Executive Summary: The H-1B visa lottery may soon move from a random selection to a wage-based system, favoring high-paying employers. Smaller companies offering competitive but mid-range salaries could lose out under the new rules. Employers should prepare early, explore alternatives like E or L visas, and monitor upcoming USCIS rule changes closely.
For years, U.S. employers have relied on the H-1B visa lottery to hire foreign talent, especially recent graduates or hard-to-fill technical roles. But that system is about to change. If you’re a small or midsize business planning to hire through the H-1B program, you need to understand what’s coming and how it could put you at a disadvantage.
How the H-1B Lottery Works Right Now
Currently, the H-1B visa process is based on a random lottery. Every year, employers submit electronic registrations during a short filing window, typically in February. By March 31, U.S. Citizenship and Immigration Services (USCIS) notifies selected employers, and those selected can then file full petitions.
There are 85,000 H-1B visas available each year—65,000 for regular applicants, and 20,000 for those with a U.S. master’s degree or higher. In FY 2024, USCIS received 758,994 registrations, and only 188,400 were selected (24.8%), a sign that demand far outpaces supply.
What’s Changing and Why It Matters
USCIS has signaled that a significant rule change is likely coming soon. Instead of using a random lottery, USCIS may switch to a wage-based system. This means H-1B visas would go to companies offering the highest salaries first.
This idea was initially proposed during the final months of the first Trump administration. The stated goal was to prioritize higher-skilled workers. But in practice, it means that:
- Larger companies with bigger budgets (especially in tech) would dominate the H-1B pool.
- Small businesses, startups, and nonprofits who often offer entry-level or mid-level wages could be shut out entirely.
- International students graduating from U.S. universities may lose their shot at getting sponsored if they can’t land a high-paying offer right away.
The exact final rule hasn’t been published yet, but we believe it will mirror the earlier Trump-era proposal. Once finalized, it could take effect for the next H-1B cycle.
We’ve Seen This Before: When the System Favors a Few
In the late 1980s and early 1990s, the U.S. operated a green card lottery known as the Diversity Visa Program. It awarded 55,000 green cards per year. But one year, 20,000 of them (more than a third) went to applicants from Ireland.
That was statistically impossible without some kind of manipulation. No investigation ever took place, but it left a lasting impression: lottery systems can be bent to serve political interests or benefit certain groups.
Now, instead of country favoritism, we may be looking at wage favoritism.
What Employers Can Do Now
If you’re considering an H-1B hire for next year, take these steps:
- Plan early. The 2026 registration period will likely open in February and close by mid-March.
- Budget realistically. If the rule changes take effect, salary will play a significant role in the selection process. Be ready to show wage level justifications if you’re targeting a higher tier.
- Track the rulemaking. Once USCIS releases the final version of the new H-1B process, review it closely with your legal team or counsel.
- Consider alternatives. Depending on your needs, E visas (for treaty investors or essential employees) or L-1 transfers may be better fits for your hiring strategy, especially for Japanese companies.
The move from a random H-1B lottery to a wage-based system would be a significant shift. It could push smaller employers out of the process entirely and make U.S. hiring more challenging for companies trying to grow. While we don’t know the exact rule language yet, we believe it’s coming soon and it’s important to prepare now.
Need help planning for next year’s H-1B cycle or exploring other visa options for your workforce? Contact Valvo & Associates. We help businesses hire smart and stay compliant without wasting time on guesswork.