The $100K H-1B Fee Was Struck Down: Why are U.S.Tech Companies Still Choosing EOR?

June 2026 Legal Update

On June 8, 2026, U.S. District Judge Leo T. Sorokin in Massachusetts officially vacated the $100,000 H-1B fee, ruling it an unconstitutional tax imposed without congressional authority. The fee — which had been in effect since September 21, 2025 — is currently unenforceable.

However, the legal situation remains fluid:

• The government has announced it will appeal the decision.
• A parallel case in the D.C. Circuit remains active and could potentially reinstate the fee.
• A third lawsuit is currently pending in San Francisco.

This article has been fully updated to reflect the current legal status and what it means for U.S. tech companies making long-term engineering team decisions.

The $100,000 H-1B fee has been struck down by a federal court, but the ruling is being appealed, three separate lawsuits are active in different circuits, and the policy could be reinstated or replaced at any point.

The deeper issue the past nine months exposed is not the fee itself: it is that building an engineering pipeline on H-1B sponsorship means accepting immigration court timelines, lottery randomness, and executive policy swings as structural business risks. 

An Employer of Record (EOR) in Indonesia offers a legally stable alternative — vetted engineers onboarded in 14 days, fixed monthly costs, no visa lottery, and compliance that does not change with election cycles.

What Actually Happened — and Why It Is Not Over

On September 19, 2025, the Trump administration issued Presidential Proclamation 10973, imposing a $100,000 supplemental payment on new H-1B petitions filed for beneficiaries outside the United States.

Standard H-1B filing costs had previously ranged from $2,000 to $5,000. The proclamation increased that to $102,000–$105,000 overnight for the affected category.

On June 8, 2026, the U.S. District Court for the District of Massachusetts vacated the policy entirely. According to immigration law firm Adams & Reese, the court ruled that the $100,000 payment constituted an unauthorized tax, and because Congress never delegated taxing authority of this magnitude to the executive branch through the Immigration and Nationality Act, the proclamation exceeded presidential authority and violated the Administrative Procedure Act.

The fee is currently unenforceable. Employers filing new H-1B petitions after June 8, 2026 are no longer subject to the $100,000 obligation. There is also a possibility that employers who paid the fee for petitions denied solely because of the requirement may have grounds for reconsideration.

But this is not a resolved story. According to Ogletree Deakins, the Department of Justice is expected to appeal quickly, and a separate appeal in the D.C. Circuit — filed by the U.S. Chamber of Commerce — remains active and could produce a conflicting ruling at any time. A third lawsuit is pending in California.

The fee could be reinstated by an appellate court, replaced by congressional legislation, or superseded by a new executive action before the year ends.

For U.S. tech companies making hiring decisions right now, the question is not "is the $100K fee back?" It is: how much of your engineering capacity can you afford to leave subject to this level of legal unpredictability?

The 9-Month Damage Report: What Immigration Volatility Actually Cost

The $100,000 fee was active from September 21, 2025 to June 8, 2026 — approximately nine months. During that period, U.S. companies relying on H-1B sponsorship for new engineering hires faced a binary choice: pay $100,000+ per hire, or freeze international talent acquisition.

For large enterprises with deep HR and legal budgets, the fee was painful but manageable. For startups and mid-sized tech companies — the segment that depends most on international engineering talent to compete with larger employers on compensation — it was effectively a shutdown of the H-1B pathway for new hires.

The practical consequences included delayed product engineering timelines as roles stayed vacant, increased salary pressure on domestic engineering hires as demand concentrated, loss of specific candidates who accepted other offers rather than wait out the legal uncertainty, and HR and legal teams spending months developing contingency sourcing strategies they should never have needed.

"Companies that came to us during that period were not just looking for cost savings," says Veri Ferdiansyah, Co-Founder & CEO of RainTech, who spent 8+ years as CTO and VP of Engineering at Indonesian tech startups. "They were looking for a path that did not have a single point of failure in a government policy decision. That is a fundamentally different conversation than 'how do we save money on hiring.'"

RainTech saw its inquiry volume from the U.S.-based companies increase significantly during the nine-month fee period. A significant portion of those companies are continuing with their Indonesia remote team strategy even after the fee was vacated — not because the $100K cost is gone, but because the volatility that created it has not gone anywhere.

H-1B vs EOR: The Comparison That Matters in 2026

The standard comparison between H-1B and EOR focuses on cost. That comparison has shifted — the $100K fee is currently off the table — but the more important comparison has always been about operational stability, not cost alone.

The H-1B Pathway in 2026: What It Still Requires

Even with the $100,000 fee vacated, the structural constraints of H-1B sponsorship remain unchanged:

Lottery Dependency

The H-1B program operates under an annual cap with a lottery system for cap-subject petitions. For roles that require lottery entry, there is no guarantee of selection regardless of how qualified the candidate is or how urgent the business need. Selected in October, start date April — that is a six-month minimum lag even in the best case.

Processing Timeline

Standard H-1B processing currently runs 3–6 months. Premium processing (available for an additional $2,805 as of 2026) can accelerate adjudication to 15 business days, but does not bypass the lottery or consular processing steps. From decision to hire: realistically 4–8 months for a new beneficiary.

Employer Liability

H-1B sponsorship creates specific obligations: the employer must pay the prevailing wage for the role regardless of market conditions, must notify USCIS of material changes to the role, and bear legal and financial exposure if the relationship ends before the petition period concludes.

Policy Fragility

The nine months between September 2025 and June 2026 demonstrated that the cost and accessibility of H-1B sponsorship can change via executive proclamation on short notice, and that the resulting legal battles can leave employers in uncertainty for the duration of litigation.

The EOR Pathway in 2026: What it Offers Instead

An Employer of Record in Indonesia does not replace a U.S.-based engineer who needs to be physically present. What it does provide is a structurally different model for building engineering capacity:

No Lottery, No Visa

Indonesian engineers work remotely. There is no visa category, no cap, no annual filing window, and no government approval required beyond the EOR's standard employment compliance in Indonesia.

14-day Average Onboarding

From first conversation to engineer working: RainTech's average is 14 days for Tier 1–2 roles. The fastest on record was five working days for a European client with a hard project deadline. No processing queue, no consular appointment backlog.

Predictable Fixed Costs

RainTech's EOR fee is $300 per employee per month, flat. BPJS contributions (Indonesia's mandatory social security) are passed through at cost, adding approximately $78–$173/month depending on salary tier. Total all-in cost for a mid-level engineer: from $1,595/month. No surprise fee increases via presidential proclamation.

Compliance Stability

Indonesian employment law — Manpower Law No. 13/2003, updated by the Job Creation Law — changes through the legislative process, not executive orders that can be issued and reversed within months. For more on what the EOR handles legally, see Understanding Employer of Record: An Essential Guide for Global Companies Hiring in Indonesia.

The Three Column Comparison: H-1B Now vs H-1B Worst Case vs EOR Indonesia

The comparison is not "H-1B is bad, EOR is good." It is: for engineering roles that can be performed remotely, the EOR pathway removes five structural risk factors simultaneously. For roles that genuinely require U.S. physical presence, H-1B remains the correct tool.

"A lot of our US clients run a hybrid model," says Fatimah Hasna, Co-Founder & COO of RainTech, who brings eight years of experience in EOR and international recruitment. "They use H-1B for roles that need to be on-site — sales engineers, implementation leads — and EOR for product engineering roles that have always been remote-first anyway. The question is not which is better in the abstract. It is appropriate for which role."

What Does the Indonesian Tech Talent Pipeline Offer That the H-1B Cannot?

The H-1B program draws talent from a global pool but concentrates heavily on India and China due to the volume of applicants from those countries.

Indonesian tech talent — which represents a fast-growing, high-quality engineering pool — is almost entirely absent from H-1B pipelines, not because of quality, but because Indonesian engineers rarely pursue U.S. visa sponsorship when remote opportunities at equivalent compensation are available.

What this means practically: the Indonesian engineering talent pool is not competing with H-1B candidates for the same positions. It is an entirely separate pipeline — one that becomes accessible the moment a company is willing to build remote-first.

For a detailed breakdown of how Indonesian engineers compare to other APAC markets on quality, cost, and English proficiency, see Why Indonesia's Tech Talent Is Your Top Choice After the $100K H-1B Fee — noting that the argument in that article extends beyond the fee itself to the structural advantages of the Indonesian market.

For companies that moved to explore Indonesia specifically because of the fee period and are now reconsidering: the nine months of inquiry that drove them to evaluate Indonesian talent have not changed the underlying market reality.

Indonesia still has 600,000+ open tech roles being filled domestically, a developer cost structure 70–80% below the U.S., and an engineering talent pool that has been building production systems for GoTo, Traveloka, and global SaaS companies for the past decade.

FAQs

Now that the $100K fee is vacated, should we go back to H-1B sponsorship for new engineering hires?

That depends entirely on whether the role requires physical U.S. presence. If yes, H-1B remains the correct pathway — the fee is currently unenforceable and standard costs apply. If the role is remote-compatible, the fee ruling does not change the structural arguments for EOR: lottery risk, 4–8 month timelines, and the ongoing appellate uncertainty that could reinstate the fee or introduce new restrictions. For remote engineering roles, EOR in Indonesia offers a more predictable, faster, and currently less expensive path.

What happens to our Indonesian EOR team if we want to eventually bring engineers to the U.S.?

EOR employment and U.S. visa sponsorship are not mutually exclusive. Some companies start engineers on EOR arrangements, establish a working relationship, and later pursue O-1 or H-1B sponsorship for individuals they want to bring on-site. This is a legitimate transition path. The EOR arrangement does not create any legal barrier to future U.S. employment — the engineer simply transitions from an Indonesian employment contract to a U.S. offer. RainTech can advise on structuring the EOR arrangement to make this transition clean when the time comes.

Is the H-1B fee truly gone, or should we expect it back?

The fee is currently vacated and unenforceable as of June 8, 2026. However, the government has announced its intention to appeal, and the D.C. Circuit still has an active case that produced an earlier ruling keeping the fee in place. The legal situation across three circuits creates genuine uncertainty. Immigration attorneys at firms including Ogletree Deakins have advised employers to continue monitoring developments, as the outcome of appellate litigation could change the picture before year-end. Planning around the fee being permanently gone is premature.

Can a U.S. company use both H-1B sponsorship and EOR simultaneously?

Yes, and many of RainTech's U.S. clients do exactly this. H-1B sponsorship for roles that require U.S. physical presence, EOR in Indonesia for remote engineering capacity. The two are complementary rather than competing strategies. The EOR layer insulates the remote engineering pipeline from any future changes to H-1B policy, while H-1B remains available for the specific use case it was designed for.

Does hiring through EOR in Indonesia create any U.S. tax or legal exposure for our company?

No U.S. tax nexus is created by engaging an Indonesian EOR. The EOR — in this case, RainTech — is the legal employer in Indonesia. Your company pays an invoice to RainTech (a foreign vendor), which is treated as a business expense. There is no employee-employer relationship established in the U.S., no U.S. payroll tax obligation, and no state employment law triggered by the arrangement. Consult your U.S. tax counsel to confirm the treatment for your specific entity structure, but this is the standard position for EOR engagements.

Conclusion

Managing global tech teams should not depend on the outcome of immigration court appeals in three separate circuits. Whether the H-1B fee returns or stays vacated, the engineering capacity you build through EOR in Indonesia is unaffected by U.S. policy volatility — by design.

Explore your options based on where you are right now:

• Understand the compliance structure: See how RainTech's EOR framework gives your Indonesian engineering team a legally stable foundation — independent of U.S. immigration outcomes.
• Run the real cost comparison: Calculate what your specific team structure would cost using RainTech's transparent pricing — including EOR fee, salary tier, and BPJS pass-through.
• Book a Strategy Session: Ready to eliminate hiring uncertainty? Schedule a free 15-minute consultation with our team to safely benchmark your remote engineering structure in Indonesia.

Related Articles:

• https://raintechnovation.com/resources/navigating-new-h1b-visa-fee-raintech
• https://raintechnovation.com/resources/7-ways-h1b-fee-changes-global-hiring

Legal status of the H-1B $100,000 fee reflects the ruling in State of California et al. v. Noem et al. issued June 8, 2026 by U.S. District Judge Leo T. Sorokin (District of Massachusetts). The ruling is subject to appeal and may change. This article is for informational purposes only and does not constitute legal or immigration advice. Consult qualified U.S. immigration counsel for guidance specific to your situation.