For H-1B professionals at Microsoft, the road to a green card narrowed sharply on Thursday. The Trump administration said it is suspending the company from the program employers use to sponsor H-1B workers for permanent residence, with Vice President JD Vance accusing Microsoft of fraud at a White House news conference held by the administration’s fraud task force, the Associated Press reported. The step extends a sanction that until now had been used against an IT services contractor and a software company to one of the country’s best-known technology employers. Officials said more companies would follow, and the move suggests that large H-1B sponsors can expect their layoffs and their green card filings to be read side by side.
Vance built his case around job cuts. “If you do the math, for every worker that Microsoft laid off, they replaced that worker with one and a half” foreign “indentured servants,” he said, according to AP. Microsoft was not alone. Reuters reported that Labor Secretary Keith Sonderling said other firms would also be suspended, naming Cognizant, Infosys, Tata, Wipro, Capgemini and Adobe among them, and that nine universities, including Harvard, Yale and Stanford, will be investigated over allegations that they brought in international students to hold down American wages. Labor Department Inspector General Anthony D’Esposito said subpoenas had already been served, according to Reuters. Newsweek identified the program as PERM labor certification. Microsoft had not responded to requests for comment from AP, Reuters or Newsweek by the time those reports were published.
The stakes are easy to underestimate. PERM is not a side door. For most workers in the EB-2 and EB-3 categories, the green card process starts with the Labor Department certifying that the employer tested the U.S. labor market and found no able, willing and qualified American worker for the job. Only after that certification can the employer file the Form I-140 immigrant petition with USCIS, and only after that can the worker eventually apply to adjust status. Cut off the first step and everything behind it stops moving.
Readers who followed this site’s coverage of Cognizant will recognize the playbook. In September, the Labor Department suspended Cognizant’s ability to file new PERM applications, and the inspector general said the investigation covered alleged fraud in both the PERM and H-1B programs, Newsweek reported at the time. The inspector general also announced action against software company Cloudera. Existing approvals were not cancelled, and as our follow-up noted this week, the Cognizant suspension was still in place a month later. Both actions followed the inspector general’s July 8 announcement of a nationwide investigation into alleged fraud and human trafficking in the H-1B and PERM programs, carried out with federal law enforcement partners and the White House fraud task force.
The legal tool behind those suspensions sits in 20 CFR 656.31. When the Labor Department learns of possible fraud or willful misrepresentation involving an employer, or learns that the employer is under investigation, it may suspend processing of that employer’s applications until the investigation or any court case ends. The first suspension can last up to 180 days, and the National Certifying Officer can then resume processing or extend the freeze until the matter is resolved. That is different from debarment under the same section, which requires a finding of fraud or other serious violations, gives the employer a right to review, and is capped at three years. None of the reports published Thursday morning said which of these tools was used against Microsoft, and the difference matters a great deal for how long the freeze could last and how the company could fight it.
That brings up the central legal question. Vance’s public explanation focused on layoffs and replacement, and layoffs alone are not fraud under the PERM rules. The regulations anticipate them. Under 20 CFR 656.17(k), an employer that has laid off workers in the area of intended employment, in the occupation or a related one, within six months before filing must document that it notified and considered the laid-off Americans who might be qualified for the job. If the government’s theory is that Microsoft’s filings misstated its recruitment or glossed over those workers, the case fits squarely within the fraud and misrepresentation language of section 656.31. If the theory rests mainly on the ratio of layoffs to foreign hires, Microsoft would have a stronger argument that the regulation was not written for that purpose. The administration has been moving toward treating layoffs as a factor in their own right. A Sept. 18 executive order and proclamation directed the State, Labor and Homeland Security departments to weigh recent or planned layoffs of similarly situated U.S. workers when reviewing H-1B labor condition applications, petitions and visas, according to Newsweek. That directive, as reported, addressed the H-1B stage, not green card sponsorship.
Microsoft has disputed the connection before. When Vance criticized the company in July 2025 after it announced about 9,000 job cuts, Microsoft said its H-1B applications were “in no way related” to the eliminations, noted that H-1B employees had lost jobs too, and said 78 percent of the petitions it had filed over the previous 12 months were extensions for people already working there, CFO Dive reported. Vance’s message on Thursday was blunt in the other direction. “You’re a great American company, but you’ve got to hire great American workers,” he said, according to Newsweek. Those two positions frame the dispute that is likely to follow: whether a sponsor that is shrinking parts of its workforce can still certify that no qualified Americans are available for the specific jobs it is filling.
Much remains undefined. The reports do not say how long the suspension will run, whether it covers PERM applications already pending or only new filings, what specific misconduct is alleged, or whether USCIS will treat Microsoft’s I-140 petitions or H-1B filings differently. USCIS is a separate agency and has not announced any change. Nor is it clear whether the other companies named by the Labor Secretary face the same sanction as Microsoft, what the university investigations will examine, or what the subpoenas seek.
The workers most exposed are those who have not yet reached an approved I-140. Under the American Competitiveness in the Twenty-First Century Act, an H-1B worker can stay past the usual six-year limit in one-year increments if a PERM application or I-140 was filed at least 365 days earlier, or in three-year increments with an approved I-140 when the green card is unavailable because of per-country limits. A worker in year four or five whose PERM case has not been filed could run out of H-1B time if the freeze lasts. Workers with an I-140 approved for 180 days or more are on firmer ground: under USCIS rules, that petition is generally not revoked automatically even if the employer later withdraws it, and the priority date can usually carry over to a new employer’s petition.
How this plays out could follow a few paths. If the Cognizant pattern holds, the freeze could stretch for months with little public explanation. Microsoft could also seek review or go to federal court under the Administrative Procedure Act, arguing that the action lacks a factual basis or exceeds what section 656.31 allows. That would be a different kind of lawsuit from the challenges to the $100,000 H-1B fee, because this is an enforcement action aimed at one company rather than a rule of general application. Either way, a list that now runs from IT outsourcing firms to Microsoft and Adobe suggests the administration sees PERM suspension as a general enforcement tool rather than a one-off response to a single contractor, and the university investigations point to the student-to-worker pipeline as the next front, a day after DHS proposed a $70,000 fee on Optional Practical Training.
For Microsoft employees, the immediate step is to find out exactly where each case stands: whether PERM has been filed, whether an I-140 is approved and for how long, and when the six-year H-1B limit arrives. Those three dates will determine who has room to wait and who may need a plan, including a possible move to another employer, which would require a new H-1B petition and, for green card purposes, a new PERM and I-140, though an approved I-140’s priority date can usually be kept.
Other employers should treat this as a compliance warning. Any company that has had layoffs in the past six months in occupations where it is also sponsoring green cards should confirm that its PERM files document notice to, and consideration of, laid-off U.S. workers, and that its recruitment reports would hold up under an audit. Practitioners should watch for a written notice, Labor Department guidance or a court filing that spells out the legal basis, since that document will shape every option that follows.
Source: Associated Press (via KIRO 7); Reuters (via GV Wire); Newsweek, Oct. 8, 2026; Newsweek, Sept. 9, 2026 (Cognizant); Newsweek, Sept. 28, 2026 (Sept. 18 directives); DOL Office of Inspector General press release, July 8, 2026; 20 CFR 656.31; 20 CFR 656.17; 8 CFR 214.2(h)(13); 8 CFR 205.1; CFO Dive, July 28, 2025.
This article is for general information and is not legal advice. The situation is changing quickly, so please consult an immigration attorney about your specific case.
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