The suspension of companies from the H-1B visa program raises questions about the impact on U.S. employment and the status of foreign workers. While the Department of Labor maintains a debarment list, the broader implications for American jobs and wage dynamics remain unclear.
The ongoing scrutiny of the H-1B visa program by the federal government has led to the suspension of several companies, including the prominent IT firm Cognizant, over allegations of fraud. This move reflects a broader effort by the Trump administration to enforce compliance with immigration and labor laws, aimed at protecting both foreign workers and U.S. employees.
As of September 2026, the Department of Labor (DOL) has identified a limited number of employers currently barred from participating in the H-1B visa program. This debarment is intended to penalize rule violations; however, the tangible outcomes of such penalties—particularly in terms of job availability for American workers—are difficult to measure.
Debarment List and Its Implications
The DOL’s debarment list is relatively concise, featuring only five companies as of September 1, 2026. These include:
- GowraTech LLC (debarred from May 12, 2025, through May 11, 2027)—6 H-1B petitions
- Renotek Group LLC (debarred from August 8, 2025, through August 7, 2027)—34 H-1B petitions
- Seeloz Inc. (debarred from March 4, 2026, through March 3, 2028)—4 H-1B petitions
- Sherwood at Mount Dora Inc., operating as Sherwood Academy (debarred from May 26, 2026, through May 25, 2028)
- Da Vinci at Hunters Creek Inc., operating as Da Vinci Academy (debarred from August 3, 2026, through August 2, 2028)
The data for H-1B visa numbers for the last two organizations on the list remains unclear, highlighting gaps in available information. Furthermore, the DOL also maintains a separate list of “willful violators”—employers that have committed significant violations of H-1B program requirements but may not necessarily face debarment.
Status of Existing H-1B Workers
A common misconception surrounding debarment is that companies must immediately terminate all foreign workers. However, the DOL specifies that debarment does not invalidate existing employee visas. Workers are permitted to continue their employment under their current authorization, though their employers lose the ability to file new H-1B petitions or pursue extensions and green card sponsorships while the debarment is in effect.
This situation creates a complex dilemma for foreign workers whose long-term employment status hinges on their employers. In practice, some may seek to transfer sponsorship to a different employer, while others might face challenging decisions as their work authorization nears expiration. Unfortunately, there is no comprehensive federal database tracking the outcomes for workers at debarred companies, contributing to a lack of transparency and complicating the assessment of the real-world impacts of debarments.
The Impact on American Jobs
The question of whether debarment leads to increased job opportunities for U.S. workers remains contentious. Daniel Kotchen, an attorney with Kotchen & Low LLP, argues that companies barred from the H-1B program may see increased labor costs and be compelled to adjust their hiring practices, potentially leading to greater employment of American workers.
However, experts caution against assuming that debarment directly translates into job creation for U.S. workers. Companies may opt to restructure operations, resort to subcontractors, or shift work to affiliates or overseas locations rather than hiring domestically. The federal government does not publish data on whether positions formerly occupied by H-1B workers at debarred firms are filled by U.S. citizens or other visa holders, further complicating the analysis.
Research Findings on H-1B Employment Effects
Academic research on the labor market effects of the H-1B program presents a divided perspective. Some studies suggest that the hiring of H-1B workers can displace other workers within the same firms. A notable study by economists Kirk Doran, Alexander Gelber, and Adam Isen found that increased H-1B visa allocations were linked to reduced employment opportunities for non-H-1B workers at participating firms.
Conversely, other research indicates that access to H-1B workers can enhance firm growth and survival, particularly among smaller businesses. These findings suggest that the dynamics of the labor market are complex, and the impact of H-1B workers varies across different sectors and types of workers.
Wage Disparities and Economic Implications
Another significant area of debate is the wage implications of the H-1B program. A recent analysis from the National Bureau of Economic Research indicated that H-1B workers at many firms earn less than their U.S. counterparts when controlling for variables such as education, occupation, and location. Critics argue that this wage disparity incentivizes employers to rely on foreign labor.
Supporters of the H-1B program contend that many employers seek foreign workers due to a lack of qualified candidates in the domestic labor market. The DOL mandates that employers certify that hiring H-1B workers will not adversely affect the wages and working conditions of similarly employed U.S. workers.
Kotchen emphasized the need to address corrupt practices within the IT sector, asserting that these issues have long hindered progress in the labor market. He expressed hope that recent developments would lead to bipartisan efforts to reform the program in a way that benefits both American and foreign workers.
