New H-1B Order Increases Scrutiny of Employers With Recent Layoffs

President Donald Trump signed a new executive order on September 18, 2026, directing federal agencies to give greater attention to an H-1B sponsor’s recent and planned layoffs when reviewing H-1B-related cases.

The order instructs the Department of Homeland Security (DHS), Department of Labor (DOL), and Department of State to consider whether an employer has directly or indirectly conducted layoffs within the previous year or plans layoffs that could negatively affect similarly situated U.S. workers. It also calls for greater coordination among federal agencies and directs DOL to begin reviewing data from previously submitted Labor Condition Applications (LCAs).

For employers and H-1B applicants, the development could make an employer’s broader workforce decisions more relevant during the H-1B process.

Recent Employer Layoffs Become an H-1B Scrutiny Factor

Under the executive order, DHS, DOL, and the State Department must take recent layoffs into account when handling H-1B-related LCAs, petitions, visas, and entry decisions.

Specifically, agencies are directed to consider whether the sponsoring employer:

• directly or indirectly engaged in layoffs during the previous year; or
• plans future layoffs that could negatively affect similarly situated U.S. workers.

The language potentially gives agencies a much broader window for examining an employer’s staffing history than applicants may have encountered in an ordinary H-1B filing.

However, a recent layoff does not automatically mean an H-1B petition must be denied.

Existing H-1B law already contains specific non-displacement requirements for certain H-1B-dependent employers and employers classified as willful violators. DOL guidance explains that these employers can be subject to restrictions on displacing similarly employed U.S. workers around the filing or placement of certain H-1B workers.

Immigration attorney Cyrus Mehta told Forbes that the executive order cannot itself rewrite those statutory requirements. He said questions could arise if agencies attempt to penalize employers that are not otherwise subject to the existing displacement provisions solely because they conducted layoffs.

DOL Will Review Previously Submitted H-1B LCAs

The order does not apply only to future filings.

It directs the Department of Labor's Wage and Hour Division to begin, within 30 days of September 18, reviewing data connected to previously submitted LCAs to determine whether additional action against sponsoring employers may be warranted under Section 212(n)(2)(G) of the Immigration and Nationality Act.

That provision gives the Secretary of Labor authority to initiate an investigation when there is reasonable cause to believe an H-1B employer is not complying with applicable LCA requirements.

The executive order does not say that every previously approved LCA will be individually reopened or investigated. Instead, it directs DOL to review existing LCA data and determine whether particular employers warrant further action.

For companies with substantial H-1B hiring alongside recent workforce reductions, that retrospective review could make past filings more relevant to future compliance activity.

DHS, DOL and the State Department Will Coordinate More Closely

Another significant part of the order is increased interagency coordination.

DHS, DOL, and the State Department are instructed to coordinate when processing H-1B petitions, LCAs, and visas. The Commerce Department, Department of Education, and Small Business Administration can also provide information involving wages, employment conditions, academic fields, industries, and other economic factors.

Previously, different stages of the H-1B process could involve separate agencies: DOL handles the LCA, USCIS adjudicates the employer's H-1B petition, and the State Department becomes involved when visa processing is required abroad.

The new order calls for those agencies to make greater use of information across the federal government when evaluating H-1B compliance.

What Could Change for H-1B Employers and Workers?

Employers considering H-1B sponsorship may now need to pay closer attention to how recent workforce reductions relate to the positions for which they are seeking H-1B workers.

Forbes reported that the order could lead to increased Requests for Evidence or other scrutiny, particularly where an employer has recently laid off workers. However, exactly how USCIS, DOL, and the State Department will implement the order will depend on future agency guidance and enforcement practices.

For current H-1B workers, the order does not cancel H-1B status or create an automatic penalty simply because their employer conducts layoffs. The more immediate issue is whether the employer's staffing decisions affect a petition, extension, LCA, visa application, or compliance review involving that employer.

Employers with recent layoffs may therefore face additional questions about the positions eliminated, the positions filled by H-1B workers, job duties, qualifications, locations, and whether affected U.S. workers were similarly situated.

What This Means for F-1 and OPT Students Transitioning to H-1B

The executive order does not specifically impose a new rule on F-1 students, OPT, or STEM OPT.

But students transitioning from F-1 or OPT to H-1B depend on an employer filing an H-1B petition on their behalf. USCIS Form I-129 covers H-1B petitions for new employment as well as requests to change a beneficiary from another nonimmigrant status to H-1B status.

That means an international student whose sponsoring company recently conducted significant layoffs could encounter the effects of the new policy at the employer-petition level, even though the student personally was not involved in those layoffs.

Students preparing for an H-1B transition may want to understand whether their prospective sponsor has recently reduced staff in positions similar to the offered H-1B role and whether the employer is prepared to address additional compliance questions if they arise.

The order itself does not change existing CPT, OPT, or STEM OPT employment authorization rules.

What Happens Next?

The first major implementation deadline comes in October 2026, when DOL is required to have begun reviewing data from previously submitted LCAs.

Further guidance from DOL, DHS or the State Department may clarify how agencies will evaluate employer layoffs during individual H-1B cases and what additional evidence employers may be expected to provide.

Another question will be how broadly agencies apply the order beyond employers already subject to statutory H-1B displacement requirements. Forbes notes that this could become an area of legal dispute if agencies attempt to create restrictions beyond what Congress authorized in existing H-1B law.

For now, the most important change is clear: recent and planned layoffs are becoming a more explicit part of federal H-1B scrutiny, while DOL is also being directed to look back at previously submitted LCA data.

Sources:

• • Executive Order: Enhancing Program Integrity and Interagency Coordination in the H-1B Nonimmigrant Visa Program — The White House
  • Fact Sheet #62N: Limitations on Displacement of U.S. Workers by H-1B Workers — U.S. Department of Labor
  • H-1B Labor Condition Application Requirements — U.S. Department of Labor
  • Trump Enacts Additional Immigration Policies Against H-1B Visa Holders — Forbes