DOL Proposes Major H-1B Wage Overhaul: What the New Prevailing Wage Rule Means for Employers

What Just Happened

The U.S. government is proposing a major increase in the wages employers must pay H-1B and other foreign workers, one that could raise entry-level salary requirements by more than 30%.

On March 27, 2026, the U.S. Department of Labor (DOL) published a proposed rule that would overhaul how prevailing wages are calculated for workers admitted under the H-1B, H-1B1, E-3, and PERM programs.

In plain terms: DOL wants to raise the minimum wages employers must pay foreign workers before the government will certify their labor applications, across all four wage tiers used in the H-1B system. It's one of the biggest changes to H-1B wage rules in decades.

This rulemaking was directed by a September 2025 Presidential Proclamation, which declared that the H-1B program "has been deliberately exploited to replace, rather than supplement, U.S. workers with lower-paid, lower-skilled labor" and instructed the Secretary of Labor to act.

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Not sure how this proposal impacts your team? Boundless helps employers model wage changes, evaluate risk, and plan upcoming H-1B filings with confidence. Learn more today.

The Numbers: Old vs. New Wage Levels

The current four-tier prevailing wage system has been in place, largely unchanged, since 2005. It uses the Bureau of Labor Statistics' Occupational Employment and Wage Statistics (OEWS) survey to set wages at approximately the 17th, 34th, 50th, and 67th percentiles of the wage distribution for a given occupation and geography. DOL now proposes to move those thresholds to the 34th, 52nd, 70th, and 88th percentiles.

Levels II and III are set arithmetically using a formula prescribed in the Immigration and Nationality Act (INA): the difference between Levels I and IV is divided by three, and the quotient is added to Level I (for Level II) or subtracted from Level IV (for Level III). With Level I at the 34th percentile and Level IV at the 88th, the math yields Level II at roughly the 52nd and Level III at roughly the 70th.

"The average wage offered to H-1B workers was approximately $10,191 lower than the OEWS average wage for similarly classified occupations."— DOL NPRM, March 2026

Why DOL Says This Is Necessary

DOL's case rests on three arguments.

1. The current wage system may not meet legal standards

The INA requires that a government survey used to set prevailing wages "provide at least four levels of wages commensurate with experience, education, and the level of supervision." DOL argues the 2005 methodology — which set Level I near the bottom of a wage distribution that includes workers without specialized degrees — doesn't meet that bar. Many occupational classifications in the OEWS include workers who wouldn't qualify for H-1B specialty occupation status, making the lower tail of the distribution a poor comparator for visa workers.

2. Data shows wages lag the broader market

DOL matched LCA data from FY 2020–2025 against OEWS data for the same occupations and states. Key findings:

• The average prevailing wage across all LCAs was $111,717, while the average wage actually offered was $121,908 , a $10,191 premium suggesting employers are already paying above the prevailing floor.
• The OEWS mean for equivalent occupations and geographies was $130,219, about $19,000 above prevailing wage levels.
• 63% of certified LCAs in FY 2024 were at Level I or II—the two lowest wage tiers.
• DOL also points to labor market trends: recent college graduates in computer science and engineering face unemployment rates of 7.5% and 6.1% respectively, while employment of domestic software developers aged 22–25 declined nearly 20% since 2022.

3. DOL says some employers are undercutting U.S. workers

DOL cited evidence that some employers use the H-1B system to replace, not supplement, U.S. workers. A 2023 Economic Policy Institute study found that the top 30 H-1B employers laid off at least 85,000 workers in 2022 and early 2023 while simultaneously hiring 34,000 H-1B workers. DOL also points to outsourcing firms that place H-1B workers at client sites where the actual workforce earns significantly more, and where the outsourcing firm's own "actual wage" benchmark never has to reflect that higher market rate.

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How DOL Arrived at 34th and 88th

The choice of percentiles wasn't arbitrary. DOL used a three-step process:

Step 1: Analyzed all LCA data from FY 2020–2025 — over 3 million applications — to understand the composition of H-1B wages by occupation, state, and wage level.

Step 2: Matched that LCA data to OEWS mean wages for the same occupation and state, producing a target benchmark: the average OEWS mean salary across all LCA-covered occupations, weighted by actual filing patterns. That figure was $130,219, about $19,000 above what employers were required to pay under current prevailing wages.

Step 3: Used a numerical optimization method to find the combination of Level I and Level IV percentiles that brings the average prevailing wage in line with that benchmark. The solution: Level I at the 34th percentile, Level IV at the 88th.

DOL chose the 34th percentile for Level I specifically to exclude the portion of the OEWS distribution likely occupied by workers who wouldn't meet the specialty occupation threshold (those without a specialized bachelor's degree or equivalent). Setting it lower would also cause the four wage levels to cluster too closely, reducing their practical usefulness.

Who Is Affected

The proposed rule would apply to:

• H-1B employers — by far the largest affected group, with over 502,000 LCAs certified annually.
• H-1B1 employers — for nationals of Chile and Singapore in specialty occupations.
• E-3 employers — for Australian nationals in specialty occupations.
• EB-2 and EB-3 PERM sponsors — the same four-tier wage structure governs permanent labor certifications.

The rule applies only to new LCAs and prevailing wage determination requests filed on or after the rule's effective date. Existing certifications, approved LCAs, and previously issued PERM applications are not affected.

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What It Will Cost

DOL's regulatory analysis projects significant economic consequences:

• Administrative cost: Around $3.5 million per year, mostly from HR staff time spent reviewing the new rule.
• Wage transfers: Up to $6.6 billion per year in higher wages paid by employers, rising to roughly $9.3 billion annually once the rule reaches full effect around Year 6.
• Per-worker impact: An estimated average increase of ~$14,000 per year per affected position.

These are upper-bound figures. Employers who already pay above the new prevailing wage (about 22.5% of LCA positions) would see no change. Others may choose to substitute U.S. workers, restructure roles, or reduce their H-1B reliance.

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Alternatives DOL Considered But Rejected

DOL evaluated three alternatives before settling on the proposed percentile approach:

Experience Benchmarking (still open for comment)

This alternative would use the American Community Survey (ACS) and Mincer earnings equations to set wage levels based on the actual education and experience of the sponsored worker, and not just the job description's minimum requirements. Under this approach, wages would be set at the 50th, 62nd, 75th, and 90th percentiles for workers with comparable credentials. DOL is still actively seeking public comment on this alternative and has described it in unusually detailed terms, suggesting it remains a live option for the final rule.

Eliminating private wage surveys

DOL considered requiring all prevailing wages to be based exclusively on OEWS data, eliminating the employer option to use private surveys. It declined, citing flexibility needs for specialized or niche labor markets, but noted that private surveys historically produce wages about 20% higher than OEWS-based prevailing wages.

National wage standard for remote workers

Given the prevalence of remote work in tech (65.7% telework rate for computer and mathematical occupations, per BLS data), DOL considered replacing area-specific wages with a single national wage. It declined due to statutory language requiring wages to be based on the "area of intended employment," but signaled it may revisit this in future rulemakings.

Key Dates

What Employers Should Do Now

With a 60-day comment window, now is the time to act. Here's how to prepare:

Audit your current LCA portfolio

Review active and pending LCA certifications to understand which positions are at Level I or II and by how much your offered wages exceed (or fall short of) the proposed new floors. DOL's published data shows the average gap between offered wages and proposed prevailing wages is roughly $14,000, but that figure varies significantly by occupation and geography.

Model your wage exposure

For each planned H-1B filing, estimate the difference between your intended offer and the new prevailing wage at the relevant SOC code, state, and level. Use BLS OEWS data (available at data.bls.gov/oesprofile/) to interpolate the 34th, 52nd, 70th, and 88th percentiles for your occupations.

Consider submitting public comments

DOL is specifically soliciting feedback on: (1) whether the proposed percentiles appropriately reflect statutory requirements; (2) the Experience Benchmarking alternative; (3) the continued use of private wage surveys; and (4) any data sources or methodologies that could improve wage-setting accuracy. Employer coalitions, industry associations, and individual companies all have standing to comment. Data-supported comments carry more weight.

Consult your immigration attorney

While the rule won't affect existing approvals, upcoming H-1B filings may need to be repriced. If you expect to file this year, start reviewing compensation plans now, before the final rule lands and timelines compress.

The Bottom Line

This is the biggest proposed change to H-1B wage rules in decades. If finalized, it would significantly raise salary requirements across all four levels, most significantly for entry-level roles, where the wage floor would jump more than 33%.

DOL's position is clear: it wants to close what it sees as a gap between what foreign workers are required to be paid and what comparable U.S. workers actually earn. Whether through the proposed percentile adjustment or the Experience Benchmarking alternative, higher wages appear to be where policy is headed, regardless of which method survives the comment period and potential litigation.

Employers should treat this as a near-term planning issue, rather than a distant possibility. The comment window is short, and companies planning H-1B filings this year should start assessing their exposure now.

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