1.14.21

The U.S. Department of Labor has again issued a final rule on the computation of prevailing wage levels for high-skilled foreign workers. The rule is intended to replace a prevailing wage rule issued in October that was struck down by a court.

The new rule says it will take effect 60 days from the date of publication (today), but that is unlikely. President-elect Joe Biden has said that he intends to issue an executive order that would freeze any “midnight regulations” issued by the Trump Administration that were scheduled to take effect after Inauguration Day, which is next Wednesday, January 20. If the President-elect follows through, this rule would be frozen, presumably until the new administration is able to formally rescind it.

In addition, the groups that successfully challenged the first iteration of this regulation are expected to challenge the new version again in the courts.

With those caveats, here are the details of the final rule.

The January 2021 prevailing wage rule

The final rule issued today raises the percentiles used to calculate prevailing wage levels. Both the H-1B and the PERM (Green Card) programs require that employers pay at least the prevailing wage. Prevailing wages are based on the DOL’s Occupational Employment Statistics data and use a four-tier system. Wage Level I is the lowest possible prevailing wage, typically for entry-level positions. Wage levels increase as the minimum qualifications for the position increase, with Level IV being the highest possible prevailing wage. The rule issued in October, which was struck down by a federal court in December, would have significantly raised the percentile of the mean wages used for each of the four levels.

Under the new final rule issued today, the percentile increases are more modest, but still very significant. The following is a comparison of the current percentiles, the percentiles in the October rule, and the percentiles in the new final rule:

Wage Level

Current Percentile

October Percentile

New Percentile

Level I (Entry)

17th

45th

35th

Level II

35th

62nd

53rd

Level III

50th

78th

72nd

Level IV

67th

95th

90th

The new rule has another provision that “softens” the October rule. Under the October rule, the prevailing wage percentiles were to take effect immediately. But under the new rule, the prevailing wage percentiles will be phased in. For most H-1B workers, the new percentiles will not take effect until July of this year. For some green card applicants, the new percentiles will not take effect until 2024.

Despite the “softening,” the expected impact from the new rule is that some employers will be unable to afford to file H-1B petitions because they will not be able to meet the higher prevailing wage requirements. These situations include petitions to extend the status of existing employees and to amend the status of existing employees to allow for a change in position, as well as H-1B change of employer petitions to hire new employees. For the same reason, employers may be unable to proceed with green card applications.

Outlook for new rule: not good

The DOL says that it has now complied with all required administrative procedures and hopes the Biden Administration will support the new rule. In addition, the DOL maintains that the changes are necessary to ensure “prevailing wage rates provided by the department fully protect the wages and job opportunities of the U.S. workers.” However, the DOL admits that most of the feedback received before it issued the October rule was negative.

Despite the expressed hopes of the DOL, support from the Biden Administration for the new rule is unlikely. Moreover, as noted above, the same plaintiffs who challenged the October rule in the courts are unlikely to be satisfied with the “slightly less dramatic” version of the October rule.

In short, employers can probably breathe easy until further notice.

For a printer-friendly copy, click here

Practice Areas

Back to Page