Labor Department Major Wage Rule Proposal Would Harm the U.S.
By C. Matthew Schulz
U.S. employers should take notice: a newly proposed Department of Labor rule could significantly raise wage requirements across key immigration programs—making it harder, more expensive, and more uncertain to recruit and retain highly skilled foreign professionals.
The U.S. Department of Labor published its proposed rule, “Improving Wage Protections for the Temporary and Permanent Employment of Certain Foreign Nationals,” in the Federal Register on March 27, 2026. The public comment period is currently open and is expected to close approximately May 26, 2026 (60 days after publication). Comments may be submitted electronically through the Federal eRulemaking Portal by referencing the rule’s docket number listed in the publication.
Summary of the Proposed Rule
The proposed rule purports to strengthen wage protections for U.S. workers and foreign nationals by fundamentally revising how wages are determined and enforced in employment-based immigration programs.
First, the rule proposes significant changes to the prevailing wage determination methodology. It would adjust wage levels (Levels I–IV) to better align with actual labor market wages, relying more heavily on percentile-based calculations and updated wage data. This change is expected to raise wage floors, particularly for entry-level positions.
Second, the rule tightens the use of alternative wage surveys, imposing stricter standards and limiting employers’ ability to rely on private surveys that may produce lower wage outcomes.
Third, the rule reinforces the requirement that employers pay the higher of the prevailing wage or the actual wage, while clarifying how “actual wage” must be calculated and documented internally.
Fourth, the rule introduces enhanced compliance and enforcement mechanisms, including expanded audit authority, stricter documentation requirements, and increased penalties for misrepresentation or wage violations.
Finally, the rule seeks to prevent common practices viewed as undermining wage integrity, such as misclassification of job duties, under-leveling of positions, and geographic wage manipulation.
Analysis
Under the current system, employers retain a degree of flexibility in selecting wage levels (particularly Level I and II), structuring job descriptions, and utilizing alternative wage surveys.
The proposed rule would materially reduce that flexibility.
Compared to the existing framework, this proposal raises baseline wage expectations, especially for early-career roles; limits employer discretion in wage determination; expands enforcement exposure, increasing the likelihood of audits and challenges; and elevates wage compliance from a procedural requirement to a central adjudicatory issue.
If adopted without significant modification, the rule is likely to increase labor costs for foreign national hires, reduce the viability of certain entry-level sponsorship models, create longer adjudication timelines due to increased scrutiny, and shift employer strategy toward fewer, higher-compensated foreign hires.
Impact
H-1B
Employers will face higher required wages, particularly for Level I and II roles. This will make early-career hiring more difficult and increase scrutiny of job leveling and SOC classification. For more details, see Professional Pathways.
H-1B1 and E-3
Because these classifications also rely on prevailing wage principles, employers will experience similar upward pressure on wages and reduced flexibility in structuring offers. For more details, see Professional Pathways.
PERM (Labor Certification)
The rule will significantly impact PERM by increasing the prevailing wage baseline and likely requiring greater transparency in recruitment. This may lead to higher denial rates where wages are perceived as inconsistent with market conditions. For more details, see Professional Pathways.
O-1/EB1A (Extraordinary Ability) and EB1B (Outstanding)
While O-1, EB1A, and EB1B are not directly subject to prevailing wage requirements, the rule will indirectly raise expectations. USCIS may increasingly view compensation as a proxy for extraordinary ability, making lower-compensated cases more difficult to sustain. For more details, see Pathways to America for Extraordinary Talent.
L-1/EB1C
Although L-1 and EB1C do not have a formal wage requirement, the broader enforcement environment may lead to increased scrutiny of compensation levels. For more details. see Pathways for Entrepreneurs.
Prevailing Wage Data and Methodology
The why the Department of Labor uses wage data is wrong.
The Department of Labor’s prevailing wage determinations are based primarily on data from the U.S. Bureau of Labor Statistics Occupational Employment and Wage Statistics (OEWS) program. OEWS data is compiled from large-scale surveys of U.S. employers and reflects actual wages paid across occupations and geographic areas. The system relies on standardized occupational groupings under the Standard Occupational Classification framework, ensuring consistency across federal datasets.
The Department of Labor uses this single wage distribution for each occupation and area to assign four wage levels (Levels I–IV). These levels are not based on separate surveys or distinct employer-reported job requirements. Instead, they are derived mathematically from the underlying wage distribution.
Under the current regulatory framework, wage levels correspond to percentile ranges within the OEWS data. For example, the regulations at 20 C.F.R. § 656.40 and DOL guidance describe Level I as representing entry-level wages and Level IV as representing fully experienced workers, with Levels II and III positioned between them.
In practice, however, Levels II and III are calculated through interpolation between lower and upper percentile values rather than real, independently surveyed benchmarks.
That means Levels II and III are not based on distinct real-world employer data tied to specific job requirements.
All four levels are generated from a single statistical dataset, with intermediate levels derived by formula. Employers select the appropriate level based on job complexity and experience requirements, but the wage attached to each level is pre-determined by the statistical model.
Example: Attorney. Department of Labor reports that a JD degree is the normal requirement to enter this occupation. Level I is applied to attorney jobs that require a JD, license to practice law, and no experience. Level II would likely be applied if the employer requires 1-2 years of experience, and so on. But in fact the wage levels are calculated based on the lower and upper percentile values rather than the actual job requirements. This is because the Department of Labor never changed its data collection even after Congress mandated.
Evolution of Wage Levels: From Two Tiers to Four
The Department of Labor did not always use the current four-tier wage system. Prior to the early 2000s, prevailing wage determinations generally relied on a two-tier structure—distinguishing primarily between entry-level and experienced workers.
The shift to a four-tier system occurred following the passage of the American Competitiveness and Workforce Improvement Act (ACWIA) in 1998. ACWIA required DOL to provide “at least 2 levels” of wages. Congress did not mandate four levels, instead setting a minimum, not a fixed structure.
DOL implemented the four-tier system through regulation in the early 2000s (finalized around 2004 under PERM rulemaking), expanding beyond the statutory requirement.
This structure is critical to understanding the proposed rule. Because the system is formula-driven, any change to percentile cutoffs or methodology—particularly at the lower and upper bounds—will cascade across all four wage levels. The proposal’s shift toward higher percentile benchmarks therefore has the effect of systematically increasing wage floors across all programs that rely on prevailing wage determinations.
Conclusion
This proposed rule represents a significant shift in employment-based immigration policy, with broad implications for employers that rely on global talent. Companies should closely monitor developments, assess their workforce strategies, and consider submitting comments to ensure their perspectives are reflected in the final rule.
Employers interested in preparing and submitting comments, or in evaluating how this rule may impact their workforce and immigration programs, are encouraged to contact the author at cmatthewschulz@schulzlaw.us for further guidance.