DHS Proposes a $103,265 Fee for H-1B Cap-Subject Petitions: Employer Guide
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The H-1B contractor's project ends Friday. Immigration counsel loops HR in that afternoon, the separation date gets a note on it, and the reverification calendar acquires a new milestone sixty days out. That milestone is 8 CFR 214.1(l)(2). Since January 2017, it has been the operational bridge between one employer and the next, the thing that lets a specialty-occupation worker roll off a project one week and land at a new sponsor the next without leaving the country.
DHS wants to take the bridge out. (It's the second big H-1B-affecting DHS rulemaking of the month; the $103,265 H-1B cap-fee proposal published two weeks earlier is running on a similar accelerated comment schedule.) The Notice of Proposed Rulemaking DHS published on September 11 (FR Doc 2026-18631) would strike 8 CFR 214.1(l)(2) from the code entirely. If it goes final as written, workers in E-1, E-2, E-3, H-1B, H-1B1, L-1, O-1, and TN status, along with their dependents, would generally be considered out of status the day after their qualifying employment ends. Nothing changes for anyone this week; the current 60-day rule stays in force until the final rule publishes and its effective date arrives. But the offboarding playbook HR has been running for nine years is now on the drafting table, and the comment window that decides whether the final rule matches the proposal closes November 10.
| Field | Detail |
|---|---|
| Title | Eliminating the Discretionary 60-Day Grace Period |
| Agency | DHS / USCIS |
| Federal Register | FR Doc 2026-18631, Vol. 91, No. 175 (Sept. 11, 2026), pp. 57807–57828 |
| Docket / RIN | USCIS-2026-0364 / RIN 1615-AD22 |
| Action | Notice of Proposed Rulemaking (NPRM). Not yet effective. |
| Regulation removed | 8 CFR 214.1(l)(2) (also touches 8 CFR Part 204) |
| Comment window | Through November 10, 2026 at regulations.gov (USCIS-2026-0364) |
| Effective date | Not set; established when USCIS publishes the final rule |
The grace period the rule targets was written into 8 CFR 214.1(l)(2) by the January 2017 "Retention of EB-1, EB-2, and EB-3 Immigrant Workers and Program Improvements Affecting High-Skilled Nonimmigrant Workers" final rule (81 FR 82398, Nov. 18, 2016). It covers eight employment-based nonimmigrant classifications and their dependents:
Classifications with their own grace-period rules written into different regulations aren't part of this NPRM. F-1 students keep the 60-day post-completion departure preparation period under 8 CFR 214.2(f)(5)(iv), J-1 exchange visitors keep the 30-day departure period, and the 10- and 30-day admission and departure periods elsewhere in Part 214 stay in place. The proposed rule targets exactly one paragraph.
| Situation | Rule today (through the final rule) | If the proposal is finalized as written |
|---|---|---|
| H-1B contractor's project ends Friday | Status continues for up to 60 days (or until I-94 expires, whichever is shorter). Worker can be picked up by a new sponsoring employer under H-1B portability. | Status generally ends the day after employment cessation. No discretionary bridge. Portability under 8 CFR 214.2(h)(2)(i)(H) still exists but a new petition has to be filed and received while status is still valid. |
| L-1 manager terminated in a RIF | Up to 60 days to depart, transfer, or file a change of status. | Immediate loss of status unless another lawful basis to remain is in place before the last day of work. |
| H-4 or L-2 spouse with an EAD (A17 / C26) | Dependent status and derivative EAD survive during the principal's 60-day grace window. | Dependent status collapses with the principal's status. Derivative EAD is no longer a valid work-authorization document once the principal loses status. |
| O-1 laid off mid-engagement | Up to 60 days to find a new petitioner or depart. | Same-day status loss. Any consulting or non-sponsored work triggers unauthorized-employment exposure for both worker and any employer that hires them off the record. |
| TN worker whose contract wraps | Up to 60 days. | Immediate loss. |
| H-1B portability (start work at new employer) | New employer's I-129 filed and received while the worker is in valid H-1B status. The grace period effectively gives an unemployed H-1B a 60-day window to find a sponsor. | Portability rule survives on its own text. But the practical runway shrinks; the new I-129 must be received the same day employment ends, at the latest. |
| 240-day extension-pending work authorization | Continues to apply under 8 CFR 274a.12(b)(20) for timely-filed extensions. | Not affected by this NPRM. Still available if the extension was filed before the current period expires. |
DHS's own framing in the preamble is where HR should start. USCIS calls the change a return to its "previous and long-standing policy" from before 2017, one that "restore[s] a direct relationship between an alien's nonimmigrant status and the specific employment or activity that formed the basis of his or her admission." Read plainly, employment is now the only thing carrying the status.
Two documents in your I-9 filing cabinet take most of the pressure here. One is the foreign passport with an I-94 endorsement (List A #5), the standard evidence for an H-1B, L-1, E, O-1, or TN hire. The other is the Form I-766 EAD (List A #4) that H-4 and L-2 spouses use, carrying category codes A17 or C26. Both derive their I-9 validity from the underlying nonimmigrant classification, which means both quietly lose force the moment DHS says the classification is over.
If the final rule matches the proposal, three things change in how the I-9 book actually runs.
The first is reverification timing. Today the date in Section 1 has a 60-day cushion behind it, so a missed calendar reminder rarely ended employment on its own. The proposal removes the cushion, which means a missed Supplement B deadline is the deadline. Our Supplement B guide walks the workflow field by field for anyone who wants a checklist.
The second is dependent EAD holders, and it's the quieter one. HR at the dependent's employer almost never has visibility into whether an H-4 or L-2 EAD employee's spouse still holds valid principal status somewhere else. If that spouse is terminated by a company HR has no relationship with, the A17 or C26 EAD sitting in the I-9 file becomes invalid the same day. Today the 60-day window absorbs the risk in most cases; under the proposal it lands on the employer immediately.
The third is rehire timing, especially at consultancies and engineering firms where H-1Bs cycle between projects. A within-60-day rehire can move on Supplement B today without a fresh I-129. Under the proposal a rehire after any real gap in status needs a new H-1B petition, with all the cap-count questions that raises.
The offboarding playbook has to be ready for the day the final rule publishes, not the day after. Which means the work between now and November 10 splits into two phases: audit the population first, then prep the mechanics.
Start with the audit. Filter your I-9 book for the artifacts a covered nonimmigrant will have on file. That's a foreign passport with an I-94 endorsement, a Form I-766 EAD carrying category codes A17 (H-4) or C26 (L-2), or E, O-1, or TN evidence recorded in Section 2. Cross-reference that list against upcoming terminations, RIFs, and end-of-contract dates. Anyone with a separation date after the final rule's effective date is your near-term exposure, and that's the list immigration counsel should be looking at now, not the morning after the final rule drops.
With the population known, the mechanics fall into three tasks.
One thing not on that list is acting today on the proposal itself. The current 60-day grace period is still in force. Terminating or reverifying anyone on the strength of a proposed rule that hasn't been finalized creates 8 U.S.C. §1324b liability with no regulatory basis behind it.
The covered population is often smaller than HR thinks, and the records to prove it are already in your I-9 book. Our compliance team can pull the covered classifications out, sort them by upcoming reverification date, and hand you the queue so you know exactly who's exposed the day the final rule publishes. Schedule a free compliance call, or run the exposure through our I-9 Risk Calculator.
The economic analysis in the preamble tries to put scale on the change. USCIS counted the filings the current grace period touches (Form I-129 extensions and change-of-employer petitions, Form I-539 change-of-status applications, Form I-485 adjustments, and Form I-765 EAD applications filed by workers in the covered categories) and used the total as a proxy for how many workers pass through the 60-day window in a year. Whatever the exact figure, the agency then acknowledges, in its own words, that removing the window would cause "increased departures following cessation of employment" and that some affected workers may "immediately depart the United States on cessation of employment because they no longer have a mechanism to remain lawfully." The justification USCIS puts on the table for accepting those consequences is administrative burden, on the theory that case-by-case grace-period assessments cost staff time to run. Employer groups and the immigration bar are near-certain to contest that trade during the comment window.
The effective date is the loudest unknown. The proposal doesn't set one, because that number gets assigned when USCIS publishes the final rule. Historically DHS rules of this scope have run 30 to 60 days between final publication and effective date, but comment-heavy rulemakings can sit in review for a year or more. Don't build the plan around a specific date, and don't wait for one to start the audit.
Scope is the second open question. The proposal targets a single paragraph in 8 CFR 214.1(l)(2) and touches 8 CFR Part 204. Public comments during this window can push USCIS to preserve a shorter grace period (15 or 30 days, say), carve out specific classifications, or leave dependents untouched. The final rule may match the proposal, may narrow it, or, less likely given the preamble's tone, may be withdrawn.
Litigation is the third, and it's essentially assumed. The 2016 rule that created the grace period was itself contested; this removal will draw suits from employer groups, universities, and immigration nonprofits within days of the final publication. A preliminary injunction is on the table, which means the final rule's paper effective date and its actual on-the-ground effect can diverge for months. Our TPS Status for Employers guide walks the same pattern (DHS rule, immediate legal challenge, staggered actual effect) in a different context.
"The 60-day grace period is one of those rules nobody thinks about until an H-1B rolls off a project or an L-1 gets caught in a reorg. Then it's suddenly the only thing keeping the offboarding call from becoming a same-day emergency. If the final rule matches the proposal, that cushion goes away. What we're telling clients this week is not to touch their live I-9s but to run the covered-classification report today, sort it by separation risk, and know before the final rule publishes exactly who they'd be worrying about the morning after," says Patricia Duarte, Director of Compliance at i9 Intelligence.
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No. What DHS published on September 11 was a Notice of Proposed Rulemaking, not a final rule. The current 60-day grace period under 8 CFR 214.1(l)(2) stays in effect until USCIS publishes a final rule and that rule's effective date arrives. Don't terminate, reverify, or take any adverse action today on the strength of the proposal.
E-1, E-2, E-3, H-1B, H-1B1, L-1, O-1, and TN principals, and their dependents (E dependents, H-4, L-2, O-3, TD). Other classifications with grace periods written into different regulations (F-1 post-completion, J-1 departure preparation, standard 10- and 30-day admission and departure periods) aren't affected.
Not directly. The portability rule at 8 CFR 214.2(h)(2)(i)(H) isn't part of this NPRM, so an H-1B worker can still start with a new employer once the new employer's I-129 is filed. What changes is the runway. Today the 60-day grace period gives HR and immigration counsel time after the last day of employment to get the transfer filed. Under the proposal that window is gone, and the new I-129 has to be filed no later than the final day of the current employment for portability to hold.
Dependent status is tied to the principal's status under the proposal, so if the principal loses status the day after their employment ends, the dependent's status ends the same day. The derivative EAD (category code A17 for H-4, C26 for L-2) stops being valid work-authorization evidence for Form I-9 purposes on that same day. Today the 60-day window absorbs the timing gap; the proposal would remove it.
The Federal Register notice doesn't set an effective date; that gets assigned at final-rule publication. Public comments are due November 10, 2026. After the comment period closes, USCIS may modify the proposal and publish a final rule. Historically DHS rules of this scope have a 30- to 60-day effective window after final publication, but the timeline can stretch to a year or longer. Track the docket at regulations.gov (USCIS-2026-0364) and the USCIS I-9 Central "What's New" page.
Submit at regulations.gov under docket USCIS-2026-0364 by November 10, 2026. Comments must be in English (or with an English translation). USCIS is required to respond to substantive comments in the preamble to the final rule. Employer associations, HR industry groups, and companies with a direct interest routinely file on rules like this one.