Department of Labor Publishes H-1B Prevailing Wage Rule with Phased Implementation Plan

January 15, 2021 Sara Herbek

Key Points

  • DOL has published the H-1B Prevailing Wage Final Rule in the Federal Register
  • The Final Rule will take effect March 15, 2021
  • The Final Rule will be implemented in multiple phases beginning on July 1, 2021
  • All LCAs and PWDs will be subject to the new wages on July 1, 2024

Overview

The Department of Labor (DOL) published the H-1B Prevailing Wage Final Rule in the Federal Register on January 14th, as anticipated. The agency also outlined the rule’s phased implementation plan, with new wage levels effective on July 1, 2021.

What are the Changes?

As it previously announced, the DOL has published the H-1B and PERM Prevailing Wage Final Rule in the Federal Register. The Final Rule modifies the Interim Final Rule that the agency issued on October 8, 2020. The Final Rule is effective on March 15, 2021.

The wage increases are scheduled to be phased in, but the DOL will ultimately calculate wage levels, as follows, with the percentages based on "the wage distribution for the most specific occupation and geographic area available."

The new Prevailing Wage Levels will be as follows:

- Level I: 35th percentile
- Level II: 53rd percentile
- Level III: 72nd percentile
- Level IV: 90th percentile

In addition to setting new prevailing wages, the Final Rule includes a two-stage wage implementation plan for most prevailing wage requests and a four-stage wage adjustment period for some H-1B employees who are seeking permanent residence status.  The transition will take place over approximately 18 months for the two-stage plan and 3.5 years for the four-stage plan.

The Prevailing Wage updates will be implemented in the following two-stage plan on July 1, 2021:   

July 1, 2021

Level 1 — 90% of the 35th percentile
Level 4 — 90% of the 90th percentile

*Level 2 and 3 applied per INA calculations (dependent on Level 1 and Level 4 calculations)

July 1, 2022

- Level I: 35th percentile
- Level II: 53rd percentile
- Level III: 72nd percentile
- Level IV: 90th percentile

For H-1Bs and prevailing wage determinations filed for foreign nationals who have approved Form I-140 or are eligible for a post-six-year extension as of October 8, 2020, the following four-phase implementation process will be used instead:

July 1, 2021

Level 1 — 85% of the 35th percentile
Level 4 — 85% of the 90th percentile

*Level 2 and 3 applied per INA calculations (dependent on Level 1 and Level 4 calculations)

July 1, 2022

Level 1 — 90% of the 35th percentile
Level 4 — 90% of the 90th percentile

*Level 2 and 3 applied per INA calculations (dependent on Level 1 and Level 4 calculations)

July 1, 2023

Level 1 — 95% of the 35th percentile
Level 4 — 95% of the 90th percentile

*Level 2 and 3 applied per INA calculations (dependent on Level 1 and Level 4 calculations)

July 1, 2024

- Level I: 35th percentile
- Level II: 53rd percentile
- Level III: 72nd percentile
- Level IV: 90th percentile

Employers may also use alternative prevailing wages as a means to determine prevailing wages as well.

What Should Employers and Employees Know?

A two-stage implementation plan will be used for most prevailing wage requests. The Final Rule will also include a four-stage wage implementation plan for some H-1B employees seeking permanent residency. The wage changes will take place over 1.5 years for the two-year plan and 3.5 years for the four-year plan. A four-phase implementation plan will be used for H-1Bs and prevailing wage determinations filed for foreign nationals who have approved Form I-140 or are eligible for a post-six-year extension as of October 8, 2020. Each phase will begin on July 1st every year, starting on July 1, 2021 and ending on July 1, 2024.

Employers may also use alternative prevailing wages to determine their employees’ prevailing wage rates.

Looking Ahead

Additional litigation is expected. Updates will be provided as they become available.


Envoy is pleased to provide you this information, which was prepared in collaboration with Sara Herbek, who is the Managing Partner at Global Immigration Associates, P.C. (www.giafirm.com), Envoy’s affiliated law firm.

Content in this publication is not intended as legal advice, nor should it be relied on as such. For additional information on the issues discussed, consult an Envoy-affiliated attorney or another qualified professional.

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