How New H-1B Visa Rules Impact Hiring Strategies

The newly announced H-1B visa amendments have created significant chaos among employers.

An unprecedented increase in fees, along with newly formed rules, has caused considerable confusion among businesses (both local and global). 

On Friday, 19th Sept., U.S. President Trump issued a new presidential order, “Restriction on the entry of certain non-immigrant workers.”

This has resulted in some changes, including a $100k fee for new applicants. 

This could pose a significant threat to small enterprises seeking to hire skilled talent from diverse countries.

But what if I tell you we’ve got the best solution to tackle this massive shift in fees?

In this blog, we will understand,

• What changes has the US president made to the H-1B visa?
• Impact of new amendments on small companies
• Fee vs salary considerations
• Remote hiring and a new landscape
• Strategies for employers to adapt
• Employer of record as a solution

Let’s understand how the new H-1B rules impact businesses and change hiring practices.

What are the new changes in the H-1B policy?

Some say the changes could be beneficial for American talent, while others express concern about them.

Let’s first understand the changes one by one.

What is the one-time fee, and what are the requirements?

According to the new policy by the White House, a one-time fee of $100,000 (₹88 lakh per year) applies to any new H-1B applicant. 

This amendment remains in effect for 1 year, unless extended. 

However, one of the standout features of this new policy does not include the existing visa holders or renewals.

Employers can request exclusion if the hiring doesn’t bother U.S. workers or if it is in the national interest.

Are there changes in minimum salary/wage levels for H-1B applicants?

Yes, the U.S. Dept of Labor is instructed to increase the wage levels for H-1B jobs.

Additionally, the bill includes a proposal for a $150,000 wage floor, which was initially set at approximately $60,000. 

However, these are just the proposed conditions in terms of a bill, and it has not yet been converted into law; there are chances of changes in the future.

Shift from pure lottery to wage-based selection

With the newly introduced reforms, the Department of Homeland Security has suggested replacing the current random lottery system with a weightage-based system, where high-paying roles or individuals receive more slots or qualifications for the visa.

This change favors employers who can offer higher salaries. Lower-paying firms (or roles) will have much lower odds.

Fee vs salary shifts

Through the old petition process, the H-1B visa cost (Local compliance fees + legal fees) reached upwards of $ 9,000; these fees varied slightly depending on the size of the employer, process, etc. But it never crossed $10k.  

Now, considering the new $100,000 fees, it feels like a massive jump, and that is not the only worrying factor; the salaries surrounding the roles eligible for H-1 B have also risen considerably. 

The new fee could still be less than 10% of what some high-paying jobs pay presently, notably for senior IT jobs. (This depends a lot on the job, the region, and the market.)

In the following image, you can find the average salary range across seniority levels, along with the old and updated terms for the H-1 B visa.

How has the H-1B visa policy impacted small businesses?

One of the clear voices of dissatisfaction towards this rule has been from the small businesses.

With the increased quota depending on the offered amount and the deep pockets of Fortune 500 companies, small businesses are at a clear disadvantage. 

And it doesn’t stop here. Add the depth of their legal team to the mix, and it might feel like for them it’s just another thing to tick off their box.

However, for smaller businesses, it could become a significant blow due to their comparatively lower cash flow, tighter salary structures, and weaker HR compliance capacity.

1. Cost burden is steep up front

For a small business, the additional $100,000 price for each new H-1B hire is more than just a regulatory cost; it’s equivalent to a full year’s compensation for many mid-level workers.

Small businesses must pay these fees all at once, whereas big companies can spread them out over hundreds of jobs or incorporate them into a global HR budget.

• • Cash flow strain: Startups and growing companies often have tight budgets and limited cash on hand. A sudden six-figure expense might push back the introduction of a product, a marketing campaign, or even payroll.
    
  • Hiring paralysis: The high cost of H-1B sponsorship may make it impossible for many companies to obtain it, which implies that they will be unable to hire highly skilled foreign workers when needed to grow.
    

2. Salary floors and market mismatch

The wage-based lottery reform links visa chances to the amount an employer pays, which immediately disadvantages smaller businesses.

• • Below-market salaries: Many small businesses, especially those outside of cities, offer competitive packages in their local markets, but they still don’t meet the national “prevailing wage” standards that the new system now prefers.
    
  • Uneven competition: A Fortune 500 corporation may easily pay salaries at the 75th or 90th percentile, which gives each candidate a chance to win the lottery. A startup that pays mid-market wages could be completely ignored.
    
  • Pressure to overpay: To stay competitive, small businesses may feel compelled to raise salaries beyond what they can afford, which could lead to budget problems or unsustainable payroll costs.

3. Risk vs reward shifts

In the past, the expense of sponsoring an H-1B petition (a few thousand dollars plus legal fees) was high, but not prohibitive. Employers could take smart risks on promising applicants, knowing the risks were low. The stakes are much higher now that the new government is in place.

• • Selective hiring: “Maybe” hires are no longer an option for small enterprises. The expenditure will only be worthwhile for mission-critical roles, which are typically senior or highly specialized.
    
  • Reduced international recruitment: Instead of pursuing the H-1B route, employers may opt to hire locally or relocate operations overseas.
    
  • Lost innovation: By making it harder for small businesses to hire people from other countries, they could miss out on the new ideas and different points of view that come with hiring people from all over the world.

4. Legal and compliance overhead

It has always been crucial to understand the law when navigating the H-1B process, but with increased costs and greater scrutiny, it’s even more important.

• • Greater risk of audits: Regulatory bodies tend to give more attention to petitions that involve substantial fee payments. Small businesses, which are already less familiar with audits, may struggle to keep up.
    
  • Complex documentation: If you make mistakes when figuring out the prevailing pay, classifying jobs, or meeting filing deadlines, you could be denied, which would waste the whole six-figure investment.
    
  • Hidden costs: In addition to the $100,000, small businesses must pay more for immigration lawyers, compliance software, and HR training to mitigate the risk of non-compliance. These “soft costs” exacerbate the financial barrier for many people.

5. Quantitative Comparison: Small vs Large Employer Impact

For a small business, paying for two H-1B workers may take up 10% of their annual revenue, which is too much.

For a company that does business in many countries, even 200 new personnel would only be a negligible risk, less than 0.2% of revenue.

The system is designed to work best at large scales.

Remote Hiring Becomes More Attractive Now

The new H-1B rules not only make it more expensive to sponsor someone, but they also prompt companies to reconsider how they recruit workers from other countries.

For many people, the most sensible move is to switch to remote and distributed recruiting methods. 

What used to seem like an optional tactic is now something that needs to be thought about.

The fact that salaries are increasing, petition fees are high, and there is an unequal playing field between large and small firms all make remote employment a more enticing and often more sustainable option.

Circumventing U.S. salary and visa cost pressures

The biggest apparent benefit of recruiting people from outside is that it allows firms to avoid the escalating costs and regulations associated with U.S. immigration.

• • No $100,000 entry charge: Companies can avoid the high new H-1B petition fee and other legal costs by employing workers directly in their home nations.
  • No more following U.S. Department of Labor wage levels: Employers can now choose to pay the highest salaries instead of following the standards. Instead, pay might be set to be competitive with what other people in the area are paying.
  • Access to new markets: Latin America, Eastern Europe, and South Asia all have highly skilled workers who are far cheaper than U.S. workers. This means that a small or medium-sized business can stretch its budget further without compromising quality.
    

Remote recruiting is like a financial release valve for employers. It lets them develop without having to pay salaries or fees that only big companies can afford.

Flexibility and resilience in workforce planning

Remote hiring also makes operations more flexible than typical H-1B sponsorship does.

• • Employers can expand or reduce staff gradually, testing small teams in various locations before making a long-term investment.
  • Faster onboarding: It can take months to get an H-1B visa, and it’s hard to know what the lottery results will be or when they’ll be approved. But remote workers can start working in just a few weeks.
  • Risk diversification: Companies protect themselves from regional risks like regulatory changes, salary hikes, or economic slowdowns by distributing its talent over many places.
  • Future-proofing: A distributed approach makes sure that the business isn’t too dependent on one system, such U.S. immigration regulations or the labor laws of another country.

This flexibility means that businesses can remain strong for their employees.

Remote infrastructure enables teams to continue growing without interruption when employing local resources becomes too expensive or risky.

Challenges that must be managed

That being said, employing people from afar can be hard. It looks good, but to be successful, you need to prepare carefully and establish effective support systems.

• • Paying taxes and following the rules: Each country has its own procedures for reporting, paying taxes, and social contributions. If firms lack the necessary infrastructure, they may face double taxation, fines, or unhappy employees.
  • Variances in employment law: There are big variances in the rules about notice periods, severance, benefits, and working hours. Making mistakes might lead to expensive fights or damage to your reputation.
  • Cultural integration: When people work from home, they often work with people from different cultures and time zones. If you don’t take care of it ahead of time, differences in communication styles, expectations, and workplace conventions might make things less efficient.
  • Oversight and accountability: Employers need clear processes for tracking performance, managing projects, and keeping employees engaged to avoid slippage when they can’t see their employees in person.
  • Each country has its unique regulations for reporting, income tax, and social contributions. If firms don’t have the right infrastructure, they could face double taxation, fines, or unhappy employees.
  • variances in employment law: There are big variances in the rules about notice periods, severance, benefits, and working hours. Making mistakes might lead to expensive fights or damage to your reputation.
  • Cultural integration: When people work from home, they often work with people from different cultures and time zones. If not handled ahead of time, differences in communication styles, expectations, and workplace conventions might make things less efficient.
  • Oversight and accountability: Employers need clear processes for tracking performance, managing projects, and keeping employees engaged to avoid slippage when they can’t see their employees in person.

These problems don’t detract from the benefits, but they do highlight why a structured solution like an Employer of Record (EOR) is often the best way to bridge the gap between the opportunity to hire people remotely and the challenges associated with it.

Strategies for Employers to Adapt 

Employers should consider three terms, onshore, remote, and abroad hiring.

Comparing these three terms will make you understand which is suitable for your condition. 

• • Onshore will help you with compliance, but is expensive
  • Remote will widen your boundaries and talent access
  • Abroad hiring provides skilled talent and compliance challenges  

Employers should adjust salaries or wages according to the local cost of living and regional differences.

Additionally, visa and legal costs can significantly impact the salary budget.

Learn about the government fees, attorney charges, and relocation costs.

It will help companies manage overall costs, avoid delays, and ultimately make informed decisions about hiring new employees.

Using a third-party service or an employer of record is the ideal option for managing payroll taxes and ensuring compliance. 

EOR manages everything that seems an obstacle to hiring a foreign employee.

• • Reduced risks
  • Speedy market entry
  • Eliminate the requirement of the entity

This option enables you to focus on your core business objectives while maintaining compliance.

Let’s know more in detail about EOR services.

Rise of the Employer of Record Solution

An Employer of Record (EOR) is the best solution for companies seeking a solution to the new U.S. H-1B visa amendments.

Let’s understand how!

An employer of record legally employs workers in a different country on behalf of the employer.

EOR handles compliance, HR administration, and contracts.

The most significant benefit is that the company can hire workers in different countries without establishing a legal entity in each location.

EORs manage compliance with local labor laws, manage payroll processing, and calculate taxes without any mistakes.

It also manages health insurance and retirement plans for the employees. This avoids the risk of hiring an employee from a different region.

EOR ensures smooth support while keeping businesses away from all the compliance risks and financial penalties.

Among all the benefits, being cost-effective is an attractive one. EOR reduces costs by saving on infrastructure, entity establishment, and primarily compliance costs.

This is the best strategic benefit for small enterprises seeking a small and skilled remote staff.

Conclusion

Due to a shortage of skilled workers in the U.S., the H-1B visa has garnered significant attention in recent years.

Some believe that employers have taken advantage of it, while others are genuinely using it to their benefit.

A substantial portion of businesses relies on the H-1B visa for hiring top-tier talent. 

Now that the new $100k for first-time H-1B visa applications has been announced, employers need to find a solution.

In this, employers must make strategic decisions that fulfill cost, compliance, and quality hiring requirements.

There is no better solution than an employer of record service to accomplish the goal of finding diverse, skilled talent within budget.

Hire the most experienced remote team worldwide with an EOR and focus on your core functions.