What You Should Know About Interim Final DOL Rule About Prevailing Wage Amendments

What Is the Broad Purpose of This New DOL Amendment to the Existing Rule?

“The Department of Labor (DOL) is amending Employment and Training Administration (ETA) regulations governing the prevailing wages for employment opportunities that United States (U.S.) employers seek to fill with foreign workers on a permanent or temporary basis through certain employment-based immigrant visas or through H–1B, H–1B1, or E–3 nonimmigrant visas”.

What is the Intended Purpose of this Interim Final Rule?

The primary purpose of these changes is to update the computation of prevailing wage levels under the existing four-tier wage structure to better reflect the actual wages earned by U.S. workers similarly employed to foreign workers
This update will allow DOL to ensure that the employment of immigrant and nonimmigrant workers admitted or otherwise provided status through the above-referenced programs does not adversely affect the wages and job opportunities of U.S. workers

How Were Prevailing Wages Calculated In the Past?

Background:

Historically, the Department relied on State Workforce Agencies (SWAs) to determine prevailing wages for purposes of its nonagricultural labor certification programs
To determine the prevailing wage for a particular job opportunity, SWAs relied on wage rates that were determined to be prevailing for the occupation and locality under other Federal laws
In the absence of such wage determinations, SWAs determined prevailing wages based on wage information obtained ‘‘by purchasing available published surveys or by conducting ad hoc surveys of employers in the area of intended employment
In October 1997, the Department amended its prevailing wage guidance to incorporate the wage component of the recently-expanded OES survey
the Department divided OES wage data into two skill levels: a Level I wage for ‘‘beginning level employees’’ and a Level II wage for ‘‘fully competent employees
To determine the prevailing wage level applicable to a particular position, SWAs considered the level of skill required by the employer, identified the appropriate occupation, and selected the appropriate wage level

Reasons for Adjusting Prevailing Wage Levels

A primary purpose of the restrictions on immigration created by the INA, both numerical and otherwise, is ‘‘to preserve jobs for American workers.’’
In general, the purpose of the H-1B program is to ‘‘allow an employer to reach outside of the U.S. to fill a temporary position because of a special need, that cannot be fulfilled by a US Worker
Using a foreign worker as a substitute for a U.S. worker who is already working in or could work in a given job is therefore inconsistent with the broad aims of the program
Under the INA, employers must pay H–1B workers the greater of ‘‘the actual wage level paid by the employer to all other individuals with similar experience and qualifications for the specific employment in question,’’ or the ‘‘the prevailing wage level for the occupational classification in the area of employment
The Department has never offered a full explanation or economic justification for the way it currently calculates the prevailing wage levels it uses in these foreign labor programs
Under the existing wage levels, artificially low prevailing wages provide an opportunity for employers to hire and retain foreign workers at wages well below what their U.S. counterparts in the same labor market, performing similar jobs, and possessing similar levels of education, experience, and responsibility—make

Why the OES Survey is Still Useful for Calculating Prevailing Wages?

The OES collects data from over 1 million establishments. Salary levels based on geographic areas are available at the national and state levels and for certain territories in which statistical validity can be ascertained, including the District of Columbia, Guam, Puerto Rico, and the U.S. Virgin Islands.
Wages for the OES survey are straight-time, gross pay, exclusive of premium pay
The base rate, cost-of-living allowances, guaranteed pay, hazardous duty pay, incentive pay including commissions and production bonuses, tips, and on-call pay are included
This is unique to the OES survey, which is a comprehensive, statistically valid, and useable wage reference

What is the Downside of OES Surveys?

The OES survey is not specifically designed to serve these programs
The OES survey captures no information about differences within the [occupational] groupings based on skills, training, experience or responsibility levels of the workers whose wages are being reported
A review of the Occupational Outlook Handbook shows that only a portion of the workers covered by many of the occupational classifications used in the OES survey likely have levels of education and experience similar to those of H–1B workers in the same occupation

Why this Change, Now?

According to the Administrations’ Research Team and Various Anecdotal Evidence:

A variety of studies and analyses demonstrate that the current wage levels allow employers to pay H–1B workers wages far below what their U.S. counterparts are paid
Most of these studies compare median H–1B worker earnings in an occupation to median U.S. worker earnings in the same occupation, without directly comparing workers with the same levels of education, experience, and responsibility
According to some estimates, H–1B employees in information technology (IT) occupations earn wages that are about 25 percent to 33 percent less than U.S. workers’ wages, a gap that appears to have persisted for more than two decades
There could also be wage suppression, due to the influx of too many H-1B workers

Summary of Changes:

“The BLS shall provide the OFLC Administrator with the OES wage data by occupational classification and geographic area,’’ and goes on to specify the four new levels (Levels I through IV) to be applied
The Level I Wage. This first wage level— currently calculated as the mean of the bottom third of the OES wage distribution—will now be calculated as the mean of the fifth decile of the wage distribution for the most specific occupation and geographic area available
Level IV Wage— currently calculated as the mean of the upper two-thirds of the OES wage distribution—will now be calculated as the mean of the upper decile of the distribution for the most specific occupation and geographic area available
- This means the fourth wage level will increase approximately from the 67th percentile to the 95th percentile of the relevant OES wage distribution
The Level II Wage shall be determined by first dividing the difference between Levels I and IV by three and then adding the quotient to the computed value for Level I
The Level III Wage is defined in new paragraph (b)(2)(i)(C) as a level determined by first dividing the difference between Levels I and IV by three and then subtracting the quotient from the computed value for Level IV
OFLC Administrator will publish, at least once in each calendar year, on a date to be determined by the OFLC Administrator, the prevailing wage rates produced under the new paragraph (b)(2)(i) of section 656.40 as a notice posted on the OFLC website
Greater precision in the language used by changing the term ‘‘DOL’’ to ‘‘BLS’’ when describing which entity administers the OES survey and eliminate redundancy by deleting the language ‘‘except as provided in (b)(3) of this section
The revised language also includes technical and clarifying revisions regarding other permissible wage sources

Overall Effect On EB-2 and Eb-3 Categories:

Under this new rule, OES prevailing wage minimums will increase significantly for foreign workers at all four levels of skill and experience. For example, under current rules, the Skill Level I (entry-level) wage minimum is set at the 17th percentile of the average wage for the occupation.

A Comparative Chart of Prevailing Wage Increase (Percentile Scores)

Skill Level	Current Percentile	New Percentile
Level I	17	45
Level 2	34	62
Level 3	50	78
Level 4	67	95

The DOL Wage Regulation Will be Applicable for:

LCAs filed on or after October 8 will be subject to the new and higher wage minimums
However, LCAs filed and pending before October 8 will be able to use the current prevailing wage structure
PERM prevailing wage determinations issued on or after October 8 will be subject to the new wage structure
Determinations issued before October 8 will be based on the current prevailing wage structure
Prevailing wage determination requests pending on October 8 will be subject to the new regulation

What is the Timeline for Comments?

This interim final rule is effective on October 8, 2020
Written comments and related material must be received on or before November 9, 2020

Please Note: Despite these wage increases, the regulation will still permit employers to continue to use alternative wage sources instead of DOL prevailing wage data for LCAs and PERM applications; these sources are not subject to the DOL wage percentiles.

Is There a Possibility For Lawsuit?

The rule is likely to be the subject of federal lawsuits
DOL issued the regulation with immediate effect, with no advance notice or opportunity for public comment, and without an economic impact analysis, all of which make the rule vulnerable
Plaintiffs in any litigation are likely to seek preliminary injunctions to block DOL from enforcing the rule while challenges are litigated in court

This alert is for informational purposes only. If you have any questions or comment, please

Schedule a call at 469-994-9407 or contact us using the form.