DOL Publishes Regulation Impacting Prevailing Wages

Tonkon Torp LLP

Tonkon Torp LLP

On October 8, 2020, the U.S. Department of Labor (DOL) published an Interim Final Rule (IFR) that impacts prevailing wage programs for H-1B, H-1B1, and E-3 temporary classifications, as well as for certain permanent residence cases requiring labor certification. We expect this IFR to be legally challenged.

The regulation is effective upon publication, October 8, and 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 leveling of positions remains the same (based on position requirements and other factors). The government made the regulation effective on publication to avoid a “rush” to file under the existing salary leveling system. The government cites the impact of COVID-19 and the need to protect the U.S. labor market for these changes

The four levels in the OES wage survey will be adjusted as follows:

  • Level 1: from the 17th percentile to the 45th percentile
  • Level 2: from the 34th percentile to the 62nd percentile
  • Level 3: from the 50th percentile to the 78th percentile
  • Level 4: from the 67th percentile to the 95th percentile

These represent significant adjustments to prevailing wage calculation and will result in significantly higher prevailing wage requirements. For example, a Computer Systems Analyst, Level IV annual wage (typically requiring a Bachelor’s degree and five years’ experience) for the Portland, Oregon metro area increased from $111,134 to $149,989. Another example: a Software Developer, Applications, Level I annual wage (entry level, typically requiring a Bachelor’s degree and zero to two years’ experience) for the Los Angeles metro area increased from $78,125 to $116,418.

Note that employers may still utilize private wage surveys, provided they meet DOL requirements.

All new Labor Condition Applications (LCAs) filed with DOL beginning October 8 must use the new OES wage data (if based on the OES wage survey). LCAs that have already been certified will remain valid to support future H-1B petitions that have not yet been filed. LCAs that are pending before October 8 will be decided by DOL based on prior OES wage data. Prevailing wage determinations for temporary and permanent employment that are pending as of October 8, however, will be issued based on the new salary levels. Currently valid prevailing wage determinations issued by DOL will remain valid during the validity periods to support pending or future filings.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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