DOL Issues Interim Final Rule Dramatically Increasing the Prevailing Wage

Posted on October 14, 2020 by Kari Thurlow

Last week, the Department of Labor (DOL) published an interim final rule that changes how prevailing wages are calculated, which has an immediate impact on foreign workers in the H1B, H1B1, and E-3 programs.

Although an interim final rule, the rule went into effect immediately. This has a big impact on the wages paid to foreign workers and for our members as it primarily concerns nurses brought in by long-term care providers to address workforce challenges.

For background, the DOL sets a prevailing wage in a number of occupations, thus determining a wage level that employers need to pay under the various foreign worker programs. There are four wage levels based on skill set and experience. Since 2005, the four levels were keyed to 17%, 34%, 50% and 67% of the wage distribution for particular occupations. Under this new rule, those levels jump to 45%, 62%, 78%, and 95%, so you can see how this would dramatically impact the costs of bringing in a foreign worker under these programs.

On the surface this looks like a boost for the foreign workers in these programs, but the clear intent is to discourage the use of these programs, especially for entry-level workers. This will likely be challenged by several organizations in federal court to block the interim rule from being enforced. Given the procedural concerns, an injunction will likely be granted. We will continue to monitor and provide updates as things progress.