Adjustment of status 2026: What Changed and Why

If your company sponsors workers on H-1B or L-1 visas, the USCIS policy memo issued on May 21, 2026 arrived with a very specific problem attached.

The headlines called it a shutdown. It isn't. But for HR directors managing sponsored employees mid-process, ops managers planning headcount across borders, and finance teams carrying the cost of delayed or denied green card applications, the consequences are real: longer timelines, more Requests for Evidence, and cases that used to move smoothly now needing significantly more documentation.

What Deel's immigration specialists are seeing: applicants with clean records and no red flags are facing closer scrutiny than before. Not because the law changed. Because the standard for what counts as a strong case has shifted, and the margin for poorly prepared applications has narrowed.

Here's what changed, what didn't, and what to do about it now.

What the memo actually says

USCIS issued Policy Memorandum PM-602-0199 — titled, in the agency's characteristic understatement, "Adjustment of Status is a Matter of Discretion and Administrative Grace."

The memo instructs officers to treat adjustment of status (AOS) — the process that allows eligible individuals already in the US to apply for a green card without leaving the country — as a form of relief that depends on officer judgment, not a guaranteed right. Under the new framework, officers must run a deliberate balancing test, weighing positive and negative factors across the full picture of each applicant's circumstances.

The agency's own press release overstated the change, suggesting all temporary visa holders would now need to leave the US to apply. That framing was wrong.

Section 245 of the Immigration and Nationality Act (INA) still permits adjustment of status. You can still file Form I-485 and get approved from within the US. Congress has not acted.

What has changed is the standard of proof. Applicants can no longer arrive at an interview with a clean record and expect that to be enough.

What hasn't changed

The adjustment of status pathway is still open. For H-1B and L-1 visa holders — categories Congress explicitly designed with a route to permanent residence — the memo's impact is more limited. The memo itself acknowledges that applying for adjustment of status is not at odds with maintaining dual-intent status.

But "more limited" is not the same as "unaffected." Greater scrutiny now touches everyone in the process. Officers have wider authority to use their judgment, and how they apply that authority will vary by case, by officer, and over time as USCIS releases further guidance on specific groups of applicants.

What this memo changes is how officers review applications. Not whether they can approve them.

How officers will now weigh cases

Before this memo, showing lawful status and no negative factors was often enough. That bar has moved.

Officers now expect applicants to bring affirmative evidence of merit. On the positive side, they'll look at family ties to the US — particularly where a US citizen or lawful permanent resident spouse or children would face real hardship if separated — long-term lawful presence backed by employment history and tax records, good moral character, and clear contribution to the US economy.

On the negative side, they're directed to scrutinize immigration violations, work without authorization, failure to leave as required, criminal history, and prior applications filed under INA Section 245(k), which covers certain status breaches.

The practical upshot: applicants who show up with nothing wrong may still be denied if they bring nothing positive. Officers now need a reason to say yes — not just an absence of reasons to say no.

What this means for employees

If you're on an H-1B, L-1, or another employment-based visa pursuing permanent residence through your employer, your path remains legally intact. But the room for error is smaller.

• Build your supporting evidence pack now, before your interview: This is organized documentation of who you are: your employment record, community ties, employer support, and contributions to the US economy. It's not a new idea — but it's now essential, not optional
• If you have gaps in your compliance history, get legal advice immediately: Employees who have worked without authorization, overstayed a visa, or broken visa conditions face a much harder path under this framework. The time to deal with that is before you file, not after
• Understand what a denial actually means: If an adjustment of status application is denied and the employee isn't maintaining active nonimmigrant status, removal proceedings can follow. The difference between remaining in the US during an authorized period of stay versus actively holding nonimmigrant status is significant — and carries real consequences
• Prepare for interview questions about why you chose AOS over consular processing: Officers may now ask this directly. Clear, honest, well-documented answers will matter

What this means for employers

For companies sponsoring workers through the adjustment of status process, this memo is a prompt to review your immigration strategy — not just for employees currently mid-process, but across the board.

• Audit your sponsored workforce now: Identify employees with pending I-485 applications, particularly those relying solely on AOS-based Employment Authorization Documents (EADs) without holding active nonimmigrant status. Anyone who filed under INA 245(k) or has any compliance history needs a proactive review
• Make documentation a core part of every petition: Employer support letters, evidence of business need, and tailored case preparation are no longer finishing touches. They're foundational. Build every application assuming it will face close review
• Plan for longer timelines: Requests for Evidence (RFEs) will increase as officers apply tighter standards. Build that into your retention planning and sponsored employee timelines now
• Reconsider consular processing as the default for new hires: For employees without complex US ties or compliance history, consular processing is now the lower-risk route to permanent residence. That said, adjustment of status offers protections consular processing doesn't — including Employment Authorization Documents — so the right choice depends on the individual's situation and should always involve immigration counsel
• Pressure-test AOS as a retention tool: Companies that have relied on adjustment of status as a standard way to keep sponsored employees in place should revisit that assumption now.

The bottom line

This is a shift in how officers apply judgment — not a closure of the pathway. The green card route through adjustment of status is still open. But the bar for demonstrating merit is higher, the room for passive applications has shrunk, and variation between officers is likely to grow before USCIS releases more specific guidance.

The best time to review your sponsored employees' AOS position and build their supporting evidence record is before they're called to interview.

How Deel Mobility can help

Policy shifts like this one are where immigration complexity grows fastest — particularly for companies managing sponsored workers across multiple cases, timelines, and visa categories at once.

Deel Mobility works with 40,000+ companies to stay ahead of changes like this. In-house immigration specialists manage cases across 100+ countries, covering compliance tracking, petition preparation, and strategic guidance at every stage. When policy shifts, Deel helps employers understand what it means for their specific workforce — not just in the abstract.

If you're not sure where your sponsored employees stand under this new framework, that uncertainty is worth resolving now.

Book a free consultation with a Deel Mobility specialist below.