DOL Changes How Prevailing Wages Are Determined for Immigration Purposes

January 13, 2021

Effective June 30, 2021, the US Department of Labor will determine the prevailing wage for permanent labor certifications and labor condition applications based on a new formula for computing prevailing wage levels, resulting in higher prevailing wage levels for all occupations in the Occupation Employment Statistics wage database.

On January 13, 2021, the US Department of Labor (DOL) announced that it will publish a final rule that adopts with changes the Interim Final Rule (IFR) that DOL published on October 8, 2020. The new Final Rule revises the methodology that DOL uses to determine prevailing wage levels for the H-1B, H-1B1, E-3, and permanent labor certification application (PERM) programs. The current four-tier wage structure remains; however, the Final Rule revises upward the wage calculation associated with each level.

DOL’s initial effort to revise the wage calculation methodology through the IFR published October 8, 2020 failed to survive legal challenge. Multiple courts ordered that DOL halt implementation of the IFR so that it could resolve various legal and procedural deficiencies in the interim rule. With publication of this Final Rule, DOL maintains that the revisions in the new rule address those earlier deficiencies. The new Final Rule takes effect March 15, 2021, and includes a phase-in process described below that begins June 30, 2021.

The following table illustrates the upward shift in wage levels for all occupations in the DOL’s Occupation Employment Statistics (OES) wage database:

OES Wage Level

Current Percentile

IFR Percentile

Final Rule Percentile

Level I

17th percentile

45th percentile

35th percentile

Level II

34th percentile

62nd percentile

53rd percentile

Level III

50th percentile

78th percentile

72nd percentile

Level IV

67th percentile

95th percentile

90th percentile

DOL’s taxonomy for the four wage levels is Level I “entry level,” Level II “qualified,” Level III “experienced,” and Level IV “fully competent.” Accordingly, the 35th percentile will be the entry-level wage under the four-tier wage structure. For a typical professional-level position (O*Net Job Zone 4), entry level is for positions that require no more than a bachelor’s degree plus two years of experience. DOL’s existing formula for computing the appropriate wage level for a professional position increases the wage level by one step for each additional year of experience that an employer requires beyond two years. Thus, a professional position that requires a bachelor’s degree plus five years of experience (a midlevel professional role for many employers) will now require a salary at no less than the 90th percentile.

What Applications Are Affected by This Rule?

The wage changes will impact the H-1B visa, the H-1B1 visa for professionals from Chile and Singapore, and the E-3 visa for professionals from Australia, all of which require a certified labor condition application (LCA). PERM prevailing wage determinations will also conform to the new formula.

What Is the Timeline for Implementing This Rule?

DOL plans to implement the new prevailing wage levels on a phased-in basis. The wage level computations in the Final Rule will apply to applications and requests that are pending on or during the relevant transition period, including the following:

  • Applications for prevailing wage determinations (PWDs) pending with the DOL National Prevailing Wage Center (NPWC) at the relevant transition period
  • Applications for PWDs filed with the NPWC after the relevant transition period
  • LCAs filed with DOL on or after the effective date of the transition period where the OES survey data is the prevailing wage source, and where the employer did not obtain the PWD from the NPWC prior to the effective date of the relevant transition period.

DOL will not apply the new regulations to any previously approved PWDs, PERMs, or LCAs, either through reopening, through issuing supplemental PWDs, or through notices of suspension, invalidation, or revocation.

What Is the Phase-In Process for the New Wage Levels?

Although the Final Rule takes effect on March 15, 2021, the new wage calculations will phase-in through July 1, 2022. The transition for most situations will include two steps concluding on July 1, 2022; however, for situations involving H-1B job opportunities where the beneficiary qualifies for post-6th year H-1B extensions under the American Competitiveness in the Twenty–first Century Act of 2000 (AC21), there will be a four-step transition concluding on July 1, 2024.

Under the default two-step transition:

  • Current wage levels will remain in effect through June 30, 2021
  • From July 1, 2021 through June 30, 2022, the prevailing wage will be 90% of the final wage level
  • From July 1, 2022 and onward, the prevailing wage will be the final wage levels based on BLS data

For the longer AC-21 transition:

  • Current wage levels remain in effect through June 30, 2021
  • From July 1, 2021 through June 30, 2022, the prevailing wage will be 85% of the final wage levels
  • From July 1, 2022 through June 30, 2023 the prevailing wage will be 90% of the final wage levels
  • From July 1, 2023 through June 30, 2024 the prevailing wage will be 95% of the final wage levels
  • Starting July 1, 2024, the prevailing wage will be the final wage levels

The regulation does not change existing regulations regarding the use of employer-provided alternative wage surveys. During the brief period that the IFR was in force, the NPWC continued to accept employer-provided wage surveys. Our expectation is that under the new Final Rule, DOL will accept alternative wage surveys that comport with existing regulations in the same fashion that it accepted them prior to this new rule.

Looking Forward

The revised Final Regulation stands a much better chance of implementation than did the Interim Final Rule that preceded it. The Final Rule makes an effort to address many of the deficiencies that led multiple courts to halt implementation of the IFR. It is too early to know whether there will be additional legal challenges to the Final Rule and, if there are, whether they will succeed.

The incoming Biden administration’s plans with respect to the Final Rule are not publicly known. New DOL leadership will need to decide whether to (a) implement the Final Rule as drafted; (b) take formal steps to revoke the Final Rule (as a Final Rule, there is a required regulatory process for revocation); (c) implement the Final Rule as drafted and amend it through additional regulation; and (d) defend any legal challenge to the Final Rule. Given the many issues that the incoming DOL leadership will face, it is not clear that there is political interest in impeding implementation of the new regulation. Moreover, the incoming Biden administration may view the Final Rule as acceptable or even desirable, in which case it might defend the regulation against legal challenge. Accordingly, employers should plan for the Final Rule to take effect as intended. We will publish additional alerts as events warrant.


If you have any questions or would like more information on the issues discussed in this alert, please contact any of the following Morgan Lewis lawyers:

Washington, DC
Shannon A. Donnelly
Eleanor Pelta
Eric S. Bord

Laura C. Garvin