New DOL Prevailing Wage Rule
November 9th, 2020
Last month, on October 8, 2020, the Department of Labor (DOL) submitted an interim final rule to the Office of the Federal Register regarding regulations governing labor certifications and labor condition applications. The rule took effect upon publication. It changes the calculation process for prevailing wage levels, and will result in higher prevailing wage rates for all occupations for each OES-based wage level as specified below:
- Level I Wage: now at 45th percentile (from 17th percentile)
- Level II Wage: now at 62nd percentile (from 34th percentile)
- Level III Wage: now at 78th percentile (from 50th percentile)
- Level IV Wage: now at 95th percentile (from 67th percentile)
Background on Prevailing Wage Rates
Under the Immigration and Nationality Act (INA), employers must pay H-1B workers "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 prevailing wage level for the occupational classification in the area of employment," whichever is greater. The intention of the wage requirement is to prevent wage suppression and replacement of U.S. workers by lower-cost foreign labor. They also ensure that employers offer and pay H-1B workers wages that are no less than what employers offer and pay U.S. workers in similar occupations. The OES prevailing wage levels that DOL uses for the H-1B program are the same for the 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 visa preference categories. This rule changes the way DOL calculates the prevailing wage based on OES surveys.
What Applications will this Rule Affect?
This rule will apply to applications for prevailing wage determination (PWD) pending with the National Prevailing Wage Center (NPWC) and labor condition applications (LCAs) filed with DOL on or after October 8, 2020 in which the OES survey data is the prevailing wage source and the employer did not obtain the PWD from the NPWC before October 8, 2020. DOL will not apply the new regulation to any previously approved prevailing wage determinations, permanent labor certification applications, or labor condition applications.
Employers that rely on LCAs or PWDs will see an increase to the wages associated with each wage level. The "required wage" associated with H-1B, H-1B1, and E-3 benefit requests will increase substantially as noted above. The rule will result in higher wages associated with employment-based immigrant visa petitions that rely on OES-based prevailing wage determination applications.
Furthermore, the Department of Homeland Security (DHS) posted an interim final rule called the DHS H-1B Strengthening Rule. This rule was published on October 8, 2020 but it will not go into effect until December 7, 2020. This will overall increase vetting in the H-1B program, revise the definition of "specialty occupation," and change "employer-employee" requirements. This rule and the prevailing wage rule will ultimately work together and impact users of the H-1B program.
Why is the Government Issuing this Change?
The H-1B program was created by the enactment of the Immigration Act of 1990. The Immigration Act of 1990 established "various labor protections for domestic workers" in the program. These primary goal of these protections was to prevent displacement of the American workforce by foreign labor. This is also the goal of the new rule.
Through the PERM programs, the Department of Labor 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. The Department of Labor's goal in adjusting the existing wage levels is to ensure that they reflect the wages paid to U.S. workers with levels of experience, education, and responsibility comparable to those of similarly employed foreign workers.
Lawsuits Against DOL's Prevailing Wage Rule
AILA filed a lawsuit challenging this new rule. According to Jesse Bless, AILA's Director of Federal Litigation, the agency did not follow notice and comment rulemaking when issuing this rule and the rule has caused immediate harm to many industries that employ H-1B workers. These industries include academic institutions, care associations, and tech companies. Furthermore, over 18,000 jobs now have zero prevailing wage or access to wage data. Many of these 18,000 jobs are for entry-level positions and have now defaulted to a $208,000 prevailing wage, which is not realistic. Bless argues that this rule will hurt, not help the economy and limit economic recovery.
IT and computer servicing companies that employ U.S. workers and H-1B workers in computer occupations in New Jersey and other parts of the U.S. have also sued the Department of Labor over this rule. These companies filed a complaint seeking a preliminary and permanent injunction to stop the rule from imposing the changes made to prevailing wage rates issued October 8, 2020 in ITServe Alliance, Inc., et al. v. Scalia, et al., 10/16/20.
For More Information:
This blog post does not serve as legal advice and does not establish any client-attorney privilege. Do not take any action based on the information contained in this post without consulting a qualified immigration attorney. If you have any questions, please do not hesitate to contact our legal team directly.
Find us on LinkedIn.
This information comes from a news release from the American Immigration Lawyers Association (AILA Doc. No. 20100601, AILA Doc. No. 20102036, and AILA Doc. No. 20101903). Graphic from Berry Appleman & Leiden LLP in AILA Doc. No. 20100601.