The Department of Labor (DOL) released a proposed rule late last week that would significantly change the methodology for determining prevailing wage levels.
The proposed rule would affect H-1B, H-1B1, E-3 and PERM filings, and would raise the prevailing wages associated with these programs.
It is important to note that the proposed rule will not take effect as published this week. The rule is subject to a 60-day comment period following its publication in the Federal Register on March 27. It will not be finalized until comments are reviewed, and a final version is re-published in the Federal Register. The rule also could face challenges in federal court.
Below is further information employers should know about the proposed rule.
What is the prevailing wage?
Certain visa types are subject to provisions established by the Immigration and Nationality Act requiring employers to pay foreign national workers the same rates as similarly employed U.S. workers, to guard against wage suppression and the replacement of U.S. workers by lower-cost foreign labor.
This provision has been established by law for more than 50 years. However, the new rule will change the wage thresholds.
In connection with the H-1B, H-1B1, E-3 and PERM programs, the Department of Labor uses Occupational Employment Statistics (OES) data from the Bureau of Labor Statistics (BLS) to determine prevailing wages for a wide range of occupations.
The prevailing wage rate is defined as the average wage paid to similarly employed workers in a specific occupation in the geographic area of intended employment.
The OES prevailing wage is subdivided into four tiers or wage levels, representing the range of skills from entry level to experienced.
Prevailing wage tiers
The new DOL proposed rule would change the calculation of prevailing wage levels by increasing the entry level minimum to the 34th percentile and raising the minimum percentiles for more skilled and experienced workers commensurately. Specifically, the levels will be raised to:
- Level I (entry level): 34th percentile (from 17th)
- Level II (qualified): 52nd percentile (from 34th)
- Level III (experienced): 70th percentile (from 50th)
- Level IV (fully competent): 88th percentile (from 67th)
Therefore, the DOL would raise the “required wage” for H-1B visas, which is equal to or higher than the “prevailing” wage for the specialty occupation in the local labor market or the “actual” wage paid by the employer to other workers with similar responsibilities and qualifications.
This would also impact wages connected to H-1B1 and E-3 applications as well as employment-based immigrant petitions requiring labor certifications.
Specifically, the rule would change the way in which the DOL calculates the prevailing wage when based on OES surveys for each of these programs, leading to higher wages.
Previous attempts to raise the prevailing wage levels
The first Trump administration attempted to raise prevailing wages multiple times in late 2020 and early 2021 before leaving office. Those attempts, however, were blocked in federal court and eventually discarded when President Joe Biden took office.
The 2026 proposed rule reflects a more tempered approach than the 2020 Interim Final Rule, incorporating a more developed administrative record that is likely intended to withstand legal challenge. Nevertheless, the proposed rule may still face similar legal challenges in federal court.
The attorneys at Garfinkel Immigration Law Firm continue to monitor the situation closely and will alert clients as circumstances evolve.
What this means for employers
The proposed rule is expected to materially increase wage obligations for employers sponsoring foreign nationals under the H-1B, E-3, H-1B1 and PERM programs, with the most significant impacts at the entry and senior levels. As a result, employers may face higher labor costs, tighter hiring budgets and the need to recalibrate compensation structures and recruiting strategies.
To prepare, employers should proactively assess their current and anticipated foreign national workforce, model potential cost increases, and evaluate the timing of pending and future Prevailing Wage Determination (PWD) and Labor Condition Application (LCA) filings.
Employers and stakeholders may also wish to consider submitting comments during the rulemaking process and should coordinate with counsel to develop a forward-looking strategy that mitigates risk and preserves flexibility as the regulatory landscape evolves.
Other changes to H-1B visa program
If the proposed rule goes into effect, it will be one of many changes to the H-1B visa program made by the current administration.
In late December, the Department of Homeland Security altered how H-1B cap-subject petitions are selected, introducing a weighted selection process based on wage levels.
Additionally, the administration imposed a $100,000 fee on new H-1B visa applicants who are outside of the United States and do not have a valid H-1B visa.