Microsoft Suspension and the Cloudera and Instacart Settlements: What PERM Sponsoring Employers Need to Know
What Is Happening With PERM Enforcement?
Since August 2026, OpenAI, Cloudera and Instacart have each settled federal claims over their PERM recruitment, and on October 8 the Department of Labor suspended PERM processing for eight employers, including Microsoft and Adobe. Three agencies are behind these actions: the Department of Labor (DOL), the Department of Justice’s (DOJ) Civil Rights Division and the Equal Employment Opportunity Commission (EEOC), and they are coordinating. Cloudera was a joint DOJ and DOL action, and Instacart was a joint DOJ and EEOC action.
2026 PERM Enforcement: Key Actions
Suspensions and settlements involving PERM recruitment
- April 28, 2026DOJ files suit against Cloudera over its PERM recruitment
- May 12, 2026DOL suspends Cloudera's PERM processing for 180 days
- August 4, 2026OpenAI settlement with DOJ: $1.2 million in civil penalties, $2 million back pay fund
- October 8, 2026DOL suspends PERM for eight employers, including Microsoft and Adobe
- October 16, 2026Cloudera settlement with DOJ and DOL: 24-month PERM debarment, $1.4 million back pay fund, $600,000 civil penalty
- October 20, 2026Instacart settlement with DOJ and EEOC: up to $4 million for applicants, $1 million in civil penalties
What Do the OpenAI, Cloudera and Instacart Settlements Have in Common?
Three employers have settled federal claims over PERM recruitment since August, and each is exactly that: a settlement of allegations, not a judgment on the merits after litigation or a hearing.
OpenAI (August 4). DOJ announced a $3.2 million settlement with OpenAI and its subsidiary Statsig: $1.2 million in civil penalties and a $2 million back pay fund. DOJ alleged that PERM positions were left off OpenAI’s careers website, that PERM applicants had to apply by mail while other roles accepted electronic applications, and that the positions were advertised on the radio late at night. Fewer than ten positions were involved. We covered that case in detail in DOJ Settles with OpenAI for $3.2 Million Over PERM Discrimination.
Cloudera (October 16). DOJ alleged in April that Cloudera told PERM applicants to apply through an email account that ultimately did not accept outside email. DOL suspended Cloudera’s PERM processing in May. Under the settlement, Cloudera pays a $600,000 civil penalty and funds $1.4 million in back pay, and under the agreement’s DOL terms it will not file new PERM applications or post PERM recruitment ads for 24 months. Cloudera denies the allegations.
Instacart (October 20). DOJ and the EEOC announced a settlement of up to $5 million: $1 million in civil penalties and up to $4 million for affected and deterred applicants. The agencies alleged that from December 2023 through February 2026, Instacart required mailed applications for PERM positions while its normal hiring accepted electronic ones.
The three settlements all involved the same alleged problem: U.S. workers or applicants were disadvantaged (discriminated against) during PERM recruitment. None of these cases turned on a wage figure or a job requirement. Each alleged a recruiting barrier that the employer’s normal hiring did not have: a job missing from the careers site, a mailing requirement, an inbox that bounced outside email.
And in addition to civil penalties, most of each settlements include back pay for U.S. workers. Instacart’s agreement also covers deterred applicants, people discouraged from applying by the process itself. This indicates that compliance review going forward should test not only the applications you received, but also the application process itself.
Why did DOL pause PERM for Microsoft and other companies?
Labor Secretary Keith Sonderling announced the suspensions at a White House Fraud Task Force briefing led by Vice President JD Vance. Officials cited active federal investigations for Microsoft and Adobe and pointed to heavy past program use by the six IT services firms. No end date was given, and DOL has not yet published a written order. These are investigative restrictions, not findings that any of the eight employers violated the law.
DOL’s regulations at 20 C.F.R. § 656.31 allow it to suspend PERM processing for an employer under investigation for possible fraud or willful misrepresentation. Debarment, a formal bar of up to three years, is a separate remedy that DOL has not announced for these eight employers. DOL used the same suspension authority against Cloudera in May and stated at the time that it would keep using it against any employer, attorney or agent under investigation.
Which Agencies Enforce PERM Compliance, and How Do They Work Together?
PERM recruitment answers to three agencies enforcing three different laws, and the agencies are acting jointly. Cloudera paired DOJ’s discrimination case with DOL’s control over program access. Instacart paired DOJ with the EEOC.
Who Enforces PERM Recruitment
Three agencies, three laws, and joint actions in 2026
| Agency | What it can do | 2026 PERM actions |
|---|---|---|
| Department of Labor20 C.F.R. Part 656 | Audits, supervised recruitment, denial or revocation of certifications, processing suspensions, debarment up to three years | Cloudera suspension and debarment (with DOJ); eight-employer suspensions |
| DOJ Civil Rights Division (IER)8 U.S.C. § 1324b, citizenship status | Back pay and civil penalties per person discriminated against; employers may contest before an administrative law judge at OCAHO | OpenAI; Cloudera (with DOL); Instacart (with EEOC) |
| EEOCTitle VII, national origin | Back pay, compensatory damages and punitive damages where warranted | Instacart (with DOJ) |
Two important points matter for employers. First, citizenship status and national origin are different legal categories, but one recruiting practice can support claims under both laws, as Instacart shows. Second, the agencies hold different levers. DOL controls access to the program. DOJ can seek back pay and civil penalties, while the EEOC can pursue back pay, damages, and other relief. Resolving one agency’s concerns does not necessarily resolve the others’.
What Does PERM Compliance Require?
A certified PERM is only as defensible as the file behind it. These are the core employer obligations under 20 C.F.R. Part 656.
PERM Compliance: What Your File Must Show
Core employer obligations under 20 C.F.R. Part 656
| Obligation | What the file must show | Rule |
|---|---|---|
| Prevailing wage | The offered wage meets or exceeds DOL's prevailing wage determination | § 656.40 |
| Notice of filing | Notice to the bargaining representative, if any; otherwise, worksite posting for at least 10 consecutive business days, plus applicable in-house notice under normal recruitment procedures | § 656.10(d) |
| Recruitment | Required ads and recruitment steps completed within the regulatory timing window | § 656.17(e) |
| Job requirements | Normal for the occupation, or supported by business necessity | § 656.17(h) |
| U.S. applicants | A lawful, job-related reason for rejecting each one | § 656.17(g) |
| Recent layoffs | For qualifying layoffs within six months before filing in the area of intended employment, potentially qualified laid-off U.S. workers in the same or a related occupation notified and considered | § 656.17(k) |
| Costs | Employer must bear PERM-related costs, including recruitment and employer attorney fees. A worker may pay for separate, independent legal representation. | § 656.12(b) |
| Records | Kept for five years from filing | § 656.10(f) |
It is important to note that officials framed the PERM suspensions and on-going investigations around companies cutting U.S. jobs while sponsoring foreign workers, and the layoff recontact requirement is where that concern may become a legal obligation. Gaps in any of these records can lead to an audit, supervised recruitment, revocation of a certification, or debarment.
H-1B LCA Obligations Face the Same Scrutiny
Many PERM beneficiaries are already in H-1B status, which carries separate obligations enforced by DOL’s Wage and Hour Division.
H-1B LCA Obligations DOL Enforces
Labor Condition Application rules under 20 C.F.R. Part 655, Subparts H and I
| Obligation | Rule |
|---|---|
| Pay the higher of the actual wage or the prevailing wage | § 655.731 |
| Pay for employer-caused nonproductive ("benched") time | § 655.731(c)(7) |
| Offer benefits on the same basis as U.S. workers | § 655.731(c)(3) |
| Do not pass the ACWIA fee to the worker or penalize early departure | § 655.731(c)(10) |
| Keep a public access file, available within one working day of filing | § 655.760 |
| H-1B-dependent and willful-violator employers: additional nondisplacement, secondary-displacement inquiry, and U.S. recruitment obligations, unless the LCA qualifies for the exempt-worker exception | §§ 655.736–.739 |
Violations can lead to back wages, civil money penalties and debarment.
What Happens to Sponsored Workers When PERM Stalls?
H-1B status is capped at six years. Extensions beyond six years may be available based on a qualifying PERM or I-140 filed at least 365 days earlier, or an approved I-140 when an immigrant visa is unavailable, under 8 C.F.R. § 214.2(h)(13)(iii)(D-E). Blocked PERM filings can leave some workers in year five or six with no way to extend, though the effect depends on each worker’s filing history, and a pending PERM does not automatically mean an employee must leave at year six. Employers must track employment-authorization expiration and applicable continuation rules for Form I-9 purposes.
Does the PERM Suspension Affect Employers That Were Not Named?
Indirectly, yes. Three groups should pay attention:
Employers hiring workers who leave suspended companies. A move to an unrelated employer generally requires a new PERM process, unless an applicable exception permits continued use of the existing green-card process.
Clients of IT staffing vendors. An H-1B-dependent or willful-violator vendor subject to the additional nondisplacement requirements must make the required inquiry about displacement of U.S. workers at a client’s worksite before placing H-1B workers there. An exception applies when the LCA is designated and used exclusively for exempt H-1B workers.
Buyers in M&A deals. Immigration diligence should cover PERM audit files, LCA public access files and any DOL audits, investigations or processing holds, not just Form I-9 records.
PERM and H-1B Compliance Checklist for Employers
These settlements do not make PERM sponsorship unlawful or unattainable. They make the integrity and documentation of recruitment the issue. An employer evaluating its PERM processes can start here:
Can applicants find the job? Post PERM positions where you post every other job, including your public careers website.
Does the application method work? Test the email address, link or portal in every ad before it runs, and keep proof that it worked.
Are differences from ordinary recruiting explainable? Document a reason for every way PERM recruitment differs from your normal process.
Do your records show how applications were reviewed? Keep a record of how each application was received and a lawful, job-related reason for each U.S. applicant not hired.
Audit PERM files from the last five years for complete wage, notice and recruitment records.
Compare this year’s layoffs to PERM and H-1B filings by occupation and worksite.
Review LCA public access files, wage records and any benching periods.
Calendar H-1B six-year dates and Form I-9 reverification deadlines.
How Elevate Justice Can Help
The October suspensions and the OpenAI, Cloudera and Instacart settlements are a reminder that the government reviews sponsorship programs as enforcement records, not just paperwork you set aside. Elevate Justice U.S. Immigration Law provides attorney-led compliance review for PERM, H-1B and LCA programs, as well as H-2A and H-2B, and represents employers when DOL comes asking.
Visa program compliance reviews. PERM recruitment file reviews, application channel testing, LCA public access file audits, actual wage and benching analysis, and worksite alignment checks for hybrid and remote employees.
DOL audit and investigation defense. Direct representation in Wage and Hour Division investigations of H-1B programs and in DOL audits of H-2A and H-2B programs, from the first document request through resolution.
M&A visa portfolio assessments. Pre-acquisition review of a target’s PERM, H-1B and LCA exposure, including successor-in-interest determinations and amended LCA triggers.
Our founding attorney previously served in DOL’s Office of the Solicitor, where she conducted legal review of H-2A and H-2B integrity audits. She brings that agency-side perspective to every engagement.
This post is for informational purposes only and does not constitute legal advice. Immigration law and enforcement guidance change frequently. Consult a qualified immigration attorney for guidance specific to your situation.
