H-1B Fraud Crackdown: Expanded Investigations and New Regulations

by Niloofar Rahimi Zadeh updated on Sep 28, 2026 05:43:49 PM

Federal scrutiny of the H-1B program is intensifying following a new executive order, an expanded Department of Labor investigation, and a one-year extension of entry restrictions for certain H-1B workers.

Department of Labor Inspector General Anthony D’Esposito said investigators are pursuing potential foreign-labor fraud, worker exploitation, and human trafficking. He also predicted that the foreign-labor visa system could look substantially different within a year.

That prediction is not itself a new H-1B rule. However, the administration has already taken several concrete actions that could increase scrutiny of sponsoring employers, particularly companies connected to layoffs, outsourcing, questionable job placements, or Labor Condition Application violations.

What Has Actually Changed

On September 18, 2026, President Trump issued an executive order directing the Departments of Labor, Homeland Security, and State to coordinate more closely when reviewing H-1B cases.

Under the order, agencies must consider whether a sponsoring employer:

Conducted layoffs during the previous year that negatively affected similarly situated U.S. workers;
Plans future layoffs that could affect comparable U.S. employees; or
May have violated H-1B wage, employment, or program requirements.

The order also directs the Department of Labor’s Wage and Hour Division to begin reviewing data from previously submitted Labor Condition Applications, or LCAs, within 30 days.

An LCA is the filing in which an H-1B employer makes legally required statements about wages, working conditions, and the proposed job. Increased review of existing LCAs could expose employers to investigations, penalties, back-wage orders, or possible debarment if violations are found.

The order does not automatically deny H-1B petitions from every employer that has conducted layoffs. Instead, recent and planned layoffs are now factors agencies have been instructed to examine during H-1B processing. (whitehouse.gov)

Federal Investigation Targets Alleged Employer Fraud

The Department of Labor Office of Inspector General announced that investigators had issued dozens of subpoenas and executed search warrants as part of a nationwide foreign-labor investigation.

The agency said applications involving Cognizant and Cloudera had been suspended pending the criminal investigation. The announcement described an ongoing investigation—not a final court judgment or completed finding of wrongdoing against either company.

D’Esposito said investigators are examining alleged schemes involving fake employers, sham job offers, worker exploitation, and potential human trafficking. Earlier enforcement activity included visits to locations associated with hundreds of approved H-1B petitions where investigators reported finding offices that appeared inactive.

The government’s statements indicate that enforcement is primarily focused on employers and individuals suspected of fraud. They do not announce the cancellation of the H-1B program or an across-the-board revocation of valid H-1B status. (oig.dol.gov)

$100,000 H-1B Entry Restriction Extended Through September 2027

A separate presidential proclamation issued September 18 extended an existing H-1B entry restriction for another year.

Effective September 21, 2026, the proclamation generally restricts covered H-1B entry and petition decisions involving workers currently outside the United States unless the petition is accompanied or supplemented by a $100,000 payment. The restriction is scheduled to remain in effect until September 21, 2027, unless it is extended again.

The proclamation allows the secretary of homeland security to grant exceptions when employing an individual, a company’s workers, or workers in an industry is determined to be in the national interest and not a threat to U.S. security or welfare.

Because its application depends on factors such as the worker’s location, petition circumstances, and any available exception, students and employers should not assume that every H-1B case is treated identically. This is especially important for F-1 students planning an H-1B transition that may involve international travel, consular processing, or entry from outside the United States. (whitehouse.gov)

What H-1B and OPT Workers Should Watch

For workers, the immediate concern is whether an employer’s records and actual employment practices match the approved H-1B filings. Employees should keep copies of their petition documents, LCA, pay statements, worksite information, and communications describing their duties.

Federal law generally requires an H-1B employer to:

Pay at least the required wage listed under the H-1B rules;
Pay for employer-caused nonproductive time, including certain “bench” periods;
Provide the working conditions described in the petition and LCA;
Avoid charging workers prohibited petition expenses; and
Refrain from retaliating against workers who report suspected H-1B violations.

F-1 students working on OPT or STEM OPT should also evaluate prospective H-1B sponsors carefully. A legitimate employer should be able to explain the position, worksite, supervision structure, salary, and petition strategy without asking the employee to provide false information or pay costs that legally belong to the employer.

The enforcement announcements point toward more employer investigations and potentially additional policy changes. They do not, however, establish that the H-1B program will be abolished or confirm what further regulations may be introduced.

Sources:

Topics: H1B Status

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