H1B Wage Levels Changes – Final Rule by DOL

US Department of Labor(DOL) published H1B, PERM Wage Levels Changes regulation as interim final rule on October 8^th, 2020 and later it was cancelled by courts as they did not follow proper notice and comment period. DOL had to revert back the FLCDataCenter published wage levels and do many other things to comply with court order.

On Jan 12^th, 2020, DOL published the final rule on the same regulation that was cancelled by Court by making changes as per public comments.  They have revised many things from the interim final rule. In this article, we will review the overall background on high level, what was changed from the interim final rule, when it will start, its potential for lawsuits, and other common FAQs.  

News : DOL Delays Effective Date to Nov 14th, 2022

March 22nd, 2021 : US Department of Labor published a new regulation of type proposed ruled that delays the implementation of the final rule related to H1B, PERM Wage Levels change by 18 months until November 14th, 2022.

If you see the update below from March 12th, 2021, they initially planned to delay it until May 14th, 2021. Now, with this regulatory update, they want to delays it further by 18 months. Below are the reasons they state in the regulatory update

• They received comments indicating concerns on the procedures used for rulemaking
• Public comments were not properly taken with proper notice and comment period.
• The transition dates given in the final rule did not consider any technical studies and data to reach a decision.
• The final rule did not really address the concerns raised by public in the Interim Final rule.
• The final rule ignore many data points, used methodology that was not consistent
• Some of these issues are also part of the lawsuits that forced the Interim final rule to be removed.
• They are delaying this by 18 months for thorough review and get feedback from public before doing any changes.
• You can check official regulation on Federalregister.gov and press release by Dept of Labor see below screenshots

March 12th, 2021 : Today US Dept of Labor published a regulatory update saying that they are delaying the implementation of the final rule regarding PERM, H1B Wage Levels changes until May 14th, 2021.

This rule was originally set to be effective by March 14th, 2021, but was delayed based on the Presidential Directive for 60 days until March 14th, 2021. Now again, after review and comments from public during Feb 2021, US Dept of Labor says they need more time to review the comments and the rule, so they are delaying the overall implementation of the rule until May 14th, 2021.

What it means is that the proposed wage levels in the below article to change H1B, PERM Wage levels from current levels to new higher levels is not effective at the moment and will not impact any new filings until May 14th, 2021. Check below screenshot and Official Regulation on FederalRegister.gov

Background – Interim Final Rule, Court Cases, Final Rule, Public Comments

• Interim Final Rule : US Dept of Labor(DOL) originally published the interim final rule on H1B, PERM Wage Levels Changes on October 8^th, 2020. DOL said that it published the same to protect American workers wages & jobs as per guidance from Trump Administration like Buy American Hire American Executive Order and Trump Travel Ban for H1B, L1, Others. The Interim final rule was effective immediately from October 8^th, 2020 and many employers scrambled to comply with the changes. 
• Lawsuits in Court : There were  lawsuits filed in various Courts by few on the changes to H1B, PERM wage levels rule and all of them ruled in favor of plaintiffs. In first week of December 2020, the Courts asked DOL to cancel the interim final rule and follow proper process. The Courts did not look at the merits of the actual issue on changes to H1B, PERM wage levels, rather issued judgement to cancel the regulation based on procedural grounds stating there was no proper reason for DOL to skip the notice and comments period.
• Final Rule Publication Jan 2021: DOL has published the final rule in federal register on Jan 12^th, 2021 stating that they gave option for public to give comments for 30 days from Oct 8, 2020 to Nov 9, 2020 after they published interim final rule. They have made some revisions to the interim final rule that was cancelled by courts based on the public comments submitted during the 30 days comment period.
• Public Comments: DOL says that about 2,340 Comments were submitted by public during the 30 days comment period that closed on Nov 9, 2020.  They say that most of the comments submitted were not relevant or not substantive. Only 148 comments were relevant and substantive. The have addressed these 148 comments responses in final rule and done changes to Interim final rule accordingly.

For more information on why DOL wanted to change the wage levels, their analysis, read H1B, PERM Wage Levels Changes – Interim Final Rule. You may read What are H1B Wage Levels, How to find, if you are new to this and how it all works.

Now that you have the background and current status, let’s look at the changes done in the interim final rule by DOL.

Changes to Interim Final rule on H1B, PERM Wage Levels after Public Comments  

The final rule on H1B, PERM Wage Levels changes that is published by US Dept of Labor (DOL) is 207 pages long in Federal register.  It is about a lot longer than the interim final rule. Below are the changes done in the final rule after DOL reviewed the public comments.

Wage Levels Changed in Final Rule

The interim final rule had 45^th percentile for Level I, now it is changed to 35^th percentile. Also, the Level IV wage was 95^th percentile before, now it is changed to 90^th percentile. As the Level II and Level III wage levels are derived based on Level I and Level IV, they are now adjusted to 53^rd and 72^nd percentile. Below table summarizes the wage levels that are in final rule in comparison with what was in Interim Final Rule (IFR) and where they stand today.

Phased approach to roll out of New Wage Levels applicant category.

DOL says that based on feedback, they want to give enough time for existing employers to transition and also time for applicants with approve PERM and I-140 to transition without changes to their wages significantly.  They categorize applications into two categories and give phased approach for roll out of new wage levels.

• New Filings of LCAs, PERM : This would be the major category of the applications filed with DOL and include all new filings of LCAs for H1B, H1B1, E3 and new PERM filings. For this category, the new wage levels will be implemented in two steps over a year and half period.  Below is how new wage levels will be rolled out by time period.

• Applicants with Approved PERM / I-140 : This would be the category of applicants filing LCAs for H1B Extensions under AC21 provision with approved PERM or I-140. The condition is that such applicants need to have  approved PERM and/or I-140, or submitted Prevailing Wage Determinations (PWD) as of October 8th, 2020. If they fall under this criteria, the new wage levels will be implemented in four steps over a three and half year period. Below is how new wage levels will be rolled out by time period.

Elimination of Default Wage of $208,000 per year for all Wage Levels

In the interim final rule, there was a default wage of $208,000 per year for all four wage levels, where the BLS Wage Level data was not available for a job title/SOC Code in a location.  DOL clarified that this issue of this only comes when Bureau of Labor Statistics (BLS) is not able to report a Level IV wage and then reports a default wage of $100 an hour or $208,000. 

DOL says that, they will not have the default $100 an hour or $208,000 for all the cases. In cases, where there is no level IV wage, they would retain the other wage levels as they stand and give those wage levels. They will not inflate the wage levels of Level I, II or Level III. They will give a foot note indicating the non-availability for Level IV wages and give guidance on how to use. They say there will be some cases, but most of the current issues with inflated wage levels will not be there.

Usage of Private Wage Surveys, Snapshot of Filings in FY 2020  

Employers are free to use private wage surveys and the regulation does not stop them from using the same.  Employers can use private wage surveys, where the data is not available. The private wage surveys have to meet the typical standards similar to OES Wage Survey. They mentioned out of the total 19,509 LCAs filed for FY 2020, about 14,153 LCAs were filed using independent authoritative sources of wages across 152 occupations.  

DOL Framework Used for choosing the Entry Level Worker Wage Level

DOL says that they looked at the H1B definition as per INA and wage data of H1B, PERM workers’. After careful analysis, they choose entry level wage for H1B, PERM to be equal to a US Workers’ wages who has master’s degree with limited work experience.

Though many commenters asked this framework is not correct, DOL says this is the appropriate logic for selecting the wage levels. The wages for such US workers with master’s and limited work experience is between 32^nd and 49^th percentile. Based on public comments and data provided, this is revised to be set at 35^th percentile.

How were the wages levels percentile Computed

 They picked the Level I wage as 35^th percentile, Level IV wage as 90^th percentile.

• Formula for other two wage levels is “Divide the difference between Leve I and Level IV by three and adding the quotient to the Level I to get Level II, and Level III is obtained by subtracting the quotient from the Level IV wage “. This formula is per Immigration and Nationality Act (INA)
• Using the formula, they took the difference between two 90 – 35 = 55 and divided it by three( 55/3 = 18.33). They just added that to the lowest 35+18.33 = 53^rd  to get the Level II and for Level III, we compute by subtracting 90 – 18.33 = 72^nd percentile.

DOL Responses on some key Issues raised

• Why change Wage levels, Keep old ones: DOL says that the old wage levels defined many years ago were not set based on any economic analysis, so it does not make sense to keep them. They say that commentors did not provide data justifying why we should keep the old one. They say the current wage levels are based on analysis and a proper framework.
• Occupation Specific Wage Levels not desirable: The reason is it there are over 800 different occupations in SOC classification and it is costly to manage and get the wage data and keep them updated. Also, BLS to produce hundreds of different wage levels by various occupations is not sustainable.  
• Medical Professionals, Wages impact : DOL says that many of the comments did not provide any data or economic justifications that tells old wages are correct. Based on DOL analysis, they are lower and hence need change. They do not really address the healthcare workers situation and say, it is DOL discretion and talk about NSF surveys. They say that the elimination of the default $100 per hour for non-data availability will address the concerns of medical professionals.

Final Rule Publish Date, Effective Date, Official Copy

Update : The wage levels final rule is delayed until May 14th, 2021 by Biden administration to review all comments

The final rule is effective 60 days from the date of publication. It is set to be published in Federal Register on Jan 14^th, 2021. It will be effective from March 15^th, 2021.  The effective date is of little importance as the wage levels will change only from July 1^st, 2021. You can check Official Copy of the PDF version of the final rule.

Lawsuits ?  Biden Administration actions ?

It is too early to say, but there would very likely be lawsuits filed by some agencies. Below are the some of the few areas that could be used for the lawsuit

• OMB review was not done and waived, though it is a economically significant rule. In general, it is important for OMB review for anything that has an annual effect of $100 million or more on economy.
• Medical professionals’ impact is not very well addressed and subject to some litigation.
• The studies used in the regulation are contradictory and DOL picked studies based on their discretion and authority.
• There could be other procedural claims that maybe raised like APA clauses as well.

As the rule would not be effective on the day Biden takes office, they can technically not make it effective. They have not really mentioned anything on the wages in their agenda, so we do not know, if they would take any action.   Also, if this issue is taken to court, Biden administration may choose not to fight it in court, thus Court would cancel. So, these are all various options. We need to wait and see.

Common FAQs

What do you think of the final Wage Levels Rule ?

Screenshots on Wage Level Changes from the official regulation document

References :

• Official Document – Final H1B Wage levels Rule
• Federal Register Document of Final Wage Levels Rule
• Press Release by DOL on Final Wage levels rule.