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New Prevailing Wage Rule Issued by Department of Labor

The Department of Labor (DOL) has issued a new prevailing wage rule that will increase the required wages for H-1B, E-3, H-1B1, and PERM processes. The rule is set for publication this month and will have a gradual wage increase rather than the immediate drastic increase that was struck down last year. The first wave of increases is set to take effect July 1, 2021. It is likely that this wage rule will be subject to litigation, just as the October 8, 2020 interim rule had been.  In addition, the newly sworn in Biden administration could delay implementation to review and determine whether the rule should take effect.

New Calculations for Prevailing Wages

The Department of Labor (DOL) calculates the average wage paid to similarly employed workers in occupations within a geographic area of employment from data gathered by the Bureau of Labor Statistics.  This data is divided into 4 wage levels:

  • Level 1 – entry level

  • Level 2 – qualified

  • Level 3 – experienced

  • Level 4 – fully competent

The new rule will increase the prevailing wage minimums for each of the wage levels in three phases.

  • Phase 1, Rule Effective Date through June 30, 2021: LCAs filed and PWDs issued during this timeframe are to remain subject to current wage levels, with Level I at the 17th percentile, Level II at the 34th percentile, Level III at the 50th percentile and Level IV at the 67th percentile.

  • Phase 2, July 1, 2021 through June 30, 2022: The new wage levels will take effect, however, they are to be adjusted downward as follows – Levels I and IV are to be set at the higher of either 90% of the wage value calculated at the 35th and 90th percentile or the mean of the lower one-third of the current OES wage distribution. Levels II and III are to be set using the wage calculations outlined in the Immigration and Nationality Act (INA), which rely on the amounts listed in Levels I and IV.

  • Phase 3, July 1, 2022 and after: The new wage levels are to take effect without any adjustments, with Level I at the 35th percentile, Level II at the 53rd percentile, Level III at the 72nd percentile and Level IV at the 90th percentile.

The rule is set to take effect within 60 days of publication in the Federal register, but will not have an immediate impact, as the current wage system remains in effect through the first phase of the rule.  

Meltzer Hellrung will be monitoring this matter and will provide updates as they occur.  Please reach out to your designated Meltzer Hellrung attorney or with any questions.