When will employers be required to pay increased prevailing wage levels?
The DOL wage rule that would increase prevailing wage levels for certain employment-based immigrant visas and H-1B and E-3 nonimmigrant visas has been delayed until May 14, 2021. On March 22, 2021, the Department of Labor published a proposed rule that would further delay the rule by 18 months until November 14, 2022.
Employers are required to pay H-1B workers the greater of “the actual wage level paid by the employer to all other individuals with similar experience and qualifications for the specific employment in question,” or the “prevailing wage level for the occupational classification in the area of employment. The wage levels are to ensure that H-1B workers are paid at the same levels as U.S. workers to protect against the replacement of U.S. workers by lower-cost foreign labor. The prevailing wage levels used in the H-1B (and H-1B1 and E-3) specialty occupation programs are the same used in PERM programs.
DOL originally published a version of the rule in October that was immediately effective. The Trump administration’s DOL argued that the new rules were necessary to combat the economic effects of the COVID-19 pandemic, which caused increased unemployment in some industries. The rule was quickly met with court challenges, with the U.S. District Court for the Northern District of California ultimately finding that the rule was in violation of the Administrative Procedures Act requiring public notice and comment periods for proposed rule changes.
In January, a new final rule was published with an effective date of March 14, 2021, but President Biden signed a Regulatory Freeze Pending Review Memorandum on January 20, 2021, postponing any “midnight” rules implemented in the final days of the previous administration. As a result, the DOL proposed a 60-day delay. On March 12, 2021, DOL published a final rule that set the effective date at May 14, 2021, but noted that a comprehensive review was being undertaken and a further delay was being considered. The final rule also removed the term “aliens” in the title, to read “immigrants and non-immigrants” instead.
On March 22, 2021, DOL published a proposed rule that would delay the effective date by eighteen months, along with all corresponding transition dates. The comment period closes on April 21, 2021.
On March 12, 2021, DOL issued a final rule delaying the effective date of the rule on the computation of prevailing wage levels until May 14, 2021. The proposed rule issued on March 22, would further delay the timeline for implementation, including all of the transitional stages proposed by the rule. If finalized, the rule would delay the effective date until November 14, 2022, along with delays for all of the transition dates until January 1, 2024, January 1, 2024, January 1, 2025, and January 1, 2026.
If the proposed rule is finalized:
- The current prevailing wage determination percentiles will remain in effect until December 31, 2022
- Starting January 1, 2023, the prevailing wage will be 90% of the new wage determination methodology percentiles for each level
- Starting January 1, 2024, the prevailing wage will be 100% of the new wage determination methodology percentiles for each wage level
However, that does not apply if the individual is a beneficiary of an approved I-140 (filed as of October 8, 2020), or otherwise eligible to extend their H-1B status beyond the typical six-year limit, but because of statutory limits, cannot be granted immigrant status. If the proposed rule is finalized, these transition stages would apply to the H-1B employees on track for an employment-based green card with an approved I-140:
- The current prevailing wage determination percentiles for each wage level will remain in effect until December 31, 2022
- From January 1, 2023, through December 31, 2023, the prevailing wage would be 85% of the new wage determination methodology percentiles for each wage level
- From January 1, 2024, through December 31, 2024, the prevailing wage would be 90% of the new wage determination methodology percentiles for each wage level
- From January 1, 2025, through December 31, 2025, July 1, 2023, the prevailing wage would be 95% of the new wage determination methodology percentiles for each wage level
- Starting January 1, 2026, the prevailing wage would be 100% of the new wage determination methodology percentiles for each wage level
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