On January 14, 2021, the Department of Labor (DOL) published a final rule titled Strengthening Wage Protections for the Temporary and Permanent Employment of Certain Aliens in the United States, at 86 FR 3608 (January 14, 2021). See NAFSA's page DOL Final Rule on OES-Based Prevailing Wage Determinations for details. This was the Trump administration's response to federal courts having set aside an October 8, 2020 interim final rule (IFR) of the same title. The final rule would have amended 20 CFR 656.40 to change how DOL computed Level I through Level IV wage rates when using Occupational Employment Statistics (OES) wage data to make a National Prevailing Wage Center (NPWC) prevailing wage determination or to certify an LCA that relies on OES wage data. This would result in higher NPWC prevailing wage determinations in each OES-based wage level. The rule had a baseline effective date with an implementation plan in which wage level adjustments would be phased in. Under the Biden Administration, DOL twice delayed the effective date of the January 14, 2021 final rule; see 86 FR 13995 (March 12, 2021) and 86 FR 26164 (May 12, 2021).

NAFSA note: Effective March 31, 2021, the Bureau of Labor Statistics (BLS) changed the name of the Occupational Employment Statistics (OES) program to Occupational Employment and Wage Statistics (OEWS). See the news item on the BLS page. The DOL rule, published before this name change, still refers to OES.

On April 2, 2021, DOL published a Request for Information: Data Sources and Methods for Determining Prevailing Wage Levels for the Temporary and Permanent Employment of Certain Immigrants and Non-Immigrants in the United States, related to DOL's reconsideration of this rulemaking. NAFSA did not comment, but read the comment submitted by the American Immigration Lawyers Association (AILA) [AILA Doc. No. 21060437].

On June 23, 2021, the U.S. District Court for the Northern District of California issued an order in Chamber of Commerce, et al. v. DHS, et al., No. 4:20-cv-07331, vacating the January 14, 2021 final rule, and remanding the matter back to DOL. The vacatur and remand was in response to DOL's own motion for voluntary remand. On June 29, 2021, DOL announced on its website: "In light of these delays and now the June 23, 2021 order vacating the Final Rule, the operative version of the regulations at 20 CFR 656.40 and 20 CFR 655.731 continues to be the version in place on October 7, 2020, prior to the publication of the IFR."

The DHS/USCIS rule also would have required DOL to develop new policy guidance. DOL withdrew the policy guidance it had developed for this purpose, to allow for the review called for by the Biden Regulatory Freeze memo. The Office of Foreign Labor Certification announced on its web page:

"January 20, 2021. U.S. Department of Labor Withdraws Program Bulletin Announcing Revised Interpretation and New Guidance under the H-1B Visa Program for Review. On January 15, 2021, the U.S. Department of Labor (Department) issued an Office of Foreign Labor Certification H-1B Program Bulletin and a Wage and Hour Division Field Assistance Bulletin (FAB) revising its interpretation of its regulations concerning which employers of H-1B workers must file Labor Condition Applications. The Department simultaneously submitted a Notice for publication in the Federal Register announcing and requesting public comments on this interpretation. On January 20, 2021, the Department withdrew its Notice from the Office of the Federal Register prior to its publication, and is now withdrawing the Bulletin and FAB for the purpose of considering the process for issuing this interpretation as well as reviewing related issues of law, fact, and policy. Accordingly, the requirements of the Bulletin and FAB are no longer in effect. The Department will notify the public of any further actions as appropriate once it completes its review."

Since the January 14, 2021 final rule has been vacated, "the operative version of the regulations at 20 CFR 656.40 and 20 CFR 655.731 continues to be the version in place on October 7, 2020, prior to the publication of the [October 8, 2020] IFR." For research and reference purposes, NAFSA is maintaining the following summary of the January 14, 2021 rule.


Summary of the vacated January 14, 2021 final rule, for research and reference purposes.

 

Main components of the final rule

NAFSA note: for research and reference purposes only. The January 14, 2021 final rule has been vacated as discussed at the top of this page.

The rule would change how DOL's National Prevailing Wage Center (NPWC) applies the four wage-level system to generate prevailing wage determinations when Occupational Employment Wage Statistics (OEWS) (formerly OES) data is used as the wage data source, using a percentile calculation instead of a mean calculation. DOL explains in the preamble:

"The Department will apply the statutory formula as follows: the difference between the two levels provided by the OES survey data is 55 percentiles. Dividing this by three yields a quotient of 18.33. This quotient, added to the value of the Level I wage at the 35th percentile, yields a Level II wage at approximately the 53rd percentile. When subtracted from the value of the Level IV wage at the 90th percentile, the quotient yields a Level III wage at approximately the 72nd percentile of the OES distribution."

The wage levels will be "assigned for the most specific occupation and geographic area available" in the OES data. The rule will impact prevailing wage determinations in both the temporary (e.g., H-1B) and permanent (PERM) programs.

Effective Dates and Transition Periods

NAFSA note: for research and reference purposes only. The January 14, 2021 final rule has been vacated as discussed at the top of this page.

Acknowledging comments that immediate changes to the prevailing wage system would "result in certain employers being unable to renew their workers for a new period of employment as it will be too costly to do so, and that this will be disruptive to business operations," DOL will phase in how it applies the new wage determination methodology. Regarding the phase-in, the preamble to the January 14, 2021 rule explains:

"...For many job opportunities, the new wage rates will phase in through two steps over a year and a half period. For job opportunities that will be filled by workers on track to become lawful permanent residents, and who therefore have greater reliance interests in the old wage methodology, the new wage rates will phase in through four steps over a three and a half year period..."

New provisions at 20 CFR 656.40(b)(2)(iii) set the phased implementation periods for the new prevailing wage levels. The rule itself is set to become effective on November 14, 2022, but the new wage level computations will only be used when OEWS survey data is the prevailing wage source, and where the employer did not obtain the PWD from the NPWC prior to the effective date(s) of each transition period, i.e.:

  • applications for prevailing wage determination pending with the NPWC on or during the effective date(s) of each transition period;
  • applications for prevailing wage determinations filed with the NPWC on or during the effective date(s) of each transition period; and
  • LCAs filed with DOL on or during the effective date(s) of each transition period

Effective Date: Delayed until November 14, 2022

NAFSA note: for research and reference purposes only. The January 14, 2021 final rule has been vacated as discussed at the top of this page.

A final rule published on May 12, 2021 delayed the effective dates set by the January 14, 2021 final rule as follows: "the effective date of the Final Rule published on January 14, 2021, at 86 FR 3608, and delayed on March 12, 2021, at 86 FR 13995, is further delayed until November 14, 2022, and the corresponding transition dates are delayed until January 1, 2023, January 1, 2024, January 1, 2025, and January 1, 2026, respectively."

Phase-In Transition: Starting January 1, 2023

NAFSA note: for research and reference purposes only. The January 14, 2021 final rule has been vacated as discussed at the top of this page.

DOL will phase in how it applies the new wage determination methodology. In the preamble to the January 14, 2021 final rule, DOL states that it "acknowledges commenters' reliance interests on the current wage methodology and understands that immediate changes to wage rates could cause some economic uncertainty for both employers and foreign workers. Thus, the Department is also adopting a series of transition provisions in this final rule to make it easier for employers and workers to adapt to the changed wage levels, thus avoiding disruption and striking a proper balance between stakeholders' reliance interests and the Department's obligation to comply with the INA and pursue a policy that is protective of U.S. workers." The transition provisions will be codified at 20 CFR 656.40(b)(2)(iii).

General two-step phase-in

NAFSA note: for research and reference purposes only. The January 14, 2021 final rule has been vacated as discussed at the top of this page.

"For many job opportunities, the new wage rates will phase in through two steps over a year and a half period."

  • Until December 31, 2022, the current prevailing wage determination percentiles will remain in effect for each wage level
  • From January 1, 2023 through December 31, 2023, the prevailing wage will be 90% of the new wage determination methodology percentiles for each wage level
  • Starting January 1, 2024, the prevailing wage will be 100% of the new wage determination methodology percentiles for each wage level

General phase-in, presented as a table:

Wage Level Current Percentile, through
12/31/2022

Final Rule Step 1
01/01/2023 - 12/31/2023

Final Rule Step 2
01/01/2024 and beyond

Level I 17th percentile 90% of Step 2 Percentile 35th percentile
Level II 34th percentile 53rd percentile
Level III 50th percentile 72nd percentile
Level IV 67th percentile 90th percentile

Immigrant visa track 4-step phase-in

NAFSA note: for research and reference purposes only. The January 14, 2021 final rule has been vacated as discussed at the top of this page.

For "workers who are on track to receive lawful permanent resident (LPR) status, as indicated by their being the beneficiaries of approved employment-based green card petitions [filed as of October 8, 2020], or otherwise eligible to extend their H-1B status beyond the six-year limit," a longer transition period is planned. To qualify for this phase-in schedule, new 20 CFR 656.40(b)(2)(iii)(C) requires that the nonimmigrant must be "as of October 8, 2020, the beneficiary of an approved Immigrant Petition for Alien Worker, or successor form, or is eligible for an extension of his or her H-1B status under sections 106(a) and (b) of the American Competitiveness in the Twenty-first Century Act of 2000 (AC21), Public Law 106-313, as amended by the 21st Century Department of Justice Appropriations Authorization Act, Public Law 107-273 (2002), and the H-1B nonimmigrant is eligible to be granted immigrant status but for application of the per country limitations applicable to immigrants under paragraphs 203(b)(1), (2), and (3) of the INA, or remains eligible for an extension of the H-1B status at the time the Labor Condition Application for Nonimmigrant Workers is filed." This "immigrant visa track" phase-in is as follows. The current phase-in start date of July 1, 2021 is used for discussion purposes in this section. If DOL's March 22, 2021 proposed rule becomes final, the Step 1 transition phase would begin on January 1, 2023 and the other transition dates would also be delayed accordingly.

  • Until 12/31/2022, the current prevailing wage determination percentiles for each wage level will remain in effect
  • From 01/01/2023) through 12/31/2023, the prevailing wage will be 85% of the new wage determination methodology percentiles for each wage level
  • From 01/01/2024 through 12/31/2024, the prevailing wage will be 90% of the new wage determination methodology percentiles for each wage level
  • From 01/01/2025 through 12/31/2025, the prevailing wage will be 95% of the new wage determination methodology percentiles for each wage level
  • Starting 01/01/2026, the prevailing wage will be 100% of the new wage determination methodology percentiles for each wage level

Immigrant visa track phase-in, presented as a table:

Wage Level Current Percentile, 12/31/2022

Final Rule Step 1
01/01/2023 - 12/31/2023
% of Step 4 percentile

Final Rule Step 2
01/01/2024 - 12/31/2024
% of Step 4 percentile

Final Rule Step 3
01/01/2025 - 12/31/2025
% of Step 4 percentile

Final Rule Step 4
01/01/2026
and beyond
Level I 17th percentile
85% of Step 4 Percentile
90% of Step 4 Percentile
95% of Step 4 Percentile
35th percentile
Level II 34th percentile 53rd percentile
Level III 50th percentile 72nd percentile
Level IV 67th percentile 90th percentile

The preamble to the January 14, 2021 final rule asserts:

"By making the phase-in nearly twice as long for these workers, and stretching it out over a period of more than three years, the Department has taken into account the fact that most LCAs are approved for a three year period, meaning that all employers seeking to renew the status of H-1B workers on track to receive LPR status will be able to do so at least once at wage levels below the new levels set by this rule and that in many cases will be closer to the prevailing wage rates that would have obtained if the prior methodology had been left in place. This allows for a more gradual transition than would be achieved if these job opportunities were subject to the two-step phase-in occurring over a year and a half."

Miscellaneous Aspects of the Final Rule

NAFSA note: for research and reference purposes only. The January 14, 2021 final rule has been vacated as discussed at the top of this page.

The preamble to the January 14, 2021 final rule notes:

  • General effect of higher wages. Preamble. "While new prevailing wage rates based on this rule's revised methodology will not immediately change the prevailing wage for H-1B workers with already-approved LCAs, the arrival of new H-1B workers at the same worksite that is subject to a higher prevailing wage under the new methodology could potentially modify employers' actual wage obligations with respect to current H-1B workers and result in the employer having to pay a higher wage."
  • Exercise of enforcement discretion. Preamble. "...although the Department does not believe that employers' actual wage obligations to current H-1B workers are likely to change immediately as a result of adjustments to the prevailing wage levels, the Wage and Hour Division will, where appropriate, take the above factors into consideration in enforcement actions. In some cases, the Department has discretion over whether to launch an investigation into potential violations of the INA's wage requirements. Similarly, even in those cases where the Department is obligated by statute to initiate an investigation and make a determination as to whether a violation has occurred, the assessment of civil money penalties, where such penalties are applicable at all, is sufficiently flexible to take all of the facts and circumstances into account."
  • Default wage of $208,000. The preamble to the January 14, 2021 final rule explains how DOL hopes to address the problem of "the default wage of $208,000 per year being used for a number of occupations where its use was likely not appropriate," saying: "Upon the effective date of this final rule, when BLS is able to report a Level I wage, the Department will utilize the OES footnote only as the Level IV wage estimate in cases where the 90th percentile wage value exceeds the highest wage interval value used by BLS. This change will allow the Department to provide leveled wages even where the footnote wage must be used for the Level IV wage and ensure that entry-level wages are not improperly inflated. In making this change, the Department expects there will be far fewer instances of the Department being unable to provide leveled wages than was the case under the IFR, or even the old wage methodology... In the unlikely event that violations of this kind arise the Department will evaluate them on a case-by-case basis, and, in choosing whether to bring an enforcement action or impose civil monetary penalties, the cause of the violation will be taken into account."

Alternatives and what hasn't changed

NAFSA note: for research and reference purposes only. The January 14, 2021 final rule has been vacated as discussed at the top of this page.

The DOL January 14, 2021 final rule focuses on the way the NPWC uses data from the Bureau of Labor Statistics (BLS) Occupational Employment Wage Statistics (OES) system (note: effective March 31, 2021, OES will be called Occupational Employment and Wage Statistics (OEWS)). It does not change the underlying laws, regulations, or policy relating to non-OES wage data. Employers would still be able to choose other wage sources that comply with DOL regulations. For example, employers would still request that the NPWC issue a prevailing wage determination based on a collective bargaining agreement (CBA), or on the basis of employer-provided wage surveys under  20 CFR 565.40(g) (PERM) or 20 CFR 655.731 (H-1B). See NAFSA Adviser's Manual 360 section 8.A.3., Employer-provided surveys, for a review. NAFSA has temporarily opened that section to non licenses holders.