The U.S. Department of Homeland Security issued a final rule replacing the random H-1B cap lottery with a wage-weighted system that will take effect for the March 2026 registration period, with the aim of shifting selections toward higher-paying jobs.
Scheduled for Federal Register publication on December 29, 2025, the rule becomes effective February 27, 2026, tying lottery odds to wage levels under the Department of Labor’s Occupational Employment and Wage Statistics (OEWS).
How the new weighted lottery works
Under the new H-1B weighted lottery, each registration will receive multiple entries based on the offered wage level using the OEWS framework. This increases the advantage for higher wage offers.
- A Level IV wage will receive 4 entries
- A Level III wage will receive 3 entries
- A Level II wage will receive 2 entries
- A Level I wage will receive 1 entry
| OEWS Level | Entries per Registration | Typical role examples |
|---|---|---|
| Level IV | 4 | Highest experience, leadership roles |
| Level III | 3 | Senior roles with autonomy |
| Level II | 2 | Mid-level professionals |
| Level I | 1 | Entry-level positions, routine tasks, supervised roles |
Because Level I wages are typical for recent graduates or junior tech positions (including many software developer roles requiring minimal experience), those registrations will have the lowest odds in a system designed to favor higher wage levels.
- Level I registrations could be up to 4 times less likely to be selected than Level IV registrations, reflecting the direct relationship between the number of entries and the chance of being drawn.
📝 Level I remains allowed, and the 20,000-master’s exemption stays in place. Entry-level and STEM grads can still compete, though with lower odds if wages stay at Level I.
Intended goals and practical effects
USCIS aims to prioritize “higher-paid, higher-skilled” positions by moving away from a purely random selection method.
- The change is meant to operate in an environment of persistent oversubscription, where demand historically far exceeds supply (e.g., “over 400,000 registrations for 85,000 visas”).
- The rule will significantly reduce selection odds for entry-level wage offers starting with FY 2027, but it does not eliminate selections for lower-wage registrations—those entries remain eligible.
Key takeaway: a Level IV registration will enter the lottery four times for every one entry assigned to a Level I registration.
Impact on employers and students
The rule’s design weights lower-wage entries rather than eliminating them, which keeps the entry-level route open for employers seeking junior hires, including those coming from student pathways.
- Small businesses filing for Level I H-1B petitions could see probabilities drop by 42%, with estimated lost labor costs of $85,006 per worker.
- Employers can try to increase selection odds by offering higher wages that place a role into a higher OEWS level (for example, moving a role into Level II instead of Level I).
The rule’s reliance on OEWS ties outcomes to how salary offers align with wage levels that reflect occupation, location, and experience. That pushes employers to plan compensation and job design around those categorizations ahead of registration.
- This dynamic could encourage changes in job duties, location, or compensation to justify higher wage levels, even for early-career roles.
- For tech employers that hire heavily from U.S. universities, the weight differential is poised to reshape how they compete in the lottery rather than whether they participate at all.
Student pathways and exemptions preserved
The rule preserves important student-related pathways:
- H-1B selection remains available to entry-level beneficiaries, including F-1 students on Optional Practical Training, because a Level I registration remains a valid entry.
- The 20,000 U.S. master’s degree exemption (the master’s cap) is unchanged, preserving an additional route that often favors international tech graduates.
By keeping the master’s cap exemption and Level I eligibility intact, the rule preserves the routes many international students use to move from school to work, even as wage weighting reduces odds for many entry-level offers.
Timing, implementation, and legal challenges
The shift is not immediate for all applicants because the source period for the current cycle remains unchanged. The random lottery still applies for FY 2026.
- The operational change takes effect at the March 2026 registration period, giving employers a short runway to align offers with the OEWS-based weighting structure before registrations are filed.
🔔 Begin mapping roles to OEWS levels now and prepare updated job descriptions. Align location, duties, and compensation so registrations reflect the intended wage tier for March 2026.
The transition introduces legal and political uncertainty:
- Legal challenges are anticipated from opponents who argue DHS exceeded statutory authority by using wages as a measure of skill.
- Opponents are expected to argue that DHS is using wages as a “skill” proxy, which could become central in courtroom fights and potentially delay FY 2027 implementation.
Distributional and strategic effects
Even without litigation delays, the design creates a clear distributional impact across job seniority:
- Level IV: highest experience and leadership roles — best odds (4 entries)
- Level III: senior roles with autonomy — strong odds (3 entries)
- Level II: mid-level professionals — moderate odds (2 entries)
- Level I: entry-level, routine roles — lowest odds (1 entry)
The weighting changes the strategic value of salary setting:
- Higher wages not only improve market competitiveness but also directly increase the number of entries assigned to a registration.
- This mechanism may intensify trade-offs for smaller employers who previously relied on Level I wage offers for junior hires and now face a steeper odds disadvantage.
⚠️ Expect possible legal challenges and potential implementation delays. Wage-based weighting may face scrutiny, which could impact FY2027 timelines or alter how levels are applied.
Alternative pathways remain available
The H-1B program is not the only route for international talent. The rule itself notes other legal pathways, including:
- O-1 visas for extraordinary ability
- L-1 intracompany transfers
- Green card sponsorship options such as EB-2 NIW for top talent
These alternatives do not remove the central role of H-1B for many entry-level candidates, but they do mean wage weighting alone does not close off the broader set of routes employers can pursue.
Final observations
For many new graduates, the practical effect will likely be a reduction in probability rather than a categorical barrier, since Level I entries remain in the pool.
- The core operational shift is the link between wage → OEWS classification → lottery weight, replacing a system where each registration previously had the same random chance regardless of pay level.
- Whether the weighting produces the selection patterns DHS intends will become clearer only after implementation begins — but the mechanics are immediate and simple to understand: 4 entries for Level IV for every 1 entry for Level I.
The DHS has finalized a rule replacing the random H-1B lottery with a wage-weighted system. Starting with the March 2026 registration, selection odds will favor higher-paid roles. Level IV positions get four entries, while Level I gets one. This shift aims to prioritize high-skilled labor but reduces probabilities for junior tech roles and recent graduates. Legal challenges are expected, though the rule preserves existing exemptions for master’s degree holders.
