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DHS Withdraws Regulation to Replace H-1B Cap Lottery with Wage Level Selection Process

The Department of Homeland Security (DHS) is withdrawing a final regulation that would replace the current H-1B cap lottery system with a system of allocating the annual H-1B quota according to a priority system by wage level. The withdrawal will be published tomorrow in the Federal Register, implementing a court order that vacated the rule in September 2021.

Under the now-defunct rule, the new H-1B process would have allocated the annual cap according to the Department of Labor’s Occupational Employment Statistics (OES) four-level wage structure. It would have given top priority in the H-1B selection process to foreign nationals whose offered salary fell in the highest wage level for their occupation and geographic area.


The H-1B cap allocation regulation was a priority of the Trump Administration and was originally set to take effect on March 9, 2021. The Department of Homeland Security then delayed the effective date of the regulation to December 31, 2021, in response to a Biden Administration regulatory freeze.

In September 2021, a California federal district court invalidated the H-1B wage allocation regulation on the grounds that then-Acting DHS Secretary Chad Wolf was not lawfully serving in his role at the time the agency promulgated the cap selection regulation. Tomorrow’s withdrawal of the rule in the Federal Register implements this court order. The case is Chamber of Commerce of the United States of America et al.  v. Department of Homeland Securityet al., Case No. 4:20-cv-07331 (N.D. Cal. March 19, 2021).

The H-1B wage selection regulation has also been challenged in a separate federal district court case, Humane Society of America v. Mayorkas, Case No. 1:21-cv-01349 (D.D.C., May 17, 2021). In recent court filings, however, DHS has indicated that it intends to come to a settlement agreement in that case, putting an end to the litigation.

What it means

The H-1B cap lottery is expected to remain in place for the foreseeable future. However, the Fall 2021 DHS regulatory agenda released in recent weeks includes the rule on its “long-term action” list. This means the rule has been deprioritized, but cannot be ruled out in the long term.  On its main regulatory agenda, DHS includes rules that may impact the H-1B program in the shorter term, including changes to redefine employer-employee relationship and establish regulations for site visits, among others. Rules on the main agenda could be published as proposals within the next several months.

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