Prevailing Wage Rule For High-Skilled Foreign Workers Effective November 2022

Jackson Lewis P.C.
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The effective date of the “Strengthening Wage Protections for the Temporary and Permanent Employment of Certain Immigration and Non-Immigrants in the United States” (Prevailing Wage Rule) related to H-1B, H-1B1, and E-3 work visa cases, as well as for PERM cases, is delayed to November 14, 2022. The Biden Administration states that it continues to review the rule.

However, the administration has released the implementation schedule. This should allow employers to prepare and strategize for what undoubtedly will be some sort of wage increase.

Background

In October 2020, the Trump Administration issued the Prevailing Wage Rule as an Interim Final Rule (IFR) that would have significantly raised prevailing wage requirements for H-1B, H-1B1, and E-3 work visa cases, as well as for PERM cases. The wage increase was so substantial and quick that employers would have had difficulty hiring entry level workers, who constitute approximately 60 percent of all H-1B and E-3 employees. The IFR was enjoined by a court. In response, the Trump Administration issued the rule again – this time as a final rule following the Administration Procedures Act  Notice and Comment process. The final rule was set to take effect on March 15, 2021.

Soon after the Biden Administration came into office, and in accordance with its directive that regulations not yet in effect be reviewed for questions of fact, law, and policy, the final rule’s implementation was delayed for 60 days from March 15, 2021, until May 14, 2021. With the latest announcement, the effective date is being pushed out for another 18 months.

Implementation Schedule

The current prevailing wages will remain in effect until December 31, 2022.

There are two sets of transition dates. The first is for most H-1B and E-3 visa workers and is a two-step transition. The second is a four-step transition for foreign workers who are on the permanent residency track. These individuals are beneficiaries of approved I-140 immigrant visa petitions or are eligible for extensions of H-1B status beyond the six-year limit because they have certain pending green card cases. In other words, there is a lengthier transition period for foreign nationals who have been in the United States longer and who have more of a reliance in the current prevailing wages.

Two-Step Transition

  • Current prevailing wages would remain effective through December 31, 2022
  • January 1, 2023, to December 31, 2023, the prevailing wage would be 90% of new prevailing wage
  • January 1, 2024, the prevailing wage would be set at the full new prevailing wage

Four-Step Transition

  • Current prevailing wages would remain effective through December 31, 2022
  • January 1, 2023, to December 31, 2023, the prevailing wage would be 85% of the new prevailing wage
  • January 1, 2024, to December 31, 2024, the prevailing wage would be 90% of the new prevailing wage
  • January 1, 2025, to December 31, 2025, the prevailing wage would be 95% of the new prevailing wage
  • January 1, 2026, the prevailing wage would be set at the full new prevailing wage

We will continue to provide updates as they become available. If you have questions about how to develop wage strategies for H-1B, H-1B1, E-3, and PERM cases.

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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