DOL announces changes to prevailing wage system effective October 8, 2020

December 7, 2020 update:

On December 1, 2020, the U.S. District Court for the Northern District of California set aside the wage change rule, requiring USCIS and the Department of Labor to revert back to the previous prevailing wage system.

Original Post:

U.S. immigration law requires employers to pay certain workers, including those working pursuant to H-1B, E-3, and H-1B1 visas, the greater of (1) the actual wage paid by the employer to all other individuals with similar qualifications for the employment in question, or (2) the prevailing wage level for the occupation in the area of employment. On October 6, 2020, the U.S. Department of Labor (DOL) announced changes to prevailing wage system, effective October 8, 2020, that will result in higher prevailing wages for all occupations.

As background, prevailing wages are usually calculated using data collected by DOL’s Office of Foreign Labor Certification (OFLC). In H-1B, H-1B1, and E-3 visa cases, the prevailing wage is then included in the Labor Condition Application (LCA) that the employer must have certified by DOL before the actual visa petition or application can be filed with the appropriate agency. DOL also uses OFLC data to set prevailing wages in its PERM program, which is often the first part of the employment-based permanent residence process.

DOL’s interim final rule (IFR), effective October 8, 2020, will change the method of computation of prevailing wages and will directly result in higher prevailing wages for all occupations. The rule will mostly apply only to prevailing wages calculated on or after October 8. It will not be applied to any previously-approved prevailing wage determinations, permanent labor certification applications, or LCAs. However, going forward, employers beginning new petitions or applications for H-1B, E-3, H-1B1, or PERM labor certification will notice an immediate increase in the OFLC prevailing wage data.

Taken with the U.S. Department of Homeland Security’s overhaul of the H-1B visa system, regulations for which are expected shortly, this change to the prevailing wage system may make it harder for U.S. employers to obtain visas for workers to fill a temporary need, adding to the stresses already imposed by the COVID-19 pandemic and an ailing U.S. economy. Existing prevailing wage data tends to skew higher than real-life salaries—for example, the prevailing wage for a software development manager with a bachelor’s degree and over four years of experience, in the San Francisco Bay Area, is $252,117 today (October 7, 2020)—so the new data may put visas out of reach for some employers.

These changes have been made at extremely short notice, and may be challenged in litigation; further updates will be posted here as they occur.

© Jewell Stewart & Pratt PC 2020