2026 US Visa Update: DHS Proposes Eliminating 60-Day Grace Period

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For multinational corporations (MNCs) operating in the United States, particularly within the technology, e-commerce, and advanced manufacturing sectors, the seamless cross-border mobility of top-tier talent is a cornerstone of operational agility. Since early 2017, a Department of Homeland Security (DHS) regulation has provided a crucial safety net: a 60-day discretionary grace period for nonimmigrant workers (including H-1B, L-1, O-1, and TN visa holders) whose employment terminates before their authorized stay expires. This buffer has allowed HR departments the operational breathing room necessary to manage corporate restructuring, internal transfers, or sudden layoffs without immediately plunging foreign professionals into unlawful immigration status.

However, the regulatory landscape shifted dramatically in August 2026. On August 6, 2026, the DHS advanced a proposed rule, titled “Eliminating the Discretionary 60-day Grace Period” (RIN 1615-AD22), to the White House Office of Information and Regulatory Affairs (OIRA/OMB) for review. If finalized, this rule will effectively eliminate the 60-day window, plunging the system back into a "termination equals immediate loss of status" reality. For CFOs, HR Directors, and Global Mobility teams, this represents an existential threat to current talent retention and restructuring protocols. Enterprises must immediately pivot their HR operations, moving compliance defense lines far upstream before this proposed rule becomes law.

Executive Summary

1. Policy Status: Under OMB Review. The proposed rule (RIN 1615-AD22) is not yet law. It is currently under regulatory review at the OMB. If it clears, it must undergo a 30- to 60-day public comment period following publication in the Federal Register. While the timeline is fluid, MNCs must prepare now for its potential enactment later in the year or early next.
2. The Core Impact: "Out of Status" Upon Termination. If enacted, the moment an H-1B or L-1 worker is removed from active employment (the day after their last day of active work), their lawful nonimmigrant status ceases. They, and their dependents, would generally be required to depart the US immediately, obliterating the traditional timeframe used to secure new employer sponsorship or file a change of status (e.g., Form I-539).
3. Strategic HR Mitigation: Payroll Continuity. MNCs can no longer rely on post-termination buffers. Global Mobility strategies must adopt "pre-filing" mandates for internal transfers. For unavoidable layoffs, HR must leverage structured "Paid Administrative Leave" to maintain the employee on the active payroll, legally sustaining their I-94 status while transitional arrangements are finalized.

I. Decoding the Proposed Rule (RIN 1615-AD22): The Legal Mechanics

To formulate an effective defense strategy, cross-border enterprises must understand the underlying mechanics of the proposed regulatory rollback.

• The Current Baseline (2017 Regulation): Under 8 CFR 214.1(l)(2), eligible nonimmigrant workers whose employment ceases prematurely are granted a grace period of up to 60 consecutive calendar days, or until their authorized stay (I-94) expires, whichever is shorter. During this window, they are not considered to have failed to maintain status, allowing them to file a change-of-employer petition or a change of status application without departing the US.
• The Proposed Mechanism: The DHS proposal seeks to strike this discretionary provision entirely. The fundamental argument driving the policy is restrictionist: temporary visas are strictly tethered to temporary jobs; therefore, once the job ceases, the justification for the stay vanishes concurrently.
• The Regulatory Timeline: The submission to the OMB on August 6, 2026, is the mandatory first step. It is highly advised that affected industries engage heavily during the upcoming Public Comment Period to articulate the severe business disruption and talent displacement this rule would trigger.

II. Operational Impact: Three Critical Shocks to MNC HR Operations

The potential realization of an immediate "out of status" environment will disrupt standard HR operating procedures across North American branches:

1. The Paralysis of Internal Transfers and Restructuring

• The Current Norm: During corporate reorganizations, HR often utilizes the 60-day grace period as a bridge, allowing an employee to be formally terminated from "Subsidiary A" while the H-1B transfer petition is being prepared and filed by "Subsidiary B."
• The New Reality: Without the grace period, terminating employment at Subsidiary A before Subsidiary B has formally filed the transfer petition with US Citizenship and Immigration Services (USCIS) will immediately render the employee "Out of Status." This severely constricts agile workforce reallocation between affiliated US entities.

2. Amplified Costs for Termination and Talent Replacement

• Severance Complexities: Routine severance packages that provide a lump sum post-termination do not maintain immigration status. Employees facing immediate departure will experience chaotic handovers, threatening project continuity.
• The Repatriation Burden: If an employee is forced to depart the US, and the enterprise wishes to rehire them later, they must undergo the arduous, expensive, and unpredictable Consular Processing phase abroad, compounding administrative overhead.

3. Escalation of Labor Disputes and Employer Leverage

• Retention Anxiety: The looming threat of instantaneous deportation upon job loss will severely impact the morale of foreign national engineers and executives.
• Dispute Triggers: Routine performance-based terminations could rapidly escalate into contentious labor disputes, as foreign nationals desperately fight to delay their official termination date to avoid accruing "Unlawful Presence."

III. Compliance Matrix: Defensive HR Strategies for US Operations

MNCs must systematically audit and upgrade their US termination and transfer protocols to embed immigration compliance at the very inception of the HR action.

IV. The Deep Water of USCIS Compliance: Payroll and Administrative Leave

If the 60-day grace period is abolished, the precise management of the corporate payroll becomes the ultimate lifeline for maintaining legal immigration status. CFOs and HRDs must master the intersection of Department of Labor (DOL) wage mandates and USCIS status rules.

1. The Mechanics of Paid Administrative Leave

‍The most robust defense mechanism during a layoff is transitioning the employee to "Paid Administrative Leave." Under USCIS scrutiny, an individual is generally considered to be maintaining their H-1B status as long as an employer-employee relationship exists and the employer continues to pay the required wage as stipulated in the Labor Condition Application (LCA).

By executing a formal Administrative Leave agreement, the employer relieves the individual of their day-to-day duties but keeps them active on the company payroll. They receive their regular paycheck (W-2 income) on the standard payroll cycle. The exact date the grace period (if it exists) or the "out of status" clock begins is the day after this Paid Administrative Leave officially ends and they are removed from the payroll system.

2. Strict Adherence to Prevailing Wage Mandates

‍It is critical that during this Administrative Leave, the salary paid does not drop below the required wage threshold (the higher of the actual wage or the DOL prevailing wage). HR cannot place an H-1B worker on "unpaid leave" or reduce their hours to part-time during a furlough to save costs, unless the H-1B petition is formally withdrawn. Doing so violates DOL LCA rules, exposing the enterprise to back-pay liabilities and civil penalties up to $10,000 per violation.

3. The Bona Fide Termination and Return Transportation

‍If Paid Administrative Leave is not feasible and the termination must be immediate, the employer must execute a "bona fide termination." To comply fully and cut off wage liability, the employer must explicitly notify USCIS to withdraw the H-1B petition and, crucially, offer to pay the reasonable costs of return transportation to the employee's last country of residence. Failing to document this offer leaves the employer vulnerable to claims of incomplete termination under DOL regulations.

Deep-Dive Q&A for MNCs in the US

Q1: Has the 60-day grace period been officially eliminated yet? If we lay off an H-1B worker next week, are they immediately out of status?A: No, the rule is not yet finalized. The grace period is still in effect.As of August 2026, RIN 1615-AD22 is a proposed rule under review by the OMB. Until it clears review, undergoes a public comment period, and is published as a Final Rule in the Federal Register with a specified effective date, eligible nonimmigrants continue to benefit from the existing discretionary 60-day grace period.

Q2: If the rule does pass, how do we safely transfer an H-1B employee from our New York office to our newly incorporated Texas subsidiary?A: You must implement a strict "pre-filing" sequence.Without a grace period buffer, you cannot terminate the employee from the NY entity and then prepare the paperwork for the TX entity. The Texas subsidiary must file the H-1B change-of-employer petition with USCIS first. Only after you receive the official Receipt Notice (indicating the petition is pending) can you safely terminate their active employment with the NY entity, ensuring no gap in lawful status.

Q3: We need to conduct layoffs next month. To help our foreign workers maintain status if the rule changes, can we just give them a lump-sum severance and let them go?A: No. A lump-sum severance does not maintain immigration status.Once active employment ceases and the employee is taken off the regular payroll cycle, they fall out of status (absent a grace period). To provide a legal buffer, you must use Paid Administrative Leave. The employee must remain on the company's active W-2 payroll system, receiving their regular, LCA-compliant wages on normal paydays for the duration of the transition period, even if they are not performing actual work.

Q4: Is there anything our company can do to oppose this proposed rule?A: Yes, actively participate in the Public Comment Period.Once the OMB completes its review, the proposed rule will be published in the Federal Register, typically opening a 30- to 60-day window for public feedback. MNCs, alongside industry associations, should submit formal comments detailing the severe economic disruptions, talent loss, and logistical impossibilities this rule would inflict on US business operations.

Q5: If an employee is laid off and cannot find a new H-1B sponsor immediately, what are their options to avoid accruing "unlawful presence"?A: They must urgently file a change of status (Form I-539).Before their status expires (or before the end of the grace period, if it still exists), the employee must file Form I-539 with USCIS to change to a different nonimmigrant category, such as B-1/B-2 (Visitor), F-1 (Student), or H-4 (if their spouse holds a valid H-1B). Filing this form while still in lawful status authorizes them to remain in the US while the application is pending, preventing the accrual of unlawful presence.

Core HR & Immigration Glossary

• 60-Day Grace Period: A discretionary provision introduced by DHS in 2017 allowing certain nonimmigrant workers (e.g., H-1B, L-1, TN) up to 60 consecutive calendar days of lawful presence following the premature cessation of their employment. In August 2026, DHS proposed rule RIN 1615-AD22 to eliminate this provision.
• Paid Administrative Leave: An HR classification where an employee is temporarily relieved of their normal job duties but remains on the employer's active payroll, continuing to receive their regular salary and benefits. In the context of H-1B compliance, it is a critical tool to legally maintain the employer-employee relationship and the worker's I-94 status during a transition or layoff phase.
• H-1B Portability: A statutory provision that allows an H-1B worker to begin working for a new employer as soon as that new employer files a non-frivolous H-1B petition with USCIS, without having to wait for the petition's final approval.
• Prevailing Wage: The average wage paid to similarly employed workers in a specific occupation in the area of intended employment. Under DOL regulations, employers must pay H-1B workers the higher of the actual wage paid at the company or the prevailing wage. This required wage must be maintained even during periods of Paid Administrative Leave.
• OMB / OIRA Review: The Office of Management and Budget, specifically its Office of Information and Regulatory Affairs, reviews all significant federal regulations before they are published in the Federal Register. The submission of RIN 1615-AD22 to OMB marks the formal beginning of the executive review process for eliminating the grace period.

Disclaimer：The information regarding the Department of Homeland Security's proposed rule RIN 1615-AD22 (Eliminating the Discretionary 60-day Grace Period), Form I-539 changes, and Paid Administrative Leave strategies is consolidated based on regulatory developments submitted to the OMB in August 2026 and standard US immigration practices. Given that this proposed rule is currently under review and is subject to public comment and revision before any final enactment, and because USCIS and DOL possess significant adjudicative discretion regarding "maintenance of status" and wage compliance, this article is intended solely to provide macro-level business forecasting and HR compliance references. It does not constitute independent legal or immigration advice for specific corporate restructuring, visa applications, or termination events. Prior to adjusting your US workforce policies or initiating any H-1B terminations, please consult a qualified Knit compliance expert and a licensed US immigration attorney.