DOL Proposes Sweeping Increase to Prevailing Wages for H-1B and PERM Programs

By: Deepika Singh

On March 27, 2026, the U.S. Department of Labor (DOL) introduced a significant proposed rule that could reshape employment-based immigration by raising prevailing wage requirements across key visa programs, including H-1B, H-1B1, E-3, and PERM labor certifications. The proposal signals a major policy shift aimed at aligning foreign worker wages more closely with U.S. labor market standards.

Core Change: Higher Wage Benchmarks

At the center of the proposal is a recalibration of the four-tier prevailing wage system, which determines minimum salaries for foreign workers. The DOL intends to move wage levels upward across the board:

• Level I: 17th → 34th percentile
• Level II: 34th → 52nd percentile
• Level III: 50th → 70th percentile
• Level IV: 67th → 88th percentile

This shift would substantially increase wage floors, particularly for entry-level roles, with some estimates suggesting increases exceeding 30% for Level I positions.

Government Rationale: Market Alignment and Worker Protection

According to the DOL, the existing wage framework has long undervalued foreign labor relative to U.S. workers. The agency emphasized that the updated methodology is designed to:

• Ensure parity between foreign and domestic wages
• Reduce incentives to hire lower-cost foreign labor
• Protect job opportunities for U.S. workers

Officials have also pointed to concerns that the H-1B system has been used in some cases to undercut wages, particularly at lower levels of experience.

Economic Impact: Rising Costs and Strategic Shifts

The proposal is expected to carry significant implications for employers:

• Average wages could increase by roughly $14,000 per position annually
• Entry-level hiring through H-1B programs may decline due to higher salary thresholds
• Employers may need to reassess job classifications, wage levels, and hiring strategies
• Geographic hiring decisions may shift toward lower-cost labor markets

Advisory analyses note that employers will need to revisit internal compensation frameworks to ensure consistency between job duties, wage levels, and immigration filings.

Compliance and Adjudication Considerations

Beyond cost, the proposal introduces heightened compliance risks:

• Wage levels will face closer scrutiny in relation to job duties and experience
• Misalignment between wage level and actual role complexity could trigger audits or RFEs
• Employers may need to conduct more detailed wage-level analyses early in the hiring process

The rule also maintains flexibility by allowing alternative wage sources in some cases, though government survey data will remain the primary benchmark.

Broader Policy Context

The proposal follows a 2025 directive calling for reforms to address perceived misuse of the H-1B program. Policymakers have argued that prior wage structures allowed employers to rely disproportionately on lower-cost foreign labor rather than supplementing the domestic workforce.

Timeline and Next Steps

The rule is currently in the Notice of Proposed Rulemaking (NPRM) stage:

• Public comments are due approximately 60 days after publication (around May 26, 2026)
• Final implementation will follow the notice-and-comment process
• Changes are expected to apply prospectively to new filings, not existing cases

What This Means Going Forward

If finalized, the proposed rule would represent one of the most substantial increases in prevailing wage requirements in decades. Employers will likely need to:

• Reevaluate wage level strategy at the outset of hiring
• Align job descriptions with higher wage thresholds
• Budget for increased immigration-related costs
• Anticipate stricter scrutiny in both DOL and USCIS processes

While supporters argue the changes will strengthen wage protections and fairness in the labor market, critics caution that the rule may limit access to global talent, particularly for early-career professionals.

How We Can Help

Our team is closely monitoring these developments and can assist with assessing the impact on your workforce, reviewing compensation structures, and advising on immigration strategy under the proposed framework.