# Strengthening Wage Protections for the Temporary and Permanent Employment of Certain Aliens in the United States

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URL: https://www.frixlaw.com/law-library/documents/fr%3A2021-00218

## Record

- **Collection:** Federal Register
- **Document type:** Rule
- **Published:** January 14, 2021
- **Citation:** 86 FR 3608

## Text

DEPARTMENT OF LABOR
Employment and Training Administration
20 CFR Parts 655 and 656
[DOL Docket No. ETA-2020-0006]
RIN 1205-AC00
Strengthening Wage Protections for the Temporary and Permanent Employment of Certain Aliens in the United States

ACTION:

Final rule.

SUMMARY:

In this final rule, the Department of Labor (the Department or DOL) adopts with changes an Interim Final Rule (IFR) that amended Employment and Training Administration (ETA) regulations governing the prevailing wages for employment opportunities that United States (U.S.) employers seek to fill with foreign workers on a permanent or temporary basis through certain employment-based immigrant visas or through H-1B, H-1B1, or E-3 nonimmigrant visas. Specifically, the IFR amended the Department's regulations governing permanent (PERM) labor certifications and Labor Condition Applications (LCAs) to incorporate changes to the computation of wage levels under the Department's four-tiered wage structure based on the Occupational Employment Statistics (OES) wage survey administered by the Bureau of Labor Statistics (BLS). The primary purpose of these changes is to update the computation of prevailing wage levels under the existing four-tier wage structure to better reflect the actual wages earned by U.S. workers similarly employed to foreign workers. This final rule will allow the Department to more effectively ensure the employment of immigrant and nonimmigrant workers admitted or otherwise provided status through the above-referenced programs does not adversely affect the wages and job opportunities of U.S. workers.

DATES:

This final rule is effective March 15, 2021.

FOR FURTHER INFORMATION CONTACT:

For further information, contact Brian D. Pasternak, Administrator, Office of Foreign Labor Certification, Employment and Training Administration, Department of Labor, 200 Constitution Avenue NW, Room N-5311, Washington, DC 20210, telephone: (202) 693-8200 (this is not a toll-free number). Individuals with hearing or speech impairments may access the telephone numbers above via TTY/TDD by calling the toll-free Federal Information Relay Service at 1 (877) 889-5627.

SUPPLEMENTARY INFORMATION:

I. Background

The Immigration and Nationality Act (INA or Act), as amended, assigns responsibilities to the Secretary of Labor (Secretary) relating to the entry and employment of certain categories of immigrants and nonimmigrants.
1

This final rule concerns the calculation of the prevailing wage for job opportunities in the PERM, H-1B, H-1B1, and E-3 programs for which employers seek labor certification from the Secretary.
2

1
There are two general categories of U.S. visas: Immigrant and nonimmigrant. Immigrant visas are issued to foreign nationals who intend to live permanently in the U.S. Nonimmigrant visas are for foreign nationals who enter the U.S. on a temporary basis—for tourism, medical treatment, business, temporary work, study, or other reasons.

2
8 U.S.C. 1101(a)(15)(E)(iii), (H)(i)(b), (H)(i)(b1).

A. Permanent Labor Certifications

The INA prohibits the admission of certain employment-based immigrants unless the Secretary of Labor has determined and certified to the Secretary of State and the Attorney General that (1) there are not sufficient workers who are able, willing, qualified and available at the time of application for a visa and admission to the United States and at the place where the alien is to perform such skilled or unskilled labor, and (2) the employment of such alien will not adversely affect the wages and working conditions of workers in the United States similarly employed.
3

3
8 U.S.C. 1182(a)(5)(A). Although this provision references the Attorney General, the authority to adjudicate immigrant visa petitions was transferred to the Director of the Bureau of Citizenship and Immigration Services (an agency within the Department of Homeland Security) by the Homeland Security Act of 2002, Public Law 107-296, 451(b) (codified at 6 U.S.C. 271(b)). Under 6 U.S.C. 557, references in federal law to any agency or officer whose functions have been transferred to the Department of Homeland Security shall be deemed to refer to the Secretary of Homeland Security or other official or component to which the functions were transferred.

This “labor certification” requirement does not apply to all employment-based immigrants. The INA provides for five “preference” categories or immigrant visa classes, only two of which—the second and third preference employment categories (commonly called the EB-2 and EB-3 immigrant visa classifications)—require a labor certification.
4

An employer seeking to sponsor a foreign worker for an immigrant visa under the EB-2 or EB-3 immigrant visa classifications generally must file a visa petition with the Department of Homeland Security (DHS) on the worker's behalf, which must include a labor certification from the Secretary of Labor.
5

Further, the Department of State (DOS) may not issue a visa unless the Secretary of Labor has issued a labor certification in conformity with the relevant provisions of the INA.
6

If the Secretary determines both that there are not sufficient able, willing, qualified, and available U.S. workers and that employment of the foreign worker will not adversely affect the wages and working conditions of similarly employed U.S. workers, the Secretary so certifies to DHS and DOS by issuing a permanent labor certification. If the Secretary cannot make one or both of the above findings, the application for permanent employment certification is denied.

4

See
8 U.S.C. 1153(b)(2), (3), 1182(a)(5)(D). Section 1153(b)(2) governs the EB-2 classification of immigrant work visas granted to foreign workers who are either professionals holding advanced degrees (master's degree or above) or foreign equivalents of such degrees, or persons of “exceptional ability” in the sciences, arts, or business. To gain entry in this category, the foreign worker must have prearranged employment with a U.S. employer that meets the requirements of labor certification, unless the work he or she is seeking admission to perform is in the “national interest,” such as to qualify for a waiver of the job offer (and hence, the labor certification) requirement under 8 U.S.C. 1153(b)(2)(B). Section 1153(b)(3), governs the EB-3 classification of immigrant work visas granted to foreign workers who are either “skilled workers,” “professionals,” or “other” (unskilled) workers, as defined by the statute. To gain entry in this category, the foreign worker must have prearranged employment with a U.S. employer that meets the requirements of labor certification, without exception.

5
8 U.S.C. 1154(a)(1)(F), 1182(a)(5)(A) and (D).

6
8 U.S.C. 1153(b)(2), (b)(3)(C), 1201(g).

Under the INA, the EB-2 classification applies to individuals who are “members of the professions holding advanced degrees or their equivalent or who because of their exceptional ability in the sciences, arts, or business, will substantially benefit prospectively the national economy, cultural or educational interests, or welfare of the United States.”
7

United States Citizenship and Immigration Services (USCIS) regulations, in turn, define an “advanced degree” as any United States academic or professional degree or a foreign equivalent degree above that of baccalaureate. A United States baccalaureate degree or a foreign equivalent degree followed by at least five years of progressive experience in the specialty shall be considered the equivalent of a master's degree. If a doctoral degree customarily is required by the specialty, the alien must have a United States doctorate or a foreign equivalent degree.
8

The regulation goes on to define “exceptional ability” as “a

degree of expertise significantly above that ordinarily encountered in the sciences, arts, or business.”
9

7
8 U.S.C. 1153(b)(2)(A).

8
8 CFR 204.5(k)(2).

9

Id.

The EB-3 program consists of three discrete classifications: “skilled workers,” defined as aliens who are “capable . . . of performing skilled labor (requiring at least two years training or experience), not of a temporary or seasonal nature, for which qualified workers are not available in the United States;” “professionals,” defined as aliens “who hold baccalaureate degrees and who are members of the professions;” and “other workers,” defined as aliens who are “capable . . . of performing unskilled labor, not of a temporary or seasonal nature, for which qualified workers are not available in the United States.”
10

10
8 U.S.C. 1153(b)(3); 8 CFR 204.5(l).

B. Labor Condition Applications

The Secretary must certify an LCA filed by an U.S. employer before the employer may file a petition with DHS on behalf of a foreign worker for H-1B, H-1B1, or E-3 nonimmigrant classification.
11

The LCA contains various attestations from the employer about the wages and working conditions that it will provide for the foreign worker.
12

Most importantly, for the purposes of this final rule, the INA requires employers to pay H-1B workers the greater of “the actual wage level paid by the employer to all other individuals with similar experience and qualifications for the specific employment in question,” or the “the prevailing wage level for the occupational classification in the area of employment.”
13

11
8 U.S.C. 1101(a)(15)(E)(iii), (H)(i)(b), (H)(i)(b1); 8 CFR 214.2(h)(2)(i)(E).

12

See generally
8 U.S.C. 1182(n), (t); 20 CFR part 655, subpart H.

13
8 U.S.C. 1182(n)(1)(A).

The H-1B program allows U.S. employers to employ foreign workers temporarily in specialty occupations. “Specialty occupation” is defined as an occupation that requires the theoretical and practical application of a body of “highly specialized knowledge,” and a bachelor's or higher degree in the specific specialty, or its equivalent, as a minimum for entry into the occupation in the U.S.
14

Similar to the H-1B visa classification, the H-1B1 and E-3 nonimmigrant visa classifications also allow U.S. employers to temporarily employ foreign workers in specialty occupations, except that these classifications specifically apply to the nationals of certain countries: The H-1B1 visa classification applies to foreign workers in specialty occupations from Chile and Singapore,
15

and the E-3 visa classification applies to foreign workers in specialty occupations from Australia.
16

14

See
8 U.S.C. 1101(a)(15)(H)(i)(b), 1184(i).

15
8 U.S.C. 1101(a)(15)(H)(i)(b1).

16
8 U.S.C. 1101(a)(15)(E)(iii).

C. The Permanent Labor Certification Process

The Department's regulations at 20 CFR part 656 govern the labor certification process and set forth the responsibilities of employers who desire to employ, on a permanent basis, foreign nationals covered by the INA's labor certification requirement.
17

The Department processes labor certification applications for employers seeking to sponsor foreign workers for permanent employment under the EB-2 and EB-3 immigrant visa preference categories. Aliens seeking admission or adjustment of status under the EB-2 or EB-3 preference categories are inadmissible “unless the Secretary of Labor has determined and certified . . . that—(I) there are not sufficient workers who are able, willing, qualified . . . and available at the time of application for a visa and admission to the United States and at the place where the alien is to perform such skilled or unskilled labor, and (II) the employment of such alien will not adversely affect the wages and working conditions of workers in the United States similarly employed.”
18

17
The current regulations were issued through a final rule implementing the streamlined permanent labor certification program through revisions to 20 CFR part 656. The final rule was published on December 27, 2004, and took effect on March 28, 2005.
See Labor Certification for the Permanent Employment of Aliens in the United States; Implementation of New System,
69 FR 77326 (Dec. 27, 2004). The Department published a final rule on May 17, 2007, to enhance program integrity and reduce the incentives and opportunities for fraud and abuse related to permanent labor certification, commonly known as “the fraud rule.”
Labor Certification for the Permanent Employment of Aliens in the United States; Reducing the Incentives and Opportunities for Fraud and Abuse and Enhancing Program Integrity,
72 FR 27904 (May 17, 2007).

18
8 U.S.C. 1182(a)(5)(A)(i).

The Secretary makes this determination in the PERM programs by, among other things, requiring the foreign worker's sponsoring employer to recruit U.S. workers by offering a wage that equals or exceeds the prevailing wage and to assure that the employer will pay the foreign worker a wage equal to or exceeding the prevailing wage.
19

Prior to filing a labor certification application, the employer must obtain a Prevailing Wage Determination (PWD) for its job opportunity from the Office of Foreign Labor Certification's (OFLC) National Prevailing Wage Center (NPWC).
20

The standards and procedures governing the PWD process in connection with the permanent labor certification program are set forth in the Department's regulations at 20 CFR 656.40 and 656.41. If the job opportunity is covered by a collective bargaining agreement (CBA) that was negotiated at arms-length between a union and the employer, the wage rate set forth in the CBA agreement is considered the prevailing wage for labor certification purposes.
21

In the absence of a prevailing wage rate derived from an applicable CBA, the employer may elect to use an applicable wage determination under the Davis-Bacon Act (DBA) or McNamara-O'Hara Service Contract Act (SCA), or provide a wage survey that complies with the Department's standards governing employer-provided wage data.
22

In the absence of any of the above sources, the NPWC will use the BLS OES survey to determine the prevailing wage for the employer's job opportunity.
23

After reviewing the employer's application, the NPWC will determine the prevailing wage and specify the validity period, which may be no less than 90 days and no more than one year from the determination date. Employers must either file the labor certification application or begin the recruitment process, required by the regulation, within the validity period of the PWD issued by the NPWC.
24

19
20 CFR 656.10(c)(1).

20
20 CFR 656.15(b)(1), 656.40(a).

21

See
20 CFR 656.40(b)(1).

22

See
20 CFR 656.40(b), (g).

23

See
20 CFR 656.40(b)(2).

24
20 CFR 656.40(c).

Once the U.S. employer has received a PWD, the process for obtaining a permanent labor certification generally begins with the U.S. employer filing an
Application for Permanent Employment Certification,
Form ETA-9089, with OFLC.
25

As part of the standard application process, the employer must describe, among other things, the labor or services it needs performed; the wage it is offering to pay for such labor or services and the actual minimum requirements of the job opportunity; the geographic location(s) where the work is expected to be performed; and the efforts it made to recruit qualified and available U.S. workers. Additionally, the employer must attest to the conditions listed in its labor certification application, including that

“[t]he offered wage equals or exceeds the prevailing wage determined pursuant to [20 CFR 656.40 and 656.41] and the wage the employer will pay to the alien to begin work will equal or exceed the prevailing wage that is applicable at the time the alien begins work or from the time the alien is admitted to take up the certified employment.”
26

25
Applications for Schedule A occupations are eligible to receive pre-certification and bypass the standard applications review process. In those cases, employers file the appropriate documentation directly with DHS.
See
20 CFR 656.5, 656.15.

26
20 CFR 656.10(c)(1).

Through the requisite test of the labor market, the employer also attests, at the time of filing the Form ETA-9089, that the job opportunity has been and is clearly open to any U.S. worker and that all U.S. workers who applied for the job opportunity were rejected for lawful, job-related reasons. OFLC performs a review of the Form ETA-9089 and may either grant or deny a permanent labor certification. Where OFLC grants a permanent labor certification, the employer must submit the certified Form ETA-9089 along with an
Immigrant Petition for Alien Worker
(Form I-140 petition) to DHS. A permanent labor certification is valid only for the job opportunity, employer, foreign worker, and area of intended employment named on the Form ETA-9089 and must be filed in support of a Form I-140 petition within 180 calendar days of the date on which OFLC granted the certification.
27

27
20 CFR 656.30(b)(1).

D. The Temporary Labor Condition Application Process

The Department's regulations at 20 CFR part 655, subpart H, govern the process for obtaining a certified LCA and set forth the responsibilities of employers who desire to temporarily employ foreign nationals in H-1B, H-1B1, and E-3 nonimmigrant classifications.

A prospective employer must attest on the LCA that (1) it is offering to and will pay the nonimmigrant, during the period of authorized employment, wages that are at least the actual wage level paid by the employer to all other employees with similar experience and qualifications for the specific employment in question, or the prevailing wage level for the occupational classification in the area of intended employment, whichever is greater (based on the best information available at the time of filing the attestation); (2) it will provide working conditions for the nonimmigrant worker that will not adversely affect working conditions for similarly employed U.S. workers; (3) there is no strike or lockout in the course of a labor dispute in the occupational classification at the worksite; and (4) it has provided notice of its filing of an LCA to its employee's bargaining representative for the occupational classification affected or, if there is no bargaining representative, it has provided notice to its employees in the affected occupational classification by posting the notice in a conspicuous location at the worksite or through other means such as electronic notification.
28

28
8 U.S.C. 1182(n)(1)(A)-(C), (t)(1)(A)-(C); 20 CFR 655.705(c)(1), 655.730(d).

As relevant here, the prevailing wage must be determined as of the time of the filing of the LCA.
29

In contrast to the permanent labor certification process, an employer is not required to obtain a PWD from the NPWC.
30

However, like the permanent labor certification process, if there is an applicable CBA that was negotiated at arms-length between a union and the employer that contains a wage rate applicable to the occupation, the CBA must be used to determine the prevailing wage.
31

In the absence of an applicable CBA, an employer may base the prevailing wage on one of several sources: A PWD from the NPWC; an independent authoritative source that satisfies the requirements in 20 CFR 655.731(b)(3)(iii)(B); or another legitimate source of wage data that satisfies the requirements in 20 CFR 655.731(b)(3)(iii)(C).
32

29
20 CFR 655.731(a)(2).

30

Id.

31

Id.

32
20 CFR 655.731(a)(2)(ii)(A) through (C).

An employer may not file an LCA more than six months prior to the beginning date of the period of intended employment. 20 CFR 655.730. Unless the LCA is incomplete or obviously inaccurate, the Secretary must certify it within seven working days of its filing.
33

Once an employer receives a certified LCA, it must file the
Petition for Nonimmigrant Worker,
Form I-129 (“Form I-129 Petition”) with DHS if seeking classification of the alien as an H-1B worker.
34

Upon petition, DHS then determines, among other things, whether the employer's position qualifies as a specialty occupation and, if so, whether the nonimmigrant worker is qualified for the position.

33
8 U.S.C. 1182(n)(1), (t)(2)(C); 20 CFR 655.740(a)(1).

34
For aliens seeking H-1B1 or E-3 classification, the alien may apply directly to the State Department for a visa once the LCA has been certified.

II. Prevailing Wage Background

A. The Department's Prevailing Wage Determination Methodology

The Department has long relied on BLS OES data to establish prevailing wage levels. The OES is a comprehensive, statistically valid survey that, in many respects, is the best source of wage data available for satisfying the Department's purposes in setting wages in most immigrant and nonimmigrant programs. The OES wage survey is among the largest continuous statistical survey programs of the Federal Government. BLS produces the survey materials and selects the nonfarm establishments to be surveyed using the list of establishments maintained by State Workforce Agencies (SWAs) for unemployment insurance purposes. The OES collects data from over one million establishments. Salary levels based on geographic areas are available at the national and State levels and for certain territories in which statistical validity can be ascertained, including the District of Columbia, Guam, Puerto Rico, and the U.S. Virgin Islands. Salary information is also made available at the metropolitan and nonmetropolitan area levels within a State. Wages for the OES survey are straight-time, gross pay, exclusive of premium pay. Base rate, cost-of-living allowances, guaranteed pay, hazardous duty pay, incentive pay including commissions and production bonuses, tips, and on-call pay are included. These features are unique to the OES survey, which make it a valuable source for use in many of the Department's foreign labor programs.
35

35

Wage Methodology for the Temporary Non-agricultural Employment H-2B Program,
76 FR 3452, 3463 (Jan. 19, 2011).

The Department incorporated the wage component of the OES survey into its prevailing wage guidance in 1997.
36

At the time, the Department divided OES wage data into two skill levels: A Level I wage for “beginning level employees” and a Level II wage for “fully competent employees.” Because the OES survey does not provide data about skill differentials within Standard Occupational Classification (SOC) codes, the Department established the entry and experienced skill levels mathematically.
37

Specifically, under an Memorandum of Understanding (MOU), BLS computed a Level I wage calculated as the mean of the lowest paid one-third of workers in a given occupation (approximately the 17th percentile of the OES wage distribution)
38

and a

Level IV wage calculated as the mean wage of the highest paid upper two-thirds of workers (approximately the 67th percentile).
39

This two-tier wage structure was based on the assumption that the mean wage of the lowest paid one-third of the workers surveyed in each occupation could provide a surrogate for the entry-level wage, but the Department did not previously conduct any meaningful economic analysis to test its validity, or otherwise explain how these levels were consistent with the INA's wage provisions.
40

36

Prevailing Wage Policy for Nonagricultural Immigration Programs,
General Administration Letter No. 2-98 (GAL 2-98) (Oct. 31, 1997),
available at https://wdr.doleta.gov/directives/corr_doc.cfm?DOCN=942.

37
GAL 2-98 at 5.

38
By way of clarification, the Department notes that, because the old wage methodology took the mean of a portion of the OES wage distribution, the precise wage it produced will not always fall at

17th percentile. Rather, the 17th percentile is the midpoint or median of the distribution for which a mean was produced, and is therefore only an approximation for what the actual wage rates would be. The same is true of the old wage methodology for calculating the Level IV wage, which used the mean of the upper two thirds of the OES distribution, the midpoint of which is the 67th percentile.

39
Intra-Agency Memorandum of Understanding executed by Mr. John R. Beverly, III, Director, U.S. Employment Service, ETA, and Ms. Katharine Newman, Chief, Division of Financial Planning and Management, Office of Administration, BLS (Sept. 30, 1998).

40
GAL 2-98,
available at https://oui.doleta.gov/dmstree/gal/gal98/gal_02-98.htm. See also Wage Methodology for the Temporary Non-agricultural Employment H-2B Program,
76FR 3452, 3453 (Jan. 19, 2011);
Wage Methodology for the Temporary Non-Agricultural Employment H-2B Program, Part 2,
78 FR 24047, 24051 (Apr. 24, 2013).

In order to implement the INA's four-tier prevailing wage provision, the Department published comprehensive Prevailing Wage Determination Policy Guidance for Nonagricultural Immigration Programs (2005 Guidance), which expanded the two-tier OES wage level system to provide four “skill levels”: Level I “entry level,” Level II “qualified,” Level III “experienced,” and Level IV “fully competent.”
41

The Department applied the formula in the INA to its two existing wage levels to set Levels I through IV, respectively, at approximately the 17th percentile, the 34th percentile, the 50th percentile, and the 67th percentile.
42

In 2010, the Department centralized the prevailing wage determination process for nonagricultural labor certification programs within OFLC's NPWC.
43

In preparation for this transition, the Department issued new Prevailing Wage Determination Policy Guidance for Nonagricultural Immigration Programs (2009 Guidance).
44

This guidance currently governs OFLC's PWD process for the PERM, H-1B, H-1B1, and E-3 visa programs and will continue to govern OFLC's PWD process for these programs. No rulemaking to codify the old wage levels was ever undertaken, nor the public given an opportunity to comment on them.

41
ETA Prevailing Wage Determination Policy Guidance, Nonagricultural Immigration Programs 7 (May 2005),
available at https://www.foreignlaborcert.doleta.gov/pdf/policy_nonag_progs.pdf; See also
85 FR at 63874—63876 for a discussion of the development of the prevailing wage determination process.

42

Id.
at 1.

43

See Labor Certification Process and Enforcement for Temporary Employment in Occupations Other Than Agriculture or Registered Nursing in the United States (H-2B Workers), and Other Technical Changes,
73 FR 78020 (Dec. 19, 2008);
Prevailing Wage Determinations for Use in the H-1B, H-1B1 (Chile/Singapore), H-1C, H-2B, E-3 (Australia), and Permanent Labor Certification Programs; Prevailing Wage Determinations for Use in the Commonwealth of the Northern Mariana Islands,
74 FR 63796 (Dec. 4, 2009).

44
Employment and Training Administration; Prevailing Wage Determination Policy Guidance, Nonagricultural Immigration Programs (Revised Nov. 2009) (
hereinafter
2009 Guidance),
available at https://www.dol.gov/sites/dolgov/files/ETA/oflc/pdfs/NPWHC_Guidance_Revised_11_2009.pdf.

When assigning a prevailing wage using OES data, the NPWC examines the nature of the job offer, the area of intended employment, and job duties for workers that are similarly employed.
45

In particular, the NPWC uses the SOC taxonomy to classify the employer's job opportunity into an occupation by comparing the employer's job description, title, and requirements to occupational information provided in sources like the Department's Occupational Information Network (O*Net).
46

Once the NPWC identifies the applicable SOC code, it determines the appropriate wage level for the job opportunity by comparing the employer's job description, title, and requirements to those normally required for the occupation, as reported in sources like O*Net. This determination involves a step-by-step process in which each job opportunity begins at Level I (entry level) and may progress to Level II (experienced), Level III (qualified), or Level IV (fully competent) based on the NPWC's comparison of the job opportunity to occupational requirements, including the education, training, experience, skills, knowledge, and tasks required in the occupation.
47

After determining the prevailing wage level, the NPWC issues a PWD to the employer using the OES wage for that level in the occupation and area of intended employment.

45

Id.
at 1.

46

Id.
at 1-7;
see also
Occupational Information Network,
available at http://online.onetcenter.org.
O*Net provides information on skills, abilities, knowledge, tasks, work activities, and specific vocational preparation levels associated with occupations and stratifies occupations based on shared skill, education, and training indicators.

47
2009 Guidance at 6.

B. The Interim Final Rule

On October 8, 2020, the Department published an Interim Final Rule (IFR) in the
Federal Register
, 85 FR 63872, revising the methodology the Department uses to determine prevailing wage levels for the H-1B, H-1B1, E-3, and PERM programs. As explained in the IFR, the Department concluded the existing wage levels were not consistent with the relevant statutory requirement that a government survey employed to determine the prevailing wage provide four wage levels commensurate with experience, education, and level of supervision.
48

The Department also determined that the existing wage levels were artificially low and provided an opportunity for employers to hire and retain foreign workers at wages well below what their U.S. counterparts earn, creating an incentive to prefer foreign workers to U.S. workers, an incentive that is at odds with the statutory scheme and causes downward pressure on the wages of the domestic workforce. Therefore, the Department revised wage provisions at 20 CFR 655.731 and 656.40 to adjust the existing wage levels to ensure the wage levels reflect the wages paid to U.S. workers with similar experience, education, and responsibility to those possessed by similarly employed foreign workers.

48

See
8 U.S.C. 1182(p)(4).

In particular, the IFR amended paragraphs (a), (b)(2), and (b)(3) of 20 CFR 656.40, codifying the four-tier wage practice and revising the wage level computation methodology. A new § 656.40(b)(2)(i) specified the four new levels (Levels I through IV) to be applied. Paragraph (b)(2)(i)(A) explained the Level I wage would be calculated as the mean of the fifth decile of the wage distribution for the most specific occupation and geographic area available, rather than calculated as the mean of the bottom third of the OES wage distribution, as was the case prior to the IFR. Paragraph (b)(2)(i)(D) provided that the Level IV wage would be calculated as the mean of the upper decile of the wage distribution for the most specific occupation and geographic area available, rather than using the mean of the upper two-thirds of the distribution. As a result of these changes, the wage levels were increased, respectively, from approximately the 17th, 34th, 50th, and 67th percentiles to approximately the 45th, 62nd, 78th, and 95th percentiles. The IFR also made minor technical and clarifying amendments to sections 656.40 and 655.731, which the Department has adopted in this final rule with only a minor change to the location of one of the amended provisions, as explained further in section IV below.

The Administrative Procedure Act (APA), 5 U.S.C. 551
et seq.,
authorizes an agency to issue a rule without prior notice and opportunity to comment when the agency for good cause finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.”
49

The good cause exception for forgoing notice and comment rulemaking “excuses notice and comment in emergency situations, or where delay could result in serious harm.”
50

The Department published the IFR with an immediate effective date, bypassing notice and comment due to exigent circumstances created by the coronavirus public health emergency that threatened immediate harm to the wages and job prospects of U.S. workers, as well as the need to avoid evasion by employers of the new wage rates.
51

However, the Department requested public input on all aspects of the IFR during a post-promulgation 30-day public comment period and explained it would review and consider these comments before issuing a final rule. The public comment period ended on November 9, 2020, and resulted in receipt of more than two thousand comments. Most of the comments were not relevant and/or not substantive, but 148 relevant and substantive comments were received and are discussed further below.

49
5 U.S.C. 553(b)(B).

50

Jifry
v.
FAA,
370 F.3d 1174, 1179 (D.C. Cir. 2004).

51

See
85 FR 63872, 63898-63902 (Oct. 8, 2020).

C. Litigation

Four groups of plaintiffs separately challenged the Department's IFR. These groups of plaintiffs, which included academic institutions, businesses, and trade associations, claimed the Department lacked good cause to issue the IFR without undergoing notice and comment procedures under the APA and that the IFR was arbitrary and capricious and in violation of the INA. These plaintiffs further requested that the IFR be enjoined and the Department prevented from implementing it. In three of the four cases, the district court approved the parties' stipulation to convert plaintiffs' preliminary injunction motion to a motion for partial summary judgment on the notice and comment claim. In
Chamber of Commerce,
the district court issued a decision on December 1, 2020, granting plaintiffs' motion for partial summary judgment on their notice and comment claim and setting aside the Department's IFR.
52

In
Purdue University
and
Stellar IT
(which were consolidated), the district court issued a decision on December 14, 2020, granting partial summary judgment to the plaintiffs on the basis that the Department lacked good cause to issue the IFR, and ordered the Department to re-issue prevailing wage determinations issued under the IFR on a mutually agreeable schedule.
53

In the fourth case,
ITServe Alliance,
the district court issued a preliminary injunction on December 3, 2020, prohibiting the Department from enforcing the IFR against the plaintiffs in that case.
54

In discussing plaintiffs' likelihood of success on the merits in that case, the court limited its analysis to plaintiffs' claim that the Department lacked good cause to forgo advance notice and comment.
55

Following the district court's decisions in
Chamber of Commerce
and
ITServe Alliance,
OFLC took immediate action to comply with the courts' directives, including issuing a public announcement on its website on December 3, 2020, outlining the steps it was taking in response to the courts' orders.

52
Order Granting Plaintiffs' Motion for Partial Summary Judgment and Denying Defendants' Cross-Motion,
Chamber of Commerce, et al.
v.
DHS, et al.,
20-cv-07331 (N.D. Cal. Dec. 1, 2020). The plaintiffs in this case also challenged an interim final rule issued by DHS,
Strengthening the H-1B Nonimmigrant Visa Classification Program,
85 FR 63, 918 (Oct. 8, 2020), that published on October 8, 2020.

53
Memorandum Opinion,
Purdue University, et al.
v.
Scalia, et al.,
20-cv-03006 (D.D.C. Dec. 14, 2020); Memorandum Opinion,
Stellar IT, et al.
v.
Scalia, et al.,
20-cv-03175 (D.D.C.).

54
Opinion,
ITServe Alliance, et al.
v.
Scalia, et al.,
20-cv-14604 (D.N.J. Dec. 3, 2020).

55

Id.
at 8-20.

Notwithstanding the district courts' orders to set aside the IFR on procedural grounds, the U.S. Supreme Court has acknowledged and affirmed the proposition that a procedurally flawed IFR does not taint a final rule relying upon an IFR as a proposed rule.
56

The Department is satisfied that it meets the APA's objective requirements necessary for the promulgation of a final rule in this case. Specifically, the Department's IFR provided sufficient notice to the public by allowing for a 30 day comment period;
57

“gave interested persons an opportunity to participate in the rule making through submission of written data, views or arguments”;
58

the rule contained a “concise general statement of their basis and purpose”;
59

and the rule will be published more than 30 days before it becomes effective.
60

Accordingly, the Department maintains the legal authority to pursue this final rule based upon its compliance with the APA's procedural requirements satisfied in the IFR.

56

Little Sisters of the Poor Saints Peter and Paul Home
v.
Pennsylvania,
140 S.Ct. 2367, 2385-86 (2020).

57
5 U.S.C. 553(b).

58
5 U.S.C. 553(c).

59

Id.

60
5 U.S.C. 553(d).

III. Discussion of Final Rule, Comments, and Responses

A. Overview

The IFR provided for the submission of public comments during a prescribed 30-day public comment period that closed on November 9, 2020. During this time, the Department received 2,340 comments. The Department received input from a broad range of commenters, including labor unions; employers; law firms; academic and research institutions; healthcare providers; public policy organizations; professional and trade associations; a federal agency; foreign workers, students, attorneys, and other individuals; and a significant number of anonymous commenters. Some commenters supported the new wage level computation methodology in the IFR generally or in concept as a necessary change to prevent abuse of the H-1B program, particularly its four-tier wage level system, by employers seeking to hire foreign workers at below market wages. However, the overwhelming majority of commenters opposed the new wage level computation methodology. Notably, however, commenters generally did not offer justifications or data to support the continued use of the old wage methodology.

Commenters opposed to the substantive changes in the IFR generally asserted that the revised wage levels do not correspond with wages paid to U.S. workers with similar qualifications or those employed in job opportunities with similar requirements, that the IFR wages do not reflect market wages as evidenced by comparisons to private wage surveys and wage data on various websites, and that the wage increases are arbitrary and unsustainable for most employers, especially given the immediate effective date of the IFR. Commenters expressed concern that the IFR would negatively impact the economy broadly by reducing labor demand, reducing American competitiveness in innovative industries, and encouraging outsourcing. A number of commenters asserted the IFR would disproportionately impact small businesses and start-ups; nonprofits; and academic, research, and healthcare institutions. Many commenters claimed that there is no need to raise wages to protect U.S. workers, asserting that foreign workers are not underpaid and employment of foreign workers creates,

rather than reduces, employment opportunities for U.S. workers and benefits the economy broadly. Many commenters also expressed concern the IFR would harm currently employed foreign workers and their families, especially foreign workers with significant ties to the U.S. and for whom immigrant visa petitions have been filed but for whom visas are unavailable due to per country visa caps.

After careful and thorough consideration of the comments, the Department has adopted a number of modifications in this final rule to the wage methodology established by the IFR. In particular, the Department has adjusted the Level I wage and the Level IV wage downward to the 35th percentile and 90th percentile, respectively. The Department is also implementing in this rule a number of changes to how it uses data from BLS in the H-1B and PERM programs that will further reduce the incidence of inappropriately inflated wages identified by commenters. Finally, the Department is adopting a phase-in approach to how the new wage levels will be applied to give employers and workers time to adapt to the change. In combination, the Department believes these measures appropriately address commenters' concerns and will ensure that, going forward, the prevailing wage rates provided by the Department fully protect the wages and job opportunities of U.S. workers.

As the Department explained in the IFR, a primary purpose of the restrictions on immigration created by the INA, both numerical and otherwise, is “to preserve jobs for American workers.”
61

Safeguards for American labor, and the Department's role in administering them, have been a foundational element of the statutory scheme since the INA was enacted in 1952.
62

For the reasons set forth below, the Department has determined that the way it previously regulated the wages of certain immigrant and nonimmigrant workers in the H-1B, H-1B1, E-3, and PERM programs is inconsistent with the text of the INA. A substantial body of evidence examined by the Department, and discussed at length in the IFR, also suggests that the existing prevailing wage rates used by the Department in these foreign labor programs are causing adverse effects on the wages and job opportunities of U.S. workers and are therefore at odds with the purpose of the INA's labor safeguards. The current wage levels were also promulgated through guidance, without providing the public with any notice or an opportunity to comment, and without any meaningful economic justification. Accordingly, the Department is acting to adjust the wage levels to ensure they are codified and consistent with the factors the INA dictates must govern the calculation of foreign workers' wages. In so doing, the Department expects to reduce the dangers posed by the existing levels to U.S. workers' wages and job opportunities and thereby advance a primary purpose of the statute. While some commenters disagreed with the Department's conclusions about the effects of the old wage levels on U.S. workers, the Department continues to believe that the reasoning put forward in the IFR on this point is sound.

61

Sure-Tan, Inc.
v.
N.L.R.B.,
467 U.S. 883, 893 (1984).

62
H.R. Rep. No. 1365, 82d Cong., 2d Sess., 50-51 (1952) (discussing the INA's “safeguards for American labor”).

The modern H-1B program was created by the enactment of the Immigration Act of 1990 (IMMACT 90). Among other reforms, IMMACT 90 established “various labor protections for domestic workers” in the program.
63

These protections were primarily designed “to prevent displacement of the American workforce” by foreign labor.
64

In general, the purpose of the H-1B program is to “allow[ ] an employer to reach outside of the U.S. to fill a temporary position because of a special need, presumably one that cannot be easily fulfilled within the U.S.”
65

Using a foreign worker as a substitute for a U.S. worker who is already working in or could work in a given job is therefore inconsistent with the broad aims of the program. Congress has recognized that repeatedly, both in enacting IMMACT 90 and in making subsequent changes to the H-1B program.
66

63

Washington All. of Tech. Workers
v.
U.S. Dep't of Homeland Sec.,
156 F. Supp. 3d 123, 142 (D.D.C. 2015), judgment vacated, appeal dismissed sub nom.
Washington All. of Tech. Workers
v.
U.S. Dep't of Homeland Sec.,
650 F. App'x 13 (D.C. Cir. 2016).

64

Cyberworld Enter. Techs., Inc.
v.
Napolitano,
602 F.3d 189, 199 (3d Cir. 2010).

65

Caremax Inc
v.
Holder,
40 F. Supp. 3d 1182, 1187 (N.D. Cal. 2014).

66

See, e.g.,
Public Law 105-277 § § 412-13, 112 Stat. 2681, 2981-642 to -650 (1998).
See also
H.R. Rep. No. 101-723(I), 101st Cong., 2d Sess. 44, 66-67 (1990) (“[IMMACT 90] recognizes that certain entry-level workers with highly specialized knowledge are needed in the United States and that sufficient U.S. workers are sometimes not available. At the same time, heavy use and abuse of the H-1 category has produced undue reliance on alien workers.”); 144 Cong. Rec. S12741, S12749 (daily ed. October 21, 1998) (statement of Sen. Abraham) (describing the purpose of the H-1B provisions of the American Competiveness and Workforce Improvement Act as being to ensure “that companies will not replace American workers with foreign born professionals, including increased penalties and oversight, as well as measures eliminating any economic incentive to hire a foreign born worker if there is an American available with the skills needed to fill the job.”).

Wage requirements are central to the H-1B program's protections for U.S. workers.
67

Under the INA, employers must pay H-1B workers the greater of “the actual wage level paid by the employer to all other individuals with similar experience and qualifications for the specific employment in question” or the “the prevailing wage level for the occupational classification in the area of employment.”
68

By ensuring that H-1B workers are offered and paid wages that are no less than what U.S. workers similarly employed in the occupation are being paid, the wage requirements are meant to guard against both wage suppression and the replacement of U.S. workers by lower-cost foreign labor.
69

67

See Labor Condition Applications and Requirements for Employers Using Nonimmigrants on H-1B Visas in Specialty Occupations and as Fashion Models,
59 FR 65646, 65655 (December 20, 1994) (describing the “Congressional purposes of protecting the wages of U.S. workers” in the H-1B program); H.R. REP. 106-692, 12 (
quoting
Office of Inspector General, U.S. Department of Labor, Final Report: The Department of Labor's Foreign Labor Certification Programs: The System is Broken and Needs to Be Fixed 21 (May 22, 1996) (“The employer's attestation to . . . pay the prevailing wage is the only safeguard against the erosion of U.S. worker's [sic.] wages.”).

68
8 U.S.C. 1182(n)(1)(A).

69

See Labor Condition Applications and Requirements for Employers Using Nonimmigrants on H-1B Visas in Specialty Occupations and as Fashion Models; Labor Certification Process for Permanent Employment of Aliens in the United States,
65 FR 80110, 80110 (Dec. 20, 2000) (“The [INA], among other things, requires that an employer pay an H-1B worker the higher of the actual wage or the prevailing wage, to protect U.S. workers' wages and eliminate any economic incentive or advantage in hiring temporary foreign workers.”);
Panwar
v.
Access Therapies, Inc.,
975 F. Supp. 2d 948, 952 (S.D. Ind. 2013) (“The wage requirements are designed to prevent . . . the influx of inexpensive foreign labor for professional services.”).

The OES prevailing wage levels that the Department uses in the H-1B program—as well as the related H-1B1 and E-3 “specialty occupation” programs for foreign workers from Chile, Singapore, and Australia—are the same as those it uses in its PERM program. Through the PERM program, the Department processes labor certification applications for employers seeking to sponsor foreign workers for permanent employment under the EB-2 and EB-3 immigrant visa preference categories. Aliens seeking admission or adjustment of status under the EB-2 or EB-3 preference categories are inadmissible “unless the Secretary of Labor has determined and certified . . . that—(I) there are not sufficient workers who are able, willing, qualified . . . and available at the time of application for

a visa and admission to the United States and at the place where the alien is to perform such skilled or unskilled labor, and (II) the employment of such alien will not adversely affect the wages and working conditions of workers in the United States similarly employed.”
70

70
8 U.S.C. 1182(a)(5)(A)(i).

The Secretary makes this determination in the PERM program by, among other things, requiring the foreign worker's sponsoring employer to recruit U.S. workers by offering a wage that equals or exceeds the prevailing wage and to assure that the employer will pay the foreign worker a wage equal to or exceeding the prevailing wage.
71

In this way, similar to its role in the H-1B program, the prevailing wage requirement in the PERM program furthers the statute's purpose of protecting the interests of, and preserving job opportunities for, American workers.
72

Effectuating this purpose is the principle objective of the Department's regulatory scheme in the PERM program.
73

71
20 CFR 656.10(c)(1).

72

Pai
v.
U.S. Citizenship & Immigration Servs.,
810 F. Supp. 2d 102, 110 (D.D.C. 2011) (“The plain language of [8 U.S.C. 1182(a)(5)(A) and 1153(b)(3)] reflects a concern to protect the interests of workers in the United States.”);
Fed'n for Am. Immigration Reform, Inc.
v.
Reno,
93 F.3d 897, 903 (D.C. Cir. 1996) (explaining that the INA's various limits on immigration, such as in the allocation of visas in the EB-2 and EB-3 preference categories, “reflect a clear concern about protecting the job opportunities of United States citizens.”).
See generally Texas
v.
United States,
809 F.3d 134, 181 (5th Cir. 2015) (quoting
I.N.S.
v.
Nat'l Ctr. for Immigrants' Rights, Inc.,
502 U.S. 183, 194 (1991) (“The INA's careful employment-authorization scheme `protect[s] against the displacement of workers in the United States,' and a `primary purpose in restricting immigration is to preserve jobs for American workers.' ”).

73

See, e.g., Durable Mfg. Co.
v.
U.S. Dep't of Labor,
578 F.3d 497, 502 (7th Cir. 2009) (“The point remains that the new § 656.30(b) advances, to some degree, the congressional purpose of protecting American workers.”);
Rizvi
v.
Dep't of Homeland Sec. ex rel. Johnson,
627 F. App'x 292, 294-95 (5th Cir. 2015) (unpublished) (“Viewed in the proper context, the challenged regulation serves purposes in accord with the statutory duty to grant immigrant status only where the interests of American workers will not be harmed; showing the employer's ongoing ability to pay the prevailing wage is one reasonable way to fulfill this goal.”).

While the prevailing wage levels the Department sets in the H-1B, H-1B1, E-3, and PERM programs are meant to protect against the adverse effects the entry of immigrant and nonimmigrant workers can have on U.S. workers, they do not accomplish that goal—and have not for some time. For starters, the Department has never offered any explanation or economic justification for the way it currently calculates the prevailing wage levels it uses in these foreign labor programs.
74

The INA requires that a government survey employed to determine the prevailing wage provide wage levels commensurate with experience, education, and level of supervision.
75

However, it is clear that the Department's current wage levels are not sufficiently set in accordance with the relevant statutory factors. In setting the wage levels, the Department did not engage in an effort to tether them to the statutory factors, identify sources of wage data that would inform an analysis of how the levels should be calibrated so as to protect U.S. workers' wages and job opportunities, or otherwise articulate an analytical framework to guide and explain how the levels were established. It also set the levels outside the rulemaking process, instead promulgating them solely through a memorandum of understanding between departmental components.

74

See Wage Methodology for the Temporary Non-Agricultural Employment H-2B Program, Part 2,
78 FR 24047, 24051 (Apr. 24, 2013) (“Since the OES survey captures no information about actual skills or responsibilities of the workers whose wages are being reported, the two-tier wage structure introduced in 1998 was based on the assumption that the mean wage of the lowest paid one-third of the workers surveyed in each occupation could provide a reasonable proxy for the entry-level wage. DOL did not conduct any meaningful economic analysis to test the validity of that assumption . . .”).

75
8 U.S.C. 1182(p)(4).

Further, the Department's analysis of the likely effects of H-1B and PERM workers on U.S. workers' wages and job opportunities shows that the existing wage levels are not advancing the purposes of the INA's wage provisions. As explained below, under the existing wage levels, artificially low prevailing wages provide an opportunity for employers to hire and retain foreign workers at wages well below what their U.S. counterparts—meaning U.S. workers in the same labor market, performing similar jobs, and possessing similar levels of education, experience, and responsibility—make, creating an incentive—entirely at odds with the statutory scheme—to prefer foreign workers to U.S. workers, and causing downward pressure on the wages of the domestic workforce. The Department is therefore acting to adjust the existing wage levels to ensure the levels reflect the wages paid to U.S. workers with levels of experience, education, and responsibility comparable to those possessed by similarly employed foreign workers.

To accomplish this, the Department articulated an analytical framework in the IFR to govern how it adjusted the prevailing wage levels. In doing so, the Department considered, among other things, the statutory context in which the INA's prevailing wage provisions are found. In particular, because the prevailing wage levels are used primarily for high-skilled workers, most of whom are H-1B workers, the Department took into account the INA's definition of “specialty occupation,” which establishes the baseline minimum qualification requirements that foreign workers must possess to obtain an H-1B visa, and also looked to the qualification requirements for obtaining an EB-2 visa. From its review of these qualification requirements, the Department drew a number of conclusions about the least-skilled, or entry-level workers employed in the PERM and H-1B programs. Specifically, the Department determined that such workers often possess greater skills than many of the least qualified workers in the most common occupational classifications in which H-1B and PERM workers are found. For that reason, the Department concluded that the lower end of the wage distribution reported by the OES survey for those classifications should be discounted in setting an entry-level wage. Because wages for H-1B and PERM workers are, under the INA, to be based on the wages paid to U.S. workers with comparable education, experience, and responsibility, looking to the wage data of workers at the lowest points of the wage distributions for these occupations who likely would not be considered as working in a “specialty occupation” would therefore be inconsistent with the statute. Because the old wage methodology made such wage data a central element of the prevailing wage calculation, it did not, in the Department's judgment, comport with the INA.

The Department's review of the INA's qualification requirements for H-1B and EB-2 workers, in combination with an analysis of the demographic characteristics of workers in the H-1B program, led the Department to determine that, for purposes of identifying an entry-level wage, it should look to the wages paid to U.S. workers who possess a master's degree and limited work experience. Using such workers as wage comparators for entry-level H-1B and PERM workers, in the Department's judgment, is an appropriate way of determining what U.S. workers similarly employed and with comparable education and experience to such H-1B and PERM workers are paid. In analyzing wage data on such workers, the Department also determined that it was appropriate

to focus its analysis on those occupations that account for one percent or more of all H-1B workers. As the Department acknowledged in the IFR, using a single wage structure across multiple programs, hundreds of different occupations, and for hundreds of thousands of different workers necessarily means that prevailing wage rates will not be perfectly tailored to every single job opportunity. While still giving due weight to other occupations in its analysis, the Department has determined that paying special attention to those occupations where foreign workers are most heavily concentrated, and where the risk to U.S. workers' wages and job opportunities from the employment of foreign labor is therefore most acute, is the optimal way of advancing the purpose of the INA's wage protections while accounting for the breadth of the programs and occupations covered by the four-tier structure. As discussed further below, while several commenters disagreed with various aspects of this analytical framework and the Department's interpretation of the INA, the Department, after considering those comments, continues to believe that its approach is appropriate.

Having determined how it would analyze the question of how to set prevailing wage levels, the Department proceeded to review data from various, credible government sources, specifically the surveys from the National Science Foundation (NSF) and the Current Population Survey (CPS), about the wages paid to master's degree holders with limited work experience employed in occupations that account for the vast majority of workers covered by the prevailing wage levels. Based on its analysis of this data, the Department concluded in the IFR that the range within the OES distribution where workers similarly employed and with levels of education and experience comparable to entry-level H-1B and PERM workers fall is between the 32nd and 49th percentiles of the distribution. The Department continues to believe that this conclusion is largely accurate, and that it is highly relevant to how it will set the entry-level wage in this final rule.

In the IFR, the Department relied on a number of qualitative considerations, including the relative strengths and weaknesses of the data it relied on to identify the entry-level wage range as well as the purpose of the INA's wage protections, to conclude that the entry-level wage should be placed higher up within the identified range at approximately the 45th percentile. Based on private wage data and other considerations provided by commenters, which are addressed below, the Department has reassessed this conclusion, and has now determined that the entry-level wage for the H-1B and PERM programs is more appropriate at the 35th percentile. In particular, data provided by commenters indicate that the lower end of the range may in fact provide a more accurate representation of what U.S. workers similarly employed to entry-level H-1B and PERM workers are paid. Concerns from commenters about how a potentially inflated entry-level wage would affect employers' ability to access the program, and how the IFR's reasoning was weighted too heavily to certain occupations and geographic areas, are also compelling reasons, in the Department's judgment, to favor a lower point in the range. Importantly, the Department believes that by staying within the range identified in the IFR, the entry-level wage it has selected will provide robust protection for U.S. workers.

The Department acknowledges commenters' reliance interests on the current wage methodology and understands that immediate changes to wage rates could cause some economic uncertainty for both employers and foreign workers. Thus, the Department is also adopting a series of transition provisions in this final rule to make it easier for employers and workers to adapt to the changed wage levels, thus avoiding disruption and striking a proper balance between stakeholders' reliance interests and the Department's obligation to comply with the INA and pursue a policy that is protective of U.S. workers. For many job opportunities, the new wage rates will phase in through two steps over a year and a half period. For job opportunities that will be filled by workers on track to become lawful permanent residents, and who therefore have greater reliance interests in the old wage methodology, the new wage rates will phase in through four steps over a three and a half year period. The Department also reduced the Level IV wage from approximately the 95th percentile to the 90th percentile, and made a number of other technical modifications to how it uses BLS data to produce prevailing wage rates. These changes, too, address commenters' concerns that wages under the IFR were inappropriately high.

B. Discussion

1. The Need for Rulemaking

Summary of Comments

The Department received a number of comments in support of the IFR, including one commenter that believed the IFR “makes important strides to bring wage requirements for the H-1B program closer to real prevailing wages in relevant industries.” These commenters agreed with the Department that the prior wage levels resulted in adverse effects on U.S. workers' wages and job opportunities. Some of these commenters noted that the Level I and II wages under the prior wage level methodology (approximately the 17th and 34th percentiles) were well below the median for the occupation and that 60 percent of H-1B positions were certified at one of these wage levels. One of these commenters expressed concern that the prior wage level methodology permitted H-1B employers to “engage in de facto wage arbitrage schemes.” A public policy organization noted that many employers “pay H-1B workers the lowest wages legally allowed, and outsource their H-1B employees to third-party firms.” The commenter asserted that employers opposed to the revised wage level methodology and increased wages claim “that employers will only hire H-1B workers if they are underpaid relative to similarly-situated U.S. workers,” which creates a wage “race to the bottom.” The commenter further stated that “other reliable sources of wage data” demonstrate that the wage results generated by the Department in the IFR are in fact too low. The commenter cited data from both the Department and NSF to draw the comparison and substantiate this claim, and it requested that the Department conduct a “systematic review” of major H-1B occupations to ensure that updates to the wage structure are in line with credible sources of salary data, such as the NSF's survey of recent college graduates. Another commenter believed the IFR would “prevent employers that seek specialized workers from being crowded out of the H-1B program by employers using the program to pay below market wages.” Some of these commenters believed the Level I wage should be set closer to the median for the occupation and one of the commenters stated that the Level I wage was the only wage level that mattered because the Department “has no adjudicative power over employer skill level claims.”

By contrast, the majority of comments received on the IFR expressed strong opposition to the rule and a number of commenters questioned whether adjustments to the prevailing wage level methodology are necessary. Many commenters believed there was no need to raise wages to protect U.S. workers, citing the Department's statement that

many frequent H-1B program users pay wages above the required prevailing wage rates, as well as other external sources finding that foreign workers are paid as much or more than similarly employed U.S. workers and that foreign workers create jobs for U.S. workers or otherwise benefit U.S. workers and the economy broadly. Many commenters pointed to unemployment statistics and forecasted job growth in certain fields as evidence that the IFR changes are not necessary to protect U.S. workers. Three commenters stated that it is more expensive to hire foreign workers due to costs related to the visa process and that employers prefer to hire U.S. workers due to concern about the “instability of H-1B lottery systems.” Some commenters believed the regulatory requirement that H-1B employers must pay the highest of the actual or prevailing wage provides sufficient protection to U.S. workers because the employer must pay the actual wage in cases where the Department's PWD rate is lower. One commenter asserted the annual visa caps provide sufficient protection for U.S. workers and a second commenter asserted the recruitment requirements in the permanent labor certification regulations offer sufficient protection.

Several commenters claimed it was improper for the Department to cite higher actual wages paid by large H-1B employers as an indication that the prevailing wage levels were insufficient to protect U.S. workers. For example, an university commenter noted the Department's acknowledgment that many large “program users pay well in excess of the prevailing wage” and the commenter asserted this was an acknowledgment “that the issue it is trying to resolve . . . is non-existent.” This commenter stated that employers paying more than the prevailing wage might simply indicate these employers pay a higher actual wage “due to legitimate business factors.” Similarly, a public policy organization and a professional association stated that the fact that a group of H-1B employers pays more than the prevailing wage indicates only that some employers voluntarily increase wages for competitive reasons. Another commenter stated that pay differences are reflective of the “free market at work” and that “high profile tech companies . . . are in heavy competition . . . and have large enough profit margins” to pay higher wages. A group of associations stated that payment of higher wages by these employers may be due to geography and “intensity of the work” such that these employers must “pay a premium to attract both domestic talent and foreign-born talent . . .” By intensity of the work, the commenters referred to areas in which at least one percent of workers are employed in a particular occupation. The commenters stated that the OES “identifies for each SOC . . . [areas where] the number of employed individuals per each 1,000 employed persons in that particular occupation . . .” and that the Department should look to this as “a useful proxy for the intensity of activity in that particular occupation in a particular geography,” in addition to analyzing available LCA data to determine how often wages in excess of prevailing wages “are primarily for such high intensity jobs and locations.”

Many commenters asserted the Department failed to consider or “insufficiently weighted” a wide range of relevant and readily available studies and reports that indicate a revision to the wage level methodology is unnecessary. These commenters stated that the Department ignored ample evidence that H-1B workers are paid at least as much as their U.S. counterparts and that employment of H-1B workers may increase the wages earned by U.S. workers. A few commenters cited a GAO report finding H-1B workers earn the same or more than similar U.S. workers and an analysis by the website Glassdoor finding that across “10 cities and roughly 100 jobs” it examined, salaries for H-1B workers were “about 2.8 percent higher than comparable U.S. salaries . . . .” Similarly, several commenters cited a report published by the Partnership for a New American Economy, a research and advocacy organization dedicated to “mak[ing] the economic case for immigration,”
76

finding that denials of H-1B petitions from 2007 to 2008 slowed job and wage growth for U.S. workers and that every one-percentage-point increase in the “foreign STEM share of a city's total employment . . . made possible by the H-1B visa program” increased wage growth by three to seven percentage points for U.S. workers. Other cited sources included:

76

See
New American Economy, “About,”
https://www.newamericaneconomy.org/about.

• A Cato Institute report indicating roughly 80 percent of H-1B employers pay H-1B workers “above average market wages”;

• A working paper from the National Bureau of Economic Research finding that “complete elimination” of the H-1B program would have virtually no effect on the wages of “high-skilled Americans in year one and a slight reduction . . . by year three”;

• A National Foundation for American Policy (NFAP) report finding “on average, H-1B workers reduce overall unemployment and increase earnings growth within the fields they are employed by increasing firm productivity”;

• An NFAP report finding that each 1 percent increase in H-1B workers in science, engineering, technology, and mathematics (STEM) occupations “increased local wages of college educated Americans by 7-8 percent and non-college educated Americans by 3-4 percent”;

• A journal article concluding that “after controlling for human capital attributes, foreign I.T. professionals” earn more than their U.S. counterparts; and

• A National Survey of College Graduates comparative analysis finding that “controlling for socioeconomic and demographic characteristics, workers who hold a temporary work visa earn about thirty percent more than comparable” U.S. workers.

Commenters also cited a variety of studies and reports that conclude that the employment of foreign workers has little or no effect on employment rates for similarly employed U.S. workers. For example, a group comment cited a 2016
Journal of Economic Perspectives
study on “Global Talent Flows” that the commenter said indicated “very little displacement of U.S.-born innovators and high-skilled professionals by high-skilled immigrants.” Another commenter stated “key fields such as software development and data science . . . are facing undeniable workforce supply shortages” and asserted this “undermin[ed] the argument that an influx in cheaper labor supply will result in lower possible earnings” for U.S. workers. In support, the commenter cited a
Wall Street Journal
article noting “tech job postings in the U.S. rose 32%” in the first half of 2019 and a 2018 BLS report projecting higher than average employment growth in high-tech services.

Some commenters also expressed concerns about the sources the Department did cite in the IFR in support of the need to revise wage levels. Citing an analysis of the IFR by labor economist and professor Dr. Madeline Zavodny, a trade association asserted the Department relied on “outdated, incorrect, or limited empirical data” and relied on sources that did not “include an analysis of the wages of H-1B workers in direct comparison with other workers having the same level of education, experience,

or responsibility.” The commenter stated that the Associated Press analysis cited at footnote 122 provides “an incomplete picture” because it is not based on “actual workers in the U.S. who hold an H-1B visa” but instead is based on LCA data, which includes “applications that are denied (often because the wage is too low).” The commenter also stated that the analysis “does not control for any differences between applicants for an H-1B visa and U.S. workers, such as differences in age and education.” An anonymous commenter stated that the Associated Press article indicated that 58 percent of H-1B workers are paid more than their U.S. counterparts and asserted the article can only be used to support statements regarding wages paid to workers in computer occupations.

The trade association stated that the citations at footnote 121 in the IFR that the Department relied on to support its statement that H-1B IT workers earn roughly 25-33 percent less than U.S. workers failed to provide “a clear analysis of the wages of workers who hold an H-1B visa compared with other workers;” failed to include H-1B workers in the analysis; and failed to provide sufficient details of the wage analysis to determine the reason for the wage differentials. The anonymous commenter stated that the CRISIL Research citation in this footnote failed to cite evidence or provide data to support the statement that H-1B workers earn 25 percent less than U.S. workers and failed to provide a source for the claim that “local hires . . . cost 25-30% more.” The anonymous commenter stated that the third citation in this footnote is outdated, analyzing “only immigrant trends in the 1990s” and does not “specifically reference computer occupations.” The commenter also noted that the report recognizes that “the lower earnings of recent immigrants may reflect unobserved differences in the quality and type of education among immigrant cohorts” and the report “offers alternative factors that weigh into the wage trends of H-1B workers that [DOL] has not accounted for in this rule.”

An immigration law firm stated that the IFR misconstrued the CRISIL report, which the commenter asserted “actually shows that as a result of recent H-1B policy changes, it is harder to obtain H-1Bs for employees that are contracted to work at third-party worksites forcing U.S. employers to instead hire full-time employees to fill these roles” and “the increase in costs is attributed to the costs of full time employees” compared to the cost of “contract employees.” The commenter also asserted that the Department misconstrued Economic Policy Institute research when it claimed the research showed that only one of every two STEM graduates get a job in the field. The commenter stated that the researchers “found that half of students that do not enter the STEM industry found jobs in other industries.”

The anonymous commenter also asserted that the congressional testimony cited in this footnote provides no evidence to “establish the median wage as the appropriate compensation for any specific [H-1B] positions” and fails to consider that “that a Level 1 wage does not necessarily represent a position that requires less skill, but rather may have fewer experience requirements or supervisory duties.” The commenter also asserted that the journal article cited in this footnote is “outdated in its data” and “refers to computer occupations” so it “cannot be applied to any other occupational codes.”

Finally, a trade association noted that the Department cited findings by George Borjas regarding the impact of foreign workers on the wages of low-skill workers but failed to acknowledge Borjas's contribution to a 2016 National Academies of Sciences, Engineering, and Medicine (NASEM) literature review in which he stated “wage impacts from immigrants on U.S.-born college-educated workforce is minor (an increase for U.S. professionals of one-half of one percent in wage rates as a result of high-skilled immigration).” The commenter added that the NASEM review found that there is a “broad consensus with respect to high-skilled immigration that any impacts on U.S. wages by high-skilled, college-educated foreign-born professionals are close to negligible.”

Response to Comments

First, as the Department explained in the IFR, a primary and independently sufficient reason for reforming the manner in which it sets prevailing wage levels in the H-1B and PERM programs is that the old wage levels were never justified through an economic analysis, nor codified in rulemaking through notice and comment, and, on closer inspection, are in substantial tension with the statutory framework. Notably, commenters have also not provided data or analysis demonstrating that the wage rates under the old wage methodology produces wage rates commensurate with the wages paid to U.S. workers similarly employed and with comparable education, experience, and responsibility to H-1B and PERM workers, as required by statute. While some commenters urged the Department to preserve the old wage methodology, they provided no evidence for why that would be appropriate or consistent with the INA. Moreover, the Department notes that criticism of the way in which the wage levels are currently set is longstanding and exists across the political spectrum.
77

Put simply, the old wage methodology is an outmoded method for calculating prevailing wage rates that is neither supported economic analysis, nor defended by commenters, and has never tied to the relevant statutory factors.

77

See https://www.grassley.senate.gov/news/news-releases/bipartisan-group-lawmakers-propose-reforms-skilled-non-immigrant-visa-programs.

The Level I wage under the old methodology is set by calculating the mean of the bottom third of the OES wage distribution. That means the wages for many H-1B workers are set based on a calculation that takes into account wages paid to workers who, as explained in the IFR and below, almost certainly would not qualify to work in a “specialty occupation,” as defined by the INA. The Department has noted previously that “workers in occupations that require sophisticated skills and training receive higher wages based on those skills.”
78

As a worker's education and skills increase, his wages are expected to increase as well.
79

For that reason, it is likely that workers at the lowest end of an occupation's wage distribution generally have the lowest levels of education, experience, and responsibility in the occupation. In consequence, if the occupation by definition includes workers who do not have the level of specialized knowledge required of H-1B workers, as is the case with some of the most common occupations in which H-1B workers are employed, the very bottom of the wage distribution should be discounted in determining the appropriate point in the OES wage distribution at which to establish the entry-level wage under the four-tiered wage structure because workers at the bottom end are not similarly employed to H-1B workers. Yet the old wage structure made such workers a central component of that calculation.
80

Similarly, the current

Level IV wage is set by calculating the mean of the upper two-thirds of the wage distribution. That means that the wage level provided for the most experienced and highly educated H-1B workers is determined, in part, by taking into account a sizeable number of workers who do not even make more than the median wage of the occupation. Given the correlation between wages and skills, this calculation also would appear inconsistent with the statutory and regulatory framework. Common sense dictates that workers making less than the median wage of the occupation cannot be regarded as being similarly qualified to the most competent and experienced members of that occupation. That puts the old methodology in substantial tension with the governing statute and is in and of itself a sufficient reason for reassessing and revising the prior methodology in order to bring it more closely in line with the INA's wage provisions.
81

78

Wage Methodology for the Temporary Non-Agricultural Employment H-2B Program, Part 2,
78 FR 24047, 24051 (Apr. 24, 2013).

79

See
Bureau of Labor Statistics, Learn more, earn more: Education leads to higher wages, lower unemployment, available at
https://www.bls.gov/careeroutlook/2020/data-on-display/education-pays.htm.

80
For example, the occupation of Software Developers, which accounts for a large number of H-1B workers, does not require the same degree of specialized knowledge as a baseline entry requirement as does the INA's definition of “specialty occupation.” Yet approximately 10

percent of all LCAs filed with the Department for software developer positions classify those positions as entry-level, meaning that under the current wage levels the wages paid to such specialty occupation workers are calculated based, at least in part, on the wages paid to some workers who do not have comparable specialized knowledge and expertise. This outcome contravenes the INA's requirement that H-1B workers be paid wages based on the wages paid to U.S. workers with similar levels of education, experience, and responsibility.

81

See Long Island Care at Home, Ltd.
v.
Coke,
551 U.S. 158, 175 (2007) (“Neither can we find any significant legal problem with the Department's explanation for the change. The agency said that it had `concluded that these exemptions can be available to such third party employers' because that interpretation is `more consistent' with statutory language that refers to `any employee' engaged `in' the `enumerated services' and with `prior practices concerning other similarly worded exemptions.' There is no indication that anyone objected to this explanation at the time. And more than 30 years later it remains a reasonable, albeit brief, explanation.”).

The Department also based its conclusion in the IFR that regulatory reform of H-1B and PERM prevailing wages was needed, in part, on a review of the academic literature on the subject, congressional testimony and media accounts of the practical consequences of the prior prevailing wage levels, and data on the actual wages that major users of the H-1B and PERM programs pay their foreign workers. As discussed at length in the preamble to the IFR, the Department considered numerous studies finding that H-1B workers are paid less than their U.S. counterparts.
82

Other studies found this disparity to be especially true of H-1B employees working in computer science and information technology, fields in which two thirds of H-1B workers are employed.
83

The Department's justification also took into account the fact that economic literature suggests that the introduction of low-cost foreign labor into a labor market suppresses wages in proportion to the number of foreign workers present in that labor market.
84

Studies involving computer science workers confirm this general finding.
85

Its review of this information led the Department to conclude that the old wage methodology resulted in adverse effects on both U.S. workers' wages as well as their job opportunities. After reviewing comments and the studies and information they provided, the Department continues to believe that, at least in some cases, the old prevailing wage methodology resulted in harm to U.S. workers and therefore should be revised.

82
Atlantic Council, Reforming US' High-Skilled Guestworker Program, (2019), available at
https://www.atlanticcouncil.org/in-depth-research-reports/report/reforming-us-high-skilled-immigration-program/;
The Impact of High-Skilled Immigration on U.S. Workers: Hearing before the Senate Committee on the Judiciary (February 25, 2016) (testimony of John Miano, representing Washington Alliance of Technology Workers, Local 37083 of the Communications Workers of America, the AFL-CIO); Norman Matloff, On the Need for Reform of the H-1B Non-Immigrant Work Visa in Computer-Related Occupations, 36 U. Mich. J.L. Reform 815 (2003).

83
U.S. Citizenship and Immigration Services, Characteristics of H-1B Specialty Occupation Workers Fiscal Year 2019 Annual Report to Congress October 1, 2018-September 30, 2019, (2020), available at
https://www.uscis.gov/sites/default/files/document/reports/Characteristics_of_Specialty_Occupation_Workers_H-1B_Fiscal_Year_2019.pdf,
(showing 66 percent of H-1B petitions approved in FY2019 were for computer-related occupations); Sean McLain & Dhanya Ann Thoppil, Bulging Staff Cost, Shrinking Margins, CRISIL Research, (2019), available at
https://www.crisil.com/en/home/our-analysis/reports/2019/05/bulging-staff-cost-shrinking-margins.html;
Sean McLain & Dhanya Ann Thoppil, U.S. Visa Bill `Very Tough' for Indian IT, The Wall Street Journal, April 18, 2013, available at
https://blogs.wsj.com/indiarealtime/2013/04/18/u-s-visa-bill-very-tough-for-indian-it/?mod=wsj_streaming_latest-headlines;
The State of Asian Pacific America,” Paul Ong (ed.), LEAP Asian Pacific American Public Policy Institute and UCLA Asian American Studies Center, 1994, pp. 179-180; Carnegie Endowment for International Peace, Balancing Interests: Rethinking U.S. Selection of Skilled Immigrants, (1996); Youyou Zhou, Most H-1B workers are paid less, but it depends on the job, Associated Press, April 18, 2017, available at
https://apnews.com/afs:Content:873580003/Most-H-1B-workers-are-paid-less,-but-it-depends-on-the-type-of-job.

84
George Borjas, The Labor Demand Curve Is Downward Sloping: Reexamining the Impact of Immigration on the Labor Market, The Quarterly Journal of Economics Vol. 118, No. 4 (Nov., 2003), pp. 1335-1374, available at
https://www.jstor.org/stable/25053941?seq=1.

85
John Bound et al., Understanding the Economic Impact of the H-1B Program on the U.S., NBER Working Paper No. 23153 (2017), available at
https://www.nber.org/papers/w23153.pdf.
The Border Security, Economic Opportunity, and Immigration Modernization Act, S. 744: Hearing before the Senate Committee on the Judiciary (April 22, 2013) (testimony of Neeraj Gupta, CEO of Systems in Motion, to the Senate Judiciary Committee), available at
https://www.judiciary.senate.gov/imo/media/doc/04-22-13GuptaTestimony.pdf.
Daniel Costa and Ronil Hira, H-1B Visas and Prevailing Wage Levels, Economic Policy Institute, (2020), available at
https://www.epi.org/publication/h-1b-visas-and-prevailing-wage-levels/.

The Department recognized, as did some commenters, the limitations of some of the wage studies it relied on in the IFR, noting that many of them compare H-1B and U.S. workers in the same occupation but do not directly compare workers in those occupations with the same levels of education, experience, and responsibility.
86

However, in the IFR, the Department explained why these studies nonetheless allow for an instructive wage comparison: “[B]ecause H-1B workers are required to possess specialized knowledge and expertise that often exceeds the level of education and experience necessary to enter a given occupation generally, and greater skills are associated with higher earnings, the median H-1B workers should earn a wage that is at least the same, if not more, than the median wage paid to U.S. workers in the occupation. But a variety of studies show that the opposite is occurring.”
87

Put another way, while the Department acknowledges that there is an inherent limitation in comparing median earnings of groups of workers, since doing so does not account for different levels of experience and education, the distortion in the data that results from such a limitation would be expected to show higher earnings for H-1B workers at the median given that a result of the INA's specialty occupation requirement for H-1B workers is that H-1B workers must possess more advanced education and experience than what is typically required to enter some of the most common occupations in which H-1B workers are employed. Yet the median earning of H-1B workers, according to these studies, are in fact skewed lower than the median U.S. worker in these occupations. Accordingly, the Department continues to believe this is a compelling data point demonstrating that H-1B workers in many cases make wages below those of similarly employed U.S. workers.

86
85 FR at 63,882.

87

Id.

Further, the Department disagrees with commenters that other aspects of the methodology and reasoning relied on in the various studies that support the Department's position are flawed. These are, in many cases, studies from credible sources that are commonly cited in reporting and literature about the effects of the H-1B program on U.S. workers. Moreover, to the extent these

studies focus on computer science and IT occupations, the Department believes that focus is appropriate. As explained at greater length below, the Department's analytic framework gives special attention to these occupations because they are where the largest concentration of H-1B and PERM workers are found, and therefore the places where the risks to U.S. workers that the Department is trying to guard against are most acute.

In addition, the Department considered testimony before the Senate Judiciary Committee
88

as well as news reports about the displacement of U.S. workers by H-1B workers.
89

As noted, some commenters criticized these sources as anecdotal and insufficient. But they were not the only sources on which the Department relied. The information from those sources supplemented the information the Department derived from studies and academic articles. Standing alone such information may (or may not) be insufficient to demonstrate systematic, adverse effects on U.S. workers, but, viewed in combination with other available evidence, it provides vital insight into the Department's understanding of the effects of the old wage methodology. The Department also views evidence about the real-world consequences of its wage methodology on U.S. workers, as shown in news reports, as important information that should not be ignored.

88
The Impact of High-Skilled Immigration on U.S. Workers: Hearing before the Senate Committee on the Judiciary (Feb. 25, 2016) (testimony of John Miano, representing Washington Alliance of Technology Workers, Local 37083 of the Communications Workers of America, the AFL-CIO); Immigration Reforms Needed to Protect Skilled American Workers: Hearing before the Senate Committee on the Judiciary (Mar. 17, 2015) (testimony of Ronil Hira, Associate Professor of Public Policy Rochester Institute of Technology, Rochester, NY), available at
https://www.judiciary.senate.gov/imo/media/doc/HiraTestimony.pdf;
The Border Security, Economic Opportunity, and Immigration Modernization Act, S. 744: Hearing before the Senate Committee on the Judiciary (Apr. 22, 2013) (testimony of Neeraj Gupta, CEO of Systems in Motion, to the Senate Judiciary Committee), available at
https://www.judiciary.senate.gov/imo/media/doc/04-22-13GuptaTestimony.pdf.

89
“Visa Abuses Harm American Workers,” The New York Times, June 16, 2016, available at
http://www.nytimes.com/interactive/opinion/editorialboard.html;
Julia Preston, Pink Slips at Disney. But First, Training Foreign Replacements, The New York Times, June 3, 2015, available at
https://www.nytimes.com/2015/06/04/us/last-task-after-layoff-at-disney-train-foreign-replacements.html;
Julia Preston, Toys `R' Us Brings Temporary Foreign Workers to U.S. to Move Jobs Overseas, The New York Times, Sept. 29, 2015, available at
https://www.nytimes.com/2015/09/30/us/toys-r-us-brings-temporary-foreign-workers-to-us-to-move-jobs-overseas.html;
Michael Hiltzik, A loophole in immigration law is costing thousands of American jobs, Los Angeles Times, February 20, 2015, available at
https://www.latimes.com/business/hiltzik/la-fi-hiltzik-20150222-column.html;
Daisuke Wakabayashi & Nelson Schwarts, Not Everyone in Tech Cheers Visa Program for Foreign Workers, The New York Times, Feb. 5, 2017, available at
https://www.nytimes.com/2017/02/05/business/h-1b-visa-tech-cheers-for-foreign-workers.html.

As detailed above, some commenters also claimed that the Department ignored or unfairly discounted studies showing that some H-1B workers earn more than U.S. workers. Far from ignoring or discounting such studies, the Department acknowledged their findings and addressed them in the IFR.
90

While the Department did not discuss in the IFR every study of that kind that the commenters cite, it has reviewed the studies provided by commenters and notes that it did consider many sources with similar information, analysis, and conclusions to these studies.
91

In addition, while some studies cited by commenters which were not directly addressed in the IFR offer additional analysis, they do not overwhelm the conclusions of other studies originally cited in the IFR. For example, reports that find that H-1B workers' wages exceed market wages often ignore that the prevailing wage level is fixed for the H-1B worker for three years, meaning that even if the H-1B worker is paid in excess of the market wage for an entry-level worker in year 1, this may not be the case in year 3 because the H-1B workers' wages should no longer be compared to entry-level workers. Other reports cited by critical commenters acknowledged that the research on employment of American workers in the presence of H-1B workers remains inconclusive or that the existing studies present mixed results on whether H-1B workers crowd out American workers. Some of these studies then focused on one segment of the American worker and H-1B market (
e.g.,
recent college graduates) to obtain specific results which in many cases cannot be extrapolated to other workers cohorts. Others of these studies relied on data gathered only during recent economic recessions, which make it difficult to draw proper conclusions about the effect of H-1B workers on compensation and employment for competing workers under other (and more typical) economic conditions. The Department examined these studies concluding that some H-1B workers in some circumstances are better paid than U.S. workers, weighed them against other studies reaching the opposite conclusion, and, in its expert judgment, determined that there was reason to conclude that, at least in some instances, prevailing wage levels are set too low. An agency's choice of studies on which to rely is entitled to substantial deference.
92

The Supreme Court has held that “[w]hen specialists express conflicting views, an agency must have discretion to rely on the reasonable opinions of its own qualified experts even if, as an original matter, a court might find contrary views more persuasive.”
93

The studies cited by commenters rest on the same kinds of analyses and reach similar conclusions to those studies reviewed by the Department in development of the IFR. The Department has reviewed these studies and has concluded that they do not discredit, or even necessarily contradict, other sources of information that demonstrate that H-1B workers do, in some instances, adversely affect U.S. workers' wages and job opportunities, even if that is not true in all cases, as explained throughout. Accordingly, based on its review of these studies the Department continues to believe that some modification to the wage levels is necessary.

90
85 FR at 63,882, 63,884.

91
An agency is not required to respond to every study, or consider every conceivable piece of evidence in drawing a conclusion.
Tex. Office of Pub. Util. Counsel
v.
F.C.C.,
265 F.3d 313, 328 n.7 (5th Cir. 2001).

92

See Or. Envtl. Council
v.
Kunzman,
817 F.2d 484, 496 (9th Cir. 1987);
see also New York
v.
U.S. Nuclear Regulatory Comm'n,
589 F.3d 551, 555 (2d Cir. 2009) (“These are technical and scientific studies. Courts should be particularly reluctant to second-guess agency choices involving scientific disputes that are in the agency's province of expertise. Deference is desirable.” (quoted source omitted));
see generally Universal Camera Corp.
v.
NLRB,
340 U.S. 474, 488 (1951) (“The substantiality of evidence [in APA review] must take into account whatever in the record fairly detracts from its weight,” but this “does not furnish a calculus of value by which a reviewing court can assess the evidence,” nor does it negate agency expertise that the court “must respect,” nor permit a court to displace the agency's “choice between two fairly conflicting views.”);
cf. Fed. Power Comm'n
v.
Fla. Power & Light Co.,
404 U.S. 453, 463, (1972) (“Particularly when we consider a purely factual question within the area of competence of an administrative agency created by Congress, and when resolution of that question depends on `engineering and scientific' considerations, we recognize the relevant agency's technical expertise and experience, and defer to its analysis unless it is without substantial basis in fact.”).

93

Marsh
v.
Or. Nat. Res. Council,
490 U.S. 360, 378 (1989).

Contrary to the commenters' assertions, the Department considered studies showing that H-1B workers benefit U.S. workers. In the IFR, the Department acknowledged that in some instances the employment of H-1B workers fuels economic growth and job creation,
94

as well as the fact that paying foreign workers at wages lower than U.S. workers may increase firms'

profitability.
95

Indeed, in the IFR the Department discussed studies that suggest the employment of H-1B workers has positive effects on the wages and job opportunities of U.S. workers and expressed a qualified agreement with them, specifically noting that “[w]hile the Department agrees that this is true in some instances, it is also clear that the current prevailing wage levels often result in adverse effects, and that adjustments to the wage levels are needed to ensure that the positive effects of the program will be enjoyed more widely.”
96

In other words, the Department anticipates that bringing the wages of foreign workers in line with what similarly employed U.S. workers actually make will enhance the benefits resulting from the employment of such workers, which studies considered in the IFR as well offered by commenters show exist in some cases. The Department did not dispute in the IFR “that allowing firms to access skilled foreign workers can lead to overall increases in innovation and economic activity, which can, in turn, benefit U.S. workers,” but did conclude “H-1B workers' earnings data and other research indicate that, in many cases, the existing wage levels do not lead to these outcomes.”
97

At no point in the IFR did the Department suggest that H-1B workers either always harm U.S. workers or always benefits U.S. workers and the firms that employ them. Rather, the Department concluded, and continues to conclude, that the positive benefits of the program, while real, are not as widespread as they might otherwise be, and that this is likely due to the fact that H-1B workers in some instances are paid wages below that paid to their U.S. counterparts.

94
85 FR at 63,882.

95

Id.
at 63,883.

96

Id.
at FR at 63,882.

97

Id.
at 63,884.

One argument along these lines that the Department addressed in the IFR was made by the general counsel of a major user of the H-1B program in testimony before the Senate Judiciary Committee. In his testimony, he contended that H-1B workers raise the income of U.S. workers because they alleviate labor shortages, particularly in STEM and computer science. Importing workers to fill needs that would otherwise go unmet, he argued, allows companies to innovate and grow, creating more employment opportunities and higher-paying jobs for U.S. workers.
98

The Department rejects the premise of the general counsel's argument that STEM jobs are going unfilled because there are no qualified American workers willing to take them, and therefore U.S. gross domestic product (GDP) would be smaller without importing foreign STEM workers. The Department notes that for every two students who graduate from a U.S. university with a STEM degree, only one obtains a STEM job.
99

In the case of computer science occupations, another study cited by the Department challenges the notion that H-1B workers are filling needs unmet by U.S. workers. The study contains findings that foreign computer science workers have suppressed wages for U.S. computer science workers along with findings that “imply that for every 100 foreign [computer science] workers that enter the US, between 33 to 61 native [computer science] workers are crowded out from computer science to other college graduate occupations.”
100

Further, while some commenters argued that the Department misconstrued the study showing that only half of U.S. STEM graduates go on to work in STEM fields on the grounds that many of these students find employment in other industries, the Department disagrees that the study is not relevant here. In fields where a graduate's degree signals certain skills to potential employers, such as computer science or many STEM fields, it is reasonable to assume that students who major in a particular field typically intend to find employment in that field. The fact that many of these particular students are able to find employment in other industries does not undercut the conclusion—indeed, it bolsters it—that at least some of their job opportunities in the fields for which they trained are limited by the presence of lower-paid foreign workers in some instances.

98
The Border Security, Economic Opportunity, and Immigration Modernization Act, S. 744: Hearing before the Senate Committee on the Judiciary (Apr. 22, 2013), available at
https://www.judiciary.senate.gov/imo/media/doc/04-22-13BradSmithTestimony.pdf.

99
85 FR at 63,855.

100
John Bound et al., Understanding the Economic Impact of the H-1B Program on the U.S., NBER Working Paper No. 23153 (2017), available at
https://www.nber.org/papers/w23153.pdf.

The Department also acknowledges commenters' point that in some circumstances H-1B workers contribute to innovation. Those contributions notwithstanding, “such outcomes are not the immediate objectives of the of the INA's wage protections.”
101

Further, this rulemaking does not alter the number of H-1B workers permitted to work and it is unclear how the current wage levels promote greater innovation than the wages which will exist under this rule. The PERM program permits employers to hire aliens to work at permanent jobs where the Secretary of Labor has certified to the Secretary of State and the Secretary of Homeland Security that the employment of an alien seeking to enter the United States to perform skilled or unskilled labor “will not adversely affect the wages and working conditions of workers in the United States similarly employed.”
102

In the case of H-1B workers, employers must file LCAs stating that the employer will offer wages that are, at a minimum, “the actual wage level paid by the employer to all other individuals with similar experience and qualifications for the specific employment in question,” or “the prevailing wage level for the occupational classification in the area of employment, whichever is greater.”
103

In rulemaking, an agency is not required “to accord greater weight to aspects of a policy question than the agency's enabling statute itself assigns to those considerations.”
104

In consequence, to the extent some comments and the studies cited therein criticized the Department's conclusion that the prevailing wage levels are set too low on the grounds that H-1B workers fuel innovation and economic growth, the Department affords them less weight. Such considerations are secondary to the Department's more immediate concern of fulfilling its statutory mandate to ensure that the presence of foreign workers does not adversely affect U.S. workers.

101
85 FR at 63,884.

102
8 U.S.C. 1182(a)(5)(A)(i)(II).

103
8 U.S.C. 1182(n)(1)(A)(i).

104

Hussion
v.
Madigan,
950 F.2d 1546, 1554 (11th Cir. 1992).

The Department also reemphasizes that while commenters preferred some studies and sources over others cited by the Department, they and their studies offered no affirmative argument in support of the old wage levels, nor did they explain how the prior wage levels reflect actual market wages. Rather, these commenters presented studies which the Department has already reviewed and which the Department does not believe align with the weight of the evidence which the Department continues to rely upon. The evidence amassed in the IFR provides a reasonable basis for increasing the wage rates, the Department stands by its determination that the old methodology did not adequately protect U.S. workers. The Department also notes that a number of commenters agreed with its conclusion that current wage levels often do not reflect prevailing wages and are set too low. For example, one commenter noted that, in some cases where H-1B workers are used to replace

U.S. workers, “the H-1B workers have been hired with annual wages of around $30,000 to $40,000 less than the workers they have replaced.” These comments corroborate the Department's position that it weighted the conflicting evidence in a reasonable way and reached an appropriate conclusion that H-1B workers can and in many cases are used as low-cost alternatives to U.S. workers, and thereby undercut U.S. workers' wages and job opportunities.

The Department also acknowledges the comments it received (and studies cited therein) that argue that pointing to the higher actual wages that some employers pay H-1B and PERM workers to show that prevailing wage rates were too low is flawed reasoning because there may be other business factors beyond a worker's qualifications that explain why some employers pay a premium on the prevailing wage. The Department agrees that there may, in some instances, be legitimate business factors that explain why actual wages paid to H-1B workers would be higher than the prevailing wage rate. For example, a firm that faces a sudden increase in demand for its product relative to its competitors might be willing to pay premiums to both domestic and H-1B workers relative to its competitors. However, factors such as these are typically specific to a particular firm, employee, or geographic area, as some commenters acknowledged in their discussion of high-intensity occupation areas, and do not reflect the wages paid by the typical employer in a given labor market. In consequence, while the actual wages paid to H-1B workers might very well exceed the prevailing wage rate for legitimate reasons in some cases, such incidents should not be the norm across all employers, occupations, and locales. If the actual wage is consistently higher across the board than the prevailing wage rate, this suggests that the prevailing wage is not actually reflective of the market wage rate on offer in the labor market. As the data presented in the IFR shows, actual wages paid to H-1B workers not only exceed the prevailing wage rate, but do so consistently and substantially, on average, across many different employers. This suggests that legitimate business factors alone do not account for the extreme differences between the actual wages paid to H-1B workers and prevailing wage rates. Rather, it suggests that the prevailing wage rate is out of line with the market wage.

For similar reasons, the Department also rejects some commenters' contention (including as purportedly supported by the studies cited) that the fact that actual wages often exceeds the prevailing wage rate shows that there is no wage problem in the H-1B and PERM programs. One shortcoming such studies failed to acknowledge is that because the prevailing wage is in place for 3 years for H-1B workers, even if they are paid more than the prevailing wage in their first year, there is a distinct possibility that the prevailing wage will be low compared to the market for more experienced workers in the subsequent years. As the Department explained in the IFR, the INA takes a belt-and-suspenders approach to protecting U.S. workers' wages. Employers must pay the higher of the actual wage they pay to similarly employed workers or the prevailing wage rate set by the Department. Both rates generally should approximate the market wage for workers with similar qualifications and performing the same types of job duties in a given labor market as H-1B workers. It is therefore a reasonable assumption that, if both of the INA's wage safeguards were working properly, the wage rates they produce would, at least in many cases, be similar. Where the Department's otherwise applicable wage rate is significantly below the rates actually being paid by employers in a given labor market, it gives rise to an inference that the Department's current wage rates, based on statistical data and assumptions about the skill levels of U.S. workers, are not reflective of the types of wages that workers similarly employed to H-1B workers can and likely do command in the actual labor market. There is a mismatch between what the Department's prevailing wage structure says the relevant cohort of U.S. workers are or should be making and what employers are likely actually paying such workers, as demonstrated by the actual wage they are paying H-1B workers. Put another way, when many of the heaviest users of the H-1B program consistently pay wages well above the prevailing wage, it suggests that the prevailing wages are too low, and thus can be abused by other firms to replace U.S. workers with lower-wage foreign workers in cases where those firms do not have similarly employed workers on their jobsites whose actual wages would be used to set the wage for H-1B workers.
105

105

See
63872 FR 63885-87.

The Department also believes that looking to the pay practices of some of the most frequent users of the H-1B program is appropriate in determining whether the prevailing wage rates are set too low. Because the risk of harm to U.S. workers is most acute by employers in labor markets with heavy concentrations of H-1B workers, data on the actual wage rates at those employers and in those areas are entitled to special weight in the Department's analysis. Further, to the extent some commenters argue that looking at such firms unduly minimizes the Department's consideration of wage effects in rural areas or at smaller employers, the Department notes that, like its use of anecdotal evidence, the wage data it looked to from the heaviest users of the program is just one piece of various types of evidence on which it bases its conclusions about the effects of the old wage levels—no single piece of which is given dispositive weight. Rather, when considered in combination, this evidence provides a sound basis, in the Department's judgment, for concluding that the old wage methodology resulted in inappropriately low wages in a variety of circumstances.

The Department also disagrees that other safeguards in the INA are sufficient to protect U.S. workers and that updates to the prevailing wage levels are therefore unnecessary. Congress chose to enact multiple forms of protection for U.S. workers in these foreign labor programs. The Department must operationalize those protections entrusted to its administration as it sees best for the discharge of its legal responsibilities under the INA and its policy of more fully ensuring the protection of U.S. workers, including by updating the prevailing wage levels.
106

106
The Department also notes that the need for this rulemaking is undiminished by the possibility, recently proposed by DHS, that the limited visas available under the H-1B cap may be allocated based on how high the wage level is at which an employer plans to compensate its foreign workers.
See Modification of Registration Requirement for Petitioners Seeking To File Cap-Subject H-1B Petitions,
85 FR 69236 (November 2, 2020). The Department's wage structure applies to programs other than the H-1B program, meaning that even if there are other means of preventing adverse wage effects in the H-1B program, the benefits of updating the Department's prevailing wage methodology extend more broadly. Relatedly, even within the H-1B program, not all visas are subject to the annual cap, and would thus not be affected by a new method of allocating capped visas. Even more critically, the INA directs the Department to set wage levels that will ensure foreign workers will be compensated at rates comparable to U.S. workers similarly employed with similar levels of education, experience, and responsibility. As explained throughout, the Department has determined that adjustments are needed for all four wage levels to ensure they protect similarly employed U.S. workers from wage suppression and dangers to their job opportunities. Thus, even under a visas allocation system that prioritizes workers placed at higher wage levels, the Department's wage methodology must still protect workers similarly employed to workers at those wage levels from adverse employment effects. Put another way, the purpose of the INA's wage provisions is to protect individual U.S. workers from having to compete

with low-cost foreign labor, something that can only be accomplished by setting appropriate wage levels even if all H-1B workers granted work authorization are at the highest skill level since such workers will necessarily be competing with U.S. workers with comparable qualifications.

As explained in the IFR, the Department has determined that the conclusions it reached about adverse wage effects with respect to the H-1B program can also be extrapolated to the PERM program, about which the economic literature is far scanter. Critically, the PERM programs and the H-1B program are closely linked in both how they are regulated and used by employers. Unlike most nonimmigrant visas, H-1B visas are unusual in that they are “dual intent” visas, meaning under the INA, H-1B workers can enter the U.S. on a temporary status while also seeking to adjust status to that of lawful permanent residents.
107

One of the most common pathways by which H-1B visa holders obtain lawful permanent resident status is through employment-based green cards, and in particular EB-2 and EB-3 visas.
108

USCIS has estimated that over 80 percent of all H-1B visa holders who adjust to lawful permanent resident status do so through an employment-based green card.
109

This is reflected in data on the PERM programs. In recent years, more than 80 percent of all individuals granted lawful permanent residence in the EB-2 and EB-3 classifications have been aliens adjusting status, meaning they were already present in the U.S. on some kind of nonimmigrant status.
110

Given that the H-1B program is the largest temporary visa program in the U.S. and is one of the few that allows for dual intent, it is a reasonable assumption that the vast majority of the EB-2 and EB-3 adjustment-of-status cases are for H-1B workers. This is corroborated by the Department's own data, which shows that, in recent years, approximately 70 percent of all PERM labor certification applications filed with the Department have been for H-1B nonimmigrants.
111

107

dePape
v.
Trinity Health Sys., Inc.,
242 F. Supp. 2d 585, 593 (N.D. Iowa 2003).

108

See
Sadikshya Nepal,
The Convoluted Pathway from H-1B to Permanent Residency: A Primer
, Bipartisan Policy Center (2020); Congressional Research Service, The Employment-Based Immigration Backlog (2020) (“A primary pathway to acquire an employment-based green card is by working in the United States on an H-1B visa for specialty occupation workers, getting sponsored for a green card by a U.S. employer, and then adjusting status when a green card becomes available.”).

109
U.S. Citizenship and Immigration Services, H-1B Authorized-to-Work Population Estimate (2020).

110

See
Department of Homeland Security, 2017 Yearbook of Immigration Statistics, Table 7. Persons Obtaining Lawful Permanent Resident Status by Type and Detailed Class of Admission: Fiscal Year 2017,
available at https://www.dhs.gov/immigration-statistics/yearbook/2017/table7.

111
Office of Foreign Labor Certification, Permanent Labor Certification Program—Selected Statistics, FY 19,
available at https://www.dol.gov/sites/dolgov/files/ETA/oflc/pdfs/PERM_Selected_Statistics_FY2019_Q4.pdf.

Because of how many H-1B visa holders apply for EB-2 and EB-3 classifications, Congress has repeatedly amended the INA to account for the close connection between the programs. For example, while H-1B nonimmigrants are generally required to depart the U.S. after a maximum of six years of temporary employment, Congress has exempted from that requirement H-1B nonimmigrants who are beneficiaries of PERM labor certification applications with the Department, or who are beneficiaries of petitions for an employment-based immigrant visa with DHS that have been pending for longer than a year, if certain other requirements are met.
112

Similarly, as noted above, Congress established the INA's prevailing wage requirements in section 212(p) with specific reference to the fact that they would apply in both the H-1B and PERM programs.
113

112

See
Public Law 107-273, § 11030A(a), 116 Stat. 1836 (2002).

113

See
144 Cong. Rec. S12741, S12756 (explaining that 8 U.S.C. 1182(p) “spells out how [the prevailing] wage is to be calculated in the context of both the H-1B program and the permanent employment program in two circumstances.”).

The various features of the statutory framework governing the programs, working in combination, have further tightened the relationship between them. In particular, because H-1B workers can have dual intent and, if they have a pending petition for an employment-based green card, can remain in the U.S. beyond the 6-year period of authorized stay limitation, many workers for whom an employer has filed a PERM labor certification application are already working for that same employer on an H-1B status.
114

And because the method by which employment-based green cards are allocated can result in significant delays between when an alien is approved for a green card and when the green card is actually issued, the period during which a worker can, in some sense, have one foot in each program, is often protracted.
115

114

See
Congressional Research Service, The Employment-Based Immigration Backlog (2020).

115

See
8 U.S.C. 1152(a)(2); U.S. Department of State, Visa Bulletin For September 2020,
https://travel.state.gov/content/travel/en/legal/visa-law0/visa-bulletin/2020/visa-bulletin-for-september-2020.html.

This system results in significant overlap in the principal uses of the H-1B and PERM programs. H-1B petitions approved in FY 2019,
116

and the vast majority of individuals waiting for adjudication of EB-2- and EB-3-based adjustment of status applications, are concentrated in the same countries of origin.
117

Relatedly, LCAs and applications for PERM labor certifications often are for job opportunities in the same occupations. Data from the Department's OFLC shows that of the ten most common occupations in which H-1B workers are employed, seven are also among the ten most common occupations in which PERM workers are employed. And PERM workers' wages are set based on the same methodology used for H-1B workers.

116
U.S. Citizenship and Immigration Services, Characteristics of H-1B Specialty Occupation Workers Fiscal Year 2019 Annual Report to Congress October 1, 2018-September 30, 2019, (2020),
available at https://www.uscis.gov/sites/default/files/document/reports/Characteristics_of_Specialty_Occupation_Workers_H-1B_Fiscal_Year_2019.pdf
(showing 66 percent of H-1B petitions approved in FY2019 were for computer-related occupations).

117
Congressional Research Service, The Employment-Based Immigration Backlog (2020).

Given the evidence that these two programs are used similarly by employers, and employ in many instances the same or at least similarly situated foreign workers, the Department believes that it should treat the H-1B and PERM programs similarly. The upshot is that the H-1B and PERM programs are, in a variety of ways, inextricably conjoined. The rules governing the programs and how employers use them mean that, in many instances, workers in the PERM programs and workers in the H-1B program are often the exact same workers doing the same jobs in the same occupations for the same employers. And given the evidence of similarity, the Department can reasonably infer that the current wage levels under the four-tier structure—which result in inappropriately low wage rates in some instances for H-1B workers—also result in inappropriately low wage rates in some instances for the PERM programs. This is also borne out by the fact that, as noted in the IFR, the significant disparities between actual wages paid by heavy users of the programs and prevailing wage rates discussed above in connection with the H-1B program are also found in the PERM program.

2. Wage Level Methodology and Analytical Framework

Summary of Comments

Many commenters disagreed with the methodology and analytical framework the Department used to determine the

appropriate prevailing wage rate, often asserting that the Department inappropriately relied on wage data from a limited pool of employers in the H-1B program and a pool of workers based on educational attainment limited to workers in information technology jobs, rather than basing the prevailing wage on market wages paid to workers in the applicable occupational classification based on the requirements of the occupation or employer's job opportunity. Several commenters also expressed concern about the chosen percentiles, asserting that an entry-level wage near the median for the occupation does not reflect real pay structures.

Some commenters asserted the Department inappropriately conflated the “actual” with the “prevailing” wage provisions in the INA and the Department's regulations at 20 CFR 655.731(a)(1) and (a)(2). A professional association stated it was improper to base prevailing wages on the “accomplishments, education or trai

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A2021-00218. Public record. Not legal advice.