How The DOL’s New Wage-Level Rule will Affect the Work Visa Program

How The DOL’s New Wage-Level Rule will Affect the Work Visa Program

Posted by: Park Evaluations

By: Rachel Horner

The Department of Labor has issued an interim final rule just days after a judge in California blocked both USCIS’ fee hike and the Trump Administration’s ban on entry for those with work visas.

The rule, titled “Strengthening Wage Protections for the Temporary and Permanent Employment of Certain Aliens in the United States,” will serve as an adjustment to the four-tier prevailing wage methodology used when applying for either an H-1B, H-1B1, or E-3 visa. In the Level 1 tier, the minimum salary paid to those on a work visa will shift from the 17th percentile of their occupation’s income to the 45th percentile. Following the same trend, Level 2 will be moved from the 34th to the 62nd percentile, Level 3 will be moved from the 50th percentile to the 78th percentile, and Level 4 will be moved from the 67th to the 95th percentile. For example, according to Foley and Lardner LLP, in Pittsburgh, PA, an electrical engineer’s Level 1 wage would have been $66,976 under the old rule. Under the new rule, the Level 1 wage would jump to the 45th percentile: $92,851.

According to the DOL, the rule will protect American workers from being replaced with cheaper foreign labor. One way in which it aims to do so is by redefining the way in which the prevailing wages for each level is calculated so that it more accurately reflects the salary of the occupations found within that level. For example, the criteria for the Level 1 prevailing wage was redefined. Originally, the prevailing wage was calculated based on a multitude of wage-related data following the same guidelines as the OES’ s annual survey wage. However, under the new rule, only entry-level workers with comparable education or experience to that of a foreign national, who is held to the standard that they acquire specialty knowledge, will be calculated, therefore making the prevailing wage more closely fit the definition of “specialty occupation.”

In the past, USCIS has routinely made the argument that the Level 1 wage is too low because it would be considered suitable for a regular, not specialty, occupation; a specialty occupation, USCIS believes, would command a salary higher, not lower, than its non-specialty counterparts. Therefore, the increase in percentiles would put extra pressure on employers to prove that a given occupation is so needed that they are willing to pay more to fill the role than they would for an ordinary job.

The most immediate potential impact of the rule could be a significant decrease in H-1B applications, due to the increased cost for each foreign national hired. Companies that had previously heavily relied on this visa to fill its needs would be faced with the process of downsizing its number of petitions, or else finding room in their budgets to accommodate these changes—and during a tough economy.

According to Nandini Nair, immigration partner at law firm Greenspoon Marder, “…In 2017, the program began being hit for using [Wage] Level 1 and most moved to Level 2, which was difficult enough. The difference between wage levels can be anywhere between $10,000 and $15,000. This would be extremely difficult for small to mid-size companies and startups to meet.”

The DOL, for its part, acknowledged that the rule will “likely result in higher personnel costs for some employers,” but asserted that “…the Department has determined that setting the wage levels in a manner that is consistent with the text of the INA and that advances the statute’s purpose of protecting U.S. workers outweighs such interests and justifies such increased cost.”

However, in spite of the DOL’s mission statement for the new rule, many are questioning its connection to the goal of ultimately employing more Americans. Several experts in the field have cited the low overall US unemployment rate in computer occupations (roughly 3.5%, up only .5% from the beginning of the year, pre-Pandemic, according to a report from Forbes) which, according to a report on USCIS’s website, accounts for about two-thirds of H1B visa holders.

Sarah Pierce, a policy analyst at the Migration Policy Institute, told CBS News, “There are many problems with the H-1B program, including that there are instances where H-1B workers are replacing U.S. workers. And that’s a problem that needs to be dealt with… But the Trump administration is dealing with it by punishing all H-1B workers, and especially those that are working in third-party worksites.”

As Pierce was alluding to, the wage regulation will not be the only proposed rule change to the H-1B program (you can read about the other changes here). The issue of increased emphasis on employers proving they exercise direct managerial supervision over their foreign workers, as opposed to merely holding the “right to control” their work, has raised additional concerns over the potential effects on the IT industries especially, for which third-party worksite deputation is often a reality of the job.

While the staying power of these changes could be impacted by the looming presidential election, the rule, now a hot topic among law firms and politicians, could easily be challenged in court regardless of the winner.