DOL Prevailing Wage Proposal for H-1B and PERM Clears Federal Review
Although the full regulatory text has not yet been published, the H1B wage proposal is widely expected to focus on how prevailing wages are calculated under the Department’s four-level wage system. Prevailing wage determinations set the minimum salary that employers are required to pay H-1B workers and to offer in PERM sponsorship cases. Any upward adjustment to those wage levels would increase the cost threshold for sponsorship across a wide range of occupations and geographic areas.
What Happens Next?
Proposed reforms to the H1B prevailing wage rules have been in the making for some time. In 2020 and 2021, the Department finalized a rule that significantly increased wage levels across all four tiers. That regulation was challenged in federal court and later set aside. A subsequent administration indicated plans to revisit prevailing wage methodology but did not move forward with a replacement rule. It is not yet clear whether the newly cleared proposal mirrors the earlier approach or adopts a different wage formula.
Publication in the Federal Register will trigger a public comment period, typically 30 or 60 days. The Department is required to consider submitted comments before issuing any final rule. Only after publication of a final regulation and completion of an implementation period would revised wage requirements take effect. Employers relying on H-1B and PERM pathways should monitor developments closely, as even incremental wage adjustments can materially affect hiring strategy, budgeting and workforce planning.
Impact FY 2027 H-1B Cap Cycle
For employers participating in the FY 2027 H-1B cap process, the proposed rule does not affect the registration or lottery selection stage. Any impact would arise only if a final rule takes effect before Labor Condition Applications are filed or certified.
Based on standard rulemaking timelines, immediate disruption to current cap filings appears unlikely, though employers should monitor implementation dates closely.
NNU: Attorney Perspective
If prevailing wages do rise, sponsorship is going to become more expensive. What is less obvious is how quickly that cost increase ripples through an organization. Higher wage tiers do not sit neatly in isolation. They can disrupt internal pay structures, potentially placing foreign hires above similarly situated US workers and triggering uncomfortable equity questions that HR and legal teams then have to defend.
In PERM cases, a higher required wage can also undermine recruitment if the salary originally tested no longer matches internal compensation data. What sounds like a wage adjustment can therefore turn into a compliance and employee relations issue.
Because of this, the timing will need to be planned. Employers with PERM recruitment underway or H-1B filings in preparation face a simple commercial question: file under the current wage framework or risk absorbing a higher threshold later. Of course, in some markets, even a moderate percentage increase translates into significant additional spend per hire.
For applicants, the concern is stability. When wage reform is pending, employers often take a cautious view on wage level selection. Roles that are currently viable at Level I may be reassessed or priced out altogether. Someone nearing the end of H-1B time or relying on PERM to secure long-term status may suddenly find that sponsorship is no longer commercially workable.
Prevailing wage reform may be framed as a technical recalibration but in reality, it narrows the pool of roles employers are willing to sponsor. Once a final rule is issued, the room to adjust closes quickly and decisions that could have been made earlier become far more expensive or unavailable altogether.
Need Assistance?
NNU Immigration are specialist US immigration attorneys based in the US and the UK. For guidance on the H1B program, or if you have specific concerns about the potential wage level uplifts, contact us. We offer fixed-fee telephone consultations where you can put your queries direct to one of our experienced attorneys.
