United States: Preparing for the FY 2027 H-1B Cap

1. Briefly, how will the annual H-1B cap lottery change in 2026?

Under a new regulation, the Department of Homeland Security is replacing the longstanding random H-1B cap lottery process with a new weighted lottery that increases the odds of selection for beneficiaries being offered the highest wages according to the Department of Labor’s four-level prevailing wage system.

2. Will the new system be in place for the FY 2027 H-1B cap season?

DHS plans to implement the system on February 27, 2026 so that it will be in effect for the FY 2027 H-1B cap season, which will begin in March 2026. This means that, for each prospective beneficiary registered in the H-1B cap registration system, employers will be required to provide the Department of Labor (DOL) prevailing wage level corresponding to the salary they will offer that employee. 

3. Will the new regulation be challenged in court? What are the chances that the new weighted system will be postponed?

Federal lawsuits challenging the regulation are possible, but the timing of those lawsuits and any preliminary relief requested by a plaintiff are unknown at this time. Employers therefore need to plan for the new weighted lottery regulation to take effect as announced by the government.

4. How will the new weighted selection system work?

The new H-1B quota allocation system will be based on the Department of Labor’s Occupational Employment and Wage Statistics (OEWS) wage levels. When an employer registers a beneficiary for the FY 2027 cap, the employer will be required to state the OEWS wage level to which the offered salary corresponds for that occupation and geographic area of employment. A beneficiary whose offered wage corresponds to Level 4 (the highest tier) of the four-level OEWS 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.

5. How is the wage level determined for purposes of the H-1B cap registration system?

Working with immigration counsel, the employer will need to determine the highest OEWS wage level that the beneficiary’s offered wage equals or exceeds for the relevant Standard Occupational Classification (SOC) code in the area of intended employment.

For example, a cap registration beneficiary is being offered a position as a data scientist in Boulder, Colorado, and the employer is offering an annual salary of $150,000. According to the DOL OEWS data, the salary corresponds to Level III for the occupation and the geographic area of employment. Therefore, Level III would be listed in the registration for the candidate, who would thus be entered three times in the computerized lottery.

6. What if the beneficiary will work in multiple locations? Which location should be used to determine the correct wage level to enter in that beneficiary’s cap registration?

If the beneficiary will be working in multiple locations, the employer must first determine the OEWS wage level for the occupation in each of the multiple locations. The employer is then required to select the lowest corresponding OEWS wage level associated with the position.

7. What if multiple employers submit registrations for the same foreign national?

If more than one employer submits a bona fide registration on behalf of a foreign national, the foreign national would be entered into the H-1B cap lottery according to the registration with the lowest prevailing wage level.

8. Will the wage level listed in the cap registration be the same as the wage level listed in the DOL labor condition application (LCA) for the beneficiary? 

Not necessarily. The OEWS wage level listed on the registration is not derived from the wage level that will be used on the LCA filed with the H-1B petition for selected registrations. 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 prevailing wage guidance.

The new regulation favors higher salaries for H-1B cap beneficiaries. It 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 (as well as PERM labor certification cases).

9. Can an employer offer a wage that is at a higher OEWS level than that listed in the LCA?

Yes. For example, an employer could offer a Level IV wage even if the beneficiary will work in a position with a lower OEWS wage level on the LCA. In commentary to the proposed version of the weighted cap allocation regulation, DHS acknowledged that some employers may choose to offer a higher wage to be more competitive in the H-1B selection process, even if the offered wage does not necessarily reflect the skill level required for the position according to DOL’s prevailing wage guidance. DHS takes the position that the higher wage is a “clear reflection of the beneficiary’s value to the employer, which, even if not related to the position’s skill level per se, reflects the unique qualities the beneficiary possesses.”

10. What happens if there is a change in the job location after the registration is selected but before the cap petition is filed?

USCIS has the discretion to accept a change in the area of intended employment between the H-1B cap registration and the cap petition filing if the employer can demonstrate that the registration represented a bona fide job offer at the time of submission. However, if the employer is unable to satisfy USCIS that the registration for the initial location reflected a bona fide job offer, the agency has the authority to deny or revoke the petition.

11. How will the new weighted system affect the odds of selection in the cap lottery? Will the new regulation limit an employer’s ability to hire candidates who are in the early stages of their careers?

Under the prior unweighted random cap lottery, USCIS selected 24.8% of H-1B cap registration beneficiaries for FY 2024, 28.9% for FY 2025, and 35.35% for FY 2026. Under the new system, the odds of selection could increase for some categories of foreign nationals, but a number of variables make the selection rate difficult to predict.

Some employers may decide not to participate in this year’s H-1B cap or may significantly reduce the number of candidates they register for the lottery because of cost concerns. The new system strongly favors higher wages, which some employers may be unable to support. The new $100,000 H-1B fee may also deter some employers from sponsoring candidates. A lower participation rate could increase the overall odds of selection for employers who elect to sponsor H-1Bs for the FY 2027 cap.

Because the new selection system gives priority to the most highly paid candidates (based on their occupation and geographic area of employment), some employers may decide to increase offered wages to improve H-1B candidates’ chances of selection. In the proposed version of the weighted lottery rule, USCIS suggested that all but those offered a Level 1 wage would have higher odds of selection under the new rule, but those predictions are not certain. What is not known is how many employers will raise offered wages and how high their increases will be relative to the DOL wage level system.

There is a strong possibility that many employers will seek to raise wages to Level 3 or 4. If that occurs, it 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. Though candidates being offered a Level 1 wage could still be selected in the weighted lottery, their odds could be significantly lower.

12. How does the new $100,000 fee affect employers registering prospective H-1B employees for the FY 2027 cap?

The new $100,000 H-1B fee may apply to some petitions filed on behalf of beneficiaries who are selected for the FY 2027 cap, but cap petitions filed and approvable for a change of status (e.g., from F-1 or L-1 status to H-1B) are not subject to the fee. 

Changes of status make up a large proportion of the H-1B cap petitions filed each year; those that are approved will not be subject to the fee. However, if the candidate is located outside the United States, the petition would have to be filed for consular notification and the $100,000 fee would therefore generally apply. In addition, even if the candidate is in the United States, employers are cautioned that, if USCIS determines that a request for a change of status is not approvable – if, for instance, the agency finds that the beneficiary did not maintain their current status and thus is not eligible to change their status in the United States – the employer would be required to pay the $100,000 fee or obtain a national interest exception in order to obtain an approval of the underlying petition. If the employer pays the required fee or obtains a national interest exception from the fee, the underlying petition would then be approved for consular notification, which would enable the beneficiary to travel abroad, obtain an H-1B visa (unless visa exempt), and reenter the United States in H-1B status. It is anticipated that USCIS would provide fee payment instructions when it notifies the petitioner, likely in an RFE or NOID, that the petition is not approvable for a change of status.

For more information about the $100,000 fee and exemptions, please see our most recent Client Alert on that issue.

13. Will the new rule and the new fee affect the way employers prepare for the cap?

Yes. The new weighted allocation rule, as well as the $100,000 fee for certain H-1B petitions, will require employers and their immigration counsel to do some additional analysis upfront before registering a candidate for the cap lottery.

Wage analysis: Employers and immigration counsel will need to evaluate each prospective H-1B worker’s role, offered salary, and anticipated work location(s) to determine which DOL wage level to enter in the candidate’s cap registration. As described above, the wage level will determine how the registration will be weighted for purposes of the selection lottery.

Liability for the $100,000 H-1B fee: Employers and their counsel will also need to evaluate each prospective H-1B employee to determine whether a petition filed on their behalf is subject to the new $100,000 H-1B fee. In brief, a petition is subject to the fee if it is filed and/or only approvable for consular notification. This would generally be the case if the sponsored foreign national is either outside the United States or, if in the United States, is not eligible for a change of status for some reason. Employers and their counsel will need to determine whether candidates for changes of status from F-1 or another nonimmigrant category are eligible for the change, i.e., whether they have violated their status in a way that would render them ineligible to change status even if their underlying H-1B petition is approvable. Though liability for the H-1B fee does not affect whether a candidate can be registered for the lottery, employers may want to assess whether they may be subject to the fee before registering a candidate.