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If employers lay off Americans and choose H-1B workers what happens next? Trump’s new order puts US firms under scrutiny
Employers sponsoring H-1B workers will face increased scrutiny if they have laid off or plan to lay off US employees, per a new executive order.
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Employers sponsoring H-1B workers will face closer scrutiny if they have recently laid off American workers or are planning job cuts that could affect similarly situated US employees under a new executive order signed by President Donald Trump.
The order directs the Departments of Labor, Homeland Security and State to consider an employer's recent or planned layoffs when processing H-1B labor condition applications, petitions, visas and requests for entry into the US.
The measure does not state that an employer automatically loses the ability to sponsor H-1B workers after conducting layoffs. Instead, layoffs are now a factor federal agencies must take into account when assessing H-1B cases.
What happens if an H-1B employer lays off Americans?
Deep Dive
Under the new order, agencies must consider whether the sponsoring employer directly or indirectly engaged in layoffs during the previous year or has plans for future layoffs that negatively affect the employment of similarly situated US workers.
Also read: Trump extends $100K H-1B fee by 12 months; India, with 71% share, most affected
That means the scrutiny is not limited to companies that have already eliminated American jobs. An employer's planned workforce reductions can also become relevant during H-1B processing.
The order applies across several stages of the H-1B process, including labor condition applications, visa petitions, visa processing and entry into the US.
Existing H-1B rules already place requirements on certain employers concerning the displacement of US workers. The Department of Labor says an H-1B-dependent employer or an employer found to have committed certain violations cannot displace a US worker in an essentially equivalent job within specified periods around an H-1B filing.
The new executive order directs agencies to take a broader look at layoffs when evaluating H-1B cases.
Labor Department gets 30 days to review past H-1B filings
One of the most immediate changes is a new review of previously submitted labor condition applications.
Within 30 days of the September 18 order, the Labor Department's Wage and Hour Division is directed to begin reviewing data connected to earlier LCAs to determine whether further action against sponsoring employers is warranted under federal law.
The review could therefore reach beyond new H-1B applications and examine information associated with earlier filings.
The Department of Labor already has authority to investigate whether employers have complied with H-1B requirements, including wage and working-condition obligations. H-1B workers generally must be paid at least the higher of the actual wage paid to similarly qualified workers or the prevailing wage for the occupation and area of employment.
Also read: Trump signs H-1B order targeting employers that lay off Americans, tighten scrutiny of foreign hires
Six US agencies to share more H-1B data
The order also expands interagency coordination around H-1B cases.
The Departments of State, Labor and Homeland Security are directed to consult with the Departments of Commerce and Education and the Small Business Administration. Those agencies are expected to provide information involving wages, employment, academic qualifications, industries and other economic conditions.
For employers, this could mean that H-1B applications are examined using a broader set of employment and economic information than before.
The White House says the goal is to identify cases where the H-1B program is being used to replace or displace American workers. The administration has also accused some outsourcing and third-party placement companies of using H-1B workers in ways that undercut US workers. Those are administration claims stated in the order.
Does a US layoff automatically block H-1B hiring?
The executive order does not establish an automatic prohibition on H-1B sponsorship whenever an employer conducts layoffs.
Instead, it instructs the relevant agencies to take recent and planned layoffs into account when considering H-1B-related applications and entries. The order also directs the Labor Department to review existing LCA data for possible further action.
That distinction is important for employers and H-1B workers because the order does not say that every company conducting layoffs will be barred from sponsoring foreign workers.
The existing H-1B framework separately contains requirements concerning wages, working conditions and, for certain employers, displacement of US workers.
The new scrutiny comes as the Trump administration is simultaneously maintaining other restrictions on the H-1B program.
The White House separately extended for another 12 months a restriction requiring a $100,000 payment for certain H-1B petitions involving workers outside the US, subject to specified exceptions. That restriction is scheduled to take effect September 21, 2026.
