The Trump Administration announced on January 12, 2021 that it has promulgated a new, final rule that will significantly increase the wages that must be paid to holders of H-1B visas for highly skilled workers, though the rule might not ultimately go into effect with the incoming Biden Administration. Last month, an interim version of the rule was invalidated on procedural grounds by three federal district courts.
The rule, announced by the Department of Labor (DOL) and titled Strengthening Wage Protections for the Temporary and Permanent Employment of Certain Aliens in the United States, would increase the prevailing wages that must be paid to H-1B visa holders. Prevailing wages are calculated based on wages paid to a particular occupation in a specific geographic area, with four prevailing-wage levels spanning from “entry-level” to “fully competent” employees. The new DOL rule adjusts the prevailing wages for each of the four levels from approximately the 17th, 34th, 50th, and 67th mean-wage percentiles to approximately the 35th, 62nd, 78th, and 90th percentiles. The changes are to be implemented gradually from July 1, 2021 through June 30, 2022. “By ensuring that H-1B workers are offered and paid wages that are no less than what U.S. workers similarly employed in the occupation are being paid, the wage requirements are meant to guard against both wage suppression and the replacement of U.S. workers by lower-cost foreign labor,” the rule states.
The final rule will not go into effect until 60 days after it is published in the Federal Register, which has not yet occurred. According to media reports, however, a spokesperson for the incoming Biden Administration said on December 30, 2020 that the new administration would stop or delay so-called midnight regulations, meaning those regulations that have not taken effect when President-elect Biden assumes office on January 20. This would include the DOL rule, though it is not yet clear how the Biden Administration would view that particular rule.
In December 2020, three federal courts invalidated a substantively similar interim version of the DOL rule, because the Trump Administration had bypassed the requisite notice and comment period. All three courts rejected the administration’s argument that, largely because of the economic impact of the COVID-19 pandemic, the notice and comment periods should have been excused for “good cause” under the Administrative Procedure Act (APA). One of those courts also invalidated a related interim rule promulgated by the Department of Homeland Security (DHS) that made several changes to the H-1B visa program, such as narrowing the definition of “specialty occupations” eligible for H-1B visas and shortening visa terms from three years to one year. DHS has not announced a final version of that rule.
The final DOL rule was announced following a 30-day comment period for the interim rule, as required by the APA. According to DOL, it received 2,340 comments, including from labor unions, employers, law firms, academic and research institutions, healthcare providers, and others. The rule states that the “overwhelming majority” of comments opposed the new prevailing-wage methodology, including objections that the prevailing-wage levels, as described in the interim rule, do not correspond to actual wages paid to US workers in similar roles and that the new prevailing-wage levels were “arbitrary and unsustainable for most employers,” particularly given their immediate implementation pursuant to the interim rule. In response to these comments, the DOL altered the final rule so that the prevailing-wage level for “entry-level” and “fully competent” employees was lowered from the 45th to the 35th mean-wage percentiles and from the 95th to 90th mean-wage percentiles, respectively. The final rule also called for the new wage levels to be implemented gradually instead of all at once.