How New H-1B Layoff Scrutiny Could Affect Employer Sponsorship

A workforce reduction that occurred months before an immigration filing may now receive closer federal attention. On September 18, 2026, an executive order directed the Departments of State, Labor, and Homeland Security to consider whether a sponsoring employer engaged in layoffs during the previous year or plans future layoffs that negatively affect similarly situated U.S. workers.

The order changes the scope of agency review, but it is important to distinguish that new scrutiny from the displacement duties already imposed on certain employers under federal immigration law. Companies that recently reduced staff or are restructuring while recruiting foreign professionals may now face both sets of concerns. Working with a New York H-1B visa lawyer can help an employer identify which existing obligations apply and how the new federal review could affect a proposed sponsorship.

What the September 18 Order Actually Changes

The September 18 order directs federal agencies to take recent and planned layoffs into account when reviewing labor condition applications, petitions, visas, and the entry of sponsored workers into the United States. It also requires greater coordination among State, Labor, and Homeland Security, with Commerce, Education, and the Small Business Administration supplying relevant wage, employment, academic, industrial, and other economic information.

The order does not rewrite the displacement provisions already found in INA § 212(n). Instead, it creates a broader review framework around them. Agencies are now instructed to consider whether a sponsoring employer directly or indirectly conducted layoffs during the previous year or is planning layoffs that negatively affect similarly situated U.S. workers. The order applies that inquiry across several stages of the immigration process rather than confining it to the existing statutory displacement rules.

The practical effect is broader scrutiny, not an automatic prohibition on sponsorship whenever an employer has laid off workers. The order itself does not state that a recent layoff makes an employer ineligible to file. It authorizes agencies to consider that history and permits further rules, policies, operational instructions, and guidance as implementation develops.

Existing Displacement Duties Still Apply to Certain Employers

Federal law already places additional obligations on H-1B-dependent employers and employers classified as willful violators. Those duties predate the September 18 order and remain a separate part of the sponsorship framework.

Under existing Department of Labor rules, covered employers generally must attest that they will not displace a similarly employed U.S. worker during the period beginning 90 days before and ending 90 days after the filing of the petition. They also face recruitment obligations and, in certain third-party placements, must make a good-faith inquiry into whether the secondary employer has displaced or intends to displace a U.S. worker.

The existing rules use a defined displacement concept. Department of Labor guidance focuses on whether a U.S. worker was laid off from a job essentially equivalent to the position for which the sponsored worker is sought. Duties, qualifications, experience, and the area of employment are part of that analysis.

Those requirements continue to operate on their own terms. The new executive order adds a separate layer of agency scrutiny that reaches more broadly in time and across more stages of the immigration process.

The One-Year Lookback Reaches Further Into an Employer’s Workforce History

The most visible difference is timing. Existing displacement obligations for covered employers generally focus on 90 days before and after petition filing. The September 18 order tells agencies to consider layoffs occurring during the previous year.

A reduction completed six, nine, or eleven months earlier may now fall within the period federal officials examine when a company later seeks to sponsor a foreign professional. An employer that has undergone several rounds of restructuring could have multiple workforce decisions within that one-year window.

Those decisions may have very different explanations. A company could close one office, eliminate a declining product line, consolidate administrative work, and later add a specialized technical position in another part of the business. The broader lookback makes the history more visible, while the relationship among those decisions remains a factual question.

“Similarly Situated” Workers May Require a Separate Comparison

The executive order uses the phrase “similarly situated United States workers.” Existing displacement rules use related but more specifically developed concepts such as “similarly employed” workers and jobs that are essentially equivalent. The September 18 order does not itself provide a detailed definition of “similarly situated” for purposes of the new one-year review.

That distinction is important. Existing Department of Labor standards offer useful context, but the new directive may ultimately be applied through additional agency guidance. Employers should avoid assuming that identical job titles will decide the issue in either direction.

A closer comparison may involve the actual work performed, required education and experience, reporting structure, business function, geographic location, and role within the organization. A software engineer supporting a discontinued product may occupy a different position from an engineer being hired for a specialized platform, even if the titles appear similar. Conversely, different titles may conceal substantial overlap in duties.

Planned Layoffs Bring Future Workforce Decisions Into the Review

The order also reaches layoffs that have not yet occurred. Agencies are instructed to take planned reductions into account when they could negatively affect similarly situated U.S. workers.

That provision matters when immigration recruiting and restructuring are moving at the same time. Management may be considering reductions in one division while another group is recruiting for specialized expertise. An acquisition may lead to consolidation in one location while generating new positions elsewhere. A petition can be under preparation while the final scope of a restructuring is still being decided.

The overlap creates a timing issue that did not exist in the same form under the older 90-day displacement framework. Employers planning both sponsorship and workforce changes may need to understand how the proposed position fits within the evolving organization before the immigration filing reaches an agency.

Previously Filed LCAs Face a Separate Enforcement Review

The executive order contains another development that is distinct from the new one-year layoff inquiry. It directs the Department of Labor’s Wage and Hour Division to begin reviewing data associated with previously submitted Labor Condition Applications to determine whether further action against sponsoring employers may be warranted under INA § 212(n)(2)(G).

LCAs contain information about the occupation, wage rate, place of employment, and conditions under which the sponsored employee will work. Federal law also requires wage and working-condition attestations, including payment of at least the higher of the applicable actual wage or prevailing wage.

Looking backward at existing LCA data gives Labor another route for examining employer compliance. A company may have filed accurately when a worker was first sponsored and later changed compensation, job duties, work location, or organizational structure. Depending on the change, the government may compare the current employment arrangement with information already contained in its records.

For dependent employers and willful violators, existing recordkeeping requirements can reach even further. Department of Labor guidance identifies records concerning recruitment, worker displacement, secondary placements, and U.S. employees hired, terminated, or departing near the time of petition filing.

Layoff Scrutiny Can Follow the Case Beyond USCIS

The September 18 order reaches more than petition adjudication. It directs consideration of recent and planned layoffs in connection with LCAs, petitions, visas, and entry into the United States.

Each stage involves a different federal role. Labor administers the LCA framework and related enforcement. USCIS adjudicates the employer’s petition. The State Department handles visa issuance for workers applying abroad. The order also expressly reaches entry, where admission questions can arise after a petition and visa have already been approved.

A company’s recent workforce history may consequently remain relevant as the sponsored worker moves through later stages of the process. An employer dealing with layoffs at the petition stage may need the same underlying employment facts to remain clear and consistent during consular processing or entry.

Workforce Planning and Sponsorship Need to Be Reviewed Together

Workforce reductions rarely begin on the day employees receive termination notices. Management discussions, budget decisions, organizational changes, recruiting plans, and proposed reductions can develop over several months. A sponsorship being prepared during the same period may eventually be reviewed against that broader employment history.

The new order makes early coordination more valuable when those timelines overlap. A company may need to distinguish the business function being reduced from the function it is trying to expand, explain why the proposed role requires different qualifications, or determine how an earlier reduction fits within the new one-year lookback.

When a restructuring overlaps with foreign-worker sponsorship, guidance from an experienced New York H-1B visa lawyer can help evaluate both the employer’s existing displacement obligations and the additional scrutiny created by the September 18 directive before the filing proceeds.

Contact The Law Offices of Meri S. Ponist, P.C.

If your company recently reduced staff, is considering future workforce changes, or is restructuring while recruiting a foreign professional, the September 18 order may affect how federal agencies review the sponsorship. Examining the timing and positions involved before filing can help distinguish existing statutory duties from the broader scrutiny now directed across the immigration process.

The Law Offices of Meri S. Ponist, P.C. represents employers and foreign professionals in business immigration matters. Contact us to speak with a New York H-1B visa lawyer and learn how we can help evaluate recent or planned workforce changes in connection with a proposed sponsorship.