TN visa is given to Canadian and Mexican Nationals under the NAFTA treaty. These individuals qualify for and work in jobs specified under a specific Schedule enumerated in the NAFTA Treaty with Canada and Mexico.
Unlike H and L visas, TN visa holders could not apply for Permanent Residency, (green card) because this visa was temporary and did not allow for dual intent (ie intent to hold both temporary and permanent visas) in the US. However, unlike visitors visa, the TN visa holder did not have to maintain foreign residency abroad. Also, a June 1996 letter by Yvonne LaFleur, Chief of Business and Trade branch at INS, said that the TN worker could do consular processing of their permanent visas. Although this letter is not binding, it has been followed by most Consular Posts.
Logistically, this was not possible earlier, because TNs were given for 1 year and most green cards took more than 1 year. So the TN visas would not be extended after that year if one applied for the Permanent Residency. However now TN visas are being given for 3 years. So many TN nationals can now probably apply for their Permanent Residency and able to do consular processing of their green card during this time. With only 65,000 H-1B visas available, it worth a shot for many desperate employers and employees.