DOL Interim Final Rule Will Immediately Increase Prevailing Wages

October 6, 2020

A U.S. Department of Labor (DOL) interim final rule (IFR), expected to be published in the Federal Register on October 8, 2020, will immediately amend existing regulations governing permanent labor certifications and labor condition applications (LCA).  Specifically, the IFR will change the computation of prevailing wage levels, resulting in higher prevailing wages for all occupations and all wage levels in the Occupational  Employment  Statistics (OES) wage survey administered  by the Bureau of Labor Statistics. Increases mandated by the IFR include:

  • Level I Wage: 45th percentile (from 17th percentile)
  • Level II Wage: 62nd percentile (from 34th percentile)
  • Level III Wage: 78th percentile (from 50th percentile)
  • Level IV Wage: 95th percentile (from 67th percentile)

Background. Under the Immigration and Nationality Act (INA), employers must pay H-1B workers the greater of “the actual wage level paid by the employer to all other individuals with similar experience and qualifications for the specific employment in question,” or the “the prevailing wage level for the occupational classification in the area of employment.”  According to DOL, by ensuring that H-1B workers are offered and paid wages that are no less than what U.S. workers similarly employed in the occupation are being paid, the wage requirements are meant to guard against both wage suppression and the replacement of U.S. workers by lower-cost foreign labor.

The OES prevailing wage levels that DOLuses in the H-1B program—as well as the related H-1B1 and E-3 “specialty occupation” programs for foreign workers from Chile, Singapore, and Australia—are the same as those it uses in its PERM programs.  Through the PERM programs, DOL processes labor certification applications for employers seeking to sponsor foreign workers for permanent employment under the EB-2 and EB-3 immigrant visa preference categories. This IFR changes the way in which DOL calculates the prevailing wage when based on OES surveys.

When does the IFR take effect, and which applications does the IFR affect? This IFR is expected to be published on October 8, 2020, and will take effect immediately upon publication.  This rule will only apply to:

  • Applications for prevailing wage determination (PWD) pending with the National Prevailing Wage Center (NPWC) as of the effective date of the regulation;
  • Applications for prevailing wage determinations filed with the NPWC on or after the effective date of the regulation; and
  • LCAs filed with DOL on or after the effective date of the regulation where the OES survey data is the prevailing wage source, and where the employer did not obtain the PWD from the NPWC prior to the effective date of the regulation.

DOL will not apply the new regulations to any previously approved prevailing wage determinations, permanent labor certification applications, or LCAs.

How does this impact employers? Employers that rely on LCAs or PWDs using the OES survey will see an immediate increase to the wages associated with each wage level.  This will effectively increase the “required wage” associated with H-1B, H-1B1, and E-3 benefit requests, as the “required” wage is defined as the higher of the actual wage and the prevailing wage.  The IFR will result in higher wages associated with employment-based immigrant visa petitions that rely on PWDs.

Will there be any other changes? The Department of Homeland Security (DHS) has developed an additional IFR amending existing H-1B regulations.  The DHS IFR is expected to work in concert with DOL’s IFR to substantially restrict the H-1B classification. Our office will provide additional updates as details become available.

This information is distributed for informational purposes only. For further questions, please contact a G&A professional for assistance.