On Jan. 1 of this year, the U.S. Department of Labor (DOL) instituted a number of changes to its foreign labor certification program. Among these was the centralization of prevailing wage adjudications.
A prevailing wage is a rate of pay calculated based on the average wages in a particular geographic area for a given occupation. It is used in the immigration context as a measure of the minimum allowable wage to be paid by employers seeking to employ foreign nationals in certain nonimmigrant classifications (H-1B, H-2B, H-1B1, E-3), or to sponsor a foreign national for permanent residence through the labor certification process (PERM).
Prior to Jan. 1, prevailing wage determinations, or PWDs, were handled by the State Workforce Agencies (SWA). SWAs administer a variety of employment related labor services, such as job search assistance, job referral, placement services, state unemployment compensation and other related functions. For a number of years, SWAs were also involved in the foreign labor certification program. In addition to PWDs, they also performed initial reviews of labor certification applications, which require employers to show that there are no qualified U.S. workers available to perform the work. With the recent centralization of PWDs, the SWAs no longer play a role in this process.
In some states, there were definite benefits to having the SWAs involved in prevailing wage determinations. Many SWAs were accessible and responsive; if there were a perceived error on the prevailing wage determination, you could simply call them and work it out. Moreover, most SWAs were fairly quick at turning around the prevailing wages, some were even same-day.
Unfortunately, this was not the case for all SWAs, which may be part of the reason that the responsibility is now with the federal government. In some states, the SWAs took months to issue a prevailing wage, and it was impossible to contest. So while this change seemed to be great news for those that worked with less-than-cooperative SWAs, it was heartbreak for those that had a good working relationship with the SWA.
Whether considered good news or bad, there is now only one office responsible for prevailing wage determinations — the National Prevailing Wage and Helpdesk Center (NPWHC) — and we all have to get used to it. It’s not that the factors used to determine prevailing wages have changed, but the system has changed, and that has impacted adjudications in a number of ways.
One of the biggest changes has been processing times, which went from a couple of days in many places to a couple of months with the NPWHC. Another change — and challenge — is that there is no one to contact if a case goes off track, or if there is a seemingly erroneous determination. While it is possible to request a “redetermination” through the online portal, there is limited opportunity to explain why the initial PWD was erroneous. As a result, even with redetermination, you may wind up with the same wage.
Given these procedural changes, it’s more important than ever to understand how a PWD is calculated and when a formal PWD is needed. In general, a PWD is made by comparing the amount of education, experience, and special skills required by the employer for a specific occupation to the Labor Department’s own data regarding what is considered to be the “normal” requirements for that occupation. The Labor Department provides step-by-step instructions to use these factors to make a PWD. These instructions, available online at www.foreignlaborcert.doleta.gov/reg.cfm#PREVAILINGWAGE, are the same instructions used by its certifying officers in making PWDs. The Labor Department also provides a “Check Sheet for Use in Determining OES Wage Level,” which can be used to complete the “Worksheet for Use in Determining OES Level.” Therefore, the Labor Department provides all the necessary information to determine the prevailing wage, without needing to request a formal determination.
If all the information needed to make a PWD is available online, why would a formal PWD ever be needed? Why worry about lengthy processing times and erroneous decisions? In some instances, it may not be needed. If a PERM labor certification application is being submitted, a formal PWD issued by the Labor Department is required. However, the same is not true for petitions for H-1B, H-1B1, and E-3 nonimmigrant classifications. For these classifications, a Labor Department PWD need only be obtained if the employer wishes to take advantage of the Labor Department’s “safe harbor” provisions.
“Safe harbor” is the term used to refer to the DOL’s regulation that states: “In all situations where the employer obtains the PWD from the NPC [National Processing Center], the Department will deem that PWD as correct as to the amount of the wage.” Therefore, the employer is “safe” from investigations questioning the validity of the prevailing wage. Mostly.
The protection offered by safe harbor is not as comprehensive as many employers believe. Although the Labor Department may not question the wage itself, it may question the information provided to determine the wage. For example, the department may investigate whether the job was accurately described, sufficiently detailed and included all requirements. If the Labor Department finds that the job as described in the request for the prevailing wage was not a complete reflection of the actual duties, notwithstanding safe harbor, the employer may still be subject to investigation and fines.
Another reason employers may want to rethink reliance on safe harbor provisions is the delayed processing times, which are around 60 days. The Labor Department regulations at 20 CFR 655.731(a)(2)(ii)(A) recognize that if an “employer is unable to wait … for the prevailing wage … the employer may rely on other legitimate sources.” This clearly indicates that employers are not required to wait for the PWD for nonimmigrant petitions. However, the regulations also state that “if the employer later discovers, upon receipt of PWD … that the information relied upon produced a wage below the final PWD … no violation will be found if the employer retroactively compensates the … nonimmigrant.” So while employers are not required to wait for the PWD, they will nonetheless be bound to it. For those who file but choose not to wait, a best practice may be to withdraw the pending request to avoid receiving a conflicting wage. An even better practice may be not to request the formal PWD at all.
Given that the Labor Department does not require a formal PWD for H-1B petitions, that it does not target employers who do not avail themselves of safe harbor, and that safe harbor offers only very limited protections, the best practice may be to use the Labor Department’s instructions to make a PWD in-house. This does not mean that you pick the wage that most fits the salary. Rather, using the tools provided by the DOL, the prevailing wage may be calculated based on a comparison of the department’s data and the employer’s position description.
In compliance with Labor Department regulations, every step taken to make this determination should be documented in the employer’s public access file. At the very least, this should include the worksheet used to calculate the wage, the employer’s position description, the Labor Department’s position description, a memo to the file explaining on what basis the DOL occupation was selected, and the DOL wage levels. Depending on the circumstances, it may also make sense to include those Labor Department descriptions that were similar to the employer’s description, but which were not chosen, along with an explanation of why those Labor Department positions were not as good a match as the position selected.
Calculating the prevailing wage will require learning and understanding a number of DOL terms and concepts, including those with which many of the new NPWHC certifying officers are still struggling. However, the benefits certainly outweigh the costs. Not only will the employer have more control over the prevailing wage process for H-1B petitions, but it will also be able to more accurately predict wages requested from the NPWHC for the PERM program. This will in essence take the guesswork out of a complicated, but not impossible, process.
Reprinted with permission of The Legal Intelligencer.
