DOL Issued Final Rule Will Dramatically Increase Prevailing Wages
On January 14, 2021, the U.S. Department of Labor (DOL) published a final rule entitled, “Strengthening Wage Protections for the Temporary and Permanent Employment of Certain Aliens in the United States,” that will change the four-tier wage-level system used when Occupational Employment Statistics (OES) data is used for permanent labor certifications and labor condition applications (LCA). The final rule is scheduled to take effect on March 15, 2021. If implemented on the scheduled date, the final rule will fundamentally alter the wages employers may be required to pay H-1B, H-1B1, and E-3 nonimmigrants as well as employees with PERM based permanent residence applications. The final rule has multiyear transition periods and although it is set to be implemented on March 15, 2021, the increase in wage minimums will not take effect until July 1, 2021 and will be coupled with a multi-year phase-in period.
Similar to previous administrations, President-elect Biden is expected to issue an executive order on January 20, delaying implementation of rules that have been published during the prior administration, but not yet taken effect, (“midnight regulations”) for 60 days. At this time, it is unclear whether the anticipated postponement of midnight regulations will also delay implementation of the final rule on July 1, 2021. It is also likely that the final rule will be challenged in federal court.
What does this mean?
- The final rule, which was initially published on October 8, 2020, had been struck down by federal courts but is now scheduled to take effect on March 15, 2021.
- The final rule will dramatically change the computation of prevailing wage levels, resulting in significantly higher prevailing wages for all occupations and all wage levels in the Occupational Employment Statistics (OES) wage survey administered by the Bureau of Labor Statistics. The new percentiles corresponding to each prevailing wage level are as follows:
- Level I Wage: 35th percentile of the OES wage distribution (currently 17th percentile);
- Level II Wage: 53rd percentile of the OES wage distribution (currently 34th percentile);
- Level III Wage: 72nd percentile of the OES wage distribution (currently 50th percentile); and
- Level IV Wage: 90th percentile of the OES wage distribution (currently 67th percentile).
What are key points for Employers to keep in mind?
- It is likely that the final rule’s implementation will be delayed by a regulatory freeze ordered by the Biden Administration and/or challenged in federal court.
- If the final rule is implemented, employers may utilize alternative private wage surveys in lieu of DOL’s prevailing wage survey.
How is MT responding?
- We are monitoring the development closely, as we anticipate a regulatory announcement by the incoming Biden Administration in the near future.