New Year, New Selection Criteria for H-1B Cap Lottery: DHS Finalizes Rule Prioritizing Higher-Paid Workers

The Department of Homeland Security (DHS) has finalized the rule overhauling the H‑1B cap selection process, replacing the longstanding random lottery with a wage-based, weighted selection system. The final rule makes no changes to the regulatory text from the Notice of Proposed Rulemaking (NPRM) in September 2025. The rule is scheduled to take effect February 27, 2026, positioning it to govern the upcoming H-1B cap lottery in March 2026.

This change marks one of the most consequential shifts in H‑1B policy in years and is expected to reshape employer filing strategies, beneficiary eligibility outcomes, and workforce planning.

Key Highlights of the Final Rule

• Weighted selection system favoring higher-paid roles: DHS will now assign higher selection odds to registrations offering higher wage levels within the Occupational Employment and Wage Statistics (OEWS) system. This replaces the purely random lottery used for decades.
• Cap numbers remain unchanged: The statutory caps–65,000 regular H‑1B visas and 20,000 U.S. advanced-degree exemptions–are not affected by the rule.
• The lottery remains beneficiary-centric. Multiple employers may enter the same beneficiary into the lottery, but that will not increase the likelihood of selection (registration is based on the unique beneficiary, not the number of registrations submitted).
• Rule intended to curb perceived program misuse: DHS states that the new system aims to reduce the ability of employers to submit large volumes of low-wage registrations and to prioritize “the most economically valuable workers.”

Implementation of the Weighted Rule

• Petitioners must select the occupational category (SOC code) and area of intended employment for each H-1B beneficiary’s registration. Based on the occupational category and area of employment, petitioners must then select the highest wage level the beneficiary’s proffered wage will meet or exceed.
  • If the petitioner will rely on an alternate prevailing wage, not the OEWS survey, that falls below the Level I corresponding wage, they will select Wage Level I.
  • If the proffered wage is a salary range, the lowest end of the range is used to determine the wage level.
  • If the beneficiary will work in multiple locations, the lowest corresponding wage level should be used.
• Each registration is assigned a number of “entries” based on the selected wage level:
  • Wage Level IV: four entries
  • Wage Level III: three entries
  • Wage Level II: two entries
  • Wage Level I (lowest): one entry
• Multiple employers with a bona fide job offer may still submit registrations for a single beneficiary. In this case, the beneficiary will be assigned the lowest wage level among all submitted registrations.
  • If Company A enters Beneficiary at a Wage Level IV and Company B enters Beneficiary at Wage Level II, Beneficiary’s name will only result in two entries based on the Wage Level II (lowest wage level) entry.
• If the beneficiary is selected, the corresponding H-1B petition must include a proffered wage equal to or exceeding the selected OEWS wage level from the cap registration.
  • The wage level used on the Labor Condition Application (LCA) for the H-1B cap petition need not be the same as the wage level selected on the registration, but the proffered wage must meet or exceed the wage level selected on the registration.

Practical Implications for Employers

• Expect materially different selection odds: Employers offering Level III or Level IV wages will likely see significantly improved chances of selection, while Level I and Level II filings may face steep declines.
• Reevaluate wage levels and job structures: Employers may consider adjusting wage levels, job descriptions, or geographic placements to remain competitive under the new system.
• Prepare for increased documentation scrutiny: Wage levels (based on occupational classifications) will now directly influence selection odds, increasing the importance of accurate job classifications.
• Start planning earlier: With the rule effective before the next registration window, employers should begin internal reviews.
• Global mobility alternatives: Employers may need to consider potential alternatives to H-1B (TN, L-1, O-1, etc.) or offshore strategies for candidates unlikely to be selected under the new system.
• Finally, the potential silver lining of the $100,000 fee: The overall number of submissions into the H-1B cap lottery may decrease after the implementation of the $100,000 fee, which impacts petitions filed for individuals outside the United States. If there are fewer H-1B cap lottery entries for individuals outside the U.S., the impact of the new wage-based selection process on lower wage level registrations may be mitigated.

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