The new rule, which will be published in the federal register on January 14, is the second attempt by the Trump administration to hike the wages for foreign workers – such as those under the H-1B or PERM (aka green card) labour certification program. The first attempt to do so via a hastily introduced interim final rule, which came into effect on October 8, last year, was scuttled by three district courts in lawsuits filed by plaintiffs from the technology sector, education sector and non-profits. The courts had held that the procedure of seeking public comments and reviewing the same, as required under the Administrative Procedure Act, was not followed. The court orders led to DOL rescinding the interim final rule.
However, as reported by TOI, the fall agenda of the Trump administration rolled out in early December had indicted the intent to reintroduce the rule, which has now been actioned upon.
“The final rule contains significant prevailing wage increases for all four wage levels, though the new minimums are not as high as initially sought by DOL. The rule also provides a multi-year transition period which is intended to give employers time to meet the wage increases and makes certain accommodations for H-1B workers who are pursuing employment-based permanent residence. Initial wage increases are set to begin on July 1, 2021,” Mitch Wexler, California based partner at Fragomen, a global immigration law firm told TOI.
A statement by DOL states, “On October 8, 2020, the department published an interim final rule, and invited public comment. After an extensive review of the comments received, the department has determined that the existing wage methodology undermines the wages and job opportunities of US workers, and that it is in tension with the governing statute.”
“The US DOL is taking these steps to strengthen wage protections, address abuses in visa programs, and protect American workers from being undercut by cheaper foreign labor,” said Eugene Scalia, secretary of labour. “These changes help ensure that these important foreign worker programs function as Congress intended, while securing American workers’ opportunities for stable, good-paying jobs. In response to the comments we received, the department has adjusted the wages levels used in the interim final rule to better reflect market wages and included provisions to smooth the transition to the new wage levels” added Scalia.
While President-elect Joe Biden, had expressed the intent to expand the number of H-1B visas (currently limited to an annual quota of 85,000) he had indicated that exploitation of foreign workers will be curbed by ensuring that employers cannot hire below market rate. It remains to be seen how the new administration will respond to this new rule.
How it will work: DOL uses ‘occupational employment statistics’ (OES) data from the bureau of labour statistics (BLS) to determine prevailing wages in a wide array of occupations. The prevailing wage rate is defined as the average wage paid to similarly employed workers in a specific occupation in the geographic area of intended employment. The OES prevailing wage is subdivided into four tiers or wage levels, representing the range of skills from entry level to experienced.
Under the new rule, OES prevailing wage minimums will increase for foreign workers at all four levels of skill and experience, but the increase is not as steep as contained in the now-defunct interim final rules.
To illustrate, the entry-level wages for H-1B and PERM cases will increase to the 35th percentile of wages for the occupation and geographic location, from the 17th percentile. This is just above the current wage minimum for skill level 2. Under the interim final rules, the hike was more significant, with the entry-level wages slotted at the 45th percentile, just under what was the minimum salary for skill level 3.
Though the rule is set to take effect within 60 days of publication in the federal register, its impact will not be immediate. New York based, Cyrus Mehta, founder of an immigration law firm told TOI, “The new rule acknowledges that an abrupt transition to the new wage levels could be disruptive to the economy and detrimental to US employers, so the DOL will gradually introduce the new wages over a period of a year and a half, with the first increase set to take place on July 1, 2021.”
“In addition, for H-1B workers who were the beneficiaries of approved I-140 applications (for green cards) as of October 8, 2021 and are caught in the backlogs, the phase-in period for the increased wages is extended over a three and a half year period,” added Mehta.
Law suits on the horizon: DOL took steps to address concerns raised in the lawsuits by responding to public comments received post October 8, providing notice in advance of the slated effective date and expanding its economic impact analysis. Yet challenges in the court are not ruled out, by immigration attorneys.
“I doubt the new rule will stand, because at its core DOL is still using the OES wage survey in ways that it was not designed to be used. The result is still that, if this rule is implemented, it potentially leaves H-1B employees being paid higher wages than their American counterparts,” Kripa Upadhyay, managing attorney at Orbit Law told TOI.
According to Mehta, “Despite the phase in, the increased wages will be artificial and will not be consistent with market wages, and the new rule is a continuation of the nonsensical wage rule that was previously blocked by the courts. I expect this rule to be challenged too as there is no basis in the Immigration Act to calculate prevailing wages to such high levels as the DOL has done. Prevailing wages must reflect the market wages that are ordinarily paid to US workers in the same occupation.”
Charles Kuck, managing partner at the immigration law firm of Kuck Baxter, who was one of the attorneys in the successful lawsuit filed by Purdue University and others told TOI, “We will be amending our lawsuit to seek to enjoin this lame attempt to fix its prior illegal regulation. We remain confident that this regulation will never see the light of day as written.”
Wexler summed: “Moreover, the Biden administration could place the wage rule – along with other regulations finalized during the last days of the Trump administration – on hold in order to review its contents and determine whether it should take effect. However, the incoming Biden administration has expressed support for the concept of increasing prevailing wages.”