Resources

A Practical Guide for HR Professionals, In-House Counsel, and Business Owners

A Policy Change with Real Workforce Consequences

On May 21, 2026, the United States Citizenship and Immigration Services issued Policy Memorandum PM-602-0199. The memorandum instructs USCIS officers to treat adjustment of status, the process by which a foreign national obtains lawful permanent resident status while remaining inside the United States, as an act of administrative grace rather than a standard procedural step. Even applicants who satisfy every statutory requirement may now be denied on purely discretionary grounds.

For employers who sponsor foreign national workers, this policy change has direct operational implications. The green card pipeline that many businesses have relied upon is now subject to greater scrutiny, longer timelines, and more uncertain outcomes. This article explains the legal framework, identifies the specific risks employers face, and outlines the practical steps employers should take now.

The Legal Framework in Brief

Adjustment of status is governed primarily by Section 245 of the Immigration and Nationality Act (INA). The statute provides that an eligible alien's status may be adjusted by the Secretary of Homeland Security, in his discretion. Congress made adjustment discretionary, and courts have consistently confirmed that characterization. The Board of Immigration Appeals established in Matter of Blas, 15 I&N Dec. 626 (BIA 1974), that adjustment of status is an extraordinary form of relief not designed to supersede the regular consular visa-issuing process. The Supreme Court reaffirmed the discretionary nature of adjustment most recently in Patel v. Garland, 596 U.S. 328 (2022).

The new memorandum does not change the eligibility rules. It changes how aggressively officers are expected to apply the discretionary component of those rules. Officers are now explicitly directed to treat in-country adjustment as the exception, not the norm, and to require applicants to affirmatively demonstrate that approval is in the best interest of the United States.

The Dual Intent Acknowledgment and Its Qualification

The memorandum acknowledges that adjustment of status is not inconsistent with simultaneously maintaining nonimmigrant status in a category with dual intent, such as the H-1B or L-1 visa. This is consistent with the statutory framework at INA Section 214(h), which prohibits denying H-1B status on the basis of immigrant intent.

However, the memorandum immediately qualifies that acknowledgment. It states that maintaining lawful status in a dual intent nonimmigrant category is not sufficient, on its own, to warrant a favorable exercise of discretion. This means that even a sponsored worker with a clean H-1B record, an approved I-140, and no violations is not automatically entitled to adjustment approval. Officers must still weigh the equities.

What Adverse Factors Officers Are Now Directed to Find

Officers are directed to consider violations of immigration law or the conditions of any immigration status, fraud or false testimony in dealings with any government agency, whether the original admission or parole violated the laws or policies in place at the time, and any conduct after admission inconsistent with the purpose of the nonimmigrant status held. For employers, this translates into several practical workforce risks.

Any employee who had even a brief unauthorized employment period — including gaps between H-1B employers during a portability transfer, a period of work before a cap-gap extension was properly documented, or work performed after a status expiration — now has an adverse factor in their record that an officer is specifically instructed to weigh. These technical violations are common in complex H-1B histories and were often treated as minor in prior practice. Under the new framework, they are significant.

Employees who entered on J-1 exchange visitor visas and later converted to H-1B present additional risk. The J-1 requires nonimmigrant intent, and if a J-1 holder harbored immigrant intent before conversion, that could be characterized as misrepresentation on the original application. Misrepresentation is one of the most serious adverse factors the memorandum identifies.

The Judicial Review Barrier

The practical consequences of a discretionary denial are more severe under the current legal landscape than in prior years. In Patel v. Garland, 596 U.S. 328 (2022), the Supreme Court held that federal courts generally lack jurisdiction to review discretionary adjustment of status denials on the merits. An employer whose sponsored worker receives a discretionary denial has limited recourse through the courts. The worker may refile, may appeal within the agency in some circumstances, or may face the prospect of departure and consular processing — a path that carries its own serious risks, including potential triggering of the three-year or ten-year unlawful presence bars under INA Section 212(a)(9)(B).

Litigation challenging the memorandum itself is anticipated. Affected employer groups, immigration advocacy organizations, and professional associations are evaluating challenges under the Administrative Procedure Act and other legal theories. Courts may narrow the memorandum's application, require more individualized USCIS reasoning in denial notices, or limit how broadly officers may apply the extraordinary grace standard to otherwise clean cases. This area of law is evolving rapidly, and employers should not assume the current framework is final.

Operational Risks Employers Should Assess Now

The first and most urgent operational risk is attrition. If sponsored employees begin receiving adjustment of status denials despite clean records, some will face the choice of departing for consular processing, a process that can take three to five years and requires time outside the United States, or remaining in extended H-1B status with increasing uncertainty about their permanent residence path. Some workers, particularly those from countries with shorter permanent residence pathways such as Canada, the United Kingdom, or Australia, may choose to leave the United States entirely rather than remain in prolonged limbo. Employers who have invested in training, credentialing, and integrating these workers face real replacement costs.

The second operational risk involves the H-1B extension pipeline. Extensions of H-1B status beyond the initial six-year period are available under AC21 only if an I-140 petition has been approved for at least 365 days or a labor certification has been pending for at least 365 days. If adjustment of status adjudications become slower or less predictable, the timing interactions between I-140 approvals, priority dates, and H-1B extension eligibility become more complex to manage. Employers must track these deadlines carefully.

The third operational risk is the potential for increased Requests for Evidence and Notices of Intent to Deny in pending cases. The memorandum applies immediately to pending I-485 applications. Employers should anticipate that workers with pending green card applications may begin receiving additional USCIS inquiries focused specifically on the discretionary balancing analysis and should ensure those workers have counsel prepared to respond.

Practical Steps Employers Should Take Now

Employers should conduct an audit of their sponsored employee population. For each worker with a pending or planned I-485 application, counsel should review the full immigration history for any periods of unauthorized employment, status gaps, J-1 background, or other potential adverse factors. Identifying problems before an application is filed or before an RFE arrives is significantly less costly than responding to a mid-adjudication challenge.

Employers should also build more robust application packages going forward. Under the new framework, an adjustment of status filing should include affirmative documentation of the employee's positive equities, not just the minimum statutory eligibility evidence. Community contributions, professional significance, patient or client impact where applicable, and other positive factors should be documented and presented as part of the application.

Employers should engage with the professional and industry associations relevant to their workforce. The U.S. Chamber of Commerce, the Society for Human Resource Management, and sector-specific associations are already monitoring this memorandum and engaging with USCIS through formal comment processes. Employers in affected industries should ensure their voices are represented in those advocacy channels, particularly as USCIS develops the category-specific guidance the memorandum previews.

Finally, employers should ensure that all sponsored workers with any immigration complexity have access to qualified immigration counsel. The cost of early legal review is small relative to the cost of a discretionary denial that triggers a multi-year consular processing detour for a key employee.

---

About the Author

Robert A. Ratliff is an immigration attorney at Brennan, Manna and Diamond, located at 200 Public Square, Suite 1850, Cleveland, Ohio 44114. He may be reached by telephone at 216-658-2155 or by email at immigration@bmdllc.com. His firm website is www.removal-defense.com. Mr. Ratliff is the author of The Pro Se Immigration Law Library, available on Amazon. He also hosts The Immigration Podcast on Spotify, where he discusses immigration law developments in plain language for a broad audience.

Scan to visit removal-defense.com | Listen on Spotify

Cross-Reference: Related Articles in This Series

This article is one of four in a series analyzing USCIS Policy Memorandum PM-602-0199 (May 21, 2026). The other articles in this series address: (1) individuals on H-1B and other nonimmigrant visas navigating the green card process; (2) general employers who sponsor foreign national workers; and (3) healthcare and nonprofit employers that depend on the H-1B to employment-based immigrant visa pipeline for physicians, scientists, and other specialized workers. All four articles are available at www.removal-defense.com.

Disclaimer

This article is intended for general informational purposes only. It does not constitute legal advice and does not create an attorney-client relationship. Immigration law is highly fact-specific, and the consequences of immigration decisions are often severe and permanent. The legal landscape described in this article is rapidly evolving. Litigation challenging USCIS Policy Memorandum PM-602-0199 is anticipated, and courts, Congress, or further agency guidance may alter the analysis described here in significant ways. Readers should not act or refrain from acting based on this article without first consulting a qualified immigration attorney regarding their specific circumstances. For a confidential consultation, contact Brennan, Manna and Diamond at 216-658-2155 or immigration@bmdllc.com.