DHS replaces H-1B visa lottery with wage-weighted system

DHS published the final rule on December 29, 2025. It becomes effective February 27, 2026. The rule will apply to the FY 2027 H-1B cap season, which opens for registration in March 2026. This means employers registering for H-1B visas in spring 2026 will use the new wage-weighted system instead of the random lottery.

The rule replaces the random lottery that's been used for years. Under the old system, each registration had equal odds regardless of salary. The new system assigns weights based on Department of Labor wage levels. Level IV wage registrations enter the pool four times. Level III enters three times. Level II enters twice. Level I enters once. Higher-wage positions have dramatically better selection odds.

The wage levels come from Department of Labor Occupational Employment and Wage Statistics data. DOL categorizes occupations by Standard Occupational Classification code and geographic area. Level I represents entry-level positions requiring basic understanding. Level II requires moderate skills. Level III needs independent judgment and moderate complexity. Level IV requires full competence and advanced tasks. Each occupation and location has different dollar amounts for each level.

DHS justifies the change as protecting American workers' wages and working conditions. The agency says weighting toward higher-wage positions incentivizes employers to offer better salaries. It also prioritizes more skilled workers who can't be easily replaced by domestic labor. DHS argues this better serves the H-1B program's purpose of filling positions requiring specialized knowledge.

The rule fundamentally changes which workers get H-1B visas without changing the 85,000 annual cap. Congress sets that cap through legislation. DHS can't increase the total but can change selection criteria through administrative rulemaking. This shifts the composition of who gets visas - more senior positions, fewer entry-level - without needing Congressional approval to raise or lower the cap.

Employers will adjust hiring strategies in response. Companies that previously filed many Level I and II petitions will face much worse odds. They may increase salaries to reach Level III or IV categories. They may also shift toward hiring workers who already have U.S. work authorization rather than sponsoring H-1B visas. The rule creates incentives for employers to pay more but may reduce entry-level hiring opportunities for foreign workers.

The weighted system creates new gaming opportunities. Employers might inflate job requirements to justify higher wage levels. They could restructure positions to qualify for Level III or IV wages even if actual work matches lower levels. DHS will need to police these practices through existing fraud detection systems. The rule may increase compliance costs and enforcement challenges.

This demonstrates executive agencies' broad authority to reshape programs through rulemaking. DHS followed the Administrative Procedure Act by publishing a proposed rule, accepting public comments, and addressing feedback in the final rule. But the agency made a fundamental policy change affecting hundreds of thousands of people without new legislation. This shows how administrative law gives agencies power to implement major changes through regulatory processes.