In the last days of the Trump administration, the US 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,” scheduling the rule to take effect on March 15, 2021 with adjustments to prevailing wage levels beginning on July 1, 2021. The final rule built on an interim final rule initially published and enacted in October 2020, which federal courts struck down in December 2020 in response to lawsuits filed by numerous business and universities led by the US Chamber of Commerce. The final rule changed the computation of prevailing wage levels, effectively raising salaries by an average of 25% for all occupations and wage levels in the Occupational Employment Statistics (OES) wage survey administered by the Bureau of Labor Statistics and impacting prevailing wage requirements for nonimmigrant sponsorship in the H-1B, H-1B1, and E-3 categories and for PERM-based immigrant visa sponsorship.
On January 20, 2021, the published final rule became subject to the “Regulatory Freeze Pending Review” memorandum from President Biden’s Chief of Staff, delaying the implementation of the final rule for 60 days pending administrative review. Subsequently, on February 1, 2021, the DOL published a notice officially proposing to delay the effective date of the final rule until May 14, 2021, which was confirmed in a final rule published on March 12, 2021. On February 19, 2021, the businesses and universities who initially challenged the interim final rule updated their lawsuit to challenge the final rule; this litigation is ongoing. On March 22, 2021, the DOL proposed a further 18-month delay of the final rule, until November 14, 2022, with adjustments to prevailing wage levels beginning on January 1, 2023. The DOL is accepting public comments on the proposed delay through April 21, 2021. Assuming the proposed delay moves forward, the DOL may revise the rule further or withdraw it entirely before the new effective date in November 2022.
While the Trump administration justified the final rule by arguing that it would ensure that the employment of foreign national workers in the US “does not adversely affect the wages and job opportunities of US workers,” many experts agree that making the US employment of foreign workers more costly is far more likely to result in companies increasing overseas hiring instead of hiring US workers and slowing the migration of foreign talent and investment dollars to the US. Existing H-1B rules already require employers to pay temporary foreign workers the greater of the in-house wages the employer pays to other workers in the same position with similar experience and qualifications or the prevailing wage for the occupational classification in the area of employment, and the H-1B1 and E-3 categories share similar requirements. Most often, employers determine the appropriate prevailing wage for the H-1B, H-1B1, and E-3 categories from OES data. When sponsoring a foreign worker for permanent residence in the US in the EB-2 and EB-3 categories, an employer must obtain a prevailing wage determination from the DOL, which relies on OES wages absent an applicable wage survey, collective bargaining agreement or prevailing wage law. These existing rules allow US employers to hire skilled foreign workers where needed, while still offering robust protections for US workers’ jobs and wages.
Now, the DOL is engaged in a comprehensive review of the prevailing wage system, recently publishing a Request for Information (RFI) inviting interested parties to provide information on data sources and methodologies for determining prevailing wages in the H-1B, H-1B1, E-3, and PERM contexts. Specifically, the DOL is soliciting “written narratives…, quantitative or qualitative data analysis, reports or studies, and other estimation techniques and methodologies, whether published or unpublished, relevant to determining wage values or levels within a specific occupational wage distribution and geographic area,” which can be submitted through June 1, 2021. Likely, the DOL’s next step will be a new round of proposed rulemaking to revise the delayed final rule, which will also be open to public comment.
Contact your Parker Gallini attorney with any questions about the status of changes to the prevailing wage system.