Court Battles Ensue on DOL’s H-1B Prevailing Wage Rule

Court Battles Ensue on DOL’s H-1B Prevailing Wage Rule

October 21, 2020

As predicted, lawsuits are being filed to stop the Department of Labor’s (DOL) H-1B prevailing wage rule. One such suit, ITServe Alliance Inc. et al. v. Scalia et al., was filed October 16, 2020. The plaintiffs, a group of technology firms, say the new interim final rule will “upend” their businesses and object to the rule on several grounds:

  • DOL “dramatically altered” the way it calculates H-1B prevailing wage rates
  • The agency made the wage rates “exponentially higher without notice or opportunity for comment
  • The new wage rates are “set under a novel standard that conflicts with the governing statutory criteria
  • The new wage rates are “arbitrary and capricious because the agency relied on outdated, incorrect, or limited empirical data, failed to consider readily available, relevant data and empirical studies, and engaged in reasoning that conflicts with basic economic theory”

The plaintiffs seek both preliminary and permanent injunctions to stop the rule from taking effect.

In related news, research from the National Foundation for American Policy (NFAP) finds that the wages mandated under the new rule “do not reflect market wages or meet the definition of a prevailing wage.” NFAP said it “downloaded the entire DOL wage library used to determine prevailing wage rates as of June 30, 2020, and compared those wages to the new required minimum wages for every occupation and geographic area after the DOL rule went into effect.” NFAP also “obtained a sample of private wage surveys to compare market wages to the new DOL wages for a selection of common occupations.”

DOL determines prevailing wages under four defined levels: Level 1 (entry level); Level 2 (qualified); Level 3 (experienced); and Level 4 (fully competent). The new wage rule increases the required minimum salary by a substantial margin across all wage levels for H-1B visa holders and employment-based green card holders. For all occupations and geographic locations, the new minimums are, on average, 39% higher for Level 1 positions, 41% higher for Level 2, 43% higher for Level 3, and 45% higher for Level 4, NFAP’s research found.

As examples, NFAP found:

  • The new rule mandates that an employer pay a petroleum engineer 99.5% more than the prevailing wage in existence at Level 1 only shortly before the DOL wage rule took effect.
  • On average, employers would need to increase annual salaries by nearly 50% at Level 1 for computer hardware engineers, more than 40% for computer programmers and chemical engineers at all wage levels, and more than 35% for electrical engineers, computer network architects, computer systems analysts, mechanical engineers and database administrators at all wage levels.
  • On average, employers would be required to pay software developers at least 45% higher annual salaries.

The new DOL wage rule appears to be unworkable for employers in another important respect, NFAP found: The new DOL wage system requires employers to pay exactly $100 an hour, or $208,000 a year, for more than 18,000 combinations of occupations and geographic labor markets, regardless of skill level and position, because DOL cannot provide prevailing wage data for the occupations under the new system. This takes place for some of the most common high-skilled occupations in America’s leading high-tech area, NFAP said.

More litigation is expected shortly on both the DOL interim final rule and a Department of Homeland Security interim final rule on specialty occupations and employer-employee relationships. Stay tuned.

WR hosted a webinar on this topic recently.

Contact your WR attorney for advice in specific situations.

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2020-10-21T09:22:18-08:00 October 21st, 2020|

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