DHS Proposes Eliminating the 60-Day Grace Period for H-1B, L-1, O-1, TN, and E Workers

Published September 13, 2026 | By Parikh & Prasad, PC

Lose your job on an H-1B today, and a discretionary grace period of up to 60 days can give you time to find a new employer or change status before you have to leave. DHS wants to take that away. A proposed rule published September 11, 2026 would eliminate that grace period for E-1, E-2, E-3, H-1B, H-1B1, L-1, O-1, and TN workers and their families. If it becomes final as written, you and your dependents would be out of status the day after your employment ends. Nothing changes today. Comments are open until November 10, 2026.

What DHS is proposing

The rule is titled Eliminating the Discretionary 60-Day Grace Period (91 FR 57807; RIN 1615-AD22; DHS Docket No. USCIS-2026-0364). It does one main thing: it deletes the grace period provision at 8 CFR 214.1(l)(2).

It also makes a technical edit to 8 CFR 204.5(p)(1)(i), the compelling circumstances employment authorization rule, removing that provision's cross-reference to the 60-day grace period.

DHS frames this as restoring its "previous and long-standing policy" of no grace period at all when employment ends mid-stay. The new expectation would be simple: when the job or activity behind your status ends, you depart — unless you are otherwise authorized to lawfully remain.

How the grace period works today

The grace period came from the 2016 AC21 final rule (81 FR 82398, Nov. 18, 2016), effective January 17, 2017.

Under 8 CFR 214.1(l)(2), a worker in E-1, E-2, E-3, H-1B, H-1B1, L-1, O-1, or TN status is not treated as failing to maintain status just because the employment ended. That protection lasts up to 60 days or until the end of the authorized validity period, whichever is shorter. It covers the worker's spouse and unmarried children under 21 too. You get one per authorized validity period.

You cannot work during it unless otherwise authorized. What it buys you is time to do one of these without leaving the country:

• Be the beneficiary of a nonfrivolous petition by a new employer on Form I-129;
• File Form I-539 to change to a different nonimmigrant status;
• File Form I-485 to adjust status; or
• File Form I-765 for a compelling circumstances employment authorization document.

And it has always been discretionary. USCIS decides whether to honor, shorten, or eliminate the grace period when it adjudicates the later filing, looking at the totality of the circumstances. The 2016 rule named status violations, unauthorized employment during the grace period, fraud or national security concerns, and criminal convictions as factors that could cut it short.

Why DHS wants it gone

Two reasons.

Statutory alignment. The Immigration and Nationality Act defines each of these classifications by the specific work the person comes to do — INA 101(a)(15)(E), (H)(i)(b), (H)(i)(b1), (L), and (O), plus INA 214(e) for TN. DHS now says a grace period "disconnects the alien's lawful status from the very basis of eligibility," and that the 2016 rule did not give that problem enough weight. It points to its authority under INA 214(a), 8 U.S.C. 1184(a), to set the time and conditions of nonimmigrant admission.

Administrative burden. Officers have to figure out whether a grace period could apply to a filing, decide whether to exercise discretion, and then pin down the date prior employment actually ended. That last part often means reading non-standard evidence, like payroll records that never state a last day of work. DHS counted more than 1.9 million petitions and applications, from fiscal year 2018 through May 20, 2026, where USCIS potentially had to run that initial assessment.

How many people use it

DHS used withdrawn I-129 petitions as a stand-in for people whose jobs ended. From FY 2021 through FY 2025, that was 328,758 primary beneficiaries who lost a job or changed employers — about 65,752 a year.

Within 60 days of the withdrawal:

• 5.77 percent had a new I-129 filed by a new employer;
• 1.70 percent filed an I-539 to extend or change status;
• 0.59 percent filed an I-485; and
• fewer than 0.1 percent filed for a compelling circumstances EAD.

DHS puts the number of workers who get a new employer's petition inside the grace period at about 3,795 a year. 99.2 percent of them are H-1B. DHS admits the data likely undercounts. Many of these classifications have no duty to tell USCIS when employment ends, and some H-1B employers are slow to file a withdrawal.

What would happen when a job ends

Under the proposal, the worker and their dependents would be treated as failing to maintain status starting the day after the principal's employment or activity ends. The proposal itself lays out what follows from that:

• Removability. A nonimmigrant who fails to maintain status is deportable under INA 237(a)(1)(C)(i), 8 U.S.C. 1227(a)(1)(C)(i). DHS expects Notices to Appear issued on this basis to "increase marginally." For context, DHS reports 37 NTAs issued in FY 2025 to H-1B beneficiaries for failing to maintain status beyond the current grace period.
• Extensions and changes of status. These are ordinarily granted only if you have maintained status when the request is filed. See 8 CFR 214.1(c)(4) and 8 CFR 248.1.
• Unlawful presence. Depending on when a person departs, they may risk accruing unlawful presence, which can lead to the 3-year or 10-year bars under INA 212(a)(9)(B). If USCIS or an immigration judge determines a nonimmigrant violated status, accrual begins on the date of that determination if it comes before the I-94 expiration date.
• Future green card eligibility. Failure to maintain status can trigger bars to adjustment, such as INA 245(c)(2), and can count as a negative factor in later discretionary decisions.

DHS also notes that a person whose job ends could still seek readmission in an employment-based classification later, after finding new qualifying employment and getting the required approvals.

Spouses and children

Dependents' status rides on the principal's. That includes spouses who work — H-4 spouses with employment authorization, L-2 spouses, and E spouses.

DHS says the impact on those working spouses "could be immediate departure and lost compensation," and that their U.S. employers would feel it too. It says it lacks reliable data to estimate how many dependents would be affected.

One thing runs only in one direction: a dependent spouse losing their own job does not affect the status of the dependent or the principal.

What would not change

The proposal is narrow. It removes 8 CFR 214.1(l)(2) and nothing else of substance.

The separate grace period of up to 10 days at 8 CFR 214.1(l)(1) stays. But DHS points out that the 10-day period applies only after a validity period ends. It does nothing for a worker whose job ends partway through an approved stay.

The proposed regulatory text does not touch the F-1 or J-1 grace periods. And DHS says the rule does not change an employer's ability to file a new petition for a worker who has already departed and bring that worker back once the petition is approved.

DHS also recognizes that some workers get enough notice before a job ends to line up new employment or file a change of status request. Others may have a pending benefit request, such as an adjustment of status application, that gives them a period of authorized stay after the job ends.

What employers should know

Employers that dismiss an H-1B or O-1 worker before the end of the authorized admission already owe the reasonable cost of return transportation abroad under INA 214(c)(5), 8 U.S.C. 1184(c)(5), and 8 CFR 214.2(h)(4)(iii)(E) and (o)(16).

Today, if a dismissed worker stays in the United States under the grace period, the employer may not end up paying that cost. DHS expects that to change if the rule is finalized, because the worker would have to depart immediately. A worker who resigns is not "dismissed" and pays their own way home.

DHS also anticipates that some employers hiring a worker whose prior job ended may see a temporary loss of productivity while that worker departs and waits to return. Business arrangements built on hiring a recently terminated worker without the worker first seeking admission from outside the United States would be disrupted. Separately, H-1B employers are still obligated under 8 CFR 214.2(h)(11)(i)(A) to notify USCIS immediately when they no longer employ the beneficiary.

Reliance interests and the alternatives DHS rejected

DHS acknowledges that workers and families may have bought homes, paid taxes, and built careers relying on the grace period. It decides those interests are outweighed. Its argument: reliance on the grace period "would be misplaced," because USCIS could always shorten or eliminate it.

It says it considered three alternatives — eliminating the grace period for only some classifications, shortening it instead of eliminating it, and imposing strict evidentiary requirements on anyone relying on it. All three were rejected, as either failing to reduce administrative burden or failing to align the regulations with the statute. OMB designated the proposal a significant regulatory action, though not economically significant.

Key dates

Published: September 11, 2026. Comments due: November 10, 2026, through the Federal eRulemaking Portal at regulations.gov under DHS Docket No. USCIS-2026-0364.

DHS will not consider comments emailed or mailed to agency officials, and USCIS is not accepting mailed comments.

There is no effective date yet; that would come with a final rule. The proposal also does not address how a final rule would treat a worker whose employment ends shortly before it takes effect. Those details are still being clarified.

What to do now

Do not change your plans on a proposal alone. The grace period is still in the regulations today — and still discretionary, as it always has been.

If your job may be ending, talk to counsel before your last day. The whole value of the grace period is time. Under the proposed rule, that time disappears. Knowing your options while you are still employed — a new employer's petition, a change of status, a pending adjustment application — matters more under the proposal than it does now.

Employers: look at how separations are handled. Think about how notice periods, final work dates, and withdrawal letters are timed for employees in these classifications. Budget for return transportation for dismissed H-1B and O-1 workers.

Families with working spouses should plan together. If an H-4, L-2, or E spouse is working, the principal's job loss would hit both incomes at once under the proposal.

Consider commenting. DHS specifically asked for comments on reliance interests and the rule's potential impact. Employers and workers who have actually used the grace period have exactly the data DHS says it is missing.

At Parikh & Prasad, PC, we advise employers and professionals in H-1B, L-1, O-1, TN, and E status on status maintenance, job changes, and employment-based green card planning. If you want to know how this proposal could affect you or your workforce, contact us to schedule a consultation.

This post is attorney advertising and is provided for general information only. It is not legal advice and does not create an attorney-client relationship. Immigration law changes rapidly; consult a qualified immigration attorney about your specific situation.

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