The U.S. Department of Homeland Security recently issued a notice of proposed rulemaking proposing a regulatory rule to change the process by which “cap-subject” H-1B status applicants are selected by U.S. Citizenship and Immigration Services for eligibility to file H-1B petitions in its annual lottery.
This substantive change is part of the department’s ongoing efforts to overhaul the H-1B system, including a $100,000 application fee. The proposal introduces a “weighted” lottery selection system whereby H-1B beneficiaries offered the highest wages are given the highest likelihood of being chosen in the lottery and afforded the opportunity to petition for H-1B work status. This system is a marked departure from the current system, in which there is generally no special preference given to H-1B lottery entrants.
Background
The H-1B visa status classification is the most common visa type used by U.S. employers to hire and employ foreign nationals for temporary employment. H-1B status is available to those hired to perform services in a “specialty occupation,” defined as requiring “theoretical and practical application of a body of highly specialized knowledge in fields of human endeavor.” Examples of such occupations include those in architecture, engineering, mathematics, physical sciences, social sciences, medicine and health, education, business specialties, accounting, law, theology, and the arts. The positions must require a bachelor’s degree or higher, or its equivalent.
Congress set an annual quota restricting use of the H-1B program. It is currently capped at 65,000 annually, for those who have not been granted H-1B status during the previous six years. An additional 20,000 slots are allocated for foreign national beneficiaries who have earned the minimum of a master’s degree from a qualifying U.S. educational institution.
Due to political constraints, the H-1B “cap” numbers have not been updated for many years and have not accounted for population growth or the current needs of the U.S. economy. The program’s quota is usually filled nearly instantaneously once the eligibility period starts.
This situation led to the creation of the H-1B cap lottery system, a random lottery system used annually to determine which applicants will fill the available cap slots and be afforded the opportunity to gain H-1B status.
Until now, no special consideration in the annual lottery was given regarding the compensation level for each offered H-1B position. Indeed, the controlling Immigration and Nationality Act states the H-1B cap slots conferring H-1B eligibility should be “issued…in the order in which petitions are filed for such visas or status,” thereby permitting the cap lottery system to be used in a random nature and not to those employers who pay the highest compensation.
Newly Proposed “Weighted” H-1B Cap Lottery Selection System
In contrast, the proposed new DHS rule drastically changes the way those who registered for the H-1B cap lottery are selected, instead instituting a new wage-based selection process system that prioritizes the salary compensation level the employer plans to pay the H-1B worker.
Four wage levels are currently used by the U.S. Department of Labor to categorize H-1B specialty occupations. This new rule utilizes that mechanism to prioritize each lottery registration in terms of its likelihood to be chosen as a lottery “winner.” Those H-1B beneficiaries to be paid at the highest Level 4 wage will possess four times the chance of being selected in the lottery than those being paid at the Level 1 “entry-level.” Those with Level 3 qualifying wage compensation will have three times the chance of success as Level 1 applicants, and those at Level 2 qualifying wage compensation two times the chance of success. USCIS has acknowledged the probability of Level 1 workers being selected will decrease by 48%.
Implications and Current Status of Rule
Immigration advocates argue this proposed rule or regulation violates Congressional intent regarding the promulgation and implementation of the H-1B program, as Congress did not intend to limit the program’s use to employers with the ability to pay the highest wages. Indeed, it can be rationally said the U.S immigration system as a whole was not intended to be, in effect, a plutocratic system favoring the wealthy.
Immigration advocates claim this change will have a substantial negative impact on a wide range of U.S. employers and industries, including the health care and technology fields. Additionally, they argue the new system will limit the ability of smaller businesses and “startups” to use the program to foster innovation and growth, thereby unnecessarily hindering the potential success of their business efforts. Therefore, they say this consequence could ultimately hurt, not help, the U.S. economy.
Conversely, large corporations that can afford to pay the higher wages are enthused by this change, as it will undoubtedly lead to higher percentages of their H-1B cap lottery entrants being selected as “winners,” affording them the opportunity to employ more H-1B workers each year.
In terms of next steps, the 30-day comment period required by the Administrative Procedure Act ended in late October. During this period, comments were submitted by immigration advocates, including the American Immigration Lawyers Association, in opposition to the proposed rule. AILA requested that, at a minimum, this rule be delayed in its implementation and not used for the upcoming Fiscal Year 2027 cap filing season (the lottery for which will be administered in March 2026).
Judicial action is also being contemplated by an array of immigration advocacy groups, but no lawsuit contesting the measure has been filed as of this writing. Barring a lawsuit or other development to pause or prevent its implementation, the rule is likely to complete its required regulatory process in time to be implemented for the next H-1B cap lottery process in March.
David H. Jacobson is an attorney in Harris Beach Murtha’s immigration practice group.
