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Department of Labor Proposes New Prevailing Wage Methodology for Foreign Worker Programs
Overview
The U.S. Department of Labor (DOL) has released a proposed rule that revises how prevailing wages are determined for key employment-based immigration programs. The proposed rule would apply to H-1B, H-1B1, and E-3 nonimmigrant workers through Labor Condition Applications (LCAs) and to EB-2 and EB-3 permanent employment-based visas through the PERM labor certification process. The rule is set to be published in the Federal Register on March 27, and contemplates a 60-day period for notice and comment.
This proposed reform comes on the heels of other recent regulatory and policy changes, including the weighted lottery selection regulation and the Presidential Proclamation imposing a $100,000 fee on certain H-1B petitions. Together, these measures reflect a broader policy effort to prioritize higher-wage and highly skilled foreign workers while strengthening protections for U.S. workers.
Proposed Prevailing Wage Levels
The proposed rule retains the four-level prevailing wage structure but revises the methodology using Occupational Employment and Wage Statistics (OEWS) data to significantly increase the benchmarks for each level. DOL now anchors Level I at the 34th percentile and Level IV at the 88th percentile. The intermediate Levels II and III are calculated using a formula provided under the statutory framework.
| Wage Level | Current Percentile | Proposed Methodology / Percentile | Description |
| Level I | 17th percentile | 34th percentile of OEWS distribution | Entry-level positions |
| Level II | 34th percentile | Level I + 1/3 × (Level IV − Level I) ≈ 52nd percentile | Qualified workers |
| Level III | 50th percentile | Level IV − 1/3 × (Level IV − Level I) ≈ 70th percentile | Experienced workers |
| Level IV | 67th percentile | 88th percentile of OEWS distribution, or higher of top OEWS interval wage / arithmetic mean if 88th percentile not computable | Highly experienced or supervisory roles |
Under the proposed rule, employers may still continue to rely on acceptable alternative wage surveys for prevailing wage determinations, provided that regulatory criteria are met.
Does the Rule Apply to Existing LCAs and PWDs?
In the PERM context, the proposed rule would apply to applications for Prevailing Wage Determinations (PWDs) pending with the OFLC National Prevailing Wage Center as of the proposed effective date, as well as PWD applications submitted on or after the effective date.
In the non-immigrant context (H-1B, H-1B1 and E-3), LCAs filed on or after the effective date would be subject to the new methodology.
Previously approved prevailing wage determinations, PERM applications, and LCAs would not be affected, avoiding retroactive changes.
Key Takeaways for Employers
- Prevailing wage refers to the minimum wage rate that an employer must pay a foreign worker in a specific occupation and geographic area. If the new rule is finalized, prevailing wages would increase significantly.
- Following the 60-day notice and comment period, the rule may be finalized as soon as the summer of 2026, and become effective as soon as 30 days thereafter. Legal challenges are possible.
- Employers should expect to review and adjust compensation structures to account for the higher wage floors across all four prevailing wage levels and evaluate long term impacts on talent pipelines.
- H-1B cap petitions, which must be filed by June 30, 2026, will remain unaffected, as LCAs would have been filed prior to the effective date.
Gibney will continue to provide additional updates. If you have specific questions, please contact your Gibney representative or email info@gibney.com.
This alert is for informational purposes and does not constitute legal advice.
Violeta Petrova