner's net current assets. Net current assets are the difference between current assets and current liabilities. The AAO found that the petitioner did not have sufficient net current assets for three of the tax years at issue. Accordingly, the petitioner could not demonstrate ability to pay based upon net current assets.
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Argument on Combining Net Income and Net Current Assets Rejected
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As an alternative, but unsuccessful argument, the employer / petitioner submitted a letter from a certified public accountant that argued the petitioner's ability to pay during the years at issue, based upon combining net income with net current assets. The AAO rejected this argument, finding that net income and net current assets are not cumulative. It stated that net income is 'retrospective' and net current assets are 'prospective' views of a petitioner's ability to pay the proffered wage. Net income is retrospective, as it is the sum of the income that is left after paying expenses. Net current assets are prospective, as it is a picture of the net total of the assets that will become cash in the near future, minus the expenses that will come due in the same time period. Thus, the AAO does not view the combination of these two figures as a meaningful way to demonstrate the employer's ability to pay the proffered wage.
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Conclusion
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This non-precedent AAO decision emphasizes that the employer must be able to demonstrate its ability to pay the proffered wage to the I-140 beneficiary from the priority date until the I-140 petition is approved and even beyond - until the person obtains permanent resident status. If this burden cannot be met, the immigrant visa petition will be denied. We at Murthy Law Firm appreciate the AAO's publication of this decision, providing guidance for the benefit of the community, to green card-sponsoring employers, their employees, and their families.