Close Side Menu
1601 Market Street
Suite 2600
Philadelphia, PA 19103
Phone: 215.825.8695
Fax: 215.825.8699
225 West 34th Street
14 Penn Plaza
New York, NY 10122
Phone: 646.787.1371
Fax: 215.825.8699
1 Thomas Cir NW – Industrious Thomas Circle
Suite 700
Washington D.C., 20005
Phone: 202-970-2642
Fax: 202-810-9031
Client Portal Pay Invoice
 

Department of Labor Updates Prevailing Wage Determination System

 

In order to use the H-1B nonimmigrant visa for professional employees, or to obtain labor certification and permanent residence on behalf of foreign national employees with skills unavailable in the U.S. work force, an employer must establish that it is offering the appropriate (or “required”) wage for the position.

The required wage is the higher of the “actual wage” the employer pays to similarly employed workers in its work force, or the “prevailing wage,” defined as the average rate of wages paid by other employers to similarly employed workers in the area of intended employment. Employers are allowed to rely upon private surveys, or to use The Department of Labor’s Online Wage Library. In connection with an H 1B petition filing, an employer may make its own determination of the prevailing wage, or may request that a state work force agency (SWA) make a wage determination for it. In connection with a permanent labor certification application, the employer must request a determination from the SWA.

Effective March 8, 2005, Congress required that any government-provided survey such as the Online Wage Library must contain salary figures for at least four different experience levels within each occupation. This mandate resulted from complaints about the Department of Labor’s previous online wage salary survey, which contained only two levels: an entry level and a fully-qualified level. Employers found that the entry level was only applied by the Department of Labor to positions which required very little education or training, and the experienced level wage, applied to most positions, was frequently higher than the wages employers offered to similarly qualified workers. The four level system was intended to provide a more finely-tuned match of job opportunities to salary levels.

One other significant change in the prevailing wage determination methodology is that the employer must now offer 100% of the prevailing wage as determined by whichever salary survey it chooses to use. Previously, the employer was considered to have met the prevailing wage requirement by offering 95% of the salary determined by the wage source. Congress eliminated the 5% variance, so employers must now try to find a multiple-level survey where the surveyed occupation most closely matches the level of experience required by the employer for the particular job opportunity.

The Department of Labor has released guidance to the SWAs regarding how they are to make determinations of the prevailing wage under the Department of Labor’s new 4 level system. The new law does not change the regulation that requires any employer covered by a collective bargaining agreement to use the collectively bargained wage rate as the “prevailing wage” for the occupation. It does mandate use of the Online Wage Library in all cases where the SWA is making its own determination of the wage; however, it also provides that an employer may provide the SWA with a survey it believes meets the requirements of the regulations, and the SWA must use that survey if it meets the regulatory requirements. To be acceptable, a survey must cover an appropriate number of employers, be geographically limited to the area of intended employment, and survey the same occupation and same level of skill as the position being offered to a foreign national.

In cases where the SWA is required to make its own wage determination based upon the Online Wage Library, it must determine which of the four levels a particular position falls into.

The Department of Labor has defined the four levels as follows:

  • Level 1 wage rates are for beginning level employees with only a basic understanding of the occupation. These employees work under close supervision.
  • Level 2 wage rates are for qualified employees with a good understanding of the occupation, performing moderately complex tasks requiring limited judgment.
  • Level 3 wage rates are for experienced employees with a sound understanding of the occupation, performing tasks that require exercising judgment, and coordinating or supervising activities of other staff.
  • Level 4 wage rates are for fully-competent employees with sufficient experience in the occupation to plan and conduct work requiring judgment, and operate under only general supervision.

In determining which of these four levels a position falls into, the Department of Labor begins at Level 1 and then increases the level based on five factors. These factors are:

  1. the level of experience required by the employer, as compared to the range of experience that is normally required for that occupation;
  2. the employer’s education requirements, if they exceed those normally required for the occupation;
  3. any special skill, knowledge, work activities, or tasks required by the employer that are not normal for that occupation;
  4. any occupational certification(s) required by the employer; and
  5. any supervisory duties not inherent in the position (i.e., if the position normally includes supervisory duties – a manager, for example – the supervisory requirement will not, by itself, cause a higher wage).

Conclusion

The Department of Labor guidance on the new 4-level wage system still provides significant discretion for state work force agencies to use higher-level wage determinations for relatively low-level positions, so employers will need to carefully document their requirements and be prepared to show how the calculation should best be done, using the same resources that the Department of Labor will be using. Alternatively, employers may wish to rely on published private surveys in order to avoid the Department of Labor’s somewhat arbitrary wage calculation method.

Stay updated! Sign up for our newsletter.

We'll keep you in the loop with important developments in the modern immigration.