President Trump has issued a new executive order aimed at strengthening oversight of the H-1B visa programme. The order places greater focus on employers’ workforce practices, including recent and planned layoffs involving U.S. workers.

It also calls for closer coordination between federal agencies and additional review of H-1B-related employment information. The changes could have implications for employers that sponsor H-1B workers, particularly as further guidance on implementation is issued.

What the H-1B Executive Order Actually Says

Signed on September 18, 2026, the executive order instructs federal agencies to thoroughly examine the general workforce practices of companies applying for H-1B visas.

The directive focuses heavily on past downsizing or scheduled workforce cuts that could overlap with the job functions of similarly situated U.S. workers. It also pushes for tighter collaboration across all government bodies handling the H-1B process.

Crucially, the order does not ban H-1B sponsorship for organizations that have experienced layoffs. Rather, it makes past or planned workforce reductions a key factor that authorities can evaluate when reviewing visa applications.

The Layoff Factor: Previous Year and Planned Layoffs

Under the new order, federal agencies must evaluate whether a sponsoring company has laid off U.S. workers in the previous year, or if it has plans for future layoffs in similar roles.

• This requirement expands far past the traditional 90-day non-displacement window that previously applied only to specific H-1B-dependent companies or wilful violators.
• However, having recent or upcoming layoffs does not automatically disqualify an employer from successfully sponsoring an H-1B worker.

Which Agencies Are Involved?

While the Departments of State (DOS), Labor (DOL), and Homeland Security (DHS) remain the primary administrators of the visa program, the order expands data collection by pulling in:

• Department of Commerce
• Department of Education
• Small Business Administration (SBA)

By connecting these departments, the government can easily cross-reference data regarding wages, regional employment trends, educational benchmarks, and broader industry conditions. This multi-agency framework aims to provide officials with a comprehensive view of a company’s labor practices during visa evaluations.

The 30-Day Labor Department Review of Past Applications

The order gives the DOL’s Wage and Hour Division a strict timeline of 30 days to begin auditing data from previously filed Labor Condition Applications (LCAs).

This rapid review aims to uncover any past discrepancies or rule violations regarding H-1B compliance. It is intended strictly as an investigation phase; the order does not impose automatic penalties on companies whose past LCAs are selected for review.

What the Order Does Not Do

• The order does not automatically prevent a company from sponsoring H-1B workers simply because it has laid off U.S. employees.
• It does not create a new rule stating that an employer becomes ineligible for H-1B sponsorship after conducting layoffs.
• It does not replace existing rules governing H-1B-dependent employers or establish an automatic finding of wrongdoing when layoffs and H-1B sponsorship happen at the same company.

Instead, it directs federal agencies to consider recent and planned workforce reductions when reviewing H-1B matters, while existing eligibility requirements and Labor Condition Application obligations remain in effect. Employers should expect questions about workforce reductions at the LCA/ petition stages and even at the visa and admission stages. Future enforcement will depend on agency implementation and whether additional regulations or guidance are issued.

Who Faces the Most Scrutiny?

The executive order applies broadly to all H-1B sponsoring employers. It is not confined to cap-subject petitions and covers any H-1B petition, including amendments and extensions. However, heightened attention and documentation requirements fall heavily on specific business models and designations.

Key Categories Facing Increased Scrutiny

• Employers with Layoffs and Outsourcing: Businesses whose staffing practices involve significant recent layoffs, outsourcing, or third-party placements must meticulously document their employment practices.
• H-1B-Dependent Employers: Employers meeting the threshold for H-1B dependency and those classified as willful violators must continue to abide by strict Department of Labor rules, including the 90-day non-displacement rule covering the period before and after an H-1B filing.
• Tech, Consulting, and Staffing Firms: The administration has specifically highlighted technology companies, outsourcing businesses, and third-party placement firms, alleging that some organizations use the H-1B program to displace U.S. workers or reduce labor costs.

Indian professionals and their employers are among the most affected by this order – our article on H-1B Visas for Indians in 2026 covers eligibility, the wage-weighted lottery, and what these new scrutiny rules mean for Indian-born workers. 

What Employers Should Do Now

As federal agencies begin implementing the executive order, H-1B sponsoring employers should proactively review their employment records, immigration filings, and workforce strategies.

Audit Recent Layoffs Against H-1B Roles:

• Review workforce reductions from the preceding year to determine if laid-off U.S. employees held positions similar to current or proposed H-1B roles. 
• Evaluate key factors such as job duties, work locations, reporting structures, and compensation. 
• Identify any planned future workforce reductions that could impact U.S. workers performing work comparable to H-1B positions. 

Review LCAs and Public Access Files:

Examine existing Labor Condition Applications (LCAs) and Public Access Files (PAFs) to ensure all details precisely match actual employment terms.

LCA compliance is now under sharper scrutiny than ever – our article on DOL’s Proposed Prevailing Wage explains the upcoming  threshold changes that employers must factor into their H-1B planning.

Verify data related to:

• Job duties and requirements 
• Work locations and wage information 
• Employment conditions and LCA records 
• Public Access File documentation and H-1B petition supporting documents 

Note: This review is vital because the executive order explicitly instructs the Wage and Hour Division to scrutinize data tied to previously submitted LCAs. 

Document Business Reasons for Workforce Changes:

• Maintain robust, transparent records explaining the legitimate business justifications behind any layoffs, restructuring, or organizational changes.
• If your organization has reduced its U.S. workforce while simultaneously sponsoring H-1B talent, clear documentation proving the distinct business rationale for both decisions is critical. 
• Ensure that job descriptions, candidate qualifications, and wage data in every H-1B filing flawlessly reflect the actual day-to-day position.

Frequently Asked Questions: 

What does the new H-1B executive order do?

It directs federal agencies to factor recent and planned workforce reductions into H-1B petition, visa, and LCA reviews. 

Does a layoff automatically disqualify a company from sponsoring H-1B workers?

No, layoffs do not automatically disqualify a company, but they trigger closer federal scrutiny. 

How far back will agencies look at layoffs?

Agencies are directed to look back at layoffs conducted within the previous 12 months. 

Which employers are most affected by the new H-1B scrutiny?

Employers with recent layoffs, outsourcing models, third-party placements, H-1B dependency, or heavy tech/consulting usage face the highest scrutiny. 

What is an H-1B dependent employer?

An employer whose workforce ratio of H-1B workers crosses specific statutory thresholds relative to the total  number of employees.

Will the Labor Department review past H-1B applications?

Yes, the order specifically instructs the Wage and Hour Division to review data from previously submitted Labor Condition Applications (LCAs). 

What happens to H-1B workers who lose their jobs?

As of now, they enter a standard 60-day grace period to find a new employer, change status, or depart the country. But the Dept of Homeland Security has formally proposed a rule to eliminate the 60-day grace period. This is currently open to public comments before the Final Rule will be passed.

Disclaimer: This article is provided for informational purposes only and does not constitute legal advice. Receipt of this communication does not establish an attorney-client relationship. Please consult with a qualified immigration attorney regarding your specific circumstances.