New H-1B wage-based selection rule effective Feb 26 — what does this mean for tech workers?

The DHS final rule replacing the H-1B lottery with wage-based selection goes into effect February 26, 2026. For those who haven't been following this: instead of the random lottery, USCIS will now rank H-1B petitions by the offered wage relative to the prevailing wage for that occupation and area. Higher wage offers get selected first.

There's also a new $100K supplemental registration fee per petition. Yes, you read that right — one hundred thousand dollars just to register.

I manage a DevOps team at a mid-size startup (Series B, ~200 employees) and we rely heavily on H-1B talent. Two of my best engineers are on H-1B and I have a job offer out to a candidate who would need sponsorship.

I'm trying to understand the practical impact:

• Does this basically mean only FAANG-level salaries will get through the selection process?
• What happens to current H-1B holders who want to transfer to smaller companies at lower salaries?
• Is the $100K fee refundable if the petition isn't selected?
• Are there realistic legal challenges that might delay implementation?

Let me clarify the mechanics of the rule since there's a lot of misinformation circulating.

The wage-based selection ranks petitions by the ratio of the offered wage to the prevailing wage for the SOC code and MSA. It uses the OES wage levels: Level 1 (17th percentile) through Level 4 (67th percentile). Petitions offering Level 4 wages get priority, then Level 3, and so on down.

Important nuances:

• It's relative, not absolute. A $120K offer in Des Moines for a software dev might rank higher than a $180K offer in San Francisco, because the prevailing wage ratio matters.
• The $100K fee is per petition and is NOT refundable if the petition isn't selected. However, it IS refundable if the registration is rejected (as opposed to not selected).
• H-1B transfers are not affected by the selection process. If someone already has H-1B status and is changing employers, they don't go through the lottery/selection again. The new employer files a transfer petition directly. This is crucial — existing H-1B holders can still move between employers.
• Cap-exempt employers (universities, nonprofits, government research orgs) are not subject to the selection process at all.

The practical effect: yes, this will heavily favor higher-paying positions. DHS's own analysis estimated that Level 1 and Level 2 wage offers would rarely be selected.

I've been running numbers on this for three of my startup clients and the financial impact is staggering.

One client — a Series A health-tech company — was planning to sponsor four H-1B petitions this cycle. Under the old system, the registration fee was $10 per beneficiary. Now they're looking at $100,000 per petition on top of the standard $1,710 base filing fee, $1,500 ACWIA fee, and $500 fraud prevention fee. That's roughly $415K total just in government fees for four petitions, with no guarantee any of them get selected.

For context, their entire annual HR budget is $600K. This is effectively a "big tech only" barrier. Google and Microsoft won't blink at $100K per petition. A 50-person startup absolutely will.

We're already advising clients to explore alternatives:

• O-1A "extraordinary ability" visas for senior talent (no lottery, no cap)
• L-1 intracompany transfers if they have international offices
• Hiring in Canada/UK and having employees work remotely
• Engaging workers as independent contractors through an EOR in their home country

The legal challenges are already being filed. Several business groups including the U.S. Chamber of Commerce and the National Association of Manufacturers have challenged the rule under the Administrative Procedure Act, arguing DHS exceeded its statutory authority.

The core argument: the Immigration and Nationality Act (INA) at 8 U.S.C. 1184(g)(3) prescribes a specific allocation mechanism for H-1B visas and says nothing about wage-based selection. The statute references a "random selection" for years where applications exceed the cap. Opponents argue DHS can't unilaterally replace Congress's prescribed mechanism.

There's also a strong argument that the $100K fee is arbitrary and capricious. DHS's regulatory impact analysis didn't adequately justify why $100K specifically — as opposed to $50K or $25K — was necessary. That's the kind of thing courts scrutinize under the APA's "arbitrary and capricious" standard.

That said, I wouldn't bank on an injunction before Feb 26. The litigation will take months, possibly years. Companies need to plan as if this rule is going into effect on schedule.

I'll be honest — as a founder, this rule makes me seriously consider relocating engineering roles to our Toronto office. We already have a small team there and Canada's Global Talent Stream processes work permits in two weeks with no lottery, no $100K fee, and no annual cap.

The irony is that this rule is supposed to "protect American workers" but in practice it's going to push companies to hire the same talent in other countries. The engineer we wanted to bring to our SF office on H-1B? We'll just hire them in Toronto instead. Same person, same company, same work — just a different country getting the tax revenue and economic activity.

The $100K fee alone makes it economically irrational for startups to sponsor H-1B petitions unless the role is truly irreplaceable and can't be done remotely.

Thanks for clarifying that transfers aren't affected, @AttorneyMichaelK. That's a huge relief for my two current H-1B engineers. My main worry was that they'd be stuck and unable to switch jobs without going through the new selection process.

For my open role though — the candidate we want to sponsor is an early-career ML engineer. We're offering $145K in Austin which I thought was competitive, but I'm guessing that's probably Level 2 or low Level 3 for SOC 15-2051 in the Austin MSA. Is there any way to know in advance whether a given salary would likely be selected?

You can check the prevailing wage for any occupation and area using the DOL's Online Wage Library (FLCDataCenter.com). For SOC 15-2051 (Data Scientists, which includes ML engineers) in the Austin-Round Rock-Georgetown MSA, the current prevailing wages are approximately:

• Level 1: ~$95K
• Level 2: ~$120K
• Level 3: ~$145K
• Level 4: ~$170K

At $145K, you're right at the Level 3 threshold. Whether Level 3 gets selected will depend on total demand — if there are more Level 4 and Level 3 petitions than available cap slots, some Level 3 offers won't make it.

Nobody can predict exact cutoffs for the first year under the new system. But given that FAANG and large consulting firms will likely flood Level 4, I'd expect most Level 3 petitions in competitive SOC codes to face real uncertainty.

One thing to consider: could you restructure the role as a senior position with a higher wage offer? Or explore the O-1A route if the candidate has strong publications or open-source contributions?

I want to raise something that's not getting enough attention: the disparate impact on certain industries. Healthcare, education, and nonprofits often pay at Level 1 or Level 2 because of institutional salary structures. Hospitals sponsoring H-1B nurses, universities hiring researchers — these petitions will basically never be selected under the new system unless they're cap-exempt.

The rule effectively says "only high-paying corporate jobs deserve H-1B visas." That's a policy choice masquerading as an administrative rule.

Also worth noting — several Indian IT staffing companies have already announced they're shifting to B-1 visa/onsite-offshore models. The talent pool isn't going away; it's just going to be accessed through different (possibly more exploitative) channels.

Something to watch: the rule also eliminates the separate 20,000-visa allocation for U.S. master's degree holders. Under the old system, applicants with advanced degrees from U.S. universities got two bites at the apple — the 20K advanced degree pool and then the general 65K pool. Now everyone goes into a single wage-ranked pool.

This could actually hurt recent graduates from U.S. master's programs. A fresh MS grad in CS from Stanford with a $140K offer at a startup will be competing head-to-head with a senior engineer at Google with a $250K offer. The degree premium is gone — it's all about the paycheck now.

I can see this reducing international enrollment at U.S. universities. Why pay $80K for a U.S. master's if it no longer gives you an edge in the H-1B process?

UPDATE: After talking to our immigration counsel and our CEO, we've decided on a two-track approach for our ML engineer candidate:

1. We're increasing the offer to $175K (Level 4) and upgrading the title to Senior ML Engineer. The candidate has enough experience to justify it, we were just being conservative with the initial offer.
2. In parallel, we're filing an O-1A petition based on her published papers and open-source contributions. Our attorney thinks she has a decent shot.

The $100K registration fee is brutal but our CEO agreed it's worth it for this specific hire. We definitely won't be sponsoring multiple H-1B petitions going forward though — it's just not financially viable at our stage.

For any other hiring managers reading this: start planning now. The March registration period will be here fast and the new system has zero room for last-minute filings.

Great discussion with a lot of practical insights. Key takeaways for anyone finding this thread:

• Wage-based selection: Petitions ranked by offered wage relative to prevailing wage (Level 1-4). Higher ratios selected first.
• $100K supplemental fee: Per petition, non-refundable if not selected. Massive barrier for startups and smaller employers.
• Transfers unaffected: Current H-1B holders changing employers don't go through the new selection process.
• Advanced degree pool eliminated: No more separate 20K allocation for U.S. master's degrees.
• Legal challenges pending: APA challenges filed but unlikely to result in injunction before Feb 26 effective date.
• Alternatives to explore: O-1A visas, L-1 transfers, cap-exempt employers, international hiring in Canada/UK.

We'll start a new thread if any court issues a stay or injunction. For now, plan as if this rule is in effect.