United States: DHS Issues Final Rule to Replace Random H-1B Cap Lottery with Wage-Level-Based Weighted System for H-1B Cap Allocation in Time for Implementation in Early 2026

The revised method of H-1B quota allocation will be based on the Department of Labor’s Occupational Employment and Wage Statistics (OEWS) Wage Levels. Beneficiaries registered for the H-1B cap lottery will be entered into the selection pool using a weighted system. Beneficiaries whose offered wage corresponds to Level 4 (the highest tier) of the Department of Labor’s four-level wage structure will be entered into the selection pool four times. A Level 3 beneficiary will be entered three times; a Level 2 beneficiary, two times; and a Level 1 beneficiary, once.

Employers will be required to indicate the appropriate occupational code, OEWS wage level, and area of employment in each candidate’s registration for the H-1B cap lottery. If a beneficiary is selected in the lottery, the employer’s USCIS Form I-129 H-1B petition will need to include documentation showing that the wage level indicated in the registration was appropriate for the occupation. USCIS can deny or revoke a petition if the agency determines that the petitioner attempted to unfairly increase the odds of selection by choosing an inappropriate wage level or by changing the wage offered to a lower wage level in the petition than that indicated in the lottery registration for that beneficiary. The final rule does, however, recognize that there are legitimate reasons that an intended work location might change between the time of registration and the time of filing the petition, so USCIS may, in its discretion, find that a change in the intended work location (corresponding to a lower wage level) is permissible, provided that it views the change as consistent with a bona fide job offer at the time of registration.

The H-1B cap registration will capture the OEWS wage level associated with the wage being offered to the prospective H-1B employee. When registering a beneficiary for the lottery, the sponsoring employer must select the highest OEWS wage level that the beneficiary’s offered wage equals or exceeds for the relevant occupation in the area of intended employment.

If the beneficiary will be working in multiple locations, the employer would be required to select the lowest corresponding OEWS wage level associated with the position. If more than one employer submits a registration on behalf of a foreign national, the foreign national would be entered into the H-1B cap lottery according to registration with the lowest prevailing wage level.

It is important to note that the OEWS wage level listed on the registration is not derived from the wage level that will be used on the Labor Condition Application (LCA) that must be filed with the H-1B petition for selected registrations. Rather, the wage level listed on the cap registration is based on the offered wage, whereas the wage level used for the LCA is based primarily on the minimum education and experience requirements for the position and certain other factors specified in applicable Department of Labor (DOL) prevailing wage guidance.

This new regulation favoring higher salaries for H-1B cap beneficiaries follows President Trump’s September proclamation requiring a $100,000 fee for H-1B petitions filed or approvable for consular notification, and it is being promulgated at a time when the Office of Management and Budget is currently considering a proposal by DOL that is expected to seek to increase the prevailing wage levels for H-1B cases.

The regulation could limit employers’ access to some candidates, particularly those offered a wage corresponding to Level 1, the entry-level tier of the DOL wage system. The regulation could also cause some employers to increase the wages offered to H-1B cap candidates to increase the odds of selection. This, in turn, could further decrease the odds of selection for candidates with offered salaries at lower OEWS wage levels.

Employers and their immigration counsel will need to undertake an evaluation of prospective H-1B candidates to determine the appropriate wage level for each, well before USCIS begins to accept registrations for the FY 2027 cap.

The Trump Administration intends the rule to take effect in time for the FY 2027 H-1B cap season beginning this Spring, but it is possible that the regulation will be challenged in federal court. If the rule is implemented for the FY 2027 cap season, USCIS is expected to publish instructions for stakeholders on completing and submitting H-1B cap registrations under the revised selection process.

Fragomen is closely following the implementation of this rule and will provide updates.