On October 8, 2020, the Department of Labor (DOL) has issued an interim final rule (IFR) to incorporate changes to the computation of prevailing wage levels. The wage adjustments will affect the processing of H-1B, H-1B1, and E-3 temporary work visas, as well as the permanent labor certification program (PERM) applications. The IFR is effective immediately and does not have a retroactive effect.
This means that the IFR will only apply to forms ETA 9141 filed or currently pending with the National Prevailing Wage Center (NPWC) as of the effective date of the regulation. The IFR will also apply to Labor Condition Applications, form ETA -9035/9035E, filed with OFLC on or after the effective date of the regulation where the OES survey data is the prevailing wage source, and where the employer did not obtain the prevailing wage determination from the NPWC prior to the effective date of the regulation.
New Prevailing Wages Calculation under the IFR
The interim final rule amends the regulations that govern how prevailing wage levels are calculated for purposes of H-1B, H-1B1, E-3, and PERM programs. The calculation changes are based on the following criteria.
- Under the former calculation, the Level I wage was approximately the 17th percentile of the OES wage distribution, calculated based on workers in a given occupation, regardless of their education, experience, or level of responsibility. Under the current IFR, the Level 1 wage will be established by a calculation of the prevailing wage for entry-level workers who have “comparable levels of education, experience, and responsibility to the foreign workers in [the H-1B, H-1B1, E-3, and PERM] programs.” This is a change from the prior calculation and results in an adjustment of the Level 1 wage to approximately the 45th percentile of the OES wage distribution.
- The Level 4 wage was 67th percentile of the OES wage distribution. With the IFR, level 4 will be established “by taking the arithmetic mean of the wages paid to the most highly paid workers in the OES distribution.” This brings an adjustment of the Level 4 wage to approximately the 95th percentile of the OES wage distribution.
- The Level 2 and Level 3 “wage levels will continue to be calculated in accordance” with the current statutory formula for establishing intermediate wage levels. Due to the change in the calculation for Level 1 and Level 4, this results in an adjustment of the Level 2 wage to approximately the 62nd percentile of the OES wage distribution, and an adjustment of the Level 3 wage to approximately the 78th percentile of the OES wage distribution.
Implementation of the new prevailing wage IFR:
- On October 8, 2020, the changes implemented by the IFR will be available through:
- On October 13, 2020, the NPWC will begin issuing prevailing wage determinations using the revised OES prevailing wage data computed for the Interim Final Rule. This brief delay in issuing wage determinations is necessary to complete the required technical changes to the FLAG system’s internal prevailing wage determination module and reduce the risk of unintended system problems or errors that may impact customers and OFLC staff.
- OFLC will continue to issue non-OES-based prevailing wages (e.g. employer-provided surveys or collective bargaining agreements) without delay. In other words, the interim final rule does not prevent an employer from utilizing an alternative wage survey that meets the regulatory requirements for H-1B, H-1B1, E-3, or PERM cases. Acceptable alternative surveys must come from “an independent authoritative source” or “another legitimate source of wage information” as defined in existing regulations. Accordingly, employers may consider using alternative wage surveys, such as a private salary survey that meets the standards, in lieu of the new OES wages.