How H-1B Changes Could Shift Talent Strategies

Scheduled to go into effect Feb. 27, the final changes to the H-1B work visa program are expected to upend the prior random selection process for one that favors high-wage roles and adds a $100,000 fee for some new applicants. However, immigration law and talent experts say the overall impact remains unclear, as different components of the new rules could cancel each other out — or dramatically shift talent flows. 

In response to these changes, organizations may need to rethink their strategies for hiring global talent, and should be aware of how adapting to the new rules could affect their overall compensation approaches.

One thing is clear: The predictability of the process has been disrupted, said Sagar Khatri, CEO and co-founder of the global employment platform Multiplier.

“The H-1B has historically been one of the most visible entry points into the U.S. labor market,” he said. “When that pathway becomes more selective, more expensive and less predictable, talent flows don’t disappear, they re-route.”

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• Beyond the H-1B: Win Without the Lottery

Same Lottery, New Rules

Touted as “better protecting American workers,” the final rule issued by the U.S. Department of Homeland Security in December retains the random selection pool previously used but gives more entries to registrations tied to higher salary levels, as defined by the U.S. Department of Labor’s (DOL) Level IV jobs (which require significant experience and leadership and management expertise) are entered into the selection pool four times, while Level I jobs (which typically are entry-level jobs that require close supervision) are entered only once.

But even the lowest-paid roles still get that one entry — the same as in past years.

“At the end of the day, you still get a chance in the lottery,” said Jocelyn Campanaro, a business immigration attorney and partner at employment law firm Fisher Phillips and co-chair of the firm’s immigration group.

A Balancing Act

Headlines when the rule was first announced focused largely on the eye-popping $100,000 fee for applicants, but U.S. Citizenship and Immigration Services (UCIS) clarified in October that (with some narrow exceptions) the $100,000 fee only applies to new hires located overseas, not foreign talent already in the U.S. or recent international graduates with F-1 status.

So, most existing workers in the program are unaffected, Campanaro clarified.

But the overall impact remains unclear: The fee could have a dampening impact on overall applications — particularly in the IT and software development sectors, which have heavily relied on overseas talent and may opt to pay the fee only for exceptional, so-called “purple squirrel” (or impossible-to-find) job candidates. At the same time, lower applicant numbers could improve the odds for those in the lower wage tiers.

Strategies for a New System

Employers should still anticipate “more competition for fewer predictable slots, especially for early-career or mid-market employers,” said Khatri. The greatest impact may be felt by small companies that have fewer positions in the top wage tiers and those with roles that must be done in-person, such as healthcare providers.

At the same time, companies shouldn’t make dramatic changes to boost applicants’ odds in the lottery.

“There’s definitely a desire to say, ‘How do we get more chances?’” Campanaro said. “But this is what the system is, and you have to work in the system.”

For affected organizations, Campanaro and Khatri offered the following strategies to consider:

• Don’t arbitrarily increase salaries. Campanaro noted: “It’s easy to say you’re going to pay more to get [additional] chances, but a lot of analysis has to go into it.” For example, she explained, the DOL’s wage tiers are tied to experience levels and the scope of duties, including whether roles involve independent work or supervisory responsibilities. Campanaro warned that increasing salaries for H-1B candidates also can introduce pay equity issues for existing workers. Immigration and compensation teams should work together to avoid “reactive or risky adjustments,” she said.
• Audit job descriptions for H-1B eligible roles. “Stress testing” job descriptions is critical, Campanaro said, as “small wording changes can materially affect wage level outcomes.”
• Prioritize H-1B for the roles that need it the most. Khatri said employers should consider whether each role truly requires a U.S. presence. In some cases, alternative “nearshore” or “friendly jurisdiction” hiring bases can onboard talent immediately, with the option of exploring relocation to the U.S. later, when candidates’ responsibilities and wage levels are higher. Khatri predicted “a shift toward mobility models that are less U.S.-centric, where work can be done across borders without requiring immediate relocation.” She added: “The most agile companies separate where talent sits from where value is created.”

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