Understanding the DOL’s Proposed Changes to H-1B Prevailing Wages

The U.S. Department of Labor (DOL) has proposed new rules that could significantly change the prevailing wage requirements for H-1B visas, along with other work visa programs like H-1B1, E-3, and PERM labor certifications. This proposal, published in March 2026, aims to increase the minimum wage employers must offer to foreign workers. While the current rules remain in effect, the proposed changes could have a substantial impact on hiring decisions and budgets for companies relying on these visa programs. Understanding the details of this proposed rule and its potential effects is important for both employers and employees.

Proposed Changes to H-1B Prevailing Wage Levels

The core of the DOL’s proposed rule involves adjusting the percentile benchmarks used in its four-level wage system. This system determines the minimum wage an employer must pay for a specific job in a particular geographic area. Currently, Level I wages are set at the 17th percentile, Level II at the 34th, Level III at the 50th, and Level IV at the 67th percentile. The proposed rule, however, would significantly raise these benchmarks.

Under the proposed changes, Level I wages would move from the 17th percentile to the 34th percentile. Level II would increase to the 52nd percentile, Level III to the 70th percentile, and Level IV to the 88th percentile. The DOL estimates that these changes could lead to an average increase of about $14,000 per year per worker. This adjustment is intended to ensure that foreign workers are paid wages that better reflect the market rate and to protect U.S. workers from potential wage depression.

Impact on Employers and Hiring

The proposed increase in prevailing wage levels could significantly affect employers, particularly those that hire entry-level foreign workers. For instance, a jump in the Level I benchmark to the 34th percentile means that jobs previously considered entry-level might now require a higher starting salary. This could impact budgets for companies that rely on junior analysts, developers, engineers, or researchers. Some employers might respond by reducing their hiring numbers, narrowing their candidate searches, or exploring options to move work to areas with lower wage requirements.

Furthermore, the prevailing wage determination is a critical step in the H-1B application process. Employers must attest on the Labor Condition Application (LCA) that they will pay the higher of the actual wage paid to similar employees or the prevailing wage for the occupation in the intended area of employment. A higher prevailing wage means a higher minimum salary requirement, which could influence strategic decisions about workforce planning and the feasibility of sponsoring foreign talent.

Legal Challenges and Current Status

The proposed rule is currently in the notice-and-comment period, with public comments due approximately 60 days after its publication in the Federal Register on March 27, 2026. This means the rule is not yet final and does not alter current employer wage obligations. However, legal experts and some employers have already voiced concerns. Critics argue that the DOL may be exceeding its statutory authority by setting a wage floor that goes beyond measuring the prevailing market wage. This argument echoes past litigation concerning DOL wage rules, such as a 2021 rule that was later vacated.

While no court has yet ruled on this specific March 2026 proposal, the history of similar legal challenges suggests that a final rule with these increased percentile benchmarks would likely face further legal scrutiny. Until a final rule is issued, employers must continue to adhere to the existing prevailing wage framework and LCA procedures.

Understanding Prevailing Wage Determination

Determining the correct prevailing wage is a complex process that depends on several factors. It is not a single national salary but rather varies based on the specific job classification and the worksite location. The DOL uses Standard Occupational Classification (SOC) codes to categorize jobs and specific geographic areas to define local wage data. For example, a software developer in a high-cost-of-living area like San Jose will have a different prevailing wage than a software developer in a lower-cost area like Dallas.

The wage level assigned to the job (Level I, II, III, or IV) then adjusts the percentile within that occupation and location. The FLCDataCenter website is a primary source for this wage data, reflecting the Occupational Employment and Wage Statistics system. Employers and employees should both consult this data to ensure that the offered salary aligns with the occupation, metro area, and assigned wage level. It is important that the job duties, required experience, and level of supervision accurately match the selected wage level to avoid issues during the petition process.

What Employers and Employees Should Do

For employers, it is crucial to stay informed about the status of the proposed rule and to begin planning for potential changes. This includes reviewing current hiring practices, assessing the impact of higher wage requirements on budgets, and ensuring accurate SOC code mapping and worksite determination for all foreign worker petitions. Starting prevailing wage reviews before the H-1B registration season, especially for roles in expensive markets, is advisable.

Employees should carefully review their offer letters, paying close attention to the job title, duties, work location, and the offered salary. Understanding which SOC code and wage level apply to their position and verifying that the salary meets the prevailing wage benchmark is essential. Keeping copies of the LCA and offer terms can also be helpful. As the DOL reviews public comments and considers a final rule, both employers and employees need to remain vigilant and adapt their strategies accordingly.

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