News & Insights

IT companies File Suit Against DOL Over Its New Wage Rule

After the Department of Labor (DOL) significantly increased the wages for all H1B workers it is not surprising that a Federal Lawsuit has already been filed.  ITServe Alliance along with several IT companies filed a lawsuit in the United States District Court in New Jersey on Friday, October 16, 2020, challenging the unlawfulness of the new DOL wage rule.

In an effort to stop IT/computer companies from hiring H-1B workers DOL hiked up the wages which Employers are required to pay their workers, making it almost impossible for companies to continue to employ foreign nationals.  

On October 8, 2020 DOL changed the way that wages are calculated, without giving prior notice and allowing the public to make comments on the new rule.  The failure to go through the proper lawmaking process is a clear violation of the Administrative Procedure Act, as the lawsuit alleges.

When filing an H-1B petition an Employer has to choose between 4 wage levels, namely, Level I, Level II, Level III and Level IV.  Level I is for entry level positions and Level IV is for the most senior positions.  The wage level is determined by a number of factors to include the education and experience requirements for the position and whether supervision is required.  The wage level which the Employer is required to pay would allow the Employer to negotiate its billing rates, however because the DOL did not provide proper notice of the rule, Employers are now facing a situation where they can no longer afford to pay their employees the prevailing wage.  

Historically level I, II, III and IV wage levels were based on the 17th, 34th, 50th and 67th percentile, however the new rule changes this and the wage levels are now based on the 45th, 62nd, 78th and 95th percentiles.  This has resulted in a significant increase in wages across the board.  For example, a level I wage for a Software Developer in Dallas was $76,752.00, however as of October 8, 2020 this wage has now jumped to a staggering $105,227.00, a difference of $28,475.00.  

Employers wishing to file an H-1B amendment based on a location change are now required to give their employee a massive pay increase in order to continue employing them or risk losing the employee altogether.  

For further details of this lawsuit please see a copy of the filed complaint via the Wasden Banias website:

https://www.wasdenbanias.com/dolifrsuit

This is most likely the first of many lawsuits challenging the new rule.  I suspect we will soon see a lawsuit challenging the new DHS rule, which attempts to change the definition of specialty occupation, the employer/employee relationship and which also attempts to limit the validity of H1B petitions for IT staffing companies to a maximum of 1 year.

For immigration related queries please contact our PLG Partner, Chris Prescott at cprescott@patellegal.com or our Immigration Attorney Monique Mutombo at Mmutombo@patellegal.com

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