At a glance
- A new U.S. Executive Order directs agencies to consider employer layoffs when reviewing H-1B filings.
- The review may apply to LCAs, H-1B petitions, visa applications, and admission to the U.S.
- Layoffs do not automatically prevent H-1B sponsorship, but they may increase scrutiny.
- Employers should document workforce decisions, role differences, and business rationale before filing.
A new U.S. Executive Order significantly expands the role that workforce reductions may play in the administration of the H-1B program, directing federal agencies to consider an employer’s recent and planned layoffs when reviewing H-1B-related applications.
Signed on September 18, 2026, the Executive Order, “Enhancing Program Integrity and Interagency Coordination in the Administration of the H-1B Nonimmigrant Visa Program,” directs the U.S. Departments of Labor (DOL), Homeland Security (DHS) and State (DOS) to consider whether an H-1B sponsoring employer has directly or indirectly engaged in layoffs during the preceding year, or plans future layoffs, that negatively affect similarly situated U.S. workers.
The change is potentially significant for employers because the consideration of layoffs applies across multiple stages of the H-1B process—including Labor Condition Applications (LCAs), H-1B petitions, visa applications and admission to the United States.
What has changed?
Historically, layoffs have been most directly relevant in certain compliance contexts, including obligations applicable to H-1B-dependent employers and willful violators. The Executive Order expands the role of layoffs by directing agencies to consider workforce reductions more broadly when administering the H-1B program. Specifically, DOL, DHS, and DOS are directed to consider whether the sponsoring employer has directly or indirectly:
- engaged in layoffs during the previous year; or
- planned future layoffs that negatively affect similar U.S. workers.
This consideration applies when adjudicating an LCA, H-1B petition or visa, as well as when an H-1B worker seeks entry to the United States. Importantly, the Executive Order does not state that an employer that has conducted layoffs is automatically prohibited from sponsoring H-1B workers. Rather, layoffs are now expressly identified as a factor that the relevant agencies must take into account. Further agency guidance will therefore be important in determining how the requirement will operate in practice.
The Executive Order refers to layoffs occurring both "directly or indirectly" but does not define what may constitute an indirect layoff. Future guidance may clarify whether workforce reductions involving affiliates, subsidiaries, contractors, client organizations, or other related business operations could be relevant in certain circumstances.
No immediate change to H-1B eligibility standards
The Executive Order does not modify the statutory requirements for H-1B classification, including the specialty occupation standard, prevailing wage requirements, annual cap process, or eligibility criteria. Instead, it directs federal agencies to incorporate workforce and compliance considerations into adjudications and enforcement activities. Additional guidance will be needed to determine how these directives will be implemented in practice.
Increased coordination between federal agencies
The Executive Order also calls for greater coordination across the federal government. DOL, DHS, and DOS are directed to consult with the Small Business Administration, along with the Departments of Commerce and Education. Those agencies may provide wage, employment, academic, industrial, and other economic information relevant to H-1B adjudications. It may also lead to greater information sharing between agencies and a more coordinated approach to H-1B compliance reviews and enforcement activities.
This could result in H-1B filings being considered against a broader range of labour-market and industry information than employers have traditionally encountered during individual case adjudications. The White House describes the measure as intended to provide enhanced scrutiny where there is a heightened risk of U.S. worker displacement.
The Executive Order repeatedly identifies third-party placement and outsourcing business models as areas of concern, stating that such arrangements may contribute to the displacement of U.S. workers and the offshoring of work. While the Order does not impose new restrictions on outsourcing arrangements, employers utilizing third-party placement models may wish to monitor future agency guidance closely, as these business structures may receive increased scrutiny as implementing guidance develops.
DOL directed to review previously filed LCAs
The Executive Order is not limited to new filings. Within 30 days of September 18, 2026, DOL's Wage and Hour Division must begin reviewing data relating to previously submitted LCAs to determine whether further action against sponsoring employers may be warranted under Section 212(n)(2)(G) of the Immigration and Nationality Act.
That statutory provision provides DOL with investigative authority in certain circumstances where there is reasonable cause to believe that an H-1B employer is not complying with applicable LCA requirements. Existing DOL guidance confirms that investigations can lead to civil monetary penalties, back wages, and debarment from immigration programs for certain violations.
This retrospective component may therefore be particularly relevant for employers that have undergone significant workforce restructuring while continuing to sponsor H-1B employees.
What does this mean for employers?
Although the Executive Order does not establish new filing requirements, employers may experience increased requests for information relating to workforce reductions, hiring plans, organizational structure and the relationship between affected U.S. workers and proposed H-1B positions. Employers may therefore wish to ensure that workforce planning decisions can be clearly documented and explained in the context of future H-1B filings.
The immediate practical impact will depend substantially on additional guidance from DOL, DHS, and DOS. The Executive Order expressly authorizes the agencies to issue rules, policies, operational guidance and other measures necessary to implement its requirements.
In the interim, employers sponsoring H-1B workers may wish to incorporate an additional workforce review into their immigration processes. In particular, employers should consider:
- identifying layoffs or reductions in force that have occurred during the preceding 12 months before commencing an H-1B filing;
- determining whether affected U.S. positions could be considered similarly situated to the proposed H-1B position;
- considering planned or anticipated workforce reductions that may overlap with an H-1B filing;
- documenting material differences between eliminated positions and the H-1B role, including job duties, skills, qualifications, organizational function and location, where applicable;
- maintaining documentation regarding redeployment, restructuring, and the business rationale for workforce changes; and
- coordinating immigration, HR, and legal teams so that relevant workforce developments are identified before LCAs and H-1B petitions are submitted.
The Executive Order expressly refers to layoffs occurring directly or indirectly, while also identifying outsourcing and third-party placement arrangements as areas of concern.
Employers utilizing these business models should be aware that future guidance may focus on whether H-1B workers are being used in circumstances that could be perceived as displacing or replacing similarly situated U.S. workers.
A broader H-1B compliance environment
The Sept. 18 Executive Order does not directly change H-1B eligibility requirements but forms part of a broader shift toward increased enforcement, compliance oversight, and scrutiny of employer workforce practices. For employers, the practical significance is that H-1B sponsorship may increasingly need to be considered alongside broader workforce planning rather than as an isolated immigration process.
For organizations contemplating restructurings, reductions in force or other material workforce changes, immigration considerations should be incorporated early in the planning process where H-1B sponsorship is ongoing or anticipated.
BDO Law will continue to monitor implementation of the Executive Order and further guidance from DOL, DHS, and DOS. For more information about how these developments may affect your organization's H-1B program or upcoming filings, please contact a member of BDO Law's Immigration Services team.
The information in this publication is current as of Sept. 28, 2026.
This publication has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The publication cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact BDO Canada LLP to discuss these matters in the context of your particular circumstances. BDO Canada LLP, its partners, employees and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based on it.