The United States Department of Homeland Security (DHS) has announced that, beginning February 27, 2026, it will scrap the long‑standing lottery used to allocate H‑1B work visas and instead introduce a wage- and skill-based selection system that prioritises higher-paid, higher-skilled foreign workers, a shift the Trump administration says is designed to protect American workers’ wages and job opportunities while critics warn it may disadvantage smaller employers, startups and younger professionals.

Under the rule, which will apply to the FY 2027 H‑1B cap registration season, US Citizenship and Immigration Services (USCIS) will move away from random selection and give preference to petitions that fall into higher government-defined wage levels. The annual statutory cap of 65,000 visas, plus 20,000 additional slots reserved for holders of advanced US degrees, will remain unchanged.


What the H‑1B Visa Programme Does

The H‑1B visa is a non‑immigrant classification that allows US employers to temporarily hire foreign workers in “specialty occupations,” typically roles that require at least a bachelor’s degree or equivalent experience in fields such as information technology, engineering, finance and healthcare. Demand for H‑1B visas has consistently exceeded supply for more than a decade, prompting the government to run a random lottery once registrations surpass the cap.

According to DHS and USCIS data, large technology, consulting and financial services companies have historically been among the biggest users of the programme. The H‑1B system has also been central to US recruitment of highly skilled workers from India and China, two of the largest source countries for applicants.

H‑1B visas allow US employers to hire foreign professionals in specialty occupations such as technology and engineering. (Representative image)

Supporters of the programme, including many business and academic leaders, argue that H‑1B workers help fill persistent skills gaps and contribute to innovation and competitiveness. Critics, including some labour advocates and restrictionist groups, contend that the visas can be used to undercut wages and displace US workers, particularly in certain segments of the tech and outsourcing industries.


From Random Lottery to Wage- and Skill-Based Selection

In its latest notification, DHS said the new regulation will “prioritise the allocation of visas to higher-skilled and higher-paid foreign workers,” replacing the random lottery with a selection process that assigns greater weight to petitions in higher prevailing wage tiers. The change is scheduled to take effect on February 27, 2026, in time for the FY 2027 H‑1B cap registration period.

Under the US wage system, occupations are typically divided into four wage levels based on experience and responsibilities. While detailed implementation guidance is expected closer to the effective date, DHS has indicated that registrations filed at higher wage levels will be considered first until the annual cap of 65,000 regular H‑1B visas and 20,000 advanced degree exemptions is reached.

“The new rule replaces the random lottery for selecting visa recipients with a process that gives greater weight to those with higher skills,” the department said in a statement, adding that the goal is to “better protect the wages, working conditions, and job opportunities for American workers.”

USCIS spokesman Matthew Tragesser said the existing random selection process for H‑1B registrations had been “exploited” and “abused” by some US employers seeking to “import foreign workers at lower wages than they would pay American workers.” He argued that the updated approach would be more consistent with congressional intent for the H‑1B programme.


Government’s Rationale: Protecting US Workers and Addressing Abuse

DHS said the current random selection system had drawn criticism for enabling “unscrupulous employers” to “flood” the process with petitions for “lower-skilled foreign workers paid at low wages,” which officials described as harmful to the American workforce. By tying selection more closely to wage levels, the administration argues, employers will be incentivised to offer higher pay and target genuinely specialised positions.

“The new weighted selection will better serve Congress’ intent for the H‑1B program and strengthen America’s competitiveness by incentivizing American employers to petition for higher-paid, higher-skilled foreign workers,” Tragesser said. He added that the Trump administration would continue to update H‑1B regulations “to help American businesses without allowing the abuse that was harming American workers.”

The rule aligns with a broader series of Trump-era immigration and labour policy changes aimed at tightening eligibility for employment-based visas and raising associated costs. DHS noted that it is consistent with previous steps, including a sharp increase in H‑1B visa fees—cited in administration materials as reaching up to $100,000 per visa in certain contexts tied to eligibility conditions—intended to discourage perceived misuse of the programme.


How the H‑1B Lottery Evolved

The H‑1B cap and lottery have been recurring flashpoints in US immigration policy. Since the early 2000s, the number of registrations has routinely outstripped the annual ceiling, prompting USCIS to run a computer-generated random selection. In some recent years, hundreds of thousands of registrations were submitted for the 85,000 total cap-subject slots.

Reform proposals have spanned multiple administrations. Some lawmakers have called for raising or eliminating the cap for certain advanced STEM degree holders, while others have sought stricter wage requirements or limits on large outsourcing firms. The Obama administration made incremental adjustments but stopped short of scrapping the lottery entirely. The Trump administration has taken a more restrictive stance, emphasising wage protections and fraud prevention.

Legal analysts note that previous attempts to significantly alter H‑1B selection criteria have faced close scrutiny from courts, which examine whether agencies have stayed within statutory authority granted by Congress for the programme. The new wage-based rule may similarly attract legal challenges from affected employers or advocacy groups after it is fully published and implemented.


Who Stands to Gain or Lose Under the New System?

Policy analysts say the primary beneficiaries of the wage-based selection model are likely to be large, well-capitalised employers that can offer salaries at the upper end of government wage scales, particularly in sectors such as big technology, finance and specialised engineering. These firms already dominate a significant share of H‑1B usage and may see their success rates increase if higher wage levels are systematically favoured.

On the other hand, smaller companies, early-stage startups, non‑profits, universities and employers in lower-cost regions may find themselves at a disadvantage if they are unable to match the highest wage tiers. Early-career professionals, including recent graduates of US universities on Optional Practical Training (OPT), could also be affected if their entry-level salaries fall into lower wage levels that are less likely to be selected.

  • Large multinationals: May benefit from being able to pay higher salaries and secure a greater share of approvals.
  • Smaller and mid-sized firms: Could face tougher competition for visas if they cannot consistently offer top-tier wages.
  • Foreign students and new graduates: Might experience reduced chances under a system that systematically favours higher wage brackets.
  • US workers: Labour advocates say they could see upward wage pressure, though empirical outcomes remain uncertain.

Diverse Reactions from Business, Labour and Immigration Advocates

Business groups and immigration attorneys have offered mixed responses. Some employers welcome greater predictability and say prioritising higher wages could strengthen the case that H‑1B workers are genuinely specialised. Others warn the rule may unintentionally shut out smaller innovators and shift more hiring and investment overseas if companies struggle to bring in needed talent at sustainable cost levels.

Labour organisations and groups advocating for reduced immigration have generally supported policies that link visa allocation to higher pay, arguing that this limits the ability of employers to use H‑1B workers as a low-cost alternative to domestic staff. However, some worker advocates caution that enforcement of wage rules and workplace protections will remain critical regardless of selection mechanism.

Immigration policy experts note that, while the Trump administration frames the shift as a way to protect US workers, the United States also competes globally for highly skilled professionals. They argue that the longer-term impact on competitiveness will depend on how the rule interacts with other visa categories, green card backlogs and international mobility trends, especially in sectors where talent shortages are acute.



Additional Context and Official Sources

DHS and USCIS emphasise that the new rule is part of an ongoing effort to refine employment-based immigration in line with what they describe as congressional intent. Detailed regulatory text is typically published in the Federal Register, followed by implementation guidance, stakeholder outreach and potential litigation.

For more detailed information and updates as the 2026 effective date approaches, readers can consult:

  • US Department of Homeland Security announcements on employment-based visas (dhs.gov)
  • US Citizenship and Immigration Services H‑1B programme page (uscis.gov)
  • Federal Register notices on H‑1B regulations (federalregister.gov)

Outlook

The shift from a random H‑1B lottery to a wage- and skill-based selection marks one of the most substantial structural changes to the programme in years. As the rule moves toward its February 2026 implementation and the FY 2027 cap season, employers, prospective applicants and policymakers will be watching closely to see how the new system affects the balance between labour market protections, business needs and the United States’ role in the global competition for high-skilled workers.