Apparently undeterred by prior litigation striking it down, the Department of Labor (DOL) has published another rule in the Federal Register raising minimum wages for high-skilled workers. The “Strengthening Wage Protections for the Temporary and Permanent Employment of Certain Aliens in the United States” Rule (Wage Protection Rule) will go into effect on March 15, 2021 and will start to affect H-1B, H-1B1, and E-3 work visa cases, as well as PERM filings in July 2021.
Employers sponsoring individuals in these types of cases must affirm that they will pay the appropriate prevailing wage as determined by DOL. There are four DOL wage levels. The minimum wages for each level are based on the DOL’s calculation of the local median salary for a specific position. In the October 8, 2020, iteration of the Wage Protection Rule, Level I was changed from the 17th Percentile to 45th Percentile. Level II moved from the 34th Percentile to the 62nd. Level III went from the 50th Percentile to the 72nd. Finally, Level IV moved from the 67th Percentile to the 95th Percentile. In the new Wage Protection Rule, these have been adjusted downward, somewhat.
This time, Level I is set at the 35th Percentile, Level II at the 53rd, Level III at the 72nd, and Level IV at the 90th Percentile. In other words, Level I and Level II have moved up a step: Level I is now the equivalent of Level II and Level II is the equivalent of Level III. DOL statistics for H-1B cases show that, historically, 31% of the selected cases filed in the annual “H-1B Lottery” were at Level I, and 53% were Level II. In general, 60% of H-1B and E-3 cases have been at Level I and Level II. What this means is that once the new wage structure goes into effect, employers will find it more difficult to hire entry level workers (those at Levels I and II) who currently constitute approximately 84% of all selected H-1B lottery cases and approximately 60% of H-1B and E-3 petitions.
With the new rule, DOL is attempting to address not only issues that were raised by opponents regarding the wage levels themselves, but also the transition to the new wages. No longer is the DOL trying to put the new rule in place immediately as it did when the original rule was published in the Federal Register. Instead, the wage increases will be phased in over a period beginning on July 1, 2021, with most beneficiaries not becoming fully subject to the new wages until July 1, 2022. In addition, DOL is adopting a longer, three-year transition period for those who are eligible to extend their H-1B status beyond the usual 6-year limit due to a pending green card process. Individuals eligible to extend their H-1Bs beyond the usual 6-year limit as of October 8, 2020, will not become fully subject to the new wages until July 2024.
The incoming Biden Administration plans to issue an Executive Order to “halt or delay” any Trump Administration rules that have not gone into effect prior to inauguration day. This DOL rule likely will fall into that category. We will continue to follow the progress of this rule. If you have any questions about its application, Jackson Lewis attorneys are available to advise you.