The Regulatory Backdrop
Since January 2017, foreign nationals in E-1, E-2, E-3, H-1B, H-1B1, L-1, O-1, and TN classifications have benefited from a codified grace period under 8 C.F.R. § 214.1(l)(2). That provision allows a nonimmigrant whose employment ends before the end of their authorized validity period to remain in lawful status for up to 60 consecutive days (or until the end of the authorized validity period, if shorter), once during each authorized validity period. The rule, part of the 2016 high-skilled workers regulation issued under the prior administration, was designed to give sponsored workers breathing room to secure new sponsorship, change status, or depart the country in an orderly fashion rather than accruing unlawful presence the moment a termination letter is signed.
Reports that a proposed rule rescinding or substantially narrowing this grace period has cleared review by the Office of Information and Regulatory Affairs (OIRA) within the Office of Management and Budget signal that a Notice of Proposed Rulemaking may be imminent. OIRA review under Executive Order 12866 is typically the final interagency checkpoint before a proposed rule is published in the Federal Register for public comment. While the substantive contours of the rule will not be fully known until publication, the direction of travel is unmistakable: DHS is signaling an intent to compress the runway available to terminated sponsored workers, and employers should not wait for a final rule to begin adjusting internal practices.
Why This Matters Beyond Compliance
The 60-day grace period is not merely a courtesy to departing employees—it is a risk-management tool for employers. It has historically provided a buffer during which:
- A terminated worker could be picked up by a new sponsor through a portability filing without a gap in status;
- Human resources and immigration counsel could coordinate an orderly exit, including COBRA elections, return of company property, and non-compete considerations, without the added pressure of same-day departure;
- Employers engaged in reductions in force or restructuring could stagger terminations without triggering immediate unlawful presence exposure for affected employees.
Eliminating or narrowing that period shifts risk squarely onto both the worker and the sponsoring employer. A worker who falls out of status immediately upon termination loses eligibility for many change-of-status and extension filings, and reentry after departure may implicate unlawful presence bars under INA § 212(a)(9)(B). For employers, the practical effect is a compressed window in which to make offboarding decisions, document terminations precisely, and, where a new position is available, initiate portability or change-of-status filings before status lapses.
Employer Strategy: Offboarding Timelines
Employers should treat the anticipated rule as a catalyst to formalize immigration-specific offboarding protocols now, rather than waiting for a final rule with a compliance deadline. Key steps include:
- Immediate notification triggers. Build a standing operating procedure requiring HR to notify immigration counsel the moment a termination decision is made for any sponsored employee, not after the termination meeting occurs.
- Same-day documentation. Prepare termination letters and last-day-of-employment confirmations in a form that clearly establishes the effective date, since that date will anchor any remaining grace period calculation or, if the rule is finalized, the absence of one.
- Coordinated exit logistics. Where feasible, align termination dates with pre-cleared departure or transfer plans so that affected employees are not left without a contingency the moment separation occurs.
Employer Strategy: Recruitment and Retention Planning
A shortened or eliminated grace period also has upstream effects on how employers recruit and retain sponsored talent:
- Earlier extension filings. Employers should move extension and amendment filings for H-1B, L-1, and other sponsored employees further in advance of expiration, reducing the number of employees whose status depends on a grace period buffer at all.
- Portability-ready recruiting. For lateral hires already in the United States on sponsored status, employers should build internal timelines assuming that portability filings must be submitted before, not after, any termination from the current employer takes effect.
- Diversified visa strategy. Employers heavily reliant on H-1B talent should reassess bench strength across other categories (O-1, L-1 intracompany transfers, TN where applicable) to reduce single-point-of-failure exposure if a worker's grace period disappears mid-transition.
Status Portability Contingency Planning
Because portability provisions under the American Competitiveness in the Twenty-First Century Act allow certain H-1B workers to begin employment with a new sponsor upon the filing of a nonfrivolous petition, the interplay between portability and a shrinking grace period becomes critical. Employers should:
- Map out, for each sponsored employee, the precise sequence of filing dates needed to preserve status continuity in the event of termination or transition;
- Establish escalation protocols with outside immigration counsel so that a portability petition can be prepared and filed within days, not weeks, of a triggering event;
- Maintain contingency communication plans for affected employees regarding international travel, since a compressed or eliminated grace period increases the risk that departure timing itself becomes legally consequential.
Preparing for the Comment Period and Beyond
Once published, the proposed rule will be subject to a notice-and-comment period under the Administrative Procedure Act, giving employers, industry groups, and other stakeholders an opportunity to submit comments before any final rule takes effect. Employers with significant sponsored workforces should consider participating in that process, either directly or through industry coalitions, while simultaneously building internal readiness independent of the rule's ultimate fate.
The prudent course is to treat OIRA clearance as an early warning rather than a final answer. Employers that update offboarding checklists, accelerate extension timelines, and stress-test portability contingencies now will be far better positioned than those that wait for a Federal Register notice to begin adapting.