DOL new rule increases prevailing wages

DOL (Department of Labor) has announced an Interim Final Rule (IFR) titled “Strengthening Wage Protections for the Temporary and Permanent Employment of Certain Aliens in the United States”, which has changed how prevailing wages for the H-1B, H-1B1 and E-3 jobs are calculated. The proposed DOL new rule will be effective immediately from October 8, 2020.

DOL’s proposed rules will result in very high prevailing wages for all occupations. Specifically, the following chart shows how the percentiles have been increased for computing the wages for each level.

With the New DOL rule, the New Level 1 wages are going to be more than Old Level 2 wages. Similarly the New Level 2 wages are going to be more than Old Level 3 wages. This is going to be hard to digest for H1B petitioners.

Furthermore, our research indicates higher wages under new rule in several counties across the United States. Following chart illustrates the level 1 wage increase for Software Developer - Applications, across 10 locations: Seattle, Dallas, New Jersey, Chicago, Atlanta, Tampa, Phoenix, Boston, Charlotte and Philadelphia.

At first glance, it looks like good news for H1b employees as this would increase their salaries. For the H-1B petitioners it's a steep increase in costs and could potentially reduce the appetite for hiring H-1B employees. The H-1B employees need to be careful as it is a double edge situation, in which the H-1B jobs could disappear as the appeal around H-1B jobs decreases considerably, which could potentially force them to leave the country. F-1 Visa holders on OPT or STEM-OPT who are fresh out of college may find it difficult to find an employer who can sponsor their H-1B visa with higher prevailing wages.

It is expected that DOL's new rule will be challenged in the court.

Learn more about the New DHS and DOL rules.