The Department of Labor Rescinds Regulation to Increase Prevailing Wages

The Department of Labor (DOL) has published a final rule that rescinds the previous administration’s rule that would have soon raised the prevailing wage for H-1B, H-1B1, and E-3 petitions as well as for applications for Permanent Labor Certification.

The regulation that this new rule rescinds was issued on January 14th, 2021, when the DOL published a rule that would significantly raise the prevailing wages over a period of time. Originally, the increased wages would have begun to be phased in at the beginning of July 2021, with a much higher percentile for each of the four wage levels.

This new rule referenced Executive Order 13788, also known as “Buy American and Hire American,” as justification for the increases. This Executive Order referenced an “urgent need for strengthening wage protections in these programs to support economic recovery.” In other words this order indicated that increased wages are critical for protecting domestic workers. In order to accomplish this the DOL through this rule intended to greatly increase prevailing wages leaving them above industry standards in order to discourage U.S. employers from choosing to hire foreign workers.

These rules would have created significant changes for employers of many foreign national workers. Under these now-defunct rules, the new wage rules were set to be increased over time with a dual wage system allowing for reduced wage levels for H-1B workers with a status extended beyond six years and for H-1B petitions for workers that have received an approved I-140 petition.

Earlier this year, the current administration chose to delay implementation of the regulation, and three distinct federal District courts had enjoined the rule or set it aside. In the case of the Qcourts, this was a result of procedural failures. Specifically, the DOL had failed to meet the requirements for public notice and provide an appropriate opportunity for the public to comment on the rule. Additionally, they had failed to provide suitable data and analysis on the new wage requirements.

This new final rule completely removes the increased wage requirements and should provide many employers with a sense of relief. This should leave the prevailing wage requirements fairly consistent for the foreseeable future.

Employer Takeaways

The rescinding of the previous administration’s final rule that would have increased the burden for many employers of foreign national workers is good news. However, for those looking to employ these workers, it is important to keep in mind that there are extensive filing and paperwork burdens in hiring these workers. One of the best ways to lighten the load is with an I-9 management tool which can make it much easier to complete the employment eligibility verification process and store documentation properly for future inspection.