The US administration has significantly expanded its scrutiny of US employers that conduct layoffs while continuing to sponsor foreign national employees for H-1B visas and employment-based permanent residence. Recent developments—including a new executive order requiring federal agencies to consider employers’ layoff histories, expanded H-1B investigations, and the announced suspension of eight major companies from the permanent labor certification (PERM) program—underscore the importance of coordinating immigration sponsorship with workforce restructuring decisions.
Although layoffs do not automatically disqualify an employer from sponsoring foreign workers, employers should anticipate increased scrutiny of their immigration filings, recruitment practices, and workforce decisions.
ADMINISTRATION ANNOUNCES PERM SUSPENSIONS FOR EIGHT MAJOR EMPLOYERS
On October 8, 2026, Vice President JD Vance and US Secretary of Labor Keith Sonderling announced that eight companies would be suspended from participation in the PERM labor certification program. The administration cited alleged misuse of employment-based immigration programs, including concerns regarding the sponsorship of foreign workers while US employees were being laid off.
The Department of Labor (DOL) has not publicly identified the regulatory basis for the suspensions. 20 CFR § 656.31(b) permits DOL to suspend PERM processing where an employer has been referred for, or is under, investigation by DOJ, the US Department of Homeland Security, or another government entity for possible fraud or willful misrepresentation in connection with the PERM program. Officials cited ongoing federal investigations and also emphasized the affected employers’ substantial volume of prior labor certifications. However, it remains unclear whether each suspension rests on an investigation that satisfies the requirements of 20 CFR § 656.31(b), or whether DOL is relying on other authority.
This does not automatically revoke previously approved PERM applications or I-140 petitions. However, suspension from the program could substantially delay the ability of employees from affected organizations to advance their permanent residence cases and, depending on individual circumstances, complicate long-term immigration status planning.
SEPTEMBER 2026 EXECUTIVE ORDER EXPANDS H-1B SCRUTINY TO EMPLOYERS’ LAYOFF HISTORIES
On September 18, 2026, President Trump signed Executive Order 14431, Enhancing Program Integrity and Interagency Coordination in the Administration of the H-1B Nonimmigrant Visa Program.
The order directs the US Departments of Labor, Homeland Security, and State to consider whether an H-1B sponsoring employer has directly or indirectly engaged in layoffs during the preceding year or plans future layoffs that negatively affect similarly situated US workers.
This directive is particularly significant because it introduces consideration of a 12-month layoff history into the administration of the H-1B program.
The executive order does not establish a categorical prohibition against H-1B sponsorship by employers that have conducted layoffs and it does not revoke previously approved H-1B petitions. It directs agencies to consider relevant workforce reductions when administering existing immigration requirements.
Employers should prepare for increased scrutiny of H-1B petitions and related filings where recent layoffs could raise questions about the continuing need for sponsored positions or the potential displacement of US workers.
The September executive order builds on DOL’s launch of Project Firewall, an enforcement initiative targeting potential abuses of the H-1B program.
Project Firewall prioritizes investigations involving suspected displacement of US workers, inadequate recruitment practices, wage violations, and other potential noncompliance with H-1B requirements.
The combination of Project Firewall and the September executive order suggest that federal agencies may increasingly evaluate employers’ immigration sponsorship practices in the context of their broader workforce decisions.
IMPLICATIONS FOR EMPLOYMENT-BASED GREEN CARD SPONSORSHIP
Employers sponsoring foreign national employees through the PERM labor certification process already face specific obligations when layoffs occur.
Under 20 CFR § 656.17(k), employers that have conducted layoffs within six months before filing a PERM application must determine whether those layoffs occurred in the area of intended employment and involved the sponsored occupation or a related occupation. Where the regulation applies, employers must notify and consider potentially qualified laid-off US workers for the sponsored position and document the results of that consideration.
The regulation does not automatically prohibit an employer from filing PERM applications following layoffs. It imposes additional notification, consideration, and documentation requirements.
Nevertheless, employers may face increased audit exposure where PERM recruitment occurs in proximity to layoffs, particularly if the company has eliminated positions involving duties similar to those of sponsored positions. Potential consequences include delayed or denied labor certifications, additional recruitment restrictions, such as supervised recruitment, and additional corporate scrutiny.
WHAT EMPLOYERS SHOULD DO NOW
Employers that have recently conducted layoffs, are considering workforce reductions, or maintain significant H-1B and PERM sponsorship programs should consider taking the following steps:
- Review recent and anticipated layoffs: Evaluate workforce reductions during the preceding 12 months and assess whether affected positions overlap with roles currently or prospectively sponsored through the H-1B program.
- Evaluate pending PERM applications: Identify PERM cases potentially affected by layoffs within the preceding six months, including positions involving similar occupational duties in the same area of intended employment.
- Assess H-1B dependency and displacement obligations: Determine whether the employer is subject to enhanced recruitment or non-displacement requirements and whether applicable exemptions are available.
- Strengthen documentation of sponsorship decisions: Maintain records supporting the business need for sponsored positions, particularly where similar roles have been eliminated or reorganized.
- Coordinate immigration and workforce planning: Establish procedures for immigration counsel to review proposed reductions in force, reorganizations, and position eliminations before decisions are finalized, where practicable.
- Review immigration program compliance: Consider targeted internal reviews of H-1B Labor Condition Applications, wage practices, job duties, work locations, PERM recruitment, and layoff-related documentation.
- Assess impacts on foreign national employees: Identify individuals whose pending green card applications, H-1B extensions, or other immigration benefits could be affected by delays or interruptions in sponsorship.
- Monitor agency implementation and litigation: Additional regulations, agency guidance, enforcement actions, or judicial challenges may clarify or alter the practical impact of these developments.
