How New York startups are hiring while the $100,000 H-1B fee sits in court
A $100,000 fee on new H-1B petitions is vacated by one court and upheld by another, leaving the nation's top H-1B market to plan around the uncertainty.
A presidential proclamation signed in September 2025 required a $100,000 payment on certain new H-1B petitions. Nine months later, a federal court in Massachusetts vacated the policy, ruling it an unauthorized tax. A different federal court in Washington had already upheld the same fee. Both rulings are now on appeal, and the fee's status has changed more than once since the proclamation took effect.
New York has more exposure to that back-and-forth than almost anywhere else. The New York metro area led the country in H-1B approvals in 2023, and New York state is itself a plaintiff in the lawsuit that produced the June 2026 ruling against the fee. Here is where the litigation stands, what it means for hiring in the city, and what alternatives exist in the meantime.
A Fee That Took Effect, Then Didn't
The proclamation took effect at 12:01 a.m. Eastern on September 21, 2025. It required a $100,000 payment, on top of standard filing fees, for new H-1B petitions filed after that moment on behalf of workers outside the United States who did not already hold a valid H-1B visa. It did not apply to previously issued visas, and USCIS later clarified it also does not apply to petitions requesting an amendment, extension or change of status for someone already inside the country.
On June 8, 2026, the U.S. District Court for the District of Massachusetts vacated the agency guidance implementing the fee in State of California v. Mullin. The court found the $100,000 payment functioned as an unconstitutional tax that Congress had not authorized the president to impose, and that the agencies had adopted it without the notice-and-comment process the Administrative Procedure Act requires. The court briefly paused its own order on June 12 while the government sought a stay pending appeal. On July 24, 2026, the First Circuit Court of Appeals denied that stay request. USCIS's own H-1B guidance now states the fee is not currently enforceable, while noting that the Department of Homeland Security disagrees with the ruling and intends to try to collect the payment if it prevails on appeal.
Two Courts, Two Very Different Answers
The Massachusetts ruling was not the only word on the subject. On December 23, 2025, the U.S. District Court for the District of Columbia reached the opposite conclusion in Chamber of Commerce of the United States of America v. U.S. Department of Homeland Security, upholding the same fee. That court held the proclamation rested on the president's statutory authority to regulate entry into the country and rejected the argument that the agencies had violated the Administrative Procedure Act.
Both decisions are now under appeal, the December ruling to the D.C. Circuit and the June ruling to the First Circuit. A separate suit is also pending in the Northern District of California. With two circuits potentially reaching different outcomes, the question of whether the fee survives may not be settled until an appeals court, or eventually the Supreme Court, resolves the conflict.
Why New York Has More Riding On This Than Most
The New York-Newark-Jersey City metro area led the nation in H-1B approvals in 2023, with more than 55,000, according to the Pew Research Center's analysis of USCIS data. That was nearly double the next-highest metro areas, Washington, D.C. and San Jose, California, each above 30,000. Nationally, computer-related occupations accounted for 65% of H-1B approvals in 2023, with a median salary of $123,600, and roughly three-quarters of approved workers that year were born in India.
USCIS employer data cited by outlets reporting on the region shows Bloomberg, Citibank, Barclays Services Corp, the New York City Department of Education and American Express among the area's top H-1B employers. That list points to how broadly the fee's reach extends across the city's finance and education sectors, beyond the venture-backed startups most vocal in opposing it. Available data does not break H-1B approvals down by company size, so how many of the region's approvals go to early-stage companies specifically is not quantified in the public record. New York joined California, Massachusetts, Illinois, New Jersey and Washington state, among others, in the 20-state lawsuit that produced the June 2026 ruling against the fee.
“One court has thrown the fee out, a second has upheld it, and the region with the most H-1B approvals in the country is left planning around whichever ruling survives on appeal.”
What Founders Are Actually Doing In The Meantime
Founders have been vocal about the fee since it was announced. Amr Awadallah, founder of the AI startup Vectara, said in September 2025 that he could not afford to pay $100,000 per hire and that the fee would price startups out relative to large companies. Brian Sathianathan, co-founder of Iterate, said his previous company's exit would not have been possible without H-1B access. Jeffrey Wang, co-founder of Exa.ai, noted that his own parents had come to the United States on H-1B visas.
With the fee's legal status unsettled, companies have been working around it rather than waiting for a final answer. One DHS clarification exempted workers already in the country on F-1 student status at the time their H-1B petition is approved. Others are exploring O-1 visas, visa-free remote hiring, or opening offices in Canada, Germany or the United Kingdom.
Startup groups and venture investors have also pressed Washington directly. A coalition sent a letter seeking a national-interest exemption for technology startups. Morgan Reed of ACT | The App Association proposed a size-based exemption instead, arguing that only large organizations can absorb a $100,000 fee. Engine, a startup policy group, has suggested reforming the separate International Entrepreneur Parole program or creating a dedicated startup visa. The U.S. Chamber of Commerce sued over the fee as well, though its challenge was the one a Washington court rejected in December.
The Route That Doesn't Depend On H-1B At All
One option exists outside the H-1B system entirely, though it helps founders rather than the engineers they want to hire. USCIS's International Entrepreneur Rule grants parole, not a visa or green card, to founders who hold at least 10% ownership in a U.S. startup formed within the past five years, play a central and active role in the company, and can show the venture has substantial potential for rapid growth and job creation.
As of October 1, 2024, applicants need to show at least $311,071 in qualifying investment or $124,429 in government awards and grants, figures that adjust every three years for inflation. Parole runs up to 2.5 years initially and can be renewed once for a total of five years, and up to three founders per startup can qualify, with spouses eligible for work authorization. It is a narrower tool than H-1B sponsorship, useful for the founder of a company rather than the specialty-occupation employees a startup is trying to staff up, and it remains a discretionary grant rather than a guaranteed path to permanent status.
