Judge Upholds $100k H-1B Fee: What Employers Need to Know (and Who Is Exempt)

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Key Takeaways

• The Ruling: A federal judge upheld the $100,000 fee, confirming it acts as a "toll" for entering the U.S.
• The "Safe Harbor": Employees already in the U.S., such as Transfers, Extensions, and approved Change of Status cases (for 2026 H-1B lottery winners in the US), are generally exempt from the fee.
• The Critical Rule: If a "Change of Status" petition is approved, the employee is "locked in" as exempt even if they travel later.
• The Risk: Traveling while a petition is pending can void your exemption, which would trigger the $100,000 liability.

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A federal judge in Washington, D.C. has issued a critical ruling regarding the administration's controversial "$100,000 H-1B Fee."

On December 23, 2025, U.S. District Judge Beryl A. Howell denied a challenge brought by the U.S. Chamber of Commerce, effectively upholding the fee. While the headline is alarming, it is critical for HR leaders to understand the limited scope of this rule.

Many companies are reacting by pausing all H-1B hiring. This is an overcorrection. The fee does not apply to every H-1B visa. For the vast majority of local hires, transfers, and extensions, business continues as usual.

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The "Entry Tax" Concept: Ticket vs. Seat

To understand who pays, you must distinguish between Status and Visa Stamp. Think of it like a movie theater:

• Visa Status (I-94): This is your assigned seat inside the theater. As long as you stay in your seat (remain in the U.S.), you are safe.
• Visa Stamp: This is the ticket you buy at the box office (Consulate) to get into the building.

The $100,000 fee is a surcharge on new tickets sold at the box office (Consulates abroad). It generally does not apply to people already sitting in their seats.

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The "Safety Zone": Who is Exempt?

If your hiring strategy focuses on talent already physically present in the U.S., your financial liability typically remains unchanged.

You generally DO NOT pay the $100,000 fee for:

• H-1B Transfers: Hiring an H-1B employee who is currently working in the U.S. for another employer.
• H-1B Extensions: Renewing the visa status of your current employees.
• Change of Status (Students): Hiring an F-1 international student graduating from a U.S. university, provided the petition is filed as a "Change of Status." Same applies to change of status from H-4 EAD, TN, J-1 etc. to H-1B.

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Critical Clarification: The "Safe Harbor" for Lottery Winners

A common question we hear is: "If my employee gets picked in the lottery and we file a Change of Status, will they have to pay $100k if they travel later to get a stamp?"

The Answer is NO.

If USCIS approves the petition as a Change of Status (COS), you are "locked in" as exempt.

• The Rule: The government views the "trigger event" as the initial petition approval type. Since the petition was approved as "In-Country," the exemption attaches to that specific approval notice (I-797A).
• The Outcome: An employee with an approved Change of Status can generally travel, apply for a visa stamp, and return without triggering the fee because their approval is already secured.

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The Danger Zone: How You Could Accidentally Pay $100k

While the "Safe Harbor" exists, you can lose it if you are not careful. There are two specific ways a domestic hire can turn into a $100,000 liability:

1. The "Abandonment" Trap (Highest Risk)

• Scenario: You file a Change of Status for a student. While it is pending (not yet approved), the student travels internationally.
• The Consequence: USCIS considers the "Change of Status" request abandoned. They will approve the H-1B petition but convert it to "Consular Notification."
• The Cost: Because it is now a Consular case, the $100,000 fee triggers immediately before the visa can be issued.
• Advice: Do not let employees travel while a Change of Status is pending.

2. The "Status Violation" Denial

• Scenario: You request Change of Status, but USCIS sees a gap in the employee's student status (e.g., unauthorized employment).
• The Consequence: USCIS approves the H-1B petition but denies the Change of Status, requiring the employee to leave and re-enter.
• The Cost: This forces a Consular application, which triggers the fee.

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Who Is Actually Impacted?

The ruling confirms that the fee applies specifically to New Hires Abroad.

• Direct Offshore Hires: Recruiting talent directly from India, Canada, or Europe who must obtain a new visa to enter.
• Lottery Winners Abroad: Candidates selected in the upcoming H-1B lottery who are currently residing overseas.

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Strategic Advice for Employers

1. Prioritize "In-Country" Talent: Double down on H-1B transfers and U.S. university graduates (F-1 OPT). These hires remain cost-effective.
2. Wait for the Appeal: If you have offshore candidates, remember that the U.S. Chamber of Commerce has filed a "fast-track" appeal. A decision from the D.C. Circuit is expected as early as February, potentially before you need to write any checks for the April filing window.
3. Strict Travel Policy: Implement a policy that prohibits international travel for any employee with a pendingChange of Status or Amendment petition.

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Frequently Asked Questions (FAQ)

Q: Does the $100,000 fee apply to H-1B transfers?

A: No. If the employee is already in the U.S. in valid H-1B status and you are filing a transfer petition to hire them, the fee does not apply.

Q: If an employee's "Change of Status" is approved, can they travel later without paying the fee?

A: Generally, yes. Once the Change of Status is approved (I-797A issued), the exemption is typically "locked in" for that specific petition period. This allows them to travel and stamp the visa without triggering the fee.

Q: What happens if an employee travels while the petition is pending?

A: This is the "Abandonment Trap." USCIS will likely deny the "Change of Status" portion of the request and convert the case to "Consular Notification." This conversion would trigger the $100,000 fee requirement.

Q: Is the L-1 visa subject to the $100,000 fee?

A: No. The current Presidential Proclamation specifically targets the H-1B classification. Intra-company transfers (L-1A and L-1B) are currently exempt.

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Disclaimer: This article provides a summary of recent court rulings and does not constitute legal advice. The status of the $100,000 fee is subject to rapid change due to active litigation. Please consult your immigration counsel for case-specific guidance.

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