US to End Work Permit Extensions, Sparking Labor Supply Fears
Policy reversal eliminates 540-day automatic renewal for immigrant workers, raising concerns of labor shortages and operational disruption in key sectors.
The U.S. government is set to terminate a crucial provision that has allowed hundreds of thousands of immigrant workers to remain employed while their permit renewals are processed, a move that business groups warn could exacerbate labor shortages and create significant operational headwinds.
In a policy reversal, the Department of Homeland Security (DHS) announced that renewal applications for Employment Authorization Documents (EADs) filed on or after October 30, 2025, will no longer be eligible for an automatic 540-day extension. The policy was originally expanded to address significant processing backlogs and prevent workers from losing their jobs due to administrative delays.
The change marks a significant pivot from earlier policy. The 540-day extension was previously adopted to provide stability for both employees and employers navigating the lengthy renewal process. The termination of this grace period means that many workers—including the spouses of H-1B visa holders, asylum applicants, and individuals awaiting green card adjustments—could face mandatory work stoppages if their current permits expire before a new one is issued.
"This reversal may lead to substantial disruptions for U.S. businesses, risking the loss of critical talent and compounding existing processing delays," noted an analysis from the law firm Ogletree Deakins. The firm highlighted that the rule change could create a precarious situation for industries already struggling with tight labor markets.
Sectors such as hospitality, technology, healthcare, and agriculture, which rely heavily on this workforce, are expected to be the most exposed. A lapse in employment authorization forces companies to remove experienced staff from payrolls, leading to productivity losses, increased recruitment costs, and potential strain on services. According to a statement from DHS, the administration is ending the policy to "enhance national security" and implement more robust screening and vetting procedures.
However, business and immigration advocates argue the move is counterproductive. They contend that it punishes lawfully present noncitizens and their employers for bureaucratic inefficiencies. "This is a step backward for legal immigrants and the businesses that employ them," wrote legal analysts at RN Law Group, who pointed out the potential for creating "avoidable hardship and increased inefficiencies" within the immigration system.
The economic implications extend to potential wage pressures. A sudden drop in the available labor supply in specific sectors could force employers to increase wages to attract and retain talent, potentially fueling inflationary pressures at a time of continued economic uncertainty.
U.S. Citizenship and Immigration Services (USCIS) has advised applicants to file for renewal as early as possible—up to 180 days before their current EAD expires—to minimize the risk of a gap in employment. However, given the agency's persistent backlogs, many fear this window may not be sufficient to prevent disruptions.
For now, renewal applications submitted before the October 30 deadline will still qualify for the 540-day extension. But as the deadline approaches, employers are being urged to conduct internal audits of their workforce to identify employees at risk and prepare contingency plans for potential staffing shortfalls. The policy shift serves as a stark reminder of how changes in immigration rules can have immediate and far-reaching consequences for the U.S. labor market and the broader economy.