The U.S. Department of Labor (DOL) published a final rule to incorporate changes to the computation of prevailing wage levels for H-1B, H-1B1, and E-3 temporary classifications, as well as for certain permanent residence cases requiring labor certification. The final rule published in the Federal Register on January 14, 2021, will be effective 60 days after publication.

This final rule follows a December 1, 2020 decision from the U.S. District Court for the Northern District of California setting aside an Interim Final Rule (IFR) issued by DOL in October 2020, which was DOL's first attempt to change the computation of prevailing wage levels. In issuing this final rule, DOL asserts that a procedurally flawed IFR does not preclude the agency from issuing a final rule relying upon that flawed IFR.

The regulation adjusts the calculation of the four wage levels in the DOL’s OES wage survey, the primary survey utilized by the government to determine prevailing wages. The rule includes transition wage rates that will be valid from the effective date through June 30, 2021 and tiered changes to be implemented July 1, 2021 to June 30, 2022; July 1, 2022 to June 30, 2023; and July 1, 2023 to June 30, 2024.

As was the case with DOL's IFR issued in October 2020, we expect the changes in computation methods to result in significantly higher prevailing wage requirements. We do expect the final rule to be legally challenged and the incoming Biden Administration has stated that any regulations not in effect on January 20, 2021 will automatically be delayed by an additional 60 days. Given the timing of this final rule, the proposed prevailing wage changes will not impact the H-1B cap lottery for fiscal year 2022.