H-1B Grace Period Eliminated: What US Employers and Workers Need to Plan For

The 60-day H-1B grace period has been a backstop for US employers and their foreign workers for years. When someone gets laid off, that 60-day window gives them time to find a new sponsor, file a transfer, or change status without falling out of lawful presence. It is not a luxury. For most H-1B workers, it is the only thing standing between a layoff and an immediate overstay clock.

DHS has proposed eliminating it.

The proposal is not final. But it is real, it is moving, and employers who sponsor H-1B workers need to understand exactly what changes, what stays the same, and what their obligations look like if the rule takes effect.

What the H-1B Grace Period Is and Where It Came From

The 60-day H-1B grace period was codified by a 2017 DHS rule. Before that, no regulatory grace period existed. If an H-1B worker lost their job, their authorized stay technically ended the day employment ceased. The 2017 rule changed that.

Under the current rule, an H-1B worker whose employment ends involuntarily gets up to 60 days, or the remaining time on their I-94 if less than 60 days, to take one of three actions:

• File a new H-1B petition with a new employer (transfer or portability)
• Change to a different nonimmigrant status (such as H-4, F-1, or O-1)
• Depart the United States

The 60 days do not extend the H-1B status itself. The worker is out of authorized employment the moment the job ends. The grace period simply prevents that gap from counting as unlawful presence for purposes of accumulating days that could trigger the 3-year or 10-year bars on reentry.

That distinction matters. A lot.

What the Proposed Rule Actually Does

In September 2025, DHS published a proposed rulemaking that would eliminate the 60-day H-1B grace period entirely. Under the proposal, H-1B status ends the day employment ends, full stop.

Workers would need to immediately file a change of status, a transfer petition, or depart. There is no wind-down window.

The proposal is framed as an enforcement measure. The current grace period, DHS argues, has been used by some workers to remain in the US after termination without any active immigration filing. Eliminating it closes what the agency characterizes as an overstay loophole.

What the agency does not address directly is the operational reality for employers. H-1B transfers cannot be filed in a single day. Premium processing takes 15 business days. Standard processing runs months. The 60-day H-1B grace period exists precisely because the system cannot move faster than it does.

Current Status: Where the Rule Stands as of October 2026

The proposed rule is in the notice-and-comment phase. As of October 27, 2026, no final rule has been published.

That means the current 60-day H-1B grace period remains in effect. Workers who are terminated today still have the 60-day window.

But the trajectory is clear. The current administration has signaled it intends to finalize the rule. And unlike the $100,000 H-1B fee, which rested on executive proclamation and was vulnerable to unlawful-tax arguments, this rule is going through formal rulemaking. A properly enacted regulation is significantly harder to challenge once finalized.

The practical planning window for employers is now, while the rule is not yet final.

What Changes for H-1B Workers If the Grace Period Is Eliminated

The impact hits hardest in three scenarios.

Layoffs with severance. Under the current rule, a worker receiving 60 days of severance pay is not in an ambiguous situation. The H-1B grace period runs concurrently. Under the proposed rule, the question becomes whether severance pay constitutes continued employment for immigration purposes, a legal question that does not have a clean, settled answer and varies by how the severance agreement is structured.

Transfers mid-petition. H-1B portability under AC21 allows a worker to switch employers while a petition is pending if they have maintained valid status. “Valid status” becomes significantly harder to establish if the grace period no longer exists. A worker laid off before a transfer petition is filed may immediately fall into unlawful presence, breaking portability eligibility before it can be invoked.

H-4 EAD holders. Spouses on H-4 status whose EAD is tied to the primary H-1B worker’s status are directly exposed. If the primary worker loses their job and the H-1B grace period no longer exists, the H-4 status is compromised the same day. The H-4 EAD becomes unauthorized work immediately.

What Employers Need to Do Right Now

Employers who sponsor H-1B workers should treat this proposed rule as an operational planning trigger, not a wait-and-see situation.

Audit your current H-1B roster. Know exactly which employees hold H-1B status, when their authorized periods expire, and which are in the middle of transfers, extensions, or green card processes. This is baseline data your immigration counsel needs to build contingency plans.

Review severance structures with immigration counsel. If your company’s standard severance agreement would trigger questions about employment continuation under the new rule, you want to know that before a layoff event, not after. Some structures can be modified to provide better protection. Others cannot.

File transfers and extensions proactively. If an H-1B transfer is pending and the worker’s employment status is uncertain, move to file as early as possible. Under the current H-1B grace period rules, a worker can file after separation. Under the proposed rule, that option disappears.

Build premium processing into your cost assumptions. With no grace period, premium processing becomes the default for any H-1B action touching a worker at risk of job loss. At $2,965, it is not trivial. But it is far cheaper than the compliance exposure of a worker who falls into unlawful presence because a petition was filed three days too late.

Communicate with affected employees. H-1B workers in your organization are watching this rule closely. Many have families on H-4 status. The uncertainty itself creates retention pressure. Getting ahead of it with clear communication, what the company’s position is, what contingencies exist, is a retention move as much as a compliance move.

The NTA Risk That Most Coverage Is Missing

There is a second-order risk that has not gotten enough attention in H-1B grace period news coverage.

Under the current enforcement posture, USCIS has been issuing Notices to Appear (NTAs) — referrals to immigration court for removal proceedings, in cases where an H-1B worker is found out of status. The grace period currently provides a buffer. Eliminate the grace period, and the window between job loss and technically being out of status compresses to zero.

For workers who are laid off, cannot immediately file a change of status, and cannot immediately depart, the NTA exposure becomes real and immediate. “H-1B grace period NTA” is already a term people are searching. The concern is not theoretical.

This does not mean every laid-off H-1B worker will face removal proceedings. It means the margin for error shrinks to nothing if the rule is finalized.

Options for Employers Who Want to Reduce H-1B Dependency

The H-1B program has been operationally unpredictable for three consecutive years. The $100,000 fee litigation, the proposed grace period elimination, the visa interview backlogs at consulates. Each episode creates the same planning problem: employers cannot reliably project timelines or costs for roles that depend on H-1B status.

Some employers have started building engineering and technical teams in India as a structural hedge. Not as a replacement for US hiring, but as a parallel path that does not sit on a single visa program.

The math is direct. A mid-level software engineer in Bangalore costs $45,000 to $60,000 in salary, plus an EOR fee of $599 per month, per employee, on top of salary. The total loaded annual cost runs $52,000 to $67,000. A comparable US engineer on H-1B costs $150,000 to $220,000 fully loaded, plus the visa fees, the legal fees, and now the planning overhead of a grace period that may not exist.

Companies already hiring through Kaamwork’s EOR model in India have found that a distributed team, part US, part India, is less exposed to any single immigration policy shift than a team built entirely around H-1B sponsorship.

That is not an argument to stop sponsoring H-1B workers. It is an argument to stop treating that program as the only path.

For a full breakdown of what hiring in India actually costs versus US hiring, the software engineer salary comparison is the clearest starting point. If you are evaluating alternatives to H-1B dependency specifically, this guide on H-1B alternatives for US employers covers the options in detail.

FAQ

Is the H-1B grace period eliminated right now?

No. As of October 2026, the 60-day H-1B grace period remains in effect. A proposed DHS rule would eliminate it, but that rule has not been finalized. Workers who are terminated today still have up to 60 days to file a transfer, change status, or depart.

How long is the H-1B grace period currently?

60 days from the date employment ends, or the remaining time on the I-94, whichever is shorter. The grace period was established by a 2017 DHS rule and applies to involuntary terminations.

What happens if the H-1B grace period 60 days rule is removed?

H-1B status would end the day employment ends. Workers would need to immediately change status, file a transfer, or depart the US. There would be no buffer for job searching or for a transfer petition to be prepared and filed.

Does the H-1B grace period apply after a layoff?

Yes, under current rules. The H-1B grace period after layoff gives workers up to 60 days to take action. If the proposed rule is finalized, that protection disappears.

What is the difference between the H-1B grace period and the 180-day approved rule?

The 60-day H-1B grace period covers the period after employment ends. The 180-day rule refers to AC21 portability, which allows an H-1B worker to change employers while a green card petition (I-140 or labor certification) has been pending for 180 days or more. These are different mechanisms with different triggers.

What should H-1B workers do right now given the proposed grace period elimination?

Stay employed in your current H-1B role if possible. Make sure your employer is filing any pending extensions or transfers immediately, not at the last minute. If your situation is uncertain, talk to an immigration attorney now, not after you receive a termination notice. The margin for error under the proposed rule is zero.