Department of Labor Proposes New Prevailing Wage Methodology for H-1B and PERM Programs
On March 27, 2026, the U.S. Department of Labor’s (DOL) Employment and Training Administration published a proposed rule, “Improving Wage Protections for the Temporary and Permanent Employment of Certain Foreign Nationals in the United States,” to revise the methodology used for determining prevailing wage levels for the H-1B, H-1B1, E-3 visas, and employment-based permanent labor certification (PERM) immigrant visas (green cards). If finalized, the rule would require significantly higher wages for foreign workers who are sponsored under these visa programs.
Background
The current prevailing wage methodology, promulgated in 2005, has long been criticized by the Trump Administration for failing to protect U.S. workers. The Administration contends that the methodology enables employers to hire and retain foreign workers at lower wages than what are paid to similarly employed U.S. workers.
This proposed rule resuscitates the 2020 Interim Final Rule (IFR) introduced by the first Trump Administration that dramatically increased the prevailing wage percentiles. Subject to several federal lawsuits, the IFR was later enjoined by the Courts on procedural grounds. In another attempt to require higher prevailing wages, the first Trump Administration issued a final rule to change the prevailing wage methodology in 2021, which was later vacated by a federal court and withdrawn by the Biden Administration.
Proposed Changes
Similar to the 2020 IFR, the DOL proposes to adjust the wage percentiles used in the four-tier prevailing wage structure (Level I, II, III, and IV) by discarding the lower portion of wage data. The stated purpose of the proposed rule is to recalibrate wage levels to better reflect the education, experience, and level of supervision required for the H-1B visa and highly-skilled positions in the PERM program. The proposed rule would also refine the use of the Bureau of Labor Statistics (BLS) Occupational Employment and Wage Statistics (OEWS) wage data to ensure that prevailing wages more accurately reflect the wages paid to similarly employed U.S. workers.
Under the proposed rule, the Level I wage would be increased from the 17th percentile to the 34th percentile, and the Level IV wage would be increased from the 67th percentile to the 88th percentile based on OEWS wage data for the most specific occupation and geographic area available. By statute, Level II and Level III are set arithmetically between Level I and Level IV. This change in methodology would increase leveling across the board and essentially eliminate the current entry-level wage distinction.
The public comment period on the proposed rule will close on May 26, 2026. Hundreds of comments have already been posted for consideration. Given the fate of the 2021 final rule by the first Trump Administration, this proposed rule may also face legal challenges.
If the proposed rule becomes final, it would apply to Prevailing Wage Determination (PWD) Requests and Labor Condition Applications (LCA) pending with the DOL or filed on or after the rule’s effective date.
What This Means for Our Clients
If finalized, the proposed rule will introduce new challenges for employers that could affect the cost, feasibility, and timing of sponsoring foreign workers under the H-1B, H-1B1, E-3 and PERM programs, particularly for entry-level and early-career employees. However, employers may continue to utilize private wage surveys that meet the DOL requirements as an alternative. These surveys often provide a viable alternative to the DOL figures. We also expect that the rule, if finalized, will be met with significant legal challenges. The questionable data and partisan analysis used to justify the proposed changes may provide a viable basis for successful challenges. If the rule is finalized, we will work with each of our clients individually to help find the best solution to ensure the ongoing success of their immigration program. We will provide more information as it becomes available.
This alert is provided for informational purposes only and does not constitute legal advice. Please contact our office for guidance specific to your situation.