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. This was the Trump administration's response to federal courts having set aside an October 8, 2020 interim final rule of the same title. The final rule would change how DOL computes Level I through Level IV wage rates when it uses 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.

  • Read the final rule at 86 FR 3608 (January 14, 2021), now effective on May 14, 2021 with an implementation transition phase-in start date of July 1, 2021, but DOL has proposed further delaying the effective date until November 14, 2022, along with corresponding proposed delays to the rule's transition dates. See updates, below.

Updates

  • On February 1, 2021, the Department of Labor/Employment and Training Administration (DOL-ETA) published a notice in the Federal Register proposing a 60-day delay of the final rule's effective date, with a 15-day request for comments regarding the proposed delay. Read the notice, published at 86 FR 7656 (February 1, 2021). DOL-ETA proposed delaying the effective date of the January 14, 2021 rule for 60 days, from March 15, 2021 to May 14, 2021. DOL-ETA received 57 comments. On March 10, 2021, AILA and the American Immigration Council submitted detailed comments, urging DHS to delay the effective date until December 31, 2021 and to take steps to rescind the rule.
  • On March 12, 2021, despite comments received, DOL-ETA published a final rule that did not modify the proposed rule's 60-day delay plan, and set the effective date of the Strengthening Wage Protections for the Temporary and Permanent Employment of Certain Aliens in the United States rule [86 FR 3608 (January 14, 2021)] at May 14, 2021, with transition periods starting July 1, 2021.
  • On March 22, 2021, DOL published a proposed rule at 86 FR 3608 (March 22, 2021), proposing "to further delay the effective date of the rule by eighteen months or until November 14, 2022, along with corresponding proposed delays to the rule’s transition date." Under the proposed rule, the Step 1 transition phase would begin on January 1, 2023 and the other transition dates would also be delayed accordingly. Comments on the delayed effective date proposal must be received on or before April 21, 2021. See the DOL press release on its proposal to further delay the effective dates of the final rule.
  • On March 23, 2020, DOL submitted to OMB for review of a "prerule" notice on the Strengthening Wage Protections for the Temporary and Permanent Employment of Certain Aliens in the United States rulemaking. OIRA/OMB FAQs describe the pre-rule stage of rulemaking: "Pre-rule (or advance notice of proposed rulemaking) - Agencies undertake this type of action to solicit public comment on whether or not, or how best, to initiate a rulemaking. Such actions occur prior to the proposed rule stage."
  • On April 2, 2021, DOL published in the Federal Register 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, which is consistent with the "pre-rule" stage of rule development. The public inspection version of the request for information was made available on April 1, 2021. The public will have 60 days to comment:

"The Department of Labor (Department) invites interested parties to provide information on the sources of data and methodologies for determining prevailing wage levels covering employment opportunities that United States (U.S.) employers seek to fill with foreign workers on a permanent or temporary basis through certain employment-based immigrant visas or through H–1B, H–1B1, E–3 nonimmigrant visas. The information received in response to this RFI will inform and be considered by the Department as it reviews the final rule entitled Strengthening Wage Protections for the Temporary and Permanent Employment of Certain Aliens in the United States, published in the Federal Register on January 14, 2021, which may result in the development of a future notice of proposed rulemaking to revise the computation of prevailing wage levels in a manner that more effectively ensures the employment of certain immigrant and nonimmigrant workers does not adversely affect the wages of U.S. workers similarly employed."

Remember that this rule would affect only NPWC prevailing wage determinations made using OES wage data and LCAs that rely on OES wage data. The final rule will continue to allow employers to submit independent authoritative sources such as surveys, and ask that the NPWC utilize that instead of OES wage data.

Main components of the final rule

The rule will change how DOL's National Prevailing Wage Center (NPWC) applies the four wage-level system to generate prevailing wage determinations when Occupational Employment Statistics (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

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 May 14, 2021 (or on November 14, 2022 under DOL's March 22, 2021 proposed rule), but the new wage level computations will only be used for when 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(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: May 14, 2021, but likely further delayed until November 14, 2022

  • Because this DOL rule was published in the Federal Register with an effective date after January 20, 2021, paragraph 3 of the Biden Administration's January 20, 2021 Regulatory Freeze Pending Review memorandum resulted in the rule's original March 14, 2021 effective date being postponed, and the rule being reviewed for "any questions of fact, law, and policy."
  • On February 1, 2021, the Department of Labor/Employment and Training Administration (DOL-ETA) proposed delaying the effective date of the final rule from March 15, 2021 to May 14, 2021, a 60-day delay. Read the notice, published at 86 FR 7656 (February 1, 2021).
  • DOL-ETA received 57 comments. On March 10, 2021, AILA and the American Immigration Council submitted detailed comments, urging DHS to delay the effective date until December 31, 2021 and to take steps to rescind the rule.
  • On March 12, 2021, DOL-ETA published a final rule at 86 FR 13995 (March 12, 2021) that did not modify the proposed 60-day delay plan, and set the effective date of the Strengthening Wage Protections for the Temporary and Permanent Employment of Certain Aliens in the United States rule [86 FR 3608 (January 14, 2021)] at May 14, 2021.
    • However, DOL states in the preamble to the effective date delay rule that: "The Department has already begun its comprehensive review of this rulemaking and may need to take additional action as necessary to complete such a review. In particular, the comments raised thus far suggest that it may be helpful for the Department to issue a request for information soliciting public input on other sources of information and/or methodologies that could be used to inform any new proposal(s) to further amend ETA's regulations governing the prevailing wages for PERM, H-1B, H-1B1, and E-3 job opportunities as the comments raised thus far suggest that additional information and data may be useful in the Department's review. In addition, in light of the complexity of this issue, the Department is considering whether to propose a further delay of the final rule's effective date and accompanying implementation periods that are currently scheduled to take effect on May 14, 2021, and July 1, 2021, respectively. Before further delaying the effective date and implementation periods, the Department will provide the public an opportunity to comment."
  • On March 22, 2021, On March 22, 2021, DOL published a proposed rule at 86 FR 3608 (March 22, 2021), proposing "to further delay the effective date of the rule by eighteen months or until November 14, 2022, along with corresponding proposed delays to the rule’s transition date." Under the proposed rule, the Step 1 transition phase would begin on January 1, 2023 and the other transition dates would also be delayed accordingly. Comments on the delayed effective date proposal must be received on or before April 21, 2021.

Phase-In Transition: Starting July 1, 2021 (or January 1, 2023, if DOL's March 22, 2021 proposed rule becomes final)

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

Note: 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.

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

  • Until June 30, 2021 (or December 31, 2022), the current prevailing wage determination percentiles will remain in effect for each wage level
  • From July 1, 2021 (or January 1, 2023) through June 30, 2022 (or December 31, 2023), the prevailing wage will be 90% of the new wage determination methodology percentiles for each wage level
  • Starting July 1, 2022 (or 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
06/30/2021
(or 12/31/2022)

Final Rule Step 1
07/01/2021 - 06/30/2022
(or 01/01/2023 - 12/31/2023)

Final Rule Step 2
07/01/2022 and beyond
(or 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

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 June 30, 2021 (or 12/31/2022), the current prevailing wage determination percentiles for each wage level will remain in effect
  • From July 1, 2021 (or 01/01/2023) through June 30, 2022 (or 12/31/2023), the prevailing wage will be 85% of the new wage determination methodology percentiles for each wage level
  • From July 1, 2022 (or 01/01/2024) through June 30, 2023 (12/31/2024), the prevailing wage will be 90% of the new wage determination methodology percentiles for each wage level
  • From July 1, 2023 (or 01/01/205) through June 30, 2024 (or 12/31/2025), the prevailing wage will be 95% of the new wage determination methodology percentiles for each wage level
  • Starting July 1, 2024 (or 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, through 06/30/2021
(or 12/31/2022)

Final Rule Step 1
07/01/2021 - 06/30/2022
(or 01/01/2023 - 12/31/2023)
% of Step 4 percentile

Final Rule Step 2
07/01/2022 - 06/30/2023
(or 01/01/2024 - 12/31/2024)
% of Step 4 percentile

Final Rule Step 3
07/01/2023 - 06/30/2024
(or 01/01/2025 - 12/31/2025)
% of Step 4 percentile

Final Rule Step 4
07/01/2024
(or 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

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 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

The DOL January 14, 2021 final rule focuses on the way the NPWC uses data from the Bureau of Labor Statistics (BLS) Occupational Employment Statistics (OES) system. 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.