The H-1B Lottery Just Became a Pay-to-Play System: What the New Weighted Selection Rule Means for Your Immigration Strategy
- Sarah Pelud
- Dec 29, 2025
- 9 min read
By Sarah Pelud, Immigration Attorney | Pelud Immigration
Published: December 29, 2025
Table of Contents
The End of Equal Opportunity
On December 23, 2025, just before the holidays, when most people weren't paying attention, DHS finalized a rule that fundamentally transforms the H-1B program from a lottery into a wage-based competition. The new "weighted selection" system, set to take effect February 27, 2026, will govern the FY 2027 H-1B cap season.
For more than a decade, every qualified H-1B registration had an equal chance in the lottery, regardless of whether the employer was a Fortune 500 company or a startup, whether the beneficiary was fresh out of university or a seasoned professional. That era is now over.
Under the new system, your chances of being selected depend entirely on one factor: how much money your employer is willing to pay you.
How the Weighted System Works
The weighted selection process assigns multiple "entries" to each registration based on the Department of Labor prevailing wage level:
Level IV (Expert/Leadership):Â 4 entries in the selection pool
Level III (Experienced/Senior):Â 3 entries in the selection pool
Level II (Qualified/Mid-level):Â 2 entries in the selection pool
Level I (Entry-level):Â 1 entry in the selection pool
According to DHS projections, this weighting system will produce the following selection probabilities:
Level IV: 61% chance of selection (up from 30% under random lottery)
Level III: 45% chance of selection (up from 30%)
Level II: 31% chance of selection (essentially unchanged)
Level I: 15% chance of selection (down from 30%)
*See Table 13 in the NPRM.
The math is straightforward: if you're being paid at Level IV, your odds of selection just doubled. If you're being paid at Level I, your chances were cut in half.
The Real-World Impact
For Recent Graduates and Early-Career Professionals
The most immediate casualties of this rule will be international graduates from U.S. universities and early-career professionals. Most new graduates start at Level I or Level II positions - not because they lack skill or potential, but because they lack U.S. work experience. Their years of study in American universities, their student loan debt, their investment in building careers here - none of that matters anymore. What matters is whether their first employer out of university can afford to pay them Level III or IV wages.
Consider an international student who just completed a master's degree in computer science from a top U.S. university. Under the old lottery system, they had roughly a 30% chance of selection. Under the new weighted system, if their starting salary corresponds to Level I, their chances drop to 15%. Meanwhile, a more experienced worker with a Level IV offer now has a 61% chance - four times better odds than our recent graduate.
For Small Companies and Startups
The rule doesn't explicitly favor large corporations over small businesses but the practical effect will be exactly that. Startups and small companies operating on tight margins often cannot compete with the salaries offered by major tech companies or consulting firms. When competing for the same talent pool, a startup offering a Level II salary will now be at a significant disadvantage against a larger company offering Level III or IV compensation.
DHS claims that any employer who "values" their prospective employee can simply offer a higher wage to increase selection chances. But this ignores economic reality. Startups and small businesses often cannot afford to overpay employees relative to market rates, even for highly skilled workers they desperately need. The weighted selection system effectively prices them out of the H-1B program.
For Mid-Size Employers in Specialized Fields
Certain industries face structural disadvantages under the weighted system, though the reasons are more nuanced than simple wage disparities. The real issue lies in hiring patterns and position classifications.
Universities, nonprofits, research institutions, and some specialized sectors often hire recent graduates and early-career professionals into positions that, by definition, qualify as Level I or II based on experience requirements. A brilliant Ph.D. graduate joining a university research lab typically starts at a Level I or II position - not because they lack skill, but because they lack years of post-graduate work experience.
Meanwhile, tech companies and consulting firms increasingly hire experienced professionals at Level III and IV, often recruiting mid-career workers away from other companies. The weighted system inherently favors this hiring pattern.
The weighted system makes no accommodation for these structural differences in hiring practices. A nonprofit organization hiring a Level II data analyst now faces 31% selection odds, while a tech company hiring a Level IV software engineer enjoys 61% odds - even if both positions require comparable skill levels within their respective fields.
Who Wins and Who Loses
The Winners
Large tech companies and consulting firms will see their selection rates increase substantially. These employers already tend to hire at higher experience levels and can afford Level III and IV salaries. Companies that have historically dominated H-1B usage will benefit most.
Experienced professionals commanding Level III and IV classifications will find their odds of selection dramatically improved compared to the current random lottery.
Employers who can strategically game the system through job description optimization, geographic arbitrage (basing remote positions in lower-cost areas), and careful wage level classification will have significant advantages.
The Losers
Recent international graduates from U.S. universities will see their chances of transitioning to H-1B status significantly reduced. Even talented graduates with competitive salaries will face 15% odds if their positions classify as Level I.
Small and mid-sized companies that typically hire early-career workers or cannot afford to artificially inflate salaries will find it increasingly difficult to compete in the H-1B lottery.
Employers in sectors with entry-level hiring patterns—universities, research institutions, nonprofits, and some specialized industries will face longer odds regardless of the actual skill levels of their prospective employees.
Entry-level U.S. workers? DHS claims this rule will protect American workers by reducing competition for entry-level positions. But I don't know that this will prove true. Many of the entry-level H-1B positions that will become harder to fill are in specialized fields where qualified U.S. workers remain scarce. The result may be unfilled positions rather than more opportunities for Americans.
The Pay Equity Problem
Here's an issue that hasn't gotten much attention: this rule could create serious pay equity problems for employers.
If you raise salaries for foreign nationals to improve their lottery odds, you risk creating compensation disparities with U.S. workers in comparable positions. This could trigger:
Internal complaints about unfair pay practices: U.S. workers performing substantially similar work will notice and question why foreign colleagues earn more for the same role
Potential discrimination claims: Paying foreign nationals more than similarly situated U.S. workers could expose employers to Title VII claims or state employment law violations based on national origin discrimination
Mandatory across-the-board wage increases: To maintain pay equity, employers would need to raise compensation for all employees in comparable roles, but this transforms what looked like a strategic H-1B investment into a company-wide compensation restructuring with costs that extend far beyond the original H-1B positions
Morale and retention issues: Even if you can legally justify the disparity, the appearance of preferential treatment for foreign workers can damage team dynamics and drive U.S. employee turnover
The cruel irony: A rule supposedly designed to protect U.S. workers' wages could pressure employers to pay foreign workers more than comparable U.S. employees—or force broad wage increases that some employers simply cannot afford, effectively pricing them out of the H-1B program entirely.
Strategic Planning for 2027
Immediate Action Items
1. Audit Your H-1B-Eligible Roles: Review SOC codes, wage level classifications, and job descriptions for all positions you might petition for. Small changes in job requirements, experience levels, or supervisory responsibilities could shift wage level designations. Consider whether remote work options based in lower-cost geographic areas could improve wage level classifications.
2. Run the Numbers: Model selection probabilities under the new system for your typical H-1B positions. If most of your roles fall at Level I or II, you need alternative strategies beyond just the H-1B lottery.
3. Consider Wage Level Adjustments—Carefully: Before adjusting compensation or job requirements to improve lottery odds, conduct a comprehensive analysis of pay equity implications. You may need to raise wages for comparable U.S. workers as well, which could price the strategy out of feasibility. Coordinate with employment counsel to avoid discrimination claims.
4. Explore Alternative Visa Categories:
O-1 visas (for extraordinary ability): No cap, no lottery, higher evidentiary burden
L-1 visas (for intracompany transfers): Requires foreign entity relationship
TN visas (for Canadian and Mexican professionals): Limited occupations, no intent to stay permanently
E-2 visas (for investors/employees of treaty investors): Requires substantial investment
STEM OPT extensions: Buys additional time for multiple lottery attempts
5. Plan for Labor Certification/Green Cards Earlier: For highly valued employees, consider starting the PERM labor certification process sooner (during F-1 OPT) rather than relying on H-1B as the primary strategy. Direct permanent residence pathways like EB-1 or EB-2 NIW may make more sense for top talent, particularly those who might not fare well in the weighted H-1B lottery.
6. Coordinate Across Departments: Immigration, HR, compensation, legal, and finance teams need to work together on H-1B strategy. The days of treating H-1B petitions as purely an immigration matter are over. Decisions about job descriptions, wage levels, and geographic work locations now have direct immigration consequences.
Long-Term Considerations
The weighted selection system introduces new uncertainty and complexity into workforce planning. Companies that have historically relied on H-1B workers for entry-level or mid-level positions may need to fundamentally rethink their talent acquisition strategies.
My Assessment
The Policy Justification Doesn't Hold Up
DHS claims this rule addresses "abuse" of the H-1B program by companies using it to fill lower-paid, lower-skilled positions. But the wage level system doesn't actually measure skill - it measures experience requirements and job complexity on paper.
A brilliant recent graduate with a Level I classification may be more skilled and valuable than a mediocre veteran at Level IV. Wage levels tell you about years of education, experience, skills and supervisory responsibilities, not about talent, innovation potential, or actual contribution to the employer.
Moreover, if the goal is to protect U.S. workers, this rule is poorly targeted. The entry-level positions that will become harder to fill through H-1B aren't necessarily positions where qualified U.S. workers are readily available. In many specialized STEM fields, there simply aren't enough U.S. graduates to meet demand. The result may be unfilled positions and slowed innovation rather than more jobs for Americans.
The Real Winners: Strategic Players and Deep Pockets
Despite DHS's stated intent to reduce program abuse, the rule will likely benefit companies with sophisticated HR and immigration coordination capabilities. Think large tech companies and IT consulting firms that already hire at higher experience levels and can afford Level III and IV wages. Their selection rates will increase under the weighted system.
Companies with deep pockets can afford to inflate salaries beyond true market value to improve lottery odds, then absorb the downstream pay equity costs.
Meanwhile, the startups, universities, research institutions, and specialized employers who use the H-1B program to fill genuinely hard-to-fill positions—but can't compete on these dimensions—will be squeezed out.
The Unintended Consequences
This rule will likely trigger a cascade of perverse effects that undermine its stated goals.
Employers will become experts at gaming the system. Job descriptions will be inflated with supervisory responsibilities that exist only on paper. Remote positions will be strategically designated in Des Moines or Oklahoma City—not because that's where the work happens, but because lower-cost areas allow the same salary to qualify for a higher wage level. The actual work doesn't change, just the paperwork.
International students who invested years and six-figure sums in U.S. education will find doors closing just as they're ready to contribute. The brightest will take their U.S.-acquired skills to Canada, Australia, or the UK. America trains them, then makes it nearly impossible for them to stay.
Meanwhile, employers who play by the spirit rather than the letter of the rules will be squeezed out by competitors willing to manipulate classifications. Some will raise salaries beyond true market value to improve lottery odds, distorting compensation markets and creating the very pay equity problems the system claims to address. Others will simply give up on the H-1B program entirely.
I think we will see an explosion of administrative complexity around wage levels, SOC codes, and geographic classifications that has everything to do with gaming a lottery system and nothing to do with attracting skilled workers or protecting American jobs.
Will It Survive Legal Challenge?
Several lawsuits challenging the rule are likely. The central legal question: Does DHS have statutory authority to implement a wage-level-based selection system?
The statute gives DHS authority to manage the numerical cap but doesn't explicitly authorize prioritization based on wage levels. Challengers will argue this exceeds DHS's statutory authority and that wage levels are an arbitrary proxy for skill.
However, given the current composition of the federal courts and recent judicial deference to executive authority on immigration matters, I'm not optimistic about the chances of a successful challenge blocking implementation. Employers should plan as if this rule will take effect as scheduled on February 27, 2026.
Bottom Line
The weighted H-1B selection system represents a fundamental shift from equal opportunity to strategic positioning. Wage levels—not skills, not business need—will determine lottery odds.
For employers who have successfully navigated the H-1B program for years, this change demands immediate strategic reassessment and cross-departmental coordination. For international workers and students hoping to build careers in America, the odds just got significantly more complex—unless you can secure a position that qualifies for Level III or IV classification.
The promise of the H-1B program was always that America would attract the world's best and brightest. Under the new weighted selection system, America will attract those who can engineer the best paperwork and secure the highest wage level classifications. Those aren't necessarily the same thing.
Contact Pelud Immigration
If you need guidance on navigating the weighted H-1B selection system, optimizing wage level classifications, developing alternative immigration strategies, or coordinating compensation decisions with immigration planning, contact Pelud Immigration.
Contact Information:
Email:Â info@peludimmigration.com
Phone:Â 450-497-1644
Website:Â www.peludimmigration.com
Sarah Pelud is an immigration attorney based in Montreal, Canada, specializing in US business and family immigration. She has been helping clients navigate complex US immigration requirements since 2006.
Disclaimer:Â This analysis provides general information about new DHS policies and should not be construed as legal advice for any specific situation. Immigration law is complex and constantly evolving. Always consult with a qualified immigration attorney regarding your specific circumstances.