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What 'Gang of Eight' Immigration Reform Would Mean for Entrepreneurs

Sen. Robert Menendez, D-N.J., speaks to immigration reform supporters as Rep. Ruben Hinojosa, D-Texas, and Rep. Luis Gutierrez, D-Ill., listen during the National Rally for Citizenship on the west lawn of the U.S. Capitol.
Bill Clark | Getty Images
Sen. Robert Menendez, D-N.J., speaks to immigration reform supporters as Rep. Ruben Hinojosa, D-Texas, and Rep. Luis Gutierrez, D-Ill., listen during the National Rally for Citizenship on the west lawn of the U.S. Capitol.

From a startup visa to mandatory "e-verify," the immigration reform plan expected from Senate leaders addresses a number of matters critical to business owners.

The proposal will include a new merit-based visa option which would be available to especially talented individuals and a new W-Visa program, which would allow immigrants to move to the U.S. for lower-skilled work, according to a Congressional summary obtained by Entrepreneur.com.

The bipartisan group of leading lawmakers, called the "Gang of Eight," postponed the release of the bill in a show of respect to those injured in the bombings near the finish line of the Boston Marathon Monday.

(Read more: 'Not Afraid': Boston Businesses Offer Aid)

The compromise proposal is considered a significant step towards bipartisan reform, but it is also not likely to get past the Republican-controlled House of Representatives without significant rancor. Here is an outline of key measures that affect entrepreneurs and their employees.

1. A visa for foreign-born entrepreneurs who want to startup in the U.S.
Technology and innovation leaders have been pushing for a way for foreign-born entrepreneurs to be able to stay in the U.S. to launch and grow their business. Canada, the U.K., Australia, Chile and Singapore already have such a visa and business leaders say that the U.S. is losing competitive startups by not having a similar option.

(Read more: How Lack of Immigration Reform Harms Startups, US Economy)

2. A merit-based visa.
Some entrepreneurs may benefit from the proposed merit-based visa, which could help keep especially talented employees in the U.S. The merit-based visa would not be available until the fifth year after the law is passed, according to the summary. These visas would be distributed to those who earn the most points in a system that rewards individuals based on education, employment, length of residence in the U.S., and other various metrics. To start with, 120,000 visas will be available based on merit and the number could increase by 5 percent per year if the allotment runs out in any year where the unemployment rate in the U.S. is less than 8.5 percent. The number of merit-based visas would max out at 250,000 visas.

3. Mandatory e-verify for all employers.
An e-verify program is an electronic employment verification system whereby employers have to check the immigration status of potential new employees before offering them a job. Some small-business advocacy groups, including the Main Street Alliance, oppose mandatory e-verification because it unduly burdens small-business owners who don't have the resources to handle the extra administrative requirement, they say.

(Read more: Social Media a Bust for Mom and Pops: Study)

The proposed bill from the "Gang of Eight" would require that all employers use an e-verify system by the end of a five-year phase-in period, according to the summary. The gradual introduction of e-verify would hit larger employers first: those with more than 5,000 employees would be required to use an e-verification system within two years and businesses with over 500 workers would have three years.

4. Raise the cap on the number of skilled-worker visas.
Technology entrepreneurs in particular depend on having access to engineers to build their business. Startups struggle to staff their startups because of insufficient engineering talent in the U.S. Federally mandated caps on what is called an H-1B visa, which allow skilled workers to stay in the country, add to entrepreneurs' headaches. The "Gang of Eight" would increase the annual cap to 110,000 H-1B visas from the current 65,000 cap. The number of H-1B visas allowed would float by as many as 10,000 each year either up or down. The maximum allowed in any given year would be 180,000 and that cap would depend on demand for the visas and the employment situation in the U.S. at the time, as measured by the Bureau of Labor Statistics.

One common objection to increasing the number of skilled workers allowed to enter the U.S. is that it will take jobs away from people already living in the U.S. To safeguard against this, those businesses that employ H-1B workers would have to pay "significantly higher wages" to the H-1B workers, the summary says.

5. New visa program for lower-skilled workers.
While Silicon Valley is powered by engineers, many entrepreneurs depend on low-skilled workers to run businesses like restaurants, lawn-care shops or garages. The "Gang of Eight" blueprint includes a new classification for these workers, called the W-Visa, which would allow a low-skilled worker to come to the U.S. to work for a registered employer in a job that would also have to be registered. The W-visa would be valid for three years initially, with the opportunity to extend if employment continues. A W-Visa-holding worker would be permitted to bring his or her spouse and children for the same allotted period. While there currently exists a visa option for business owners to bring unskilled workers into enter the U.S., known as the H-2B visa, the program is considered especially frustrating to small-business owners because of the red tape involved.

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