The U.S. Department of Labor (DOL) has issued a Notice of Proposed Rulemaking (NPRM) titled “Improving Wage Protections for the Temporary and Permanent Employment of Certain Foreign Nationals in the United States.” The proposal would revise how prevailing wages are calculated for PERM labor certifications and Labor Condition Applications (LCAs) used in H-1B, H-1B1, and E-3 filings. Clients should review this Notice and be prepared to weigh in on how the rule, if it becomes effective in its current form, would affect their immigration programs.
This long-anticipated rule seeking to raise the minimum wages that must be offered for employers to sponsor H-1B workers and employment-based green cards follows years of litigation and regulatory uncertainty stemming from the October 2020 interim final rule (IFR) and subsequent agency actions. While the NPRM continues DOL’s effort to raise wage levels, it adopts a more moderate approach than the IFR and is being issued through standard notice-and-comment rulemaking.
Critically, the proposed rule would not eliminate the ability of employers to use private wage surveys meeting current DOL standards. For employers who are not able to use the OEWS wage survey due to incompatibility between their job descriptions and the OEWS wage leveling system, this continuity will be critical to their H-1B and PERM programs.
Key Provisions of the Proposed Prevailing Wage Rule
1. Revised Wage Level Percentiles
The centerpiece of the proposal is a recalibration of the four-tier prevailing wage structure using Bureau of Labor Statistics Occupational Employment and Wage Statistics (OEWS) data:
- Level I: 34th percentile (currently 17th percentile)
- Level II: 52nd percentile (currently (34th percentile)
- Level III: 70th percentile (currently 50th percentile)
- Level IV: 88th percentile (currently 67th percentile)
DOL states that these changes are intended to better reflect wages paid to similarly employed U.S. workers and reduce the potential for wage undercutting. As a practical matter, however, by eliminating the current entry-level wage classification and requiring entry level workers to be offered wages currently at level II in the OEWS wage system, many smaller employers and nonprofit employers will be shut out of the H-1B and PERM system.
As an example of how the wage recalculation might affect a typical H-1B employer, an entry-level physical therapist in Scranton, Pennsylvania, would see $80,000 as a competitive entry-level offer according to public data sets. In the current method used to generate the OEWS wage set, that offer would meet the “entry level” (Level I) requirement from the OEWS wage set. Under the proposed rule, the entry level salary offer would need to be increased by nearly $14,000 to $93,787 in order to meet the DOL’s new definition of the prevailing wage.
2. Applicability Across Programs
The revised wage methodology would apply to:
- PERM labor certifications (20 CFR 656.40)
- LCAs for H-1B, H-1B1, and E-3 programs (20 CFR 655.731)
The rule continues to be reliant on OEWS data as the primary wage source, but also continues to allow employers to use certain private wage surveys meeting DOL standards for accuracy and geographic specificity.
3. Prospective Implementation
DOL proposes that the new prevailing wage levels would apply to:
- Prevailing Wage Determination (PWD) requests pending as of the rule’s effective date
- New PWD requests filed on or after the effective date
- LCAs filed on or after the effective date, where a PWD was not already obtained
Importantly, the rule would not retroactively affect previously issued PWDs, LCAs, or PERM applications. Note that the effective date is not yet set, as the DOL will receive comments for 60 days and will have to publish a final rule that includes its assessment of the public comments.
How the Proposal Differs from the 2020 Interim Final Rule
While the NPRM builds on the same policy objective as the 2020 IFR – raising prevailing wages – it differs in several important respects:
1. Lower Wage Percentiles
The most significant change is the less aggressive wage structure:
| Wage Level | Pre-2020 System | 2020 IFR | 2026 NPRM |
| Level I | ~17th | 45th | 34th |
| Level II | ~34th | 62nd | 52nd |
| Level III | ~50th | 78th | 70th |
| Level IV | ~67th | 95th | 88th |
Because the wage levels that would be required if this proposed rule is implemented are still substantially higher than the longstanding system, the proposed levels may be challenged in court, as the 2020 IFR was.
2. Rulemaking Process
- The 2020 IFR was issued without prior notice and comment, based on a “good cause” justification tied to pandemic-related labor market concerns. A court rejected that use of the “good cause” exception of the normal rulemaking process that the government must follow for rules like this one.
- The 2026 NPRM follows standard administrative procedure, allowing for public comment and stakeholder input before finalization.
This shift is likely intended to create a more durable rule that can withstand legal challenge.
3. Policy Framing and Justification
The 2020 IFR emphasized urgency and immediate economic harm to U.S. workers. In contrast, the NPRM reflects a more developed administrative record, incorporating:
- Post-IFR litigation outcomes
- A 2021 Request for Information (RFI)
- Additional economic analysis and stakeholder feedback
DOL positions the proposal as a balanced approach that raises wages while considering employer reliance interests on the current wage system, including both OEWS wage levels and the use of private surveys.
Implications for Employers
If finalized, the proposed rule would increase prevailing wages across most occupations and locations, particularly for entry-level (Level I) and senior (Level IV) positions, as well as raise labor costs for employers using H-1B, E-3, H-1B1, and PERM programs. As a result, the proposed rule, if finalized, could affect workforce planning and recruitment strategies, especially for early-career roles. Employers should closely monitor the timing of PWD and LCA filings relative to the rule’s effective date. However, compared to the 2020 IFR, the proposal represents a more moderate cost increase, which may ease some of the more extreme impacts previously anticipated.
What Employers Should Do Next
The proposed rule is expected to be published in the Federal Register on March 27, 2026, with a 60-day public comment period. Employers and stakeholders should consider submitting comments, particularly addressing the appropriateness of the proposed wage percentiles, the methodology for determining Levels II and III, the implementation timelines and transition considerations, and voicing their support to continue to allow private wage surveys that employers rely upon. DOL will review comments before issuing a final rule, which could include further modifications. The Klasko Corporate Immigration team is available to help interested employers to draft comments.
The NPRM marks a significant step in DOL’s ongoing effort to reshape prevailing wage determinations. While it continues the upward trajectory initiated by the 2020 IFR, it adopts a more measured and procedurally sound approach. Employers should begin evaluating potential impacts now and prepare for possible changes in wage obligations in the near future.
Klasko Immigration Law Partners continues to monitor this development. If you have questions about how this proposed rule may affect your workforce or immigration strategy, please contact your Klasko attorney.
The material contained in this alert does not constitute direct legal advice and is for informational purposes only. An attorney-client relationship is not presumed or intended by receipt or review of this presentation. The information provided should never replace informed counsel when specific immigration-related guidance is needed.
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