For nearly two decades, getting an H-1B visa for a new hire came down to a coin flip dressed up as a lottery. A recent computer science graduate offered $65,000 and a senior engineer offered $185,000 had exactly the same odds of being picked out of the pool. Starting with the fiscal year 2027 cap season, that's no longer true. The U.S. Department of Homeland Security has finalized a rule that throws out the random lottery and replaces it with a wage-weighted selection process — and the gap between a low-paying offer and a high-paying one now translates directly into selection odds.
If your business sponsors H-1B talent, or has been thinking about it for the first time, the math you need to run before your next hire just changed completely.
What Actually Changed
Since 2020, USCIS has run the H-1B cap as a straightforward random drawing. Every registered beneficiary, regardless of salary, job title, or employer size, had an equal shot at one of the roughly 85,000 available slots (65,000 under the regular cap plus 20,000 for advanced-degree holders). It was simple, it was arguably fair in a narrow sense, and it was also completely disconnected from Congress's stated goal for the program: bringing in high-skilled workers the U.S. labor market genuinely needs.
DHS's final rule, effective February 27, 2026, replaces that coin flip with a weighted entry system tied to the Department of Labor's four-tier prevailing wage structure (OEWS wage levels I through IV). Instead of one entry per registrant, each beneficiary now gets a number of entries into the selection pool based on the wage level of the job being offered:
- Level IV (highest wage) — 4 entries
- Level III — 3 entries
- Level II — 2 entries
- Level I (entry-level wage) — 1 entry
More entries means a statistically better chance of being drawn. Based on historical registration volume, DHS and outside immigration analysts project selection probabilities of roughly:
- Level IV: over 61%
- Level III: over 45%
- Level II: around 31%
- Level I: around 15%, down from the old flat rate of roughly 30% for everyone
That's the headline number for any small business trying to sponsor a new graduate, a junior developer, or an entry-level analyst: the odds of winning the lottery for that role just got cut roughly in half.
Why DHS Made the Change
The stated rationale is straightforward — DHS argues the random lottery let the program drift away from its original purpose. When wages don't factor into selection, employers filing large volumes of Level I registrations (historically dominated by outsourcing and IT-staffing firms) crowd out higher-wage, higher-skill petitions with no penalty for doing so. The agency's framing is that weighting toward wage level "will better serve Congress' intent for the H-1B program and strengthen America's competitiveness by incentivizing American employers to petition for higher-paid, higher-skilled foreign workers."
Whether or not you agree with the policy goal, the practical effect for anyone hiring through this program is the same: pay level now directly determines your odds of getting a visa slot at all.
Who Has to Determine the Wage Level, and How
This isn't optional paperwork. Every H-1B registration must now include the OEWS wage level for the position, and it isn't a number you get to pick freely — it's determined by the offered salary relative to the Department of Labor's prevailing wage tables for that occupation (SOC code) and geographic area. You use the highest wage level that your offered salary equals or exceeds.
A few details that matter for anyone doing the math:
- Multiple work locations: if the role covers more than one location, the employer must use the lowest applicable wage level across those locations — no cherry-picking the best-paying market.
- Duplicate registrations: if more than one employer registers the same candidate (common when a candidate is job-hunting broadly), that person is entered into the lottery using whichever registration carries the lowest wage level, not the highest.
- Job description wording matters more than ever: small differences in how a role is titled and described can shift its SOC code classification, which changes the applicable prevailing wage table entirely. A "Software Engineer II" and a "Backend Developer" doing identical work can land in different wage bands depending on how the job description maps to Bureau of Labor Statistics occupational codes.
- Equity doesn't count: for startups that lean on stock options, equity grants, or other non-cash compensation to round out an offer, none of that factors into the wage-level calculation. Only base cash salary counts. A promising early-stage hire paid a modest base salary plus meaningful equity will be scored on the base salary alone.
The Small Business Angle
DHS's own regulatory impact analysis is blunt about who bears the cost of this change. The agency estimates that roughly 5,193 small entities — about 30% of the 17,069 small businesses that sponsor H-1B workers — will be affected, either because their Level I petitions will no longer clear the lottery, because they'll face higher compliance costs to restructure job offers into higher wage tiers, or both. DHS itself characterizes that as a significant economic impact on a substantial share of small employers.
That tracks with how small businesses have historically used the H-1B program. A five-person software shop hiring a promising junior developer, a regional accounting firm sponsoring an analyst fresh out of a master's program, or a healthcare practice bringing on an entry-level specialist — these are exactly the Level I and Level II scenarios that just saw their odds cut.
There is one piece of good news buried in the same set of 2025–2026 H-1B changes: the separate $100,000 supplemental fee that applies to certain new H-1B petitions (those requiring consular processing) doesn't change based on this rule, but small employers aren't exempt from it either — that fee applies regardless of company size. Where small businesses do get some relief is in overall competition: immigration analysts expect total H-1B registration volume to fall by more than half as high-volume offshore staffing and consulting firms pull back in response to both the fee and the wage-weighting, since their business model has traditionally run on high volumes of Level I registrations. A smaller applicant pool, even a wage-weighted one, could mean better real-world odds for a Level II or Level III candidate than the headline percentages suggest — some analysts project overall selection rates approaching or exceeding 50% once the pool shrinks, with the highest-paid candidates approaching 90%.
What to Do Before the Next Registration Window
The FY2027 cap registration period is expected to open sometime in March 2026, with selection notifications following shortly after and the petition-filing window running into early summer for an October 1, 2026 employment start date. USCIS hasn't published exact dates as of this writing, so treat early March as your planning deadline, not your actual deadline.
Before that window opens:
- Run the wage-level math now, not in March. For every role you're considering sponsoring, look up the applicable SOC code and OEWS wage level for your area. A modest salary bump that moves a role from Level II to Level III can meaningfully improve selection odds — worth pricing out against the cost of losing the hire to the lottery entirely.
- Audit job titles and descriptions for accurate classification. Misclassified roles can land in the wrong wage tier, either underpaying relative to what the classification requires (a compliance risk) or missing a higher tier your actual offer would have supported.
- Reconsider compensation structure for close calls. If a candidate's package leans heavily on equity, ask whether shifting more of the value into base salary changes the wage-level outcome, especially for early-stage hires where the lottery odds at Level I are now roughly half what they used to be.
- Look at alternative visa categories in parallel. For candidates who won't clear a favorable wage tier, options like O-1 (extraordinary ability), L-1 (intracompany transfer), TN (for Canadian/Mexican professionals under USMCA), or STEM OPT extensions may be worth exploring as a backup path or an alternative entirely.
- Loop in whoever owns compensation decisions early. This is no longer a pure immigration-law question — it's a joint call between HR, finance, and whoever is deciding what the role pays, because the pay decision now has an immigration outcome attached to it.
Keep Your Hiring Costs Traceable
Whether a visa sponsorship succeeds or falls through in the lottery, the costs involved — legal fees, filing fees, any salary restructuring, and the eventual visa fee itself if the petition proceeds — are exactly the kind of expenses that get messy in a spreadsheet and even messier come tax time. Beancount.io provides plain-text accounting that gives you complete transparency and control over your financial data, so hiring and compliance costs stay clearly tracked from the first filing fee onward. Get started for free and see why developers and finance professionals are switching to plain-text accounting.