DOL Announces Changes to H1B Wage Determination, Disregards Notice and Comment Period

An advanced copy of a US Department of Labor Interim Final Rule (IFR) has just been released. It is anticipated to be published in the Federal Register on 10/8/20 and will be effective on the date of publication. The US Department of Labor, citing high levels of unemployment and their mandate to protect US workers, is taking the extraordinary measure to fast track a regulation which will dramatically and IMMEDIATELY alter the way the wage obligation of US employers that seek to hire foreign national workers both for temporary and permanent (green card) statuses.

Notably, the regulation avoids the normal rulemaking process in which a period of Notice and Comment is given to affected parties. Instead, the government says that giving the public, to include US employers, an opportunity to review the rule before it is effective is “impracticable, unnecessary, or contrary to the public interest”. Despite the fact that the existing regimen has been in operation for two decades, the DOL feels this massive expansion of their authority to avoid the regular rulemaking process now is justified because a delay in this plan “could result in serious harm”.

By way of background, the current regulatory framework requires all employers who sponsor a foreign national in the H-1B, H1B1, E3 and Labor Certification categories to show that they are paying a fair or prevailing wage. These wages are divided by DOL into four levels according to occupation and experience. The DOL will alter the existing four required wage levels – which they state are set at approximately the 17th, 34th, 50th, and 67th percentiles to the 45th, 62nd, 78th, and 95th percentiles. What this means in concrete numbers will depend on numerous factors, and the surveys reflecting these levels are not yet available.

The DOL acknowledges that this will represent “a significant change” and may result in some employers “modifying their use of the H1B and PERM programs”, and also “likely result in higher personnel costs for some employers”. However, outweighing “the extent [to which] employers have reliance interests in the existing levels”, the DOL has determined that the new wage levels “outweighs such interests and justifies such increased costs”.

This regulation will impact:

• All applications for prevailing wage determinations pending with DOL as of the effective date of the regulation;

• All applications for prevailing wage determinations filed with the DOL on or after the effective date of the regulation; and

• All Labor Condition Applications (necessary for H1B, H1B1 and E3 status) filed with the Department on or after the effective date of the regulation using DOL’s wage surveys.

This regulation will NOT impact:

• Previously approved prevailing wage determinations that form the basis of Permanent Labor Certification Applications (PERM) or Labor Condition Applications (H1B, H1B1, E3)