United States: DOL Proposes Rule to Increase PERM and H-1B Wage Minimums

The Department of Labor uses Occupational Employment and Wage Statistics (OEWS) data from the Bureau of Labor Statistics (BLS) to determine prevailing wages in a wide array of occupations. The prevailing wage rate is defined as the average wage paid to similarly employed workers in a specific occupation in the geographic area of intended employment. The OEWS prevailing wage is subdivided into four tiers or wage levels, representing the range of skills from entry level to experienced.

Under the new rule, OEWS prevailing wage minimums will increase significantly for foreign workers at all four levels of skill and experience. For example, under current rules, the Skill Level I (entry level) wage minimum is set at the 17th percentile of the average wage for the occupation. When the new regulation takes effect, the entry-level minimum will increase to the 34th percentile, which is currently the minimum salary for Skill Level II.

The following chart illustrates how the four OEWS wage levels would change under the proposal:

DOL Prevailing Wage Levels: Current and New

The proposed revised percentiles are nearly identical to the percentiles proposed in the final wage rule issued at the end of the first Trump Administration, which was challenged in court and ultimately never took effect.

Although the proposed regulation would significantly raise the required minimum wages for H-1B, H-1B1, and E-3 labor condition applications (LCAs) and PERM applications that rely on the government’s OEWS salary survey data, the proposed rule would continue to permit employers to use alternative wage sources, which are not subject to the DOL wage percentiles.

The new required wage levels would apply only to applications for prevailing wage determinations that are pending on the date the regulation would take effect, and to new prevailing wage requests and LCAs filed on or after the effective date of the regulation. The new percentiles would not apply to any previously issued or approved prevailing wage determinations, PERMs, or LCAs.

In the preamble to the proposed rule, DOL noted that it considered delaying implementation of the new higher wage minimums by two years but opted not to do so, since the rule would be applied only prospectively to new LCAs and PERM applications and not to existing certifications or (in the words of DOL) “renewals.” As LCAs, PERMs, and prevailing wage determinations are not renewable, it is not clear what this reference to renewals relates to. Nevertheless, it would appear that H-1B, H-1B1, and E-3 extensions would be subject to the new rule, if the LCA on which the filing is based is filed on or after the effective date of the regulation.

DOL will accept public feedback on the regulation for 60 days after the proposal is published in the Federal Register. Once the comment period closes, DOL must consider the feedback; though there is no deadline for this review, the agency usually considers feedback for at least a period equal or similar to the public comment period, though a shorter consideration period is possible. Once the review is completed, the regulation would be finalized and published in the Federal Register with an effective date that is typically 30 to 60 days after publication. If the rule is finalized, legal challenges are possible.

Feedback from the business community will be crucial to inform the government of the rule’s impact on the position of the United States in the competition for global talent. If your organization is interested in submitting a comment, please contact your Fragomen professional or the firm’s Government Strategies and Compliance Group.