Weighted selection process to determine this year’s H-1B lottery.

Posted on Jan 5, 2026 by Chris Prescott

The Trump administration is once again going after the H-1B program and has now introduced a rule that will radically change the H-1B lottery for FY 2027.

Background

Every March foreign nationals enter the H-1B cap lottery in the hopes of competing for an H-1B to either begin employment in the United States or transition from F-1 student status to H-1B status. The H-1B program allows U.S. employers to hire foreign professionals in specialty occupations, most commonly in fields such as technology, healthcare, engineering, and finance.

Each March, foreign nationals enter the H-1B cap registration process in hopes of being selected to either begin employment in the United States or transition from F-1 student status to H-1B status. The H-1B program allows U.S. employers to hire foreign professionals in specialty occupations, most commonly in fields such as technology, healthcare, engineering, and finance.

Despite strong employer demand, the number of new H-1B visas issued each fiscal year is strictly capped at 85,000. Of these, 65,000 visas are allocated under the regular cap for individuals holding at least a bachelor’s degree, and an additional 20,000 visas are reserved for individuals who have earned a U.S. master’s degree or higher.

Because demand consistently exceeds supply, selection is made through a lottery system. In recent years, overall selection rates have typically ranged between 25% and 30%, though in particularly competitive years the rate has dropped as low as 15%.

What is Trump trying to change?

A notice of proposed rulemaking seeks to change the lottery from a purely randomized selection process to one where weight is given to candidates that are being paid a higher wage.

Under the proposed weighted selection system, registrations would be prioritized based on the wage level offered:

  • Level IV wages receive 4 entries
  • Level III wages receive 3 entries
  • Level II wages receive 2 entries
  • Level I wages receive 1 entry

In practical terms, this framework materially shifts the odds in favor of higher-paying employers. Companies offering top-tier wages gain multiple chances in the lottery, while employers filing at lower wage levels, particularly Level I, face significantly reduced selection probabilities.

In our experience, the majority of H-1B cap cases are filed at Level I wages. While these cases would technically remain eligible under the new system, their likelihood of selection would be meaningfully diminished compared to higher-wage filings. The result is a system that advantages large employers with substantial compensation budgets and places smaller companies at a competitive disadvantage.

Adding to the financial impact, current USCIS guidance indicates that the $100,000 H-1B registration fee would apply beginning with the FY 2026 lottery, further increasing the cost of participation for employers. A recent court challenge, by the US Chamber of Commerce, disputing this fee was unsuccessful.  The District Court ruled in favor of the President’s authority to limit immigration.  For further details, click here.

A professional, blue-toned graphic showing a group of business professionals in suits seated around a conference table in a modern office setting. A large digital screen behind them displays financial charts and data, symbolizing wage levels and economic factors. The headline text reads “H-1B Lottery Rules Are Changing,” with a subheading stating “Proposed rules favor higher-wage filings starting FY 2027.” The PSBP Law logo appears at the bottom left. The image visually represents changes to the U.S. H-1B visa lottery system, emphasizing wage-based selection, employer impact, and immigration policy analysis.
When does the new rule take effect?

The new rule is effective February 27, 2026, meaning that if it goes ahead, it will be in effect for the FY 2027 H-1B lottery.

Will the rule be challenged?

Most likely, yes. A legal challenge is highly anticipated, particularly from small and mid-sized employers, startups, and industry groups that view the weighted selection system as inconsistent with the statutory framework of the H-1B program. Critics are expected to argue that prioritizing wage levels effectively transforms the lottery into a pay-to-win system, exceeding DHS’s authority under the Immigration and Nationality Act and undermining Congress’s intent that H-1B visas be allocated through a neutral selection process when demand exceeds supply. Given the significant economic and competitive implications, litigation is likely to follow shortly after implementation, potentially delaying or enjoining the rule before it is fully applied.

Conclusion

If implemented, the weighted H-1B selection process would represent one of the most consequential changes to the H-1B program in decades. By shifting selection odds toward higher-wage positions, the rule would fundamentally reshape employer participation, disproportionately benefiting large corporations while marginalizing smaller businesses and early-stage companies that rely on entry-level professional talent. Combined with the proposed $100,000 registration fee, the barrier to entry for many employers would increase dramatically. While legal challenges may ultimately determine the rule’s fate, employers should begin evaluating alternative workforce strategies, reassessing compensation structures, and exploring other visa options now to mitigate risk in the FY 2027 H-1B cycle.

If you have questions regarding the above, please reach out to PSBP Law Partner Chris Prescott at cprescott@psbplaw.com.