Cowry Tech News
Policy

A layoff is now a visa event: what the H-1B order, the grace-period proposal and one court ruling do and don’t do

Executive Order 14431 tells agencies to weigh an H-1B sponsor's layoffs. A DHS proposal would end the 60-day grace period for laid-off workers. A court ruling people cite alongside them covers something else. Here is what each instrument does and does not do.

By Kwesi Addo · 9 Oct 2026 · 14 min

Three federal actions on H-1B landed within three weeks of each other, and two of them treat a layoff as something the visa system should notice. One is an executive order that tells agencies to weigh a sponsor’s layoffs. The other is a proposed rule that would end the 60-day cushion for a worker who loses a job. Neither is final, and the court ruling people keep citing is about something else.

By Kwesi Addo, Policy Desk. Primary documents are linked in Sources. CTN has no tie to any party in this story.

When a person on an H-1B visa loses their job, two clocks start. One belongs to the worker, who has to find a new sponsor or leave. The other belongs to the former employer, whose layoffs can now be written into how the government looks at its next H-1B petition. For years only the first clock was a policy question. In September 2026 the federal government put both on paper.

The documents are different kinds of instruments, and the differences decide what you can rely on today. So this piece defines each one first, says what it can and cannot do, and only then gets to what it might mean.

The order: an instruction to agencies, not a rule

Executive Order 14431, “Enhancing Program Integrity and Interagency Coordination in the Administration of the H-1B Nonimmigrant Visa Program,” was signed on 18 September 2026 and published in the Federal Register on 23 September (document 2026-19555).

An executive order is the President’s instruction to the executive branch. It binds agencies, within the limits of existing law, and it does not by itself create new duties for a private employer. When an order wants to change how a visa is decided, the usual next step is guidance or a rulemaking from the agencies it names.

Section 3(a) is the sentence that matters here. It says the Secretaries of State, Labor and Homeland Security “shall take into account” in any labor condition application, petition, visa and entry of H-1B workers “whether the employer 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.”

Section 3(b) adds a timetable. Within 30 days of the order, the Secretary of Labor, through the Wage and Hour Division, is to begin reviewing data on previously submitted labor condition applications to decide whether further action against sponsoring employers is warranted under section 212(n)(2)(G) of the Immigration and Nationality Act. That provision covers enforcement against employers that misrepresent or violate the terms of their labor condition applications. Thirty days from 18 September is 18 October, so that review is due to start in about nine days.

Section 2 tells those three departments to coordinate with Commerce, Education and the Small Business Administration, which are to supply wage, employment, academic and industry information.

What the order does not say

The order’s own findings are blunt. Section 1 says the program has been “widely abused” by certain employers, third-party placement groups and outsourcing firms, and states that technology employers “have also laid off somewhere between 800,000 to 1.3 million American employees from 2022 through 2026.” It gives an estimated wage gap “starting at $9,000 and climbing as high as $20,000” in industries that rely on H-1B workers. Those are the order’s statements. I did not find the underlying data in the order’s text, so this story repeats them as claims of the order and does not vouch for them.

Then the operative sections go quiet on the hard questions. In sections 2 and 3 as published, the order does not define “indirectly engaged in layoffs.” It does not say how large a layoff counts, what “similarly situated” means, how far back “plans future layoffs” reaches, or what an agency should do once it has taken a layoff into account. It sets no threshold, no penalty and no denial standard. “Take into account” is a weighing instruction. A weighing instruction can become a denial, a delay, a request for more evidence or nothing visible at all, and the text does not say which.

That gap is the main reason to hold back on strong claims. A law firm that tracks the order has made the same reading, saying the order does not itself change an adjudication standard and that implementation has not yet been published. That is a secondary source and a lawyer’s view, and the primary text supports it. Nothing in the sections I read creates a rule an employer can be held to today.

The grace period: what it is, and what DHS wants to do

The second instrument is a proposed rule, and a proposed rule is a different kind of instrument from an order. A notice of proposed rulemaking asks the public to comment on regulatory text before the agency decides whether to adopt it. Until a final rule is published with an effective date, the current regulation stays in force.

On 11 September 2026 the Department of Homeland Security, through U.S. Citizenship and Immigration Services, published “Eliminating the Discretionary 60-Day Grace Period” at 91 Federal Register 57807 (RIN 1615-AD22, docket USCIS-2026-0364). It proposes removing 8 CFR 214.1(l)(2) in its entirety. Comments are due by 10 November 2026.

That regulation currently says workers in certain employment-based categories, and their dependents, are not considered to have failed to maintain status for up to 60 days after the job that supported their status ends. The categories are E-1, E-2, E-3, H-1B, H-1B1, L-1, O-1 and TN. The grace period is discretionary. DHS can shorten or eliminate it, and the proposal notes that this decision is usually made when the worker or a new employer files a petition or application afterwards.

For a laid-off H-1B worker the grace period is what makes a job search possible without leaving the country. In practice it gives a new employer time to file a change-of-employer petition while the worker is still lawfully present. DHS’s own history in the proposal says the 60 days came in with a 2016 rule, the American Competitiveness in the Twenty-First Century Act rule at 81 FR 82398. Before it, DHS writes, workers whose employment ended were “generally considered to be present in violation of their status” and had to depart immediately.

DHS now argues the grace period is “inconsistent with the purpose for which Congress created the relevant nonimmigrant classifications,” because a worker’s lawful status is tied by statute to the job that supported it. It also argues that the grace period adds steps for USCIS officers, who must decide whether it applies, whether to eliminate it, and when it started and ended. DHS considered shortening the period and rejected that as not meeting its goal or reducing its burden. It also considered tighter evidence rules and rejected that.

If the proposal were adopted as written, DHS says workers and dependents “would be considered to be immediately failing to maintain their nonimmigrant status the day after the principal alien’s employment or activity ceases.” One thing would not change. The separate 10-day period in 8 CFR 214.1(l)(1) applies after a validity period ends, so by DHS’s description it would not help someone who stops working mid-validity.

What DHS’s own numbers show, and what they don’t

DHS does not put a dollar figure on the cost to workers. Its analysis is “qualitative.” It says a subset of workers “may incur lost income” because leaving the country and returning takes longer than starting a new job in place, and that some could be issued Notices to Appear, which begin removal proceedings. It says the rule would marginally increase referrals to the immigration courts and lead to a “minor increase” in workload for the Justice Department and Immigration and Customs Enforcement.

It does give counts for the population that used the grace period in a specific way. For fiscal year 2025, DHS estimates about 2,886 unique entities filed change-of-employer petitions for about 5,178 workers whose earlier approved petition had been revoked because the original petitioner withdrew it. Those entities filed their new petitions within the possible 60-day window. That figure covers all eight categories in the proposal, not H-1B alone, and it counts one route into the grace period, not every worker who ever used it. DHS also reports that about 99 percent of the unique entities that filed new H-1B petitions in the grace window filed petitions not subject to the annual cap.

DHS does not say how many of those workers were laid off, as opposed to resigning or having a sponsor withdraw for another reason. A petition withdrawal can follow a layoff, a resignation or a business closing. Legal commentary on the proposal says it would reach workers who are laid off, terminated, resign or lose a position because a business closes. The numbers therefore size the population the proposal touches, and they do not measure layoffs.

The proposal also admits it is changing a long-standing policy. Its reliance-interests section says workers and their dependents may, for example, have bought homes, paid taxes and otherwise invested in their communities, and that employers may have built hiring plans on the assumption that a laid-off worker could start a new job without going abroad. DHS invites comments on those interests.

The court ruling is about a different measure

The third item gets cited alongside the first two, and it should be kept apart from them.

In State of California v. Mullin (Civil No. 25-13829-LTS, D. Mass.), twenty states challenged how federal agencies carried out the September 2025 proclamation that requires a $100,000 payment to accompany certain new H-1B petitions. On 8 June 2026 Judge Leo T. Sorokin granted summary judgment to the states. The judgment vacated ten agency actions, among them USCIS and State Department guidance, a USCIS fee schedule and the payment website, “insofar as they impose a $100,000 payment obligation on H-1B petitions.” On 24 July 2026 the First Circuit denied the government’s motion to stay that ruling while it appeals.

USCIS’s H-1B FAQ says the agency will comply with the court’s order while it considers next steps, and that if the order is lifted, DHS “still plans to collect the payment.” The American Immigration Lawyers Association adds that merits briefing in the First Circuit is expected to finish on 16 October. That is a secondary source, and I did not confirm the date from the docket.

The proclamation itself was continued on 23 September 2026 in a document that restricts entry of H-1B workers without a $100,000 payment for 12 months from 21 September 2026 (Federal Register 2026-19554). Read that against the court ruling carefully. The ruling vacated the agency implementation. It did not strike down the President’s proclamation. The ruling matters for the money question. It has nothing to say about the layoffs order or the grace-period proposal, and neither of those is blocked by it.

What is in force today, and what is not

Putting the instruments side by side, here is the state of play as of this writing, from the primary documents.

  • The executive order is in effect as an instruction to agencies. It creates no rule, standard or penalty in the sections I read. The 30-day Labor review of past labor condition application data is the first concrete step, due to begin around 18 October.
  • The grace-period proposal is only a proposal. The 60-day grace period stays available until DHS issues a final rule, and DHS has not set an effective date. It may be finalised, revised, withdrawn or challenged in court.
  • The $100,000 payment is not being collected for H-1B petitions while the court order stands, though the proclamation remains in place and DHS says it intends to collect if the order is lifted.

Two readings of one layoff round

The most useful thing about reading these documents together is how they treat the same event from opposite sides.

The order is concerned with layoffs of American workers, specifically layoffs “that negatively affect the employment of similarly situated United States workers.” Its target is the sponsor. The grace-period proposal is concerned with the visa holder who loses a job, whatever the reason. Its target is the worker. A single round of layoffs at a company that also sponsors H-1B workers can touch both. The sponsor’s record may be weighed in its next filings, and some of the workers who lose their jobs would face a shorter path to find a new employer if the proposal is adopted.

Those two readings do not depend on each other. The order does not mention the grace period, and the proposal does not mention the order. They came from different parts of the executive branch under different authorities and on different dates. Treating them as one policy would be our framing, and the documents do not say it.

What the documents do share is a view that status follows the job. DHS makes the point in plain regulatory language: lawful status in these categories is “directly connected to and contingent upon” the employment that supported it. The order starts from a related instinct, that the program should be judged by what employers do to the labour market around it. Both ask the visa system to pay more attention to what happens when employment ends or changes.

What to watch

Three dates are worth keeping. Around 18 October, the Labor Department’s Wage and Hour Division is due to begin its review of earlier labor condition application data. On 10 November, comments on the grace-period proposal close at regulations.gov under docket USCIS-2026-0364. And sometime after that, DHS decides what to do with the comments, which can take months.

Three open questions would change the picture. Whether agencies publish guidance that turns “take into account” into something an employer can measure. Whether the final grace-period rule, if there is one, looks like the proposal. And whether the First Circuit’s merits decision in the payment case reaches any of the reasoning that would apply to the other two measures.

For workers and employers, this is a moment to read the primary documents and talk to an immigration attorney about specific facts. This article is not legal advice.

What we could not confirm

  • I did not find a definition of “indirectly engaged in layoffs,” “similarly situated” or “plans future layoffs” in the order’s text.
  • The figures in the order’s findings are the order’s own; I could not trace them to the underlying data.
  • DHS’s FY2025 counts cover eight visa categories and one route into the grace period. They are not an H-1B-only or layoff-only number.
  • The 16 October First Circuit briefing date comes from an immigration-bar notice, not the docket.
  • No immigration attorney or labour economist has commented for this piece. CTN has not yet requested comment from an immigration attorney or labour economist, and will add one, attributed and marked as an update, if it arrives.

Sources

Related reading: Read the brief: H-1B layoffs order and the 60-day grace period proposal (Oct 9 Morning Brief)