Project Firewall: DOL Opens Nationwide H-1B and PERM Fraud Probe

What Happened

On July 8, 2026, the U.S. Department of Labor's [Office of Inspector General (OIG)](https://oig.dol.gov/public/Press%20Releases/OIG-Press-Release-070826.htm) announced a major nationwide investigation into fraud and human trafficking within the H-1B and PERM labor certification programs. Inspector General Anthony P. D'Esposito disclosed that investigators have already issued dozens of subpoenas as part of the probe.

The investigation is being carried out in coordination with the [White House Task Force to Eliminate Fraud](https://www.whitehouse.gov/), chaired by Vice President JD Vance, which was established in early 2026 and held its first meeting on March 27. On the same day as the OIG announcement, Vice President Vance spoke at an anti-fraud event in Milwaukee, framing the investigation as part of the administration's broader effort to ensure American jobs go to American workers rather than "foreign fraudsters."

The OIG's press release describes the investigation as targeting "widespread schemes in which employers and labor brokers submitted fraudulent applications, exploited foreign workers through coercive wage-kickback arrangements, and undercut American workers by flooding the market with below-wage labor." The investigation also examines potential ties to forced labor, human trafficking, and organized crime.

Project Firewall: From Audits to Criminal Investigations

The OIG investigation represents a significant escalation of [Project Firewall](https://meltzerhellrung.com/project-firewall-escalates-dol-launches-major-h-1b-and-perm-fraud-investigations/), the DOL's H-1B enforcement initiative launched in September 2025. Project Firewall granted the Secretary of Labor authority to personally certify H-1B investigations based on "reasonable cause" — without waiting for a worker complaint — and directed the Wage and Hour Division to prioritize cases involving worker displacement and inadequate U.S. recruitment.

Since its launch, Project Firewall has produced over 175 H-1B audits and investigations, with millions of dollars in back wages assessed against employers, according to the DOL. The OIG announcement signals that the initiative has moved beyond civil enforcement into a full fraud investigation track with potential criminal exposure.

As immigration law firm [MeltzerHellrung noted](https://meltzerhellrung.com/project-firewall-escalates-dol-launches-major-h-1b-and-perm-fraud-investigations/), "Project Firewall is the most aggressive H-1B enforcement effort in DOL history, and the recent OIG announcement is a clear signal that the administration intends to continue to expand its scope." The firm emphasized that the increased use of subpoenas signals an "active, resourced investigation" that extends to staffing vendors, not just direct sponsors.

What Investigators Are Examining

According to the [OIG press release](https://oig.dol.gov/public/Press%20Releases/OIG-Press-Release-070826.htm), the investigation is focused on several categories of alleged abuse across the H-1B and PERM programs:

• Fraudulent H-1B and PERM applications submitted by employers and labor brokers
• Wage-kickback arrangements in which workers are required to return part of their salary to their sponsor
• Paying foreign workers below the prevailing wage stated in the Labor Condition Application (LCA) or PERM filing
• Exploiting foreign workers and displacing U.S. workers through below-market labor
• Potential ties to human trafficking, forced labor, and transnational criminal networks

Who Is Affected

The investigation directly targets employers and labor brokers suspected of fraudulent schemes — not ordinary H-1B workers employed in good faith at their stated wage and job duties. Holding an H-1B visa does not, by itself, make a worker a subject of the investigation.

However, heightened enforcement means materially more scrutiny across the entire H-1B and PERM ecosystem. Compliant employers and their employees should expect an increase in Requests for Evidence (RFEs), Fraud Detection and National Security (FDNS) worksite visits, and audits of Labor Condition Applications and PERM recruitment files — not as suspects, but as part of a broader compliance review.

The investigation is not limited to the technology sector. The OIG has indicated that healthcare employers (including physicians' offices and nursing facilities) and other industries that use employment-based visa programs are also in scope. This is significant for EB-3 Schedule A employers who sponsor nurses and physical therapists through the PERM process.

What Attorneys Should Know

The OIG investigation adds a criminal enforcement layer to Project Firewall's existing civil and administrative framework. Under the prior audit-driven model, consequences were typically limited to back-wage assessments and potential debarment from the H-1B and PERM programs. The OIG's involvement brings the possibility of federal criminal charges for fraud, conspiracy, and trafficking-related offenses.

Attorneys should note that the investigation's use of subpoenas — rather than voluntary information requests — signals that the OIG is exercising compulsory process powers. Under [5 U.S.C. Appendix § 6(a)(4)](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title5a-node20-section6&num=0&edition=prelim), the Inspector General has statutory authority to issue subpoenas for documents and testimony. Failure to comply can result in judicial enforcement.

Key compliance areas under scrutiny include: whether H-1B workers are paid the actual wage or prevailing wage as required by [20 CFR § 655.731](https://www.ecfr.gov/current/title-20/chapter-V/part-655/subpart-H/section-655.731), including during periods of nonproductive status ("benching"); whether PERM recruitment reflects a genuine test of the U.S. labor market under [20 CFR § 656.17](https://www.ecfr.gov/current/title-20/chapter-V/part-656/subpart-C/section-656.17); and whether the Public Access File required by [20 CFR § 655.760](https://www.ecfr.gov/current/title-20/chapter-V/part-655/subpart-H/section-655.760) is complete and current.

The scope of the investigation extends to third-party staffing and subcontracted placements. Any routine FDNS site visit, ICE I-9 audit, or DOL Wage and Hour investigation can trigger an OIG review — employers already under scrutiny through any of these channels should assume they may also face OIG inquiry.

What Employers Should Do Now

Given the investigation's breadth and the transition from civil audits to potential criminal exposure, immigration counsel and compliance teams should take proactive steps immediately:

• Audit H-1B wage compliance: Verify that every H-1B worker is paid at or above the wage stated in the LCA, including during nonproductive periods. Check that actual wages match the required wage for the SOC code and geographic area.
• Review PERM recruitment files: Examine pending and recently filed PERM cases to confirm that recruitment efforts reflect a genuine, defensible test of the U.S. labor market — not pro-forma advertising designed to yield no qualified U.S. applicants.
• Vet third-party staffing arrangements: If H-1B workers are placed at third-party worksites, ensure that LCA postings, worksite designations, and wage levels accurately reflect the end-client location and duties.
• Establish an audit response protocol: Create a clear internal procedure for responding to subpoenas, preservation of records, and coordination between immigration counsel, HR, and outside counsel.
• Review Public Access Files: Confirm that every LCA has a complete, current Public Access File as required by regulation, including prevailing wage documentation, actual wage data, and notice postings.

What H-1B Holders Should Do

If you are an H-1B worker employed in good faith, the investigation is not targeting you. However, it is wise to take several precautionary steps in an environment of heightened enforcement:

• Keep copies of your key documents: I-797 approval notice, LCA (Labor Condition Application), and recent pay stubs showing your actual compensation.
• Verify your LCA wage and duties: Your actual pay should match or exceed the wage stated in the LCA, and your job duties and worksite should match the petition.
• Watch for red flags from your employer or broker: demands to "pay for sponsorship," requests to return part of your wages, non-payment during bench time between projects, fictitious project assignments, or a worksite address that doesn't match your actual work location.
• Report concerns: The DOL OIG operates a confidential hotline at 1-800-347-3756 and online at oig.dol.gov/hotline.htm. Cash rewards may be available for information that assists with prosecution.
• Consult an immigration attorney before taking any action if you suspect your employer is engaged in the practices under investigation.

What's Next

The investigation is currently in its information-gathering phase. No charges have been filed, and no employers or individuals have been formally accused of wrongdoing. News reports citing federal officials have identified Cognizant as one firm drawing investigator attention, but the company has not been charged and the presumption of innocence applies.

The trajectory of Project Firewall suggests the investigation will continue to expand. The DOL has signaled that the enforcement initiative is part of a sustained effort rather than a one-time action. Employers should anticipate additional subpoenas, expanded audit activity, and potentially the first criminal referrals in the months ahead.

The DOL OIG is encouraging anyone with information about H-1B or PERM fraud — including displaced U.S. workers, exploited foreign workers, and whistleblowers with knowledge of fraudulent practices — to contact the OIG Hotline at 1-800-347-3756 or visit [oig.dol.gov/hotline.htm](https://www.oig.dol.gov/hotline.htm).