How to Calculate Prevailing Wage
Updated: Jun 11, 2021
When you hire a foreign national employee through H-1B or start the Green Card process, you will hear the term “Prevailing Wage”. So, as the HR Manager or the Hiring Manager you should keep yourself abreast with what this means and how it impacts you and your foreign national employee.
What is H-1B Prevailing Wage and Wage Level?
Prevailing Wage (PW) - Simply put, the PW is the minimum required wage or salary that the Department of Labor (DOL) wants you to pay your foreign national employee for a particular job or job category. The required experience for the job determines how high the needed salary needs to be i.e. the prevailing wage level.
Prevailing Wage Level (PWL) - The level of the prevailing wage is the amount of salary that you need to pay the employee based on the job experience and education requirements, and employee’s work location. More on this below.
H-1B Salary - This is the annual salary or the hourly rate that the employee is paid when he/she starts on the H-1B visa.
Wage Determination: how it works?
The Prevailing Wage Level (PWL) is determined by two factors:
Required experience for the job: Note this is the experience that the job needs and not the experience that the employee has. For example, if you need to fill the Data Analyst position with no prior required experience and you hire a foreign national with 3 years of experience then the PW will be based on the ‘no experience required’ level.
Work Location: Work location is defined as the address where the foreign national employee would work during the H-1B employment. The employee may work at multiple locations. If that’s the case then the wage will be calculated off of the highest PW of all the locations. For those more interested in technicalities, a work location (actually the zip code) is associated with the Metropolitan Statistical Area (MSA) that is used to determine the wage in a particular area.
Why is the Prevailing Wage important for an H-1B or a Green Card?
The Immigration and Nationality Act (INA) requires that the hiring of a foreign national employee should not adversely affect the wages and working conditions of U.S. workers, comparably employed. Therefore, to comply with the regulations, the DOL requires that the salary offered to the foreign national employee must be over the prevailing wage determined for the job category in the area of employment.
As an employer, DOL requires you to offer a salary over the PW. Getting an approval on the PW is a mandatory step for your employee’s H-1B petition or the PERM application for the Green Card.
How is Prevailing Wage approved for compliance?
Your immigration attorney should help you with the prevailing wage determination and then file the Labor Condition Application (LCA) with the DOL for the decided job category, prevailing wage and wage level. The DOL then approves the PW request and the time depends on whether the request is for H-1B or for Green Card. The processing times for each request are below.
Processing time for H-1B Prevailing Wage approval?
For the H-1B, the DOL usually confirms the LCA within a week. The submitted LCA and LCA Notice needs to be publicly displayed at two conspicuous places in the offices for 10 consecutive days. The notice should be posted within 1 business day of filing the LCA and the posting and removal process can happen while waiting on the LCA approval.
The DOL now allows employers to electronically publish and maintain the LCA and Public Access Folder.
Processing time for Green Card Prevailing Wage approval?
2 - 4 Months
For a Green Card, the attorney should apply for Prevailing Wage through the DOL in essentially the same way but the approval for Green Card PW approval takes anywhere from 2 (two) to 4 (four) months.
Impact of calculating prevailing wage incorrectly?
Getting the Job Category (called the Standard Occupational Classification or SOC) and PW correct is very important for the success of H-1B or Green Card petition. If USCIS believes that the job category is not a ‘specialty occupation’ they may issue a ‘Request for Further Evidence’ (RFE) or deny the case through a ‘Notice of Intent to Deny’ (NOID). So, how do you make sure that your foreign national employee is in a specialty occupation role? Here’s a step by step guide on what to look for -
STEP-BY-STEP: How to calculate the H-1B wage for your employee?
The easiest way to obtain the PW information is by using the Online Wage Library or the Foreign Labor Certification (FLC) Data Center maintained by the Department of Labor. Yes, we know that it does not have a ‘.gov’ in the URL but it is a legitimate source of information for job categories and prevailing wage.
Step 1 - Go to the website and click on ‘Search Wizard’ on the top left side of the page.
Step 2 - Now, pick the state that the foreign national employee (or beneficiary) will be working in. If there are multiple work addresses in the same state or multiple states, then you’ll need to run this exercise for all the locations.
Step 3 - On the next page -
You’d be asked to select a data source (we recommend keeping it at “All Industries Database”.
Select the county for the work location. If you don’t know the county, you can google the county associated with the zip code for the work location. Based on the county you select, the database will calculate the PW for the Metropolitan Statistical Area (MSA) that the county comes under.
Keyword / Phrase - It’s important that you start with the broadest term to see what all categories show up for that term. For example, if you are looking to file H-1B for a Data Analyst then type in ‘data’ to see what all job categories show up.
Step 4 - On the results page, read the details of the categories and see which category fits the job role closest. Since there are a few things you can click on to get more details, we suggest that you first click on the “View Wages for OES/SOC….” line at the bottom of each category.
Step 5 - This final page states the salaries for each level based on the county. Level 1 wage is for someone with no prior experience in the role and level 4 is for someone with multiple years of experience. No, there is no strict correlation between the number of years of experience and the job level. IMPORTANT NOTE -- this experience is what the job requires and not what the employee has.
Step 6 - How to make sure that the role meets USCIS’ speciality occupation criteria?
Go back to the page on Step 4 and now this time click on the code next to the job title. For example, it’s 15-1199.08 for a Business Intelligence Analyst. This should take you to the O*NET Online website and will show you all the skills, tools and abilities that are needed for someone in this job. Scroll down to “Education” category. If this shows that a high percentage of applicants with a bachelor’s degree then that’s a good sign but if it shows a considerable number of applicants without a bachelor’s degree then that means you’d have to do some explaining on why your job needs special skills.
Our suggestion is to work with your immigration counsel to select the job category that most closely relates to the role and build the case to explain to USCIS why the role needs special skills.
When should I pay the prevailing wage salary to the employee?
The PW needs to be paid as soon as the employee enters H-1B status. The salary before entering H-1B status is subject to other regulations, but not PW. Let me explain with examples -
Change of Status H-1B: If your employee does get picked in the H-1B lottery and gets a visa approval then his/her status will automatically change to H-1B at the date on the confirmation notice (I-983). It is from this date that the employee needs to be paid the PW salary.
Consular Processing H-1B: If your employee is on OPT and has opted for consular processing then their PW salary does not need to start until the employee enters back into the U.S. with the H-1B visa stamped on their passport.
As for the Green Card, the salary does not need to be paid until the I-485 approval, which changes which status of the employee from non-resident alien to resident alien.
What is the impact of new rules on Prevailing Wage in 2021?
No PW Increase - The Department of Homeland Security had increased the Prevailing Wages on October 07, 2020 but has gone back to the older Prevailing Wage data since December 03, 2020. So, the revised wages will not have any impact on the PW in 2021.
No lottery selection based on higher PW - Although this new rule is active during the time of this publication, we believe that the Biden Administration will put a hold on this rule or it will be challenged in the court. Either way, this rule will not be implemented in time for the 2021 (FY 2022) lottery. Read our Ultimate Guide to 2021 (FY 2022) H-1B Lottery.
Content in this publication is not intended as legal advice, nor should it be relied on as such. For additional information on the issues discussed, consult a WayLit-affiliated attorney or another qualified professional.