Companies that reduced headcount in the past year now face a new question every time they sponsor an H-1B worker.
On September 18, 2026, the President signed Executive Order 14431. It directs the Department of State, the Department of Labor, and the Department of Homeland Security to take an employer’s layoffs into account at every stage of the H-1B process. It also starts a clock: the Department of Labor’s Wage and Hour Division must begin reviewing previously filed Labor Condition Applications by October 18, 2026. For background on the other recent White House action, see what two recent actions mean for employers.
What the Order Does, and What It Does Not Do
Agencies must now consider whether the sponsor “directly or indirectly engaged in layoffs within the previous year or plans future layoffs that negatively affect the employment of similarly situated United States workers.” This applies to the Labor Condition Application, the petition filed with U.S. Citizenship and Immigration Services (including extensions), the visa interview, and admission at the border. The order does not ban H-1B filings after a layoff, and it does not change the annual cap or the law Congress wrote. It also does not define “indirectly” or “similarly situated,” and no agency has issued guidance yet.
A Wider Net Than Existing Rules
Until now, only H-1B dependent employers (generally those with 15% or more of their workforce in H-1B status) and past willful violators had to promise not to displace U.S. workers within 90 days before or after a filing. The new order reaches every H-1B sponsor, looks back a full year, and also considers planned layoffs.
Why the October 18 Review Matters
Labor Condition Application data is public: job title, worksite, offered wage, and wage level. That makes it easy to compare listed wages with actual pay, listed worksites with where employees really work, and filing dates with announced layoffs. Small gaps, such as an uncovered home office or a missing worksite notice, can lead to back wages, civil penalties, or a period during which the employer cannot sponsor H-1B workers.
Five Steps HR Teams Should Take Now
- Map every layoff from the past 12 months. Include planned reductions, with dates, job titles, locations, and business reasons. Build this list with counsel.
- Compare eliminated roles with sponsored roles. Cover new hires, transfers, and extensions. Send any overlap in duties, skills, or location to legal review before filing.
- Document why each sponsored role is needed. A memo written today is more persuasive than one written to answer a Request for Evidence, the written request for more documentation from U.S. Citizenship and Immigration Services.
- Audit public access files and worksite notices. Confirm that wages paid match the application and that every work location, including home offices, is covered. Never backdate a document.
- Recalculate your H-1B dependent status. Layoffs shrink the workforce and raise the H-1B share, which may trigger the extra attestations described above.
Expect slower processing too, so file extensions early.
What Comes Next
Agency guidance could arrive with little notice, and new rules may face legal challenges. Employers should not plan around litigation, though. The Department of Labor’s power to review these applications already exists. The order simply sets a date to start.
Klug Law Firm works with HR, legal, and talent acquisition teams to review H-1B programs before the government does. Schedule a confidential H-1B and Labor Condition Application compliance audit before October 18. Reach out to our team at (212) 495-9245 or use our contact form.
This article is provided for informational purposes only and does not constitute legal advice.