Two major H-1B policy changes arrived within months of each other, and the status of one has already shifted twice since June. San Francisco employers who sponsor H-1B workers are now navigating a wage-weighted lottery that permanently reshapes selection odds, alongside a $100,000 supplemental fee that was vacated by a federal court, appealed by the government, and denied a stay by the First Circuit. All of this occurred within about seven weeks. The rules aren’t settled, and the cost of misreading the current situation is high.
We’ve spent decades advising employers across San Francisco and the Bay Area on immigration matters, and we’ve watched fast-moving regulatory changes catch companies off guard when they relied on headlines instead of current legal analysis. Here’s what both changes actually mean, where each one stands right now, and what San Francisco employers should be doing before the next filing cycle.
The Wage-Weighted Lottery: How Selection Odds Now Work
A Department of Homeland Security final rule took effect February 27, 2026, replacing the old random lottery with a tiered system tied directly to OEWS prevailing wage levels. The Occupational Employment and Wage Statistics (OEWS) system classifies wages for every occupation by metro area into four levels, from entry-level (Level I) to fully competent senior positions (Level IV). Under the new rule, registrations at each level receive a corresponding number of lottery entries: Level I receives one entry, Level II receives two, Level III receives three, and Level IV receives four. An employer offering a Level IV salary is four times as likely to be selected as one offering a Level I salary for the same role.
There’s a critical detail many employers haven’t fully absorbed: only base salary and guaranteed compensation count toward the wage level determination. Bonuses, commissions, equity awards, and benefits are all excluded. USCIS has also made clear it will deny or revoke a petition if it finds the employer inflated a wage level to improve selection odds and then paid less than what was registered. Documentation supporting the wage level must accompany the petition after selection, so the number entered at registration is a commitment, not an estimate.
What San Francisco’s Prevailing Wage Context Means for Your Odds
Prevailing wage levels are calculated by Standard Occupational Classification (SOC) code and Metropolitan Statistical Area, which means the same salary produces a different OEWS level depending on where the position is located. A software engineer earning $120,000 may qualify as Level II in San Francisco but as Level III or Level IV in a lower-cost metro like Austin. San Francisco ranked third nationally for H-1B petition approvals from FY2017 to FY2022, with 165,000 approvals during that period, and approximately 30,000 Bay Area workers were hired through the H-1B process in 2025 alone. Because San Francisco wages are elevated across nearly every professional category, some roles that would register at Level I elsewhere may qualify for Level II or Level III at the same dollar figure, organically improving an employer’s odds without any wage inflation.
The equity exclusion creates a structural disadvantage for a large share of the local employer market. Seed-stage and early-stage tech companies often offer below-market base salaries supplemented heavily by equity, and none of that equity counts toward the wage level formula. A startup offering a $90,000 base with significant stock compensation registers at the same level as one offering a $90,000 base with no equity at all. Large tech firms with high guaranteed base salaries enter the lottery at Level III or Level IV by default. For companies relying on equity-heavy compensation to attract talent, the new system requires a deliberate strategic response.
The $100K Fee: Where the Litigation Stands Right Now
Presidential Proclamation 10973, signed September 19, 2025, imposed a $100,000 supplemental fee on new H-1B petitions for beneficiaries physically located outside the United States who required consular processing. Petitions filed as change of status for workers already in valid U.S. status (including F-1 students on optional practical training) were exempt from the beginning.
On June 8, 2026, the U.S. District Court for the District of Massachusetts vacated the fee entirely in California v. Mullin. California was one of twenty states that joined the coalition challenging the proclamation. The court found that the fee functioned as an unauthorized tax, exceeded executive authority, and violated the Administrative Procedure Act, which governs how federal agencies and the executive branch may create binding rules. The government appealed and sought a stay that would have kept the fee in place while the appeal proceeded. On July 24, 2026, the First Circuit denied that request. The fee is currently unenforceable, though DHS has explicitly warned it still intends to collect if the order is later lifted or reversed.
Why the Fee Could Return & What Employers Should Watch
The First Circuit’s July 24 ruling addressed only whether the fee should remain in force during the appeal. It didn’t decide the underlying merits. The appeal continues, and a final ruling could go either way. The government may also seek emergency relief directly from the U.S. Supreme Court without waiting for the First Circuit to finish.
A separate lawsuit brought by the U.S. Chamber of Commerce and the Association of American Universities in the U.S. District Court for the District of Columbia reached the opposite conclusion: that court upheld the fee. The resulting circuit split raises the probability of Supreme Court review. When two federal districts issue contradictory rulings on the same federal policy, the Supreme Court has strong grounds to take the case and resolve the conflict.
For employers who already paid the $100,000 fee, there’s no established refund mechanism. The July 24 order doesn’t create a refund process, and DHS hasn’t announced any formal guidance. Employers in this position should preserve documentation of payment while monitoring for agency guidance.
What San Francisco Employers Should Do Now
The clearest immediate action is to audit every anticipated H-1B registration by the candidate’s location and current immigration status. Consular-processing candidates physically outside the United States remain at risk if the $100,000 fee is reinstated on appeal. Change-of-status candidates already in valid U.S. status weren’t subject to the fee and aren’t affected by the ongoing litigation. Understanding which category each candidate falls into is the foundation of any filing plan.
Before registration, map each role’s SOC code against the San Francisco Metropolitan Statistical Area prevailing wage tables. Because Bay Area wages are elevated relative to national benchmarks, some positions that would register at Level I in another city qualify for Level II or Level III at the same salary. That means two or three lottery entries instead of one. For employers sponsoring multiple candidates, this analysis can materially change selection outcomes.
For roles that can’t support higher guaranteed base salaries under the new system, these alternative pathways are worth evaluating:
- O-1A visa for workers who can demonstrate extraordinary ability in their field through awards, publications, high salary relative to peers, or other recognized evidence
- L-1 intracompany transfer for workers moving from a foreign affiliate, subsidiary, or parent company into a U.S. position in a managerial, executive, or specialized knowledge capacity
- TN visa for qualifying Canadian or Mexican nationals in specific professional categories defined under the United States-Mexico-Canada Agreement
The regulatory environment around H-1B sponsorship is as active as it’s been in years. The wage-weighted lottery is permanent law until a court says otherwise, and the $100,000 fee litigation could produce a binding circuit decision or a Supreme Court grant at any point. Neither situation rewards a wait-and-see approach. If your company is sponsoring H-1B workers or planning to, now is the time to get current, case-specific legal guidance. Law Offices of Shamieh, Shamieh & Ternieden works directly with San Francisco employers through exactly these kinds of fast-moving changes. Reach us at our contact page or call (415) 300-2144.