DHS Considers Removing H-1B Job Loss Grace Period

On August 6, 2026, the U.S. Department of Homeland Security (DHS) submitted a proposal that could eliminate the current 60-day grace period for certain foreign workers, including H-1B visa holders, after a job loss.

The grace period currently allows eligible workers time to find a new employer, transfer sponsorship, change immigration status, or prepare to leave the United States. If adopted, the change could significantly reduce the time workers and their families have to address immigration status issues following a job loss.

Employers that sponsor affected workers could also face a narrower window to complete sponsorship and transfer processes. The proposal remains under review and does not change current immigration rules or create any new compliance obligations.

What Employers Should Do

Legal Requirements

• The proposal has not been finalized and does not create any new employer obligations at this time. Existing immigration sponsorship, employment verification, and related compliance requirements remain unchanged.

Practical Considerations

• Monitor future DHS announcements and any Federal Register publication for additional details about the proposal.
• Consider engaging a Professional Employer Organization (PEO), Administrative Services Organization (ASO), or immigration compliance provider to assist with workforce planning, immigration compliance monitoring, and employee communications related to evolving immigration regulations.

Overview

Current Rule: The existing discretionary grace period became effective in 2017 and generally allows eligible workers to remain in the United States for up to 60 days following the termination of qualifying employment, or until the expiration of their authorized stay, whichever occurs first.

During that period, workers may:

• Search for a new sponsoring employer.
• Transfer to another qualifying employer.
• Apply for a change of immigration status.
• Prepare to depart the United States if another immigration option is unavailable.

Who Is Covered? The current grace period applies to workers in E-1, E-2, E-3, H-1B, H-1B1, L-1, O-1, and TN visa classifications. It also applies to eligible dependents, including family members whose immigration status is tied to the principal visa holder.

Why Is the Proposal Significant? If the grace period is eliminated, affected workers could face a much more immediate loss of lawful immigration status following a job loss. Workers would have less time to secure a new employer sponsor, change status, or leave the United States. Dependents could also be affected because their immigration status is typically tied to the principal worker’s status.

The proposal could be particularly disruptive for workers with families, housing obligations, pending immigration applications, or children enrolled in school.

What Happens Next? The proposal remains under review by the Office of Information and Regulatory Affairs (OIRA). The text of the proposal has not yet been released publicly. Once OIRA completes its review, DHS would generally publish the proposal in the Federal Register and provide an opportunity for public comment before issuing any final rule. The existing 60-day grace period remains in effect unless and until DHS finalizes a new regulation.

Why This Matters

Many employers rely on highly skilled foreign talent to fill specialized positions. The current grace period gives affected workers time to find a new sponsor, transfer employment, or pursue another immigration option following a job loss. If the proposal is finalized, employers could face a smaller window to recruit and hire affected workers, potentially reducing workforce flexibility and making talent transitions more difficult.

The proposal could also increase the importance of employer participation during the federal rulemaking process. If OIRA completes its review and DHS publishes the proposal in the Federal Register, employers and industry stakeholders will have an opportunity to submit comments and provide feedback on how the proposed change could affect workforce planning, talent mobility, and recruitment efforts.

Key Risks for Employers

• Reduced time to recruit and sponsor laid-off H-1B and other nonimmigrant workers.
• Increased workforce planning challenges involving sponsored employees.
• More compressed timelines for immigration transfer petitions if the proposal is finalized.
• Greater employee uncertainty following layoffs, which may affect retention and workforce stability.
• The proposal’s final requirements, implementation details, and compliance impacts cannot yet be determined because the full text has not been published.

Source References

• OIRA – Pending EO 12866 Regulatory Review (RIN 1615-AB22) – August 6, 2026

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