Updated: Dec 4, 2020
Update - Dec 04, 2020
On December 03, 2020 the Department of Labor has announced that they will be updating its Foreign Labor Application Gateway and the FLC Data Center website to reflect the updated rates as per pre-Oct 08.
You can read more about how the changes would go into effect in this article.
Update - Dec 02, 2020
A federal judge in San Francisco on Tuesday (Dec 01, 2020) struck down this Trump administration policy. This policy, which went into effect immediately, required employers to pay foreign workers on H-1B visas significantly higher wages.
Update - October 21, 2020
The Bay Area Council, Stanford University have sued the Trump Administration over new rules for the controversial H-1B visa program relied on by many Silicon Valley technology companies. Other plaintiffs include the California Institute of Technology, the U.S. Chamber of Commerce, the National Association of Manufacturers and other groups and universities.
Update - October 19, 2020
ITServe Alliance, a group of information technology companies filed a lawsuit on Oct 16, 2020 challenging the Interim Final Rule that raises the salaries that employers must pay to their foreign national workers on H-1B and green cards. The suit was filed against the department in the U.S. District Court in New Jersey.
On October 08, 2020 the Department of Labor (DOL) brought into effect a new Interim Final Rule (IFR) that will require employers to pay much higher minimum wages for employees looking to apply for H-1B, PERM (Green Card), E-3 and H-1B1 visas.
What is Prevailing Wage?
The Department of Labor calculates prevailing wages (PW) using data from Occupational Employment Statistics (OES). These wage estimates are primarily defined by geographical area (known as Statistical Metropolitan Area) and are broken down into four categories/levels depending upon the job requirements → entry-level (Level 1) to experienced (Level 4). Employers must pay over the determined minimum prevailing wage for H-1B, E-3, H-1B1 and green card workers.
What does the new Interim Final Rule do?
The new rule has significantly increased the prevailing wage requirements for all levels and Metropolitan Areas. The DOL has determined based on new formulas that the new prevailing wages would change as follows:
Level 1 (entry-level) Wage: 45th percentile (up from 17th percentile)
Level 2 Wage: 62nd percentile (up from 34th percentile)
Level 3 Wage: 78th percentile (up from 50th percentile)
Level 4 (maximum experience) Wage: 95th percentile (up from 67th percentile)
How does this convert into numbers?
The new data is already reflected on the Foreign Labor Certification Data Center Website. For a randomly chosen metropolitan area, this is how the numbers differ now versus before for the position of a software developer:
Levels | PW (pre-rule) | PW (post-rule)
Level 1 $60K $92K
Level 2 $83K $114K
Level 3 $103K $135K
Level 4 $113K $158K
When does this rule go into effect?
The unpublished rule was made public on October 06, 2020 and has gone into effect starting Oct 08, 2020.
Who does this impact?
H-1B LCAs filed on or after October 8, 2020 will have to adhere to the new higher prevailing wage minimums. LCAs already filed and pending before October 8, 2020 would be subjected to the lower prevailing wage levels.
However, the prevailing wage determinations issued for PERMS on or after October 8, 2020, or pending on October 8, will be calculated using the new prevailing wage structure. PERM prevailing wage determinations issued before October 8, 2020 will use the prior prevailing wage structure.
When do I have to start paying my employees the new wage?
The new wage does not go into effect until the foreign national employee gets his/her H-1B or Green Card. For example, if your employee is six months away from renewal, and you file for PW with the new rule then the new salary does not have to be paid until the start of the new H-1B. If you are filing PERM with the new prevailing wage then the new salary does not have to be paid until the employee gets his/her green card. So, essentially, you should be thinking in the future when you look at the new salaries today.
If you have specific questions about your or your employee's case, then reach out to your immigration attorney to chalk a path forward.
What are the alternatives to using the hiked OES data?
The DOL interim final rule focuses on the way the NPWC uses data from the Bureau of Labor Statistics (BLS) Occupational Employment Statistics (OES) system. It does not change the underlying laws, regulations, or policy relating to non-OES wage data. Employers can continue to choose other wage sources that comply with DOL regulations. For example, employers can request that the NPWC issue a prevailing wage determination based on a collective bargaining agreement (CBA), or on the basis of employer-provided wage surveys under 20 CFR 565.40(g) (PERM) or 20 CFR 655.731 (H-1B).
What are the chances of these new hiked wages to become the norm?
Since the rule was issued without any advance notice, opportunity for public comment or economic impact analysis, legal challenges are very likely in the coming weeks. WayLit will monitor any developments and update this page with new information.
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.