A Note on Timing: In this guide, we refer to the upcoming lottery taking place in March 2026 as the "2026 Lottery." (In government terms, this is technically the "FY 2027 Cap," but we will stick to the calendar year to keep things simple).
Key Takeaways
- The Big Shift: The random lottery is transitioning to a Wage-Based Selection system. This awards more lottery "entries" to roles with higher salaries relative to their job codes.
- The Odds: The new system mathematically favors higher-paid roles. However, entry-level candidates are still fully eligible and will receive at least one lottery entry.
- The Strategy: Your immigration counsel should perform a "Strategic Wage Analysis" before registration to ensure every candidate is positioned for the best possible outcome.
- The Fee Exemption: The new $100,000 fee generally applies to offshore hires. It is typically waived for candidates already in the U.S. (F-1, H-4, TN, L-1, etc.) if the petition is filed as a Change of Status.
1. What is Changing? The Move to Weighted Selection
For years, the H-1B lottery was a random process where every registration had an equal chance of selection. Starting March 2026, the Department of Homeland Security (DHS) is implementing a weighted selection process.
The goal of this system is to prioritize higher-paid workers by assigning lottery entries based on the Department of Labor (DOL) Wage Level.
Employees' New Odds by Wage Level
According to our recent analysis, the system now assigns a specific number of "tickets" to the lottery pool based on the wage level offered. This level is determined by comparing the proposed salary to the local prevailing wage for that specific job code.
- Level 4 (Fully Competent): Receives 4 Entries (~68% chance)
- Level 3 (Experienced): Receives 3 Entries (~51% chance)
- Level 2 (Qualified): Receives 2 Entries (~ 34% chance)
- Level 1 (Entry Level): Receives 1 Entry (~17% chance)
What this means for your team: Employees whose salaries align with Level 3 or 4 will see a statistical advantage compared to previous years. Entry-level employees (Level 1) will still receive one entry, similar to the traditional lottery system. While the pool is competitive, Level 1 candidates remain fully eligible for selection.
2. The Process Shift: A Collaborative Approach
In previous years, companies could gather basic data in February and finalize the legal details later. Under this new system, the "Wage Level" submitted during registration is binding.
This requires a new workflow where HR and legal counsel work closely together earlier in the season.
The New Workflow:
- January: HR provides the candidate roster along with salary data, job titles, and job descriptions.
- February (The Legal Review): Your immigration counsel conducts a Strategic Wage Analysis. They review the salary against various job codes to confirm the correct Wage Level. In some cases, legal counsel may find that a candidate qualifies for a Level 2 classification because their salary is strong for a specific job code, even if their title suggests otherwise.
- March: Your immigration counsel registers the candidate using the optimized Wage Level.
The "Job Title" Nuance: It is important to note that simply changing a job title does not automatically improve odds. The lottery relies on the Salary relative to the Job Code (SOC).
- Example: If a candidate is registered with a "Manager" job code but the salary is entry-level for a manager, the system will still classify them as Level 1.
- Best Practice: Trust your legal team to align the Job Code (SOC) with the salary to find the most beneficial classification.
3. Maximizing Chances: Compliance & Location Strategy
While the Job Description is less critical for the lottery odds (which are driven by salary), it remains vital for the final approval.
The Role of the Job Description
You do not need a complex job description to get high lottery odds; you simply need a competitive salary. However, the job description is what allows the visa to be approved after selection.
- The Goal: To prove the job is a "Specialty Occupation" (requires a Bachelor's degree).
- The Fix: Your legal team will ensure the description accurately reflects the duties of a degreed professional. This prevents issues down the line, ensuring that if you win the lottery, the visa is actually approved.
Location Strategy: Busting the "Remote Work" Myth
There is a common misconception that adding a remote work location in a lower-cost area will automatically boost an employee's wage level. This is false.
The DHS Final Rule includes specific "anti-gaming" provisions for employees working in multiple locations (e.g., splitting time between a Headquarters in San Francisco and a home office in Texas).
- The Rule: If a beneficiary will work in multiple locations, the employer must select the lowest corresponding wage level among all the listed locations.
- The Scenario:
- Location A (SF HQ): $100k Salary = Level 1 (due to high cost of living).
- Location B (Texas Home): $100k Salary = Level 3 (due to lower cost of living).
- The Outcome: If you register the employee for both locations, USCIS mandates you use Level 1 for the lottery. You do not get the "best" of both worlds; you get the "worst" of the two.
- HR Action Item: Work with your legal counsel to determine the employee's primary and intended place of employment. To benefit from a favorable geographic wage level, the employee must genuinely be based in that location.
4. The $100,000 Fee: Exemptions & The "Silver Lining"
There has been a lot of discussion regarding the new $100,000 "Entry Fee" for offshore hires. While daunting, recent legal developments have actually created a potential upside for U.S. employers hiring locally.
The Legal Update (Good News for Odds) A federal judge recently denied the challenge to block this fee, meaning the $100,000 penalty remains a very real threat for offshore petitioners.
- The Impact: Because this fee remains active, we expect a significant drop in speculative registrations from offshore consultancies that previously flooded the lottery system.
- The Result: Fewer total registrations in the pool means slightly higher selection odds for legitimate U.S. employers.
Who is Likely Exempt? You generally do not pay this fee for candidates currently in the U.S. who are eligible for a "Change of Status," including:
- F-1 Students: Recent graduates working on OPT/STEM OPT.
- H-4 & H-4 EAD: Dependents of H-1B holders.
- TN & E-3: Citizens of Canada, Mexico, or Australia currently in status.
- L-1 Intracompany Transferees.
The Strategy: This year, prioritizing candidates who are already in the U.S. (like students or transfers) is a cost-effective strategy, as they avoid this significant fee.
Join us:
HR Leadership Series Webinar: H-1B Lottery 2026 Strategy
Reserve my spot →
5. Roadmap to Approval: From Registration to Visa
Selection is just the first step. Here is how to guide the case to a successful approval.
Step 1: The Labor Condition Application (LCA)
Once selected, your legal team files the LCA. It is critical that the job code on this form matches the registration exactly. Aligning this data upfront ensures full compliance.
Step 2: The Petition (Filing as "Change of Status")
To ensure the $100,000 fee exemption applies, the petition should be marked as "Change of Status" on Form I-129. This signals to USCIS that the employee is staying in the country and simply switching visa categories.
Step 3: Managing Travel
Travel planning is essential during this period.
- The Guidance: If an employee travels internationally while a "Change of Status" petition is pending, USCIS may consider the request abandoned. This could result in the approval defaulting to "Consular Processing," which might trigger the $100,000 fee liability.
- The Advice: We generally recommend that H-1B candidates remain in the U.S. from the time of filing (April) until their status is active (October) to ensure a smooth transition.
6. Common Questions: Salary Risks & Backup Plans
We know this new system raises questions about budgets and long-term planning. Here are answers to the two most common concerns we hear from HR leaders.
Q: Does the lottery require us to increase salaries? What if this new employee gets picked and becomes too expensive?
No, the lottery does not force a salary increase. You are fully permitted to register an employee at their current salary, even if that falls into Wage Level 1.
- The Choice: You only need to increase the salary if you voluntarily choose to register them at a higher wage level (e.g., Level 2 or 3) to improve their odds.
- The Commitment: If you do register them at a higher level to get better odds, you are legally committed to paying that higher salary starting October 1, 2026 (if the visa is approved).
- The Safe Play: If the budget is tight, simply register them at Level 1. They still get a ticket in the lottery, and you have zero risk of being forced into a salary hike you didn't plan for.
Q: If a Level 1 candidate is not selected, can we continue to employ them?
Yes, absolutely. Not being selected in the lottery does not revoke an employee's current work authorization.
- Status Quo: A candidate on F-1 OPT or STEM OPT can continue working for you as long as their current EAD remains valid.
- Future Chances: If they have time remaining on their student visa (such as the 24-month STEM extension), we can simply enter them in the lottery again next year.
- Backup Options: For critical talent running out of time, we can explore alternatives like the O-1 (Extraordinary Ability), TN (for Canadians/Mexicans), or Day 1 CPT programs.
Q: When will we know if our employees were selected?
USCIS typically announces the lottery results by March 31st.
- Selected: We will immediately notify you and begin preparing the full petition (due between April 1 and June 30).
- Waitlisted: Candidates not selected in the first round are placed on a waitlist. If USCIS does not receive enough petitions to fill the quota, they may run a second lottery in July or August.
- Rejection: You will not receive an official "rejection" notice until the entire lottery season is closed (usually late in the year).
Q: Does a Master's degree still help with the odds?
Yes. The "Master's Cap" (the extra 20,000 spots for U.S. advanced degree holders) still exists.
- The Advantage: Candidates with a U.S. Master’s degree or higher are entered into the lottery twice—first in the general pool, and if not selected, again in the advanced degree pool.
- The Nuance: Under the new rules, both of those entries will be weighted by their Wage Level. A Master's degree holder at Wage Level 3 is statistically your strongest possible candidate.
Q: What if an employee's student visa (OPT) expires before October 1?
This is very common, and the "Cap-Gap" rule protects you here.
- The Rule: If we file a "Change of Status" petition for a student on F-1 OPT before their current work authorization expires, their status is automatically extended until September 30.
- The Catch: This only applies if they are selected and we file the petition on time. If they are not selected, they have a 60-day grace period to leave the U.S., transfer schools, or find another visa solution (like Day 1 CPT).
Q: Can we register the same employee under two different entities to increase the odds?
No. Do not do this.
- The Risk: USCIS has cracked down aggressively on "multiple registrations." If they find that related entities (companies with common ownership) submitted multiple entries for the same person to game the system, they will deny all registrations for that employee.
- The Policy: Stick to one legitimate registration per employee.
Q: We have a hybrid work policy. Can we choose the office location with the lower prevailing wage?
Be very careful here. The new DHS rule has a specific "anti-gaming" provision for multi-location employees.
- The Rule: If an employee works in multiple locations (e.g., 3 days in SF, 2 days in Texas), you must use the lowestcorresponding wage level among all listed locations for the lottery registration.
- The Trap: If you try to claim the "Texas" wage level but the employee spends 51% of their time in SF, you are risking a denial for fraud.
- The Fix: We must identify one "Primary" location where the employee is genuinely based and price the wage level against that market.
Q: Can we use a signing bonus or stock options to bump a salary to Level 2?
Generally, No.
- The Rule: To count toward the Prevailing Wage, compensation must be "guaranteed, irrevocable, and taxable."
- The Nuance: Discretionary bonuses, stock options (which might be worth $0), and "performance" incentives do not count.
- The Strategy: If you are close to the Level 2 threshold, it is safer to increase the base salary slightly rather than relying on variable comp that USCIS will likely reject.
Q: If we raise an H-1B employee's salary to win the lottery, do we have to raise it for everyone else?
This is a critical HR compliance question.
- The Risk: Raising the salary of a foreign national to "Wage Level 2" while keeping U.S. workers in the same role at "Wage Level 1" can trigger discrimination claims or violate the Equal Pay Act.
- The Advice: Before you approve a "lottery-based" raise, run a quick internal equity check. If the new salary is significantly higher than their peers', document the specific reasons (e.g., specialized skills, additional duties) that justify the difference beyond just visa sponsorship.
Q: What if the candidate registers with another company, too?
This actually hurts them.
- The New Rule: If a candidate is registered by multiple employers (e.g., Company A offers Level 3, Company B offers Level 1), USCIS will assign the candidate the lowest wage level among all their registrations.
- The Action Item: Explicitly ask your candidates: "Are you working with any other employers?" If they are "double dipping" with a consultancy offering a low wage, they are actively sabotaging the high-wage petition you are building for them.
Q: We had layoffs recently. Does this block us from the lottery?
Not necessarily, but it requires caution.
- The Rule: Layoffs generally impact your ability to file H-1Bs if you are a "H-1B Dependent Employer" (mostly large consultancies) or if you laid off U.S. workers in the exact same occupation and location within 90 days.
- The Strategy: For most standard employers, you can still file. However, we must ensure the LCA (Labor Condition Application) is accurate regarding "non-displacement." If you have had recent reductions in force, let us know immediately so we can clear the specific job codes.
7. A Note for WayLit Clients
If you are an existing WayLit client, we have already updated our entire registration workflow to handle these new changes seamlessly.
We will run the Strategic Wage Analysis for your entire roster. You will see these insights directly in the employees' case in February.
- Guidance: We will provide you with specific talking points to share with your employees.
- Visibility: You will see exactly which employees are eligible for which SOCs and levels.
- Support: Our team is here to answer individual questions from both your HR team and your employees directly.
You do not need to take any extra steps right now. We have this covered.
Conclusion: Confidence Through Preparation
The 2026 season rewards early preparation and strategic analysis. While the rules have changed, the path to success remains clear: accurate data, smart classification, and close collaboration with your legal partners.
Have questions about your team's roster?
WayLit is ready to run a personalized Wage Level Analysis for your employees today. Reach out to us at support@waylit.com to get started.
Legal Disclaimer: The information provided in this article is for general informational purposes only and does not constitute legal advice. Immigration laws and regulations are subject to change, often on short notice. Reading this article or contacting WayLit does not create an attorney-client relationship. Always consult with a qualified immigration attorney regarding your specific case or corporate immigration strategy.
.svg)
