DHS Proposal Ends 60-Day H-1B Grace Period: Legal Analysis

The Department of Homeland Security's Federal Register notice on September 10, 2026 triggers a formal notice-and-comment rulemaking that could strip H-1B workers of the 60-day grace period they have held since 2017. For immigration and employment counsel, the key question is whether DHS has adequately justified the reversal under the Administrative Procedure Act and whether affected industries will challenge the final rule in federal court.

The U.S. Department of Homeland Security published a proposed rule in the Federal Register on September 10, 2026, that would eliminate the 60-day grace period for H-1B visa holders and certain other temporary workers who lose their jobs. Under the proposal, affected workers would have to leave the United States as soon as their employment ends rather than using the current 60-day window to find a new sponsoring employer or arrange their affairs. The Trump administration's move is the latest in a series of restrictions on legal migration since President Donald Trump returned to office in January 2025, following earlier increases in skilled-worker visa fees and a temporary pause on immigrant visa appointments at U.S. missions worldwide.

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Companies such as Deloitte, PwC, Ernst & Young, Tata Consultancy Services, Infosys, HCL Tech, and LTIMindtree rely heavily on H-1B workers to fill roles where employers say there is a shortage of qualified U.S.

This proposal would unwind a policy that has been in place since 2017. The 60-day grace period was designed to provide continuity for foreign workers, allowing them time to identify another U.S. employer willing to file an I-129 petition, or to sell a home, pull children out of school, and depart in an orderly way. Eliminating it would create an abrupt cliff for H-1B workers who are laid off, downsized, or caught in a corporate restructuring. DHS acknowledged in the notice that companies could see some disruption but said the jobs could go to American workers instead. The agency wrote: "DHS presumes that they will either offer the same jobs to equally qualified U.S. workers or go through the I-129 petition process depending on their workforce requirement." That statement suggests DHS is prioritizing domestic labor substitution over employer continuity.

The H-1B program, created by Congress in 1990, has long been crucial for technology companies, consultancies, and outsourcing firms. Companies such as Deloitte, PwC, Ernst & Young, Tata Consultancy Services, Infosys, HCL Tech, and LTIMindtree rely heavily on H-1B workers to fill roles where employers say there is a shortage of qualified U.S. workers, particularly for talent from India and China. For these employers, the proposed change raises operational and financial risks. It would compress the time available to reassign projects, transfer knowledge, or file petitions for departing employees. If an H-1B worker is terminated, the employer would face an immediate compliance and offboarding burden, while the worker would face a forced departure and potential separation from family, housing, and financial obligations.

From a legal and regulatory perspective, the proposal is not yet final. Publication in the Federal Register initiates a notice-and-comment period under the Administrative Procedure Act. Affected businesses, trade associations, and immigration advocacy groups are likely to submit comments and may challenge any final rule in federal court if it is seen as arbitrary or insufficiently justified. The reversal of a longstanding regulatory protection without a clear evidence base could be vulnerable to APA claims. Courts have previously grappled with immigration rule changes, and the technology industry has been an active litigant in prior H-1B and optional practical training disputes. A final rule that eliminates the grace period would likely face immediate legal challenge, and any injunction or administrative delay could create uncertainty for employers and workers.