What Is the H-1B Visa? The Program at the Center of the Microsoft Layoffs Controversy, Explained

The H-1B is a temporary U.S. work visa for "specialty occupations" — jobs that generally require at least a bachelor's degree, most commonly in technology. It is in the news this week for two converging reasons: reports that Microsoft received approval for thousands of H-1B petitions in the same period it cut thousands of jobs, including about 1,600 immediate layoffs at Xbox, and Vice President JD Vance's announcement of a Department of Labor investigation into alleged fraud in the program. Here is what the visa actually is, what both sides are saying, and what happens to visa holders caught in the layoffs.

What Is the H-1B Visa Program, in Plain Language?

Created by Congress in 1990, the H-1B lets U.S. employers temporarily hire foreign professionals for roles that require specialized knowledge — software engineering is by far the most common, but it also covers fields like medicine, finance and research. The employer files the petition, not the worker, and the visa is tied to that job. It is granted for an initial three years and can be extended to a maximum of six, or longer if a green-card application is already in process. According to Pew Research Center data, the median H-1B salary in the private sector is about $92,600, rising to roughly $123,600 for computer-related occupations.

How Many H-1B Visas Are Issued Per Year?

• Annual cap: 65,000 new visas, plus 20,000 reserved for holders of advanced degrees from U.S. universities — 85,000 total per fiscal year.
• Cap-exempt: Universities, nonprofits and research institutions can sponsor workers outside the cap.
• The lottery: Registrations far exceed available slots, so recipients are chosen by lottery. Under a wage-weighted system that took effect in February 2026, higher-paid roles receive more lottery entries than entry-level ones.
• New cost: A September 2025 presidential proclamation attached a $100,000 fee to new petitions. A federal court in Massachusetts struck the fee down in June 2026 as beyond presidential authority, but paused its own ruling — so the fee remains in effect while the government appeals.

Why Is Microsoft Hiring H-1B Workers During Layoffs? The Controversy

On July 6, Microsoft cut roughly 3,200 Xbox positions — about 20 percent of the division — with around 1,600 eliminated immediately, part of approximately 4,800 cuts company-wide, according to Newsweek. Critics online, including Seattle-area commentators, contrasted those cuts with federal data showing Microsoft has received about 2,273 H-1B approvals in 2026 and nearly 40,000 since 2020, accusing the company of replacing American workers with cheaper foreign labor. (See our Microsoft layoffs full-list story for every affected studio.)

Microsoft rejected that framing. "These decisions are based on business need, not visa status," the company said, adding that H-1B employees were also among those laid off in the U.S. Xbox leadership, per reports, attributed the cuts to a business that was "not healthy," with margins far below comparable gaming companies. Immigration-data analysts also note a caveat on the numbers: USCIS approval totals include extensions and renewals for people already employed, not only new hires — so approval counts do not equal new foreign workers hired in a given year.

The Vice President's Anti-Fraud Campaign

On July 8, speaking in Wisconsin, Vice President JD Vance announced that the Department of Labor has opened investigations and issued dozens of subpoenas targeting alleged H-1B and PERM visa abuse, labor trafficking, and displacement of American workers. "American jobs ought to go to American workers and not foreign fraudsters, and the Department of Labor is fighting back against it," Vance said, according to The Hill and The Washington Times. Reports note he did not name the companies or individuals under investigation or detail the legal basis for the subpoenas. Supporters of the program, including tech-industry groups, have long argued it fills genuine skill shortages, while critics contend it is used to undercut U.S. wages — the dispute now heading into the midterm campaign season.

What Happens to H-1B Workers After Layoffs? The 60-Day Rule

For visa holders swept up in the Microsoft cuts, the human stakes are immediate. Under USCIS rules, a laid-off H-1B worker gets a one-time grace period of up to 60 calendar days (or until their authorized stay ends, whichever is shorter) to do one of three things: find a new employer to file a petition, change to a different visa status, or leave the United States. They generally cannot work during the grace period, though if a new employer files a non-frivolous H-1B petition, the worker can start immediately once USCIS receives it. Leaving the country ends the grace period, and overstaying it can trigger unlawful presence — which carries potential multi-year reentry bans. Dependents on H-4 visas, including children, share the same clock.

The Numbers: Top Employers and Salaries

Amazon has been the top H-1B employer every year since 2020, with more than 11,000 approvals in fiscal 2023, per Pew Research Center. Labor-condition filing data for FY 2025 shows Amazon filing over 15,500 applications at an average salary near $157,000, with Meta reporting the highest average pay at about $205,000. Microsoft, Google, Apple and large IT-services firms round out the biggest sponsors.

What Could Change Next

Three tracks to watch: the appeals court ruling on the $100,000 fee, which could reshape who can afford to sponsor; the outcome of the Labor Department investigations, which could bring enforcement actions against specific employers; and the wage-weighted lottery, which is already tilting selection toward higher-paid roles. Any of the three could significantly alter how the 35-year-old program works — and the debate over whether it protects or displaces American workers shows no sign of cooling.

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