DHS Announces Sweeping Policy Shift on Adjustment of Status—Key Implications for Employers

Introduction

On May 21, 2026, U.S. Citizenship and Immigration Services (USCIS) issued Policy Memorandum PM-602-0199, formally reaffirming that adjustment of status (AOS) under Section 245 of the Immigration and Nationality Act (INA) is a matter of "discretion and administrative grace"—an extraordinary form of relief not designed to supersede the regular consular visa process. The memorandum is effective immediately and applies to all pending and future AOS applications.

While styled as a reminder of longstanding policy, this memorandum signals a materially more restrictive approach to the adjudication of AOS applications (often referred to as “green card” applications) and carries significant practical consequences for employers with foreign national workforces. Employers who have relied on AOS as a routine pathway to permanent residence for sponsored employees should take immediate stock of how this guidance will affect their immigration programs and workforce planning.

Background: Statutory Design vs. Reality

Congress enacted AOS as a way for certain foreign nationals in the U.S. to obtain lawful permanent resident status without first leaving the country to process an “immigrant visa” at a U.S. consulate abroad. The AOS statute vests the Secretary of Homeland Security with discretion to adjust status and establishes eligibility requirements that are more restrictive than those applicable to consular processing. Courts and the Board of Immigration Appeals have consistently characterized AOS as "extraordinary" relief, and the Supreme Court has repeatedly affirmed that adjustment is "a matter of grace, not right."

However, AOS has become the predominant mechanism by which employment-based immigrants in the U.S. obtain permanent residence. In practice, most employer-sponsored foreign nationals who are present in the U.S. in a temporary nonimmigrant status file for AOS rather than departing for consular processing abroad. The AOS process has thus become the default process for employment-based green cards and is deeply embedded in employer-sponsored immigration strategies, particularly given multi-year visa backlogs in employment-based preference categories.

Summary of Department of Homeland Security (DHS) Changes

The memorandum does not change the regulatory text governing AOS, but it substantively changes the manner in which USCIS officers are directed to exercise discretion. The key changes and directives include:

• “Reaffirming” AOS as Extraordinary, Not Routine. This framing signals that applications from individuals who could have pursued consular processing will face heightened scrutiny.

• Expanded Adverse Factor Analysis. Officers are directed to consider, as adverse factors in their discretionary AOS analysis, "any conduct of the alien after admission as a nonimmigrant or parolee inconsistent with the purpose of that nonimmigrant status or parole or with representations made to consular or DHS officers."

• Dual Intent Acknowledgment—With Limits. “Dual intent” allows certain individuals to be in temporary nonimmigrant status (H-1B or L-1) while also pursuing permanent immigrant status (i.e., becoming a permanent resident). The memorandum acknowledges that "applying for adjustment of status is not inconsistent with simultaneously maintaining nonimmigrant status in a category with dual intent." However, it immediately cautions that "maintaining lawful status in a dual intent nonimmigrant category is not sufficient, on its own, to warrant a favorable exercise of discretion."

Impact on Employers and Foreign Nationals

This memorandum may substantially complicate the green card process for employers and foreign nationals. Specifically, under the current system, most employer-sponsored immigrants apply for AOS and complete the green card process from within the U.S. The memorandum's instruction that AOS is extraordinary, and that pursuing it is itself an adverse factor, disrupts this established workflow. Thus, the memorandum introduces uncertainty regarding the approvability of routine AOS applications, even for applicants who satisfy all eligibility requirements.

Additionally, the instruction that officers weigh conduct "inconsistent with the purpose" of the nonimmigrant status raises the question of whether USCIS will view the intent to immigrate permanently as inconsistent with single-intent nonimmigrant categories (e.g., F-1, TN, E-3) or those with “quasi-dual intent” (e.g., O-1).

Implications by Nonimmigrant Category

• H-1B and L-1 Workers. H-1B and L-1 status are the only two nonimmigrant categories that explicitly allow for dual intent. The memorandum acknowledges that AOS is "not inconsistent with simultaneously maintaining nonimmigrant status in a category with dual intent." However, the caveat that a dual intent status is "not sufficient, on its own, to warrant a favorable exercise of discretion" introduces new risk even for this traditionally protected population. H-1B holders who have any adverse factors—including minor status violations, gaps in employment, or discrepancies in prior filings—may face denials on discretionary grounds.

• F-1 Students. F-1 students are in a single-intent nonimmigrant category. The memorandum's emphasis that pursuing AOS contravenes Congress's expectations creates substantial risk for F-1 holders who pursue AOS.

• Other Single-Intent NIV Holders (O-1, TN, E-3, etc.). The risk profile varies by category. O-1 status is not officially a dual-intent status, although it is treated as permitting “quasi” dual-intent. TNs and E-3s or others in single-intent classification face higher risk profiles similar to F-1 students, although individual equities will vary.

Practical Considerations for Employers

This memorandum will likely face legal challenges, but prospects for success are uncertain. Given the rapidly evolving landscape, employers should work closely with immigration counsel to develop individualized strategies for sponsored employees, including contingency plans in the event of AOS denial.

Employers may consider the following steps in response to this memorandum:

• Audit Pending and Planned AOS Applications. Review all pending I-485 applications and planned filings to assess vulnerability under the heightened discretionary standard. Identify employees with any adverse factors—status violations, gaps, unauthorized employment, prior misrepresentations—and develop mitigation strategies.

• Reassess Consular Processing as the Default. For future green card cases, particularly for individuals who are abroad or who can travel, employers should evaluate whether consular processing is now the safer pathway. While consular processing has its own risks and delays, it avoids the discretionary landmine that this memorandum creates.

• Prioritize Dual-Intent Status. For employees currently in single-intent categories (F-1 OPT, TN, E-3, etc.), employers should evaluate pathways to H-1B or L-1 status as a predicate to future AOS filing. The H-1B cap lottery should be viewed as an essential part of long-term green card strategy for employees in vulnerable categories.

• Ensure Strict Status Compliance. The memorandum's focus on violations of immigration law and conditions of status means that even minor violations—late filings, brief gaps in status, unauthorized employment—may be used in the discretionary analysis. Employers should work with immigration counsel to develop compliance protocols that ensure sponsored employees always maintain status.

Implications Beyond Employment-Based Immigration

Although this alert focuses on the employer context, the memorandum's reach extends well beyond employment-based AOS. Family-based applicants—including beneficiaries of immediate relative and family preference petitions—who are present in the U.S. and seeking to adjust rather than consular process will face the same heightened discretionary scrutiny. The memorandum's adverse factor framework, including its emphasis on status violations, unauthorized employment, and failure to depart, will disproportionately affect family-based applicants who may have accrued periods of unlawful presence or engaged in unauthorized work while awaiting visa availability.

Ultimately, the memorandum's signal is clear: USCIS intends to treat every discretionary AOS grant as extraordinary regardless of the underlying immigrant classification, and applicants who could have pursued consular processing should expect to justify why they did not.

Please contact Ballard Spahr’s Immigration Group if you have questions.

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