- within Immigration topic(s)
- within Immigration topic(s)
Texas officials have opened investigations into alleged H‑1B fraud, issuing civil investigative demands, directing audits, and launching legislative inquiries, despite the federal government’s exclusive authority over the program.
While the immediate ramifications are limited to state consumer-protection law, the broader effects may not be. Employers should be aware that developments in Texas could influence H‑1B enforcement priorities well beyond the state’s borders.
Federal Framework
The H‑1B program is governed by the Immigration and Nationality Act and other federal regulations. This framework sets the requirements for employers hiring foreign workers in specialty occupations and is the basis for fraud investigations and enforcement. US Citizenship and Immigration Services enforces compliance through site visits. During these reviews, officers may interview personnel, review records, and issue administrative subpoenas. Refusal to cooperate can result in denial or revocation of associated H‑1B petitions, and USCIS may refer matters to US Immigration and Customs Enforcement, where fraud indicators are identified.
The US Department of Labor also has authority to enforce H-1B compliance, which has taken on added significance under Project Firewall, a department enforcement initiative launched in September to increase scrutiny of wage violations or misrepresentation of working conditions.
H-1B compliance has become a federal priority independent of, but reinforced by, what is occurring in Texas. A highly litigated presidential proclamation from September imposed a $100,000 fee on petitions filed for workers abroad. A US Department of Homeland Security final rule restructured the H-1B lottery so that petitions offering higher wages received better odds of selection.
Texas Investigations
In January, reports of alleged H-1B “ghost offices”—fraudulent businesses sponsoring unusually high numbers of H-1B visa applicants with little or no apparent commercial activity—prompted a series of state actions.
Gov. Greg Abbott (R) ordered all state agencies to halt H-1B visa applications for state employees through May 2027. State Attorney General Ken Paxton (R) issued civil investigative demands to employers suspected of misrepresenting operations through nonexistent or nonoperational worksites, compelling production of employee rosters, financial information, and service descriptions. Texas House Speaker Dustin Burrows (R) also directed a legislative committee to investigate whether the state has sufficient visibility into employer use of the H-1B visa program to identify patterns affecting the Texas workforce or raising security concerns.
Despite these actions, at a structural level, no state has authority to administer or enforce the H‑1B program itself. State enforcement is limited to underlying business conduct under consumer-protection law without requiring proof of any immigration violation.
The more consequential effect from these state actions could be economic and legislative. Any proposal imposing additional reporting requirements or higher eligibility criteria for state or local incentives could create fiscal uncertainty for companies using H-1B workers.
Congressional Efforts
Last month, several of Texas’ US House representatives called for coordinated investigations involving DHS, the US Department of State, and DOL, citing gaps in oversight. Congress is already considering the bipartisan H-1B and L-1 Visa Reform Act of 2025, which proposes stricter wage baselines and expanded compliance tools. The collaboration requests and the bill don’t create new legal authority, but they signal that a “fraud and abuse” framing is generating federal legislative momentum.
Beyond Texas
The patterns being targeted in Texas align closely with existing federal risk indicators. USCIS already uses data-driven targeting to identify fraudulent petitions, including unusual worksite arrangements or inconsistencies in business operations. That convergence increases the likelihood of similar state-level scrutiny nationwide.
Additionally, federal enforcement may become more aggressive in response to state and congressional pressure. USCIS’ authority to conduct site visits and penalize noncooperation can be exercised more frequently without additional rulemaking under Project Firewall and an increase in multiagency coordination.
The narrative surrounding H‑1B fraud is shifting to higher enforcement. Authorities are focusing on issues such as allegations of sham entities, misrepresented worksites, and displacement concerns are being framed as systemic issues rather than isolated misconduct, which is most likely to affect smaller employers, third-party placements, or remote-work arrangements.
Finally, other states may follow Texas’ lead. The attorney general’s investigative theory rests on consumer protection principles common to virtually every state. Attorneys general in states with many H-1B employers could pursue parallel frameworks using existing authority and deceptive trade practice statutes without new legislation.
How to Proceed
The fact patterns at issue in Texas are already within federal enforcement architecture. Employers nationwide, particularly those with remote workforces, third-party worksites, or fast-scaling operations should treat “ghost office” allegations as a proxy for the questions USCIS and DOL are already positioned to ask: Does the company exist as represented? Are wages and working conditions compliant?
Employers should continue to focus on ensuring that the facts underlying each H‑1B petition remain aligned with day-to-day operations. In practice, this means keeping job duties, work location, supervision, and compensation consistent with the petition and maintaining accurate records on the Public Access Files. Employers should also be prepared for unannounced site visits by designating knowledgeable points of contact and conducting internal audits.
In addition, a political engagement strategy at the state and federal levels may be critical not only to address immediate issues, but also to engage with lawmakers on long-term strategies from both proactive and defensive postures.
The present issue around H-1B isn’t the first time—nor will it be the last—that political posturing could lead to upending favorable economic outcomes. Market certainty is heavily reliant on regulatory stability across a variety of statutory issues that are ultimately decided by elected officials in state legislatures and in Congress. These political decisions directly and indirectly determine how the private sector turns a profit. Companies and their leadership will have to decide how to engage with the policymakers impacting their bottom lines.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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