Layoffs, Lawsuits, and a $100,000 H-1B Question

The Trump administration opened a new front in its effort to reshape the H-1B visa program last week, pairing a fresh executive order focused on employer layoffs with a one-year extension of the controversial $100,000 payment requirement. Yet for employers, the practical picture is more complicated than the headlines suggest: the fee remains tied up in federal court, and the layoff order’s real impact will depend on how agencies choose to implement it.

What the Executive Order Does

On September 18, 2026, President Trump signed the Executive Order “Enhancing Program Integrity and Interagency Coordination in the Administration of the H-1B Nonimmigrant Visa Program.” The order instructs the Departments of Labor, Homeland Security, and State to coordinate more closely on H-1B program administration and take into consideration employers’ recent or planned layoffs. 

Specifically, the agencies are directed to weigh whether an employer conducted layoffs within the prior year or plans future layoffs affecting similarly situated U.S. workers when adjudicating H-1B-related filings. That scrutiny could surface at several points along the way, since the order applies to “any labor condition application, petition, visa, and entry” of an H-1B nonimmigrant, meaning the Labor Department’s review of labor condition applications, USCIS petition adjudications, consular visa processing, and admission at the border. 

The order also widens the circle of agencies involved. The Departments of State, Labor, and Homeland Security must coordinate with the Departments of Commerce and Education and the Small Business Administration, which are expected to supply relevant wage, employment, academic, industrial, and other economic information. In addition, it directs the Wage and Hour Division, within 30 days, to begin reviewing data relating to previously submitted LCAs to determine whether further action against sponsoring employers is warranted. 

Notably, the order does not rewrite the law itself. It does not, on its face, amend the Immigration and Nationality Act (INA) or the H-1B regulations. Instead, it directs the agencies to incorporate layoff and labor-market information into H-1B administration to the extent consistent with existing law. The executive order does not immediately change H-1B filing requirements, and industry observers expect federal agencies to issue additional implementation guidance in the coming months. 

The Fee Extension

Alongside the order, the President issued a proclamation that renews the $100,000 fee requirement for certain alien H-1B visa applications first imposed on September 19, 2025. The proclamation, titled Restriction on Entry of Certain Nonimmigrant Workers, extends through September 21, 2027, the $100,000 payment requirement first imposed in 2025 for covered H-1B cases involving workers outside the United States.

The White House argues the policy is working. According to its fact sheet, since the 2025 Proclamation took effect, H-1B registrations filed by the largest IT outsourcing firms have been reduced by 92%. The administration frames the order as a continuation of efforts to combat H-1B abuse, prevent worker displacement, increase scrutiny of outsourcing models, and prioritize higher-paid workers. 

Why the Fee Still Can’t Be Collected

The extension lands on a policy that courts have already struck down. On June 8, 2026, the U.S. District Court for the District of Massachusetts vacated the DHS and State Department actions implementing the 2025 proclamation in State of California v. Mullin, finding the agencies had acted unlawfully in requiring the payment. The government’s attempt to pause that ruling failed when, on July 24, 2026, the United States Court of Appeals for the First Circuit denied the government’s motion to stay that judgment pending appeal. USCIS has acknowledged that it will comply with the order while considering further steps. 

Immigration attorneys argue the new proclamation doesn’t change that outcome. Their reasoning is that the vacatur targets the agency actions carrying out the fee, so it should therefore prevent DHS and the State Department from collecting the payment under the extension as well, unless the judgment is stayed, reversed, or the agencies adopt materially different lawful implementing action. Still, that conclusion carries a caveat: guidance from counsel cautions that the existing judgment against the proclamation policy should not be assumed automatically to resolve every question, and further court clarification may be needed.

A separate regulatory track adds another layer. The Federal Register lists a proposal called “Fee for Certain H-1B Petitions,” published August 25, 2026, document 2026-17324. It remains distinct from the proclamation payment. If both measures were ever to take effect, the proposed regulatory charge could apply in addition to the $100,000 proclamation payment for petitions covered by both.

Legal Questions Ahead

Critics contend the layoff directive stretches beyond what Congress authorized. Existing law already addresses displacement, but only narrowly: Congress was concerned about displacement by H-1B-dependent employers and willful violators, not layoffs by every H-1B employer. The new order, by contrast, reaches any sponsor, looks back a full year, and even considers planned future reductions. It also leaves key terms undefined, such as what counts as a “similarly situated” worker or an “indirect” layoff. Commentators warn that without objective standards, employers may receive inconsistent treatment among DOL, USCIS, consular posts, and Customs and Border Protection. As with earlier measures, future regulations implementing this order could face legal challenges if stakeholders argue that agencies exceed statutory authority. 

Supporters of the administration’s approach, meanwhile, see the order as a long-overdue tool to stop companies from cutting American staff while sponsoring foreign workers, and point to the sharp drop in outsourcing-firm registrations as evidence that tougher measures change behavior. The fee debate remains contested on both policy and legal grounds, and the First Circuit appeal is still pending.

What Employers Should Do Now

For now, employers and universities can continue planning H-1B sponsorship under the current court-ordered framework. But the layoff order means the fee isn’t the only concern: the separate September 18 executive order may produce increased scrutiny of layoffs, wages, and hiring practices even while collection remains blocked. Employers that have reduced headcount should be ready to explain the timing, locations, occupations, and business reasons behind those cuts, and to show how affected roles differ from sponsored H-1B positions. At the same time, attorneys stress that employers should not assume that any layoff makes an H-1B filing unlawful; the executive order says that layoffs are to be considered, but it does not announce a categorical prohibition. 

The next few months, with agency guidance expected and the fee litigation still unfolding, will determine whether these measures become meaningful new hurdles or remain largely on paper.

Legal Disclaimer

The information provided in this article is for educational and informational purposes only and does not constitute formal legal advice. Reading this material does not create an attorney-client relationship. Every case involves unique facts, and individuals seeking guidance on their case should consult an experienced attorney for legal advice. For a free phone consultation with Attorney Thomas Lee, please call (213) 251-5533.