From Campus to Capitol 5: How New Immigration Rules Will Reshape International Student Pipeline — H-1B and L-1 Visa Reform Bill Awaits Decision — A Turning Point for U.S. Employers and Foreign Talent?

The U.S. Senate has introduced the “H-1B and L-1 Visa Reform Act of 2025,” co-sponsored by Senators Chuck Grassley and Dick Durbin. The bill seeks to curb fraud and abuse in both visa programs by prioritizing high-value applicants, tightening eligibility standards, and expanding U.S. worker protections to all employers. It marks a continued shift toward a more selective and compliance-driven immigration system.

It remains uncertain whether the reform bill will advance through the legislative process. However, if enacted, it is expected to have a far-reaching impact on hundreds of thousands of foreign applicants and the U.S. businesses that rely on global talent. The traditional framework of employment and workforce management for foreign professionals in the United States could be fundamentally reshaped.

If you and your company have questions about U.S. immigration policy or need tailored legal support, please contact our Partner, Anna Sun, at contact@consultils.com.

Legislative Background

Senators Chuck Grassley and Dick Durbin have long been leading advocates for high-skilled immigration and visa reform. As early as 2007, they jointly introduced a bipartisan proposal to overhaul the H-1B and L-1 visa programs, aiming to close systemic loopholes and strengthen employer accountability — though the bill ultimately failed to advance. In subsequent sessions of Congress, they continued to sponsor and support legislation such as the Fairness for High-Skilled Immigrants Act, which sought to eliminate per-country caps for employment-based immigration and modernize the visa allocation system.

While none of these prior efforts were enacted, calls for reform have grown louder amid intensifying global competition for talent, evolving U.S. immigration priorities, and mounting labor market pressures. The introduction of the current H-1B and L-1 Visa Reform Act reflects both historical continuity and policy momentum. However, given the divided political climate, its path to passage remains highly uncertain, warranting continued attention to future developments.

Key Provisions and Impact

The reform bill introduces a series of measures addressing both the H-1B and L-1 visa programs from multiple angles. Its core objective is to tighten oversight, raise eligibility standards, and curb visa misuse, while prioritizing protections for U.S. workers. The key proposed changes include:

H-1B Visa: Higher Standards and Employer Accountability

1. Visa Allocation Prioritizes “High-Value” Applicants and Compliant Employers

• Tiered Lottery System Based on Applicant Priority: Under the proposed reform, the H-1B visa lottery would adopt a nine-tier priority structure based on applicant type. Top priority would be given to U.S. STEM advanced-degree graduates and workers earning wages at or above the Level 4 prevailing wage, followed by other U.S. advanced-degree holders, Level 3 wage earners, U.S. bachelor’s degree graduates, and employers with strong compliance records. As a result, ordinary applicants—those without advanced degrees or higher salaries—would face significantly lower chances of selection.

• Stricter Degree Requirements: Applicants must now hold an actual qualifying degree, as the bill eliminates the long-standing allowance that treated work experience as equivalent to a degree. This change closes a loophole that had been widely viewed as enabling the misuse of the “experience equals education” standard.

• Restrictions on Extensions and Substitutions: The maximum H-1B validity remains three years, with an additional three-year extension permitted only for beneficiaries of approved I-140 immigrant petitions who are actively pursuing permanent residence. The bill further prohibits the use of B-1 visas as substitutes for H-1B employment, closing a long-standing workaround that allowed employers to engage foreign professionals under business visitor status.

2. Stricter Employer Requirements and Compliance Obligations

• Substantially Higher Wage Standards: Employers must pay H-1B workers the highest of the following three benchmarks: 1) The prevailing local wage for the occupation; 2) The median wage for all workers in that occupation; 3) The Level 2 median wage under the Occupational Employment and Wage Statistics (OEWS) survey. Each Labor Condition Application (LCA) must specify the wage determination method used. This measure aims to prevent employers from using H-1B workers as a low-cost labor alternative, effectively closing the gap that allowed underpaid foreign hires to displace U.S. employees.

• Transparency and Non-Displacement Obligations: All H-1B employers must ensure fair competition for U.S. workers by publicly posting job openings—including pay, terms, and qualifications—on a Department of Labor (DOL)-designated website for at least 30 days. Job postings cannot target or favor H-1B applicants. Employers are further prohibited from replacing U.S. workers within 180 days before or after hiring an H-1B employee (an increase from the current 90-day rule).

• Workforce Composition Restrictions: Companies with 50 or more employees may not have a combined total of H-1B and L-1 workers exceeding 50% of their overall workforce. The bill also prohibits corporate restructuring designed to circumvent this limit, curbing excessive dependence on foreign labor.

• Outsourcing and Third-Party Placement Limitations: Unless specifically exempted by the DOL, employers may not place, outsource, or contract H-1B employees to third-party worksites. To qualify for exemption, employers must demonstrate that: 1) The client company will not replace U.S. workers; 2) The H-1B employee remains under the primary control of the petitioning employer; 3) The placement is not, in substance, a labor-for-hire arrangement.

• Stricter Documentation and Review Procedures: Employers must submit W-2 wage records for previously employed H-1B workers to verify wage compliance.

  The DOL will expand its review beyond procedural completeness to include fraud detection and material misrepresentation screening, with authority to initiate investigations and hearings upon suspicion. The LCA review period will be extended from 7 to 14 days, making it harder for employers to rapidly redeploy H-1B workers to new locations. Additionally, the bill introduces an LCA processing fee to fund DOL enforcement, with the amount yet to be determined.

  
  

L-1 Visa: Wage and Worker Protections Aligned with H-1B Standards

1. Stricter Eligibility for L-1B Specialized Knowledge Workers

• The bill significantly tightens the definition of “specialized knowledge.” 1) L-1B classification would be limited to foreign employees who possess proprietary knowledge of the company’s products, services, or intellectual property that is not readily available in the labor market and is distinct from others in similar roles. 2)Patent or copyright ownership alone would not qualify as specialized knowledge unless the employee is a key contributor whose protected expertise is essential to business performance. 3) An employer’s internal processes would not automatically constitute proprietary knowledge unless the underlying systems and methodologies are demonstrably unique, complex, and protected from disclosure to competitors.

• Tighter Standards for “New Office” L-1 Petitions: Employers seeking to transfer L-1 employees to establish new U.S. offices must provide detailed business plans, proof of physical office space, and financial documentation. An employee may not have been granted two or more “new office” L-1 approvals within the past two years. To renew such petitions, employers must demonstrate ongoing business operations—including records of service provision, payroll documentation, and financial statements. Limited exceptions may apply for force majeure or other extraordinary circumstances that impede compliance.

• Expansion of Blanket L Petitions to USCIS: The bill authorizes USCIS to process expedited adjudications for employers holding approved Blanket L petitions, though specific criteria for such premium processing remain undefined.

  
  

2. Stricter Employer Obligations

• Wage Parity and Equal Benefits: Under current law, the L-1 category has no wage floor. The proposed reform would change this by requiring that, after one year of U.S. employment, L-1 workers be paid the highest of the following: 1) The prevailing local wage for the occupation; 2) The median wage in the area of employment; 3) The Level 2 median wage under the OEWS survey. Employers must also provide equal benefits—including insurance, retirement contributions, bonuses, and stock options—comparable to those offered to U.S. workers. Charging “departure penalties” or repayment obligations upon resignation would be expressly prohibited.

• Prohibition on Displacement of U.S. Workers: Employers may not terminate U.S. workers within 180 days before or after hiring an L-1 employee, excluding training periods. This measure is intended to prevent companies from using the L-1 category to replace domestic labor under the guise of intracompany transfers.

• Limits on Offsite Placement and Assignments: L-1 workers assigned to non-petitioning or unrelated entities may not spend more than one cumulative year at those locations unless the employer obtains a DOL exemption by proving that: 1) The host company does not replace U.S. workers within 180 days of the assignment; 2) The petitioning employer retains primary supervision and control over the employee; 3) The placement does not constitute a labor-for-hire arrangement but instead involves bona fide specialized knowledge related to the petitioning employer’s business.

Expanded DOL Enforcement Powers and Escalated Penalties

1. Enhanced Investigative Authority: The reform bill grants the Department of Labor (DOL) significantly broader enforcement authority. The Secretary of Labor may initiate investigations proactively—without waiting for employee complaints—to determine employer compliance with H-1B program requirements. This includes the power to conduct random or targeted audits, issue subpoenas, and seek injunctive relief to compel employer compliance. The DOL would be authorized to hire up to 200 additional enforcement officers dedicated to H-1B oversight and to establish a formal complaint system with a 24-hour hotline available via phone and online submission. Employees—whether current, former, or job applicants—who report violations would be legally protected from retaliation, and any employer found retaliating could face severe sanctions.

2. Substantially Higher Penalties for Violations: Employers that violate H-1B or L-1 wage, working condition, or other program requirements would face fines of up to $5,000 per violation, along with back pay and benefits restitution and a one-year suspension from the visa programs. For willful or serious violations—such as discrimination, retaliation, or displacement of U.S. workers—penalties would increase dramatically to between $25,000 and $150,000 per violation, with up to two years of program ineligibility, and in extreme cases, permanent disqualification.

3. Mandatory Compliance Audits and Proactive: The DOL would be required to conduct annual audits of at least 1% of all H-1B and L-1 employers, regardless of whether complaints have been filed. Additionally, employers with over 100 employees, where more than 15% of the workforce holds H-1B or L-1 status, must undergo mandatory yearly compliance audits. Summaries of audit findings would be publicly disclosed, promoting transparency and deterrence through accountability.

Strategic Recommendations: Plan Ahead to Mitigate Policy Risks

Given the potential far-reaching impact of the proposed reform on both foreign professionals and U.S. employers, proactive preparation is essential.

For Foreign Applicants

• Strengthen Qualifications and Competitiveness: Pursue advanced STEM degrees from accredited U.S. institutions and gain experience in high-skill industries. Target high-wage positions (Level 3–4 of the prevailing wage scale) to improve your standing in the H-1B or L-1 selection process.

• Choose Compliant Employers: Prioritize companies that participate in E-Verify, maintain clean immigration and labor compliance records, and demonstrate willingness to sponsor employment-based green cards, reducing risks of petition denial or status loss.

• Diversify Immigration Pathways: Beyond H-1B or L-1 status, explore alternative options such as O-1 (Extraordinary Ability) or EB-5 (Investment Immigration) to avoid overreliance on a single visa category.

For U.S. Employers

• Assess Current Compliance Readiness: Conduct a comprehensive review of all H-1B and L-1 employee records, including wages, working conditions, and documentation such as W-2 tax forms, to ensure alignment with the proposed requirements.

• Optimize Workforce Planning: Prioritize hiring highly skilled U.S. workers to reduce dependency on lower-wage foreign labor. When sponsoring foreign employees, focus on STEM graduates or high-wage roles to improve petition success rates.

• Engage Professional Counsel Early: Consult with immigration attorneys and compliance specialists to design tailored compliance frameworks, such as recruitment posting procedures or waiver documentation, to prepare for heightened audit and enforcement standards. 

If enacted, the reform bill would fundamentally transform how companies utilize H-1B and L-1 visa programs—raising compliance costs, tightening scrutiny, and increasing operational complexity—while strengthening worker protections across the board.

To adapt, employers must reinforce compliance and strategic workforce planning, and foreign professionals must enhance competitiveness and diversify options. Only through early coordination and strategic preparation can both sides minimize disruption and continue advancing their long-term goals amid the evolving U.S. visa landscape.

If you need to plan for the 2026 lottery in advance, please contact the ILS Immigration Team. We will provide you with customized response solutions to ensure that your company can still safeguard talent mobility and minimize compliance risks amid major policy changes.

Emergency Contact Hotline： 626-344-8949

Email Inquiry： immigrationlaw@consultils.com

We have published five in-depth articles analyzing recent developments in U.S. immigration policy. You can find them under the “Business Immigration” category for further insights.

1. The first article focuses on the Trump administration’s proposal to "end the abuse of foreign student visas"; click the link to read the full text.

2. The second article interprets the U.S. Department of State’s tightening of non-immigrant visas; click the link to read the full text.

3. The third article analyzes H-1B visas: the reform from random lottery to a "weighted selection" system; click the link to read the full text.

4. The fourth article analyzes the Dual Impact of H-1B Entry Restrictions and the Gold Card Program; click the link to read the full text.

5. The fifth article examines the upcoming 2026 H-1B lottery policy changes and their potential implications for employers and foreign professionals; click the link to read the full text.

   
   

Disclaimer：This article is based on the latest policy information as of September 21, 2025. Given the rapid changes in immigration policies, it is advisable for enterprises to pay close attention to official updates and consult professional immigration lawyers for the latest guidance. Our firm will continue to track policy developments and provide clients with timely and accurate professional services.

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As Partner and Head of Immigration at ILS, Anna advises global employers on all aspects of U.S. business immigration. She helps companies recruit and retain executives and highly skilled professionals essential to their U.S. operations, with experience spanning industries from autonomous driving and biotech, to entertainment, logistics, and manufacturing.

Previously, Anna practiced at leading global law firms and served as in-house counsel and compliance manager in the telecommunications, finance, and gaming industries. This diverse background equips her with practical, cross-industry insights that inform strategic, business-focused immigration solutions.

Email: contact@consultils.com | Phone: 626-344-8949