Senators Grassley and Durbin Introduce H-1B and L-1 Visa Reform Act of 2025

By: Jioselin Juarez Contreras

Senators Chuck Grassley (R-IA) and Dick Durbin (D-IL) have introduced the H-1B and L-1 Visa Reform Act of 2025, a bill that seeks to reform and close loopholes in the H-1B and L-1 visa programs. The bill aims to tighten oversight, reduce abuse, protect both U.S. and foreign workers, and enhance transparency in the foreign worker recruitment process.

H-1B Proposals in the Reform Act

• Stricter Degree Requirements
  To qualify, foreign nationals must a hold a U.S. bachelor’s degree, or equivalent foreign degree in a specialty that is directly related to the job. Experience alone, or incomplete degree programs, will no longer qualify. Existing regulations already require a direct relationship between a foreign national’s degree and H-1B occupation, the bill would make that requirement part of federal law, possibly making regulations stricter for what counts as a “related degree”.
• Shorter Initial Stay
  Initial maximum stay is 3 years, and one additional 3-year extension is available if the worker has an approved green card petition (Form I-140). The bill would not change H-1B employee’s period of stay under the American Competitiveness in the 21^st Century Action (AC21) protections, allowing extensions beyond 6 years (based on green card delays remain intact).
• New Visa Allocation Preference System
  The 65,000 H-1B cap would be prioritized rather than random.
   The order would go as follows:
  1. U.S. STEM advanced degrees earned in the U.S.
  2. Level 4 wage positions under the Occupational Employment and Wage Statistics (OEWS) wage structure.
  3. Any U.S. advanced degrees earned in the U.S.
  4. Level 3 wage positions under the Occupational Employment and Wage Statistics (OEWS) wage structure.
  5. A U.S. bachelor’s degree in STEM earned in the U.S.
  6. A U.S. bachelor’s degree in any field earned in the U.S.
  7. Occupations under Group 1 of the DOL's Schedule A, where the Secretary has determined there is a shortage of U.S. workers.
  8. Petitions from “good corporate citizens”, applicants with a valid E-Verify registration, compliance record, and high approval and sponsorship rate.
• Higher Wage Requirements
  The bill would require employers to pay H-1B employees the higher of the locally determined prevailing wage, median wage for the occupation in the area, or median Skill Level 2 wage under OEWS. Each labor condition application (LCA) must detail how the wage was calculated.  
• Recruitment and Non-Displacement Obligations for All Employers
  All H-1B employers must recruit U.S. workers and offer the position to any equally or better qualified U.S. worker for which an H-1B worker is sought. H-1B employers would be required to post jobs on a Department of Labor (DOL) website for 30 days, and any “H-1B” only job advertising or advertising that indicates a preference for H-1B Workers would be prohibited. H-1B employers would be required to attest they have not – and will not displace – a U.S. worker within 180 days before or after hiring an H-1B worker. The 180-day period could not include any period of training of the H-1B employees.
• Restrictions on Third-Party Placement
  ​​​​​H-1B Employers cannot place H-1B workers at another company (outsourcing/contracting) without a DOL waiver. The waiver requires proof that no U.S. workers are displaced, the secondary company employer won’t control/supervise the H-1B employee, and the arrangement is not “labor for hire”. DOL must decide on waivers within 7 days.

• Workforce Composition Limits
  Employers with 50 or more employees in the U.S. would be restricted from employing more than 50 percent of their workforce in H-1B or L-1 status. The employer must also attest that it had not restructured its organization to evade this limitation.
• Stricter DOL Review & Longer Processing
  DOL will review LCAs for fraud/misrepresentation indicators in addition to completeness and obvious errors. If DOL discerned indicators of fraud or misrepresentation in the LCA review, it could initiate an investigation. The review period extended from 7 days to 14 days. DOL will establish a new LCA fee to fund an H-1B Administration, Oversight, Investigation and Enforcement Fund.

L-1 Proposals in the Reform Act

• Wage Requirements for L1s
  L-1 employers would be required to pay any L-1 worker employed for more than one year the highest of:
  • The local prevailing wage in that occupation
  • The median wage of all workers in that occupation in the area, or
  • The median wage for the occupation at OEWS Level 2

Employers would also need to provide fair working conditions that do not harm U.S. workers in similar roles. Under current law, there is no wage requirements for the L-1 category.

• Stricter Definition of Specialized Knowledge
  The bill would have more restrictive requirements of L-1B workers specialized knowledge. They must show proprietary knowledge of their employer’s product or services that is not readily available in the labor market and is clearly different from peers in similar jobs. Patents or copyrights would not automatically prove specialized knowledge unless the worker is a key person essential to the job. Internal company procedures would only count if they were unique, complex, and confidential.

• Non-Displacement Obligation
  L-1 employer would be prohibited from replacing a U.S. worker with an L-1 worker. L-1 Employer could not displace a U.S. worker within 180 days before or after the placement of an L-1 worker.
• Restrictions on Third-Party Placement
  L-1 Employers cannot place L-1 workers at another company (outsourcing/contracting) without a DOL waiver. The waiver requires proof that no U.S. workers are displaced, the secondary company employer won’t control/supervise the L-1 employee, and the arrangement is not “labor for hire”. DOL must decide on waivers within 7 days.
• Blanket L Petitions Expanded
  L-1 Employers with an approved corporate blanket L could get expedited processing for individual L-1 petitions filed at USCIS, although the bill does not define what “expedited” will entail.
• Tighter Rules for “New Office” L-1 Petitions
  The bill would require and impose additional obligations on employers seeking to transfer a manager, executive, or individual with specialized knowledge to work in a new U.S. office. L-1 Employers would need to submit a detailed business plan and provide proof of adequate facilities and funding to operate. Initial approval would last 12 months only. Extensions would require proof that the office has followed the business plan and is regularly providing goods/services. The Department of Homeland Security (DHS) could grant extensions in extraordinary cases even if these conditions aren’t fully met.

Elimination of B-1 in Lieu of H-1B

The bill would close the loophole that currently allows some individuals to use a B-1 visa instead of an H-1B for certain work assignments in the U.S. All work that would qualify as H-1B employment would require an actual H-1B visa, rather than allowing temporary use of the B-1 category.

H-1B and L-1 Enforcement

• Expanded Enforcement Authority for DOL and DHS
  DHS and DOL would have much greater authority to initiate and carry out investigations into H-1B and L-1 employers, including the power to issue subpoenas. Agencies would not need to notify an employer before initiating an investigation if they believed notice might interfere with the investigation. Workers, job applicants, and former employees would have expanded avenues to file complaints against employers. DOL would be authorized to hire 200 additional staff to administer and enforce H-1B program rules. Funding would come from a new fee on Labor Condition Applications (LCAs).
• Increased Whistleblower Protection
  The bill would provide increased protection for current or former employees, or job applicants who file complaints and would prohibit employers from taking adverse action against them. The time to file complaints would also be extended from 12 months to 24 months.
• Increased Penalties for H-1B and L-1 Program Violations
  Employers violating H-1B or L-1 rules would face fines of $5,000 per violation, up to $25,000 for willful violations or fraud. If a violation involved displacing a U.S. worker, through willful failure, fraud or misrepresentation then the employer would face a mandatory $150,000 penalty.
• Annual H-1B and L-1 Compliance Audits
  DHS and DOL would be permitted to audit H-1B and L-1 employes without cause. At least 1% of all H-1B and L-1 employers would be audited every year. Employers with more than 100 workers and a workforce of 15% or more in H-1B/L-1 status would automatically be audited annually.
• Increased Transparency
  DHS would issue an annual report to Congress pertaining to H-1B, L-1, O, P, and Q visa programs. The report would name all H-1B and L-1 petitioning employers, all employers with more than 15% H-1B or L-1 workers, all employers with more than 50% H-1B or L-1 workers, and all employers who received waivers for third-party placement restrictions.

For any questions or assistance, please contact your trusted Chugh, LLP immigration professional.