New DOL Rule Results in Substantial Increases to H-1B, E-3 and PERM Prevailing Wage Levels
/The Department of Labor (DOL) has published a new regulation that substantially increases the prevailing wage levels used when filing H-1B and E-3 work visa applications and PERM labor certification applications. This new DOL rule is effective immediately.
However, since DOL circumvented the normal rulemaking process to roll out this new rule with very weak legal justifications for doing so, we expect this new rule will be challenged in court.
What is a Prevailing Wage?
DOL defines the prevailing wage rate as the average wage paid to similarly employed workers in a specific occupation in the geographic area of intended employment, according to Occupational Employment Statistics (OES) data from the Bureau of Labor Statistics (BLS).
The OES prevailing wage survey data is broken down into four wage levels, which are intended to reflect the range of skills from entry level (Level 1) to highly experienced (Level 4).
When Do the Prevailing Wage Requirements Apply?
Employers submitting a petition for a foreign national worker in the H-1B and E-3 categories must first obtain a Labor Condition Application (LCA), which requires an attestation that the employer will pay the H-1B or E-3 worker a salary that is equal to, or above, the prevailing wage for the occupation.
Employers seeking a PERM Labor Certification to support green card sponsorship for a foreign national worker must first obtain a Prevailing Wage Determination (PWD) from DOL, and the PERM Labor Certification will only be issued if the employer is offering a wage that exceeds the prevailing wage set by DOL in the PWD.
How Does This New DOL Rule Impact Prevailing Wage Levels?
Under the new DOL rule, prevailing wage minimums will increase substantially at all four OES wage levels.
As an illustration, under the current rules, the Level 1 entry level wage minimum is set at the 17th percentile of the average wage for the occupation.
Now, under the new rule, the Level 1 wage minimum will increase to the 45th percentile, which is the equivalent of just under the previous Level 3 wage. The chart below shows the increases in wage percentiles for prevailing wage Levels 1-4 under the new rule.
Increase in Prevailing Wage Percentiles Under New DOL Rule
The new DOL rule does permit employers to continue to use alternative wage sources instead of the DOL prevailing wage data for LCAs and PERM applications. However, in practice, DOL’s willingness to accept alternative wage sources is typically quite limited.
When Does this New DOL Rule Become Effective?
The new DOL rule is effective immediately.
LCAs for H-1B or E-3 workers filed on or after October 8 will be subject to the new and higher prevailing wage structure. LCAs filed and pending before October 8 will benefit from the current prevailing wage structure.
PERM prevailing wage determinations issued on or after October 8 will be subject to the new prevailing wage structure. Determinations issued before October 8 will be based on the current prevailing wage structure. Prevailing wage determination requests pending on October 8 will be subject to the new regulation.
Federal Lawsuit Anticipated
We fully expect that a lawsuit will be filed soon in Federal Court seeking a preliminary injunction to block DOL from enforcing this new rule while challenges to the rule are litigated in court.
Considering DOL issued this new rule with an immediate effective date, no advance notice or opportunity for public comment, and without an economic impact analysis, we believe the new rule is vulnerable to challenge.
Ellis Porter will continue to monitor developments related to the new DOL rule closely and report any updates as they happen.
Questions?
If you have any additional questions about how this new DOL prevailing wage rule change will impact you, please contact Ellis Porter and we will be happy to provide further clarification and assistance.