On September 18, 2026, President Trump signed an executive order that could fundamentally reshape how federal agencies evaluate H-1B visa petitions.
The order directs the Departments of State, Labor, and Homeland Security to consider whether a sponsoring employer has conducted or will conduct layoffs when adjudicating H-1B petitions, visa applications, applications to enter the United States, and H-1B-related labor condition applications (LCAs).
The President's order also directs the agencies to consult a broad range of federal economic data in its consideration of these applications.
The move represents the latest in a sustained campaign by the administration to tighten oversight of the H-1B program and is expected to have significant implications for employers, H-1B workers, and prospective applicants alike.
What the Executive Order Requires
The directive creates a multi-agency framework for evaluating employer layoff activity at virtually every stage of the H-1B process.
The order focuses on whether a sponsoring employer has "directly or indirectly" laid off employees within the previous year or plans layoffs that could negatively affect the employment of similarly situated U.S. workers.
Employers could face scrutiny at multiple points, including DOL LCA review, USCIS petition adjudication, consular processing, and admission at the border.
Critically,
the directive is broader than the existing statutory nondisplacement rules because it reaches layoffs during the prior year and planned future layoffs, rather than focusing only on the existing ninety-day window.
It also may apply to all H-1B employers, not only H-1B-dependent employers and willful violators.
The order directs the Secretary of State, the Secretary of Labor, and the Secretary of Homeland Security to consult with the Secretary of Commerce, the Secretary of Education, and the Administrator of the Small Business Administration in order to receive additional data for the administration of the H-1B program, such as data on wages, industrial conditions, and employment specialization.
Retroactive Review of LCAs
Beyond prospective scrutiny, the executive order also has a backward-looking enforcement component.
Under the order, the Department of Labor will begin, within 30 days, reviewing data from previously submitted labor condition applications to determine whether additional action against sponsoring employers may be warranted under federal law.
The administration is giving agencies a way to compare visa requests with wage data, employment conditions, academic credentials, industry information and a company's own layoff record.
This retrospective review could expose employers to enforcement actions based on filings already on the books — a prospect that makes proactive compliance review essential for any company with active H-1B sponsorships.
Outsourcing and Staffing Firms in the Crosshairs
Consulting, staffing, outsourcing, and other third-party placement models may face particular scrutiny because those arrangements can raise displacement questions at client worksites.
The administration has been explicit about its rationale. The executive order cites what the White House describes as a pattern of abuse,
noting that "technology sector employers have collectively requested H-1B visas for hundreds of thousands of workers, yet have also laid off somewhere between 800,000 to 1.3 million American employees from 2022 through 2026."
Since the 2025 Proclamation took effect, H-1B registrations filed by the largest IT outsourcing firms have been reduced by 92%.
The White House points to these figures as evidence that its enforcement strategy is producing measurable results.
What This Means for Current H-1B Holders
For foreign nationals currently in H-1B status, the order introduces a new layer of uncertainty — particularly for those whose employers have recently undergone workforce reductions.
The fact that an employer has recently laid off workers in similar positions does not mean an H-1B worker's status is automatically in danger. However, if you are considering a change of employer, international travel, an extension, or a new visa application, seek advice before taking action.
The order does not ban employers with layoff histories from filing H-1B petitions, nor does it establish a formal labor market test. It requires agencies to weigh layoff activity as a factor.
But the practical effect could be significant: requests for evidence, delays in adjudication, and potential denials may increase for petitions filed by employers with recent or planned reductions in force.
Implementation Details Still Pending
Despite the sweeping scope of the directive, much remains undefined.
The executive order leaves significant implementation details to forthcoming agency guidance, which will determine how DOL, DHS, and the State Department incorporate layoff-related information into H-1B adjudications. Information on how the directive will apply in practice is not yet known.
The practical rules are not fully defined yet. Federal agencies have not published detailed implementation guidance, and the order is not itself a new regulation with clear standards for every case.
Key questions remain unanswered: How will "similarly situated" be defined? What threshold of layoffs will trigger heightened review? Will agencies develop formal questionnaires or rely on existing public information? And how will indirect layoffs — such as those conducted by staffing firms at client sites — be assessed?
The Bigger Picture: Part of a Broader H-1B Overhaul
This executive order is not an isolated action.
According to the White House, the order is intended to strengthen oversight of the H-1B program, increase interagency coordination, and require agencies to consider whether employers have recently conducted layoffs of similarly situated U.S. workers when adjudicating H-1B-related filings. It was announced alongside a proclamation renewing the administration's previously imposed $100,000 H-1B fee requirement for certain petitions.
President Trump's September 18/19, 2026 Presidential Proclamation extends the $100,000 fee on certain H-1B petitions until September 21, 2027.
However, the fee's legal enforceability remains uncertain:
on July 24, 2026, in State of California v. Noem, the U.S. Court of Appeals for the First Circuit denied the U.S. government's request for a stay on a temporary pause of the $100,000 H-1B fee policy, after the U.S. District Court for the District of Massachusetts vacated the controversial $100,000 H-1B proclamation fee, ruling it an unlawful tax and an improper use of executive power.
DOL enforcement activity may increase as the EO requires prompt review of labor condition application data. Industry observers expect additional H-1B regulatory changes, potentially including further reforms concerning employer eligibility and labor market protections.
What Employers and H-1B Workers Should Do Now
While the full impact of the order depends on forthcoming agency guidance, employers and H-1B workers should take immediate steps to prepare:
- Audit internal records: Employers should review recent and planned workforce reductions alongside pending or anticipated H-1B filings to identify potential compliance risks.
- Evaluate third-party arrangements: Companies using staffing or outsourcing models should be particularly vigilant, as these structures may attract additional scrutiny.
- Consult immigration counsel: Given the uncertainty around implementation, legal guidance is essential for employers navigating H-1B filings during a period of organizational restructuring.
- Prepare for RFEs and delays: Increased scrutiny is likely to translate into more requests for evidence and longer processing times, especially for employers with recent layoff activity.
Clinch Law Firm will continue to monitor developments as agency guidance is released. Contact our immigration team for case-specific advice on how these changes may affect your situation.