US Tightens H-1B Scrutiny as Executive Order Targets Employers Who 'Directly or Indirectly' Lay Off Staff

Companies seeking H-1B visas for foreign workers will now face closer checks if they have recently cut American jobs, under a new executive order signed on Friday, 18 September.

The order directs the Departments of State, Labor and Homeland Security to consider whether a sponsoring employer 'directly or indirectly' laid off similarly situated US workers within the past year, or plans to do so, before approving H-1B applications. According to the order, the new standards apply across labour condition applications, petitions, visas and entry requests tied to the programme.

For context, the H-1B route was originally established to let American firms bring in specialised foreign talent to fill skills gaps, not to replace existing staff. Scrutiny of the programme has simmered for years, with US senators such as Chuck Grassley and Dick Durbin questioning how major technology and outsourcing companies use H-1B workers in the context of wider hiring and layoff patterns.

Several firms have disputed that characterisation. Supporters of the new order argue that it translates long-running political debate over the programme into binding federal policy.

Numbers Behind the H-1B Crackdown

The proclamation accompanying the order makes a striking claim: technology employers collectively sought H-1B visas for hundreds of thousands of workers while shedding between 800,000 and 1.3 million American jobs over recent years. It goes further, alleging that some employers have 'forced laid off American workers to train their foreign replacement.'

The White House insists the programme has drifted from its purpose. Rather than supplementing the workforce, officials argue, it has become a tool to 'undercut and displace' Americans, replacing them with 'lower-paid labour.'

The order cites an unnamed firm that reportedly warned shareholders that restrictions on cheap H-1B labour could force it to hire 'local' workers, who might only be available at higher wages. The document does not identify the company.

Before an employer can sponsor an H-1B worker, it must file a labour condition application with the Department of Labor, attesting to wages, job duties, location and working conditions.

Under the new order, the department's Wage and Hour Division is given 30 days to review previously filed applications and decide whether further action against employers is warranted. It is a tight deadline for what could become a sprawling review.

What the H-1B Order Actually Changes

Mitch Wexler, an immigration lawyer with the global firm Fragomen, cautioned that the practical mechanics remain murky.

'It is not yet clear how the immigration agencies will implement these provisions,' he said, noting that existing law already forces so‑called H-1B‑dependent employers, and those found to have wilfully broken programme rules, to attest that they have not replaced a US worker with an H-1B hire in an equivalent role within a 90‑day window either side of filing. Under current law, he added, those obligations do not extend beyond that narrower group of employers.

Wexler also highlighted uncertainty over how economic data will actually be applied at the adjudication stage. 'It is also not yet known how the agencies will consider economic data in the adjudication of H-1B filings, though this could result in higher scrutiny of offered wages, job duties and job requirements,' he said, pointing to USCIS's recent expansion of job‑requirement disclosures on H-1B petitions.

The order also singles out the outsourcing model favoured by some IT services firms, describing arrangements in which H-1B holders replace US staff at client businesses before much of the work eventually moves offshore. That framing, more than most of the order's text, hints at where enforcement energy might land first. Whether the Wage and Hour Division actually finds grounds to act within its 30‑day review window is a key question for immigration practitioners.

Separately, a proclamation issued alongside the order extends the existing $100,000 fee tied to certain new H-1B petitions until at least 2027, though it does not apply to foreign students already in the US or to standard visa renewals.