The Department of Homeland Security (DHS) has issued a proposed rule that would change how USCIS handles the H1B lottery. While the selection process will remain random, the proposal introduces a wage-based weighting system that increases the chances of selection for beneficiaries who are offered higher wages. Employers should review the changes closely and begin preparing for stricter documentation and new compliance risks.

Under the proposal, each unique beneficiary would be entered into the lottery once, regardless of the number of employers submitting registrations, but would be weighted according to the highest wage level that the offered wage meets or exceeds in the Department of Labor’s publicly available wage database. Level I entries would be counted once, Level II entries twice, Level III entries three times, and Level IV entries four times. The higher the wage level, the greater the chance of selection. The proposed rule would maintain this two-stage selection process to keep a higher chance of beneficiaries with a qualifying U.S. master’s degree or higher of being selected.

Employers would be required to identify the wage level, the occupation code (SOC code), and the worksite at the time of registration. If a job involves multiple locations or roles, the registration must reflect the lowest applicable wage level. Once selected, the H1B petition must match the registration’s wage level, job title, SOC code, and work location. Any material discrepancies could result in denial or revocation.

The rule also introduces stronger anti-fraud measures. USCIS would have the authority to deny or revoke petitions if it determines that changes in wage level or job location were made to manipulate lottery odds. The agency could also deny subsequent petitions filed by related entities, broadly defined, for the same beneficiary if there’s evidence of coordinated attempts to increase selection chances.

Importantly, this is a proposed rule, not a final one. It is undergoing notice-and-comment rulemaking, a process required for most federal regulations. DHS published the proposed rule in the Federal Register and invited public feedback. During this period, individuals, companies, advocacy groups, and other stakeholders may submit comments. After reviewing these comments, DHS may revise the rule before finalizing it. Employers have a limited time frame to raise concerns, propose alternatives, or suggest clarifications.

DHS estimates that, if implemented, the rule would result in substantial shifts in the H1B cap landscape, potentially transferring billions of dollars in wages from lower-paid to higher-paid H1B workers and tilting selection towards employers offering more competitive salaries. While the agency frames this as enhancing U.S. competitiveness and program integrity, it may disadvantage employers who rely on entry-level positions or offer Level I wages.

It’s also important to note that this proposed rule is separate from the recent Presidential Proclamation that would impose a $100,000 fee for certain H-1B filings. Employers should treat the rulemaking and the proclamation as two independent developments, each with distinct compliance and budget implications. For a full breakdown of the Proclamation, see: Understanding the New H1B Proclamation.

Employers should begin reviewing their H1B sponsorship strategies in the coming months. This includes evaluating prevailing wages, confirming the correct occupation codes, reviewing job descriptions and worksites, and preparing to justify the offered wage level in the event of a challenge. The rule is not yet final, but given the stakes, preparation and early compliance planning are strongly advised. Employers may also wish to submit comments on the proposed rule to make their voices heard in the final rulemaking process.