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H-1B Series: The Labor Condition Application - Part 2
by George N. Lester IV

George N. Lester IV Determining the "Prevailing Wage"

The "prevailing wage" for the occupation in the intended area of employment must be determined "as of the time of the filing of the [LCA]" based on the "best available information" at that time. Under DOL regulations, the prevailing wage is to be established from one of the following three general sources:

"(i) A wage determination for the occupation and area issued under the Davis-Bacon Act, or the McNamara-O'Hara Service Contract Act."
The Davis-Bacon Act and McNamara-O'Hara Service Contract Act ("SCA") govern wage rates paid to workers in certain specific occupations under contracts issued by the United States or the District of Columbia. These laws require that the DOL determine the prevailing wage for particular positions, and contractors on public projects must then pay at least that wage to workers in those positions. Under the LCA regulations, if an H-1B position is one for which the DOL has established a prevailing wage under the Davis-Bacon or Service Contract Act, then that will be the prevailing wage to which the employer is held for purposes of the LCA.

The Davis-Bacon Act applies by its terms to "laborers and mechanics" in contracts for construction, alteration or repair of public buildings or works, and thus it is unlikely to apply to any H-1B specialty occupation. The NcNamara-O'Hara Service Contract Act, however, applies more broadly to contracts whose "principal purpose ... is to furnish services in the U.S. through the use of service employees," which has given rise to a long list of "service" occupations for which DOL has published prevailing wages under the aegis of the SCA. The list includes several professional positions which arise frequently in H-1B cases such as computer programmer, computer systems analyst, librarian, and paralegal. For computer programmer and computer systems analyst positions, it is actually helpful to have SCA data for comparison because the data is presented in up to four levels, depending on experience. This contrasts with the problematic two-level system of the DOL's "OES" data, discussed below. Information about SCA wages, including the complete list of SCA occupations, is publicly available at
"(ii) A union contract which was negotiated at arms length between a union and the employer, which contains a wage rate applicable to the occupation."
If an H-1B position is unionized and a wage rate has been negotiated at arms length between the union and the employer, then that wage is presumptively established as the accepted prevailing wage. Generally it is infrequent for H-1B specialty occupation positions to be unionized, but it is common in certain settings. Engineering or technical positions in government agencies, utilities and large manufacturers, and attorney or paralegal positions in government and legal services organizations are examples where professional positions may be unionized and subject to collective bargaining. It will be helpful to the petitioning employer to have a prevailing wage set by collective bargaining in situations where such an "agreed" wage is lower than occupational sector-wide wage levels. This would be the case, for example, with attorney positions in government or legal services organizations.
"(iii) If the job opportunity is in an occupation that is not covered by either of the above provisions, the prevailing wage shall be the weighted average rate of wages, that is, the rate of wages to be determined, to the extent feasible, by adding the wages paid to workers similarly employed in the area of intended employment and dividing the total by the number of such workers. Since it is not always feasible to determine such an average rate of wages with exact precision, the wage set forth in the application shall be considered as meeting the prevailing wage standard if it is within 5 percent of the average rate of wages."
If the position is not expressly subject to the Davis-Bacon Act, the Service Contract Act, or a collective bargaining agreement, this provision sets the general guideline for determining the prevailing wage from other sources. For purposes of this guideline, "similarly employed" means "having substantially comparable jobs in the occupational classification in the area of intended employment." If there are no such workers employed by anyone other than the applicant employer in the area of intended employment, then "similarly employed" will mean:
"(A) Having jobs requiring a substantially similar level of skills within the. area of intended employment; or

"(B) If there are no substantially comparable jobs in the area of intended employment, having substantially comparable jobs with employers outside of the area of intended employment."
"Area of intended employment" means "the area within normal commuting distance of the place (address) where the H-1B nonimmigrant is or will be employed. If the place of employment is within a Metropolitan Statistical Area (MSA), any place within the MSA is deemed to be within normal commuting distance of the place of employment."

The DOL regulations then specify three sources where the employer may then obtain the prevailing wage data it uses for the LCA, which the DOL believes to be, "in order of priority, the most accurate and reliable." For a prevailing wage determined from one of these sources, the regulation provides that the employer need only offer 95% of the wage rate to be in compliance. The first of these sources, a "SESA Determination" is described in the following portion of this article, and the other two will be described in the next article.

The "SESA Determination"

First, the employer may apply to the "State Employment Security Agency" or "SESA" in its state, also known as the "State Workforce Agency" ("SWA"), for a "SESA Determination" of the prevailing wage. The procedure will vary from state to state, but generally this involves submitting a form to the SWA with at least the following information about the job:
  • Title,

  • Detailed description of duties,

  • Requirements for the position, including academic degree and any specific experience,

  • Geographic location,

  • Position's supervisor,

  • Whether the position has supervisory duties, and if so, the number and titles of personnel that are supervised by the position, and

  • Proposed salary, although with some SESAs the application may be submitted without the salary as a "blind" request for the prevailing wage to be determined.
The SESA will first determine if the position is one coming within the Davis-Bacon or Service Contract Act data sources, and if so use that data for its determination, as described above. Then no further analysis is needed. When one of these data sources applies the employer must offer 100% of the determined wage rate.

Where neither of those sources applies, the SESA will rely on the "Occupational Employment Statistics" prevailing wage survey program ("OES"), which includes publicly available data from the Bureau of Labor Statistics ("BLS"), a branch of DOL. Under its authority to administer the LCA program, the DOL has required SESAs to use the OES data source for most prevailing wage determinations since January l, 1998, pursuant to a detailed policy memorandum known as General Administration Letter ("G.A.L.") No. 2-98. Under the OES program, the BLS conducts extensive surveys of employers throughout the country to obtain data on wages being paid across a full spectrum of occupations.

Prevailing wage analysis under G.A.L. No. 2-98 begins with a determination of the appropriate occupational classification of a job under the Dictionary of Occupational Titles ("DOT"), and the relevant nine-digit "DOT" code. The SESA will make this determination based on the closest match between the employer's job title and description and the titles and description in the DOT. The DOT was described in more detail in the August 26, 2002 article in this series, and is available on-line at

Then, the DOT code is used to see if the equivalent occupational code exists in the SCA list, in which case the analysis need go no further. Where, as in most instances, there is not an SCA match, then the DOT code is "crosswalked" to a matching "Standard Occupational Code," or "SOC," which are the codes used by the OES prevailing wage database. The "crosswalk" is a function in which every DOT code is assigned to match a corresponding occupational code in a in a newer database of job categories used by BLS known as the O*NET. The actual code number for a job in the O*NET is known as the SOC. The DOT has approximately 12,700 occupational classifications, whereas the O*NET contains a more generalized group of approximately 900 titles. Consequently, there is a fair amount of consolidation in the crosswalk, where varying numbers of ostensibly related DOT titles will link to a more generic SOC classification. A further discussion of O*NET is contained in the August 26, 2002 article in this series, and it is available on-line at

Next, the appropriate match to an "area of intended employment" is determined. OES prevailing wage data assigns most locations to a Metropolitan Statistical Area (MSA) or a Primary Metropolitan Statistical Area (PMSA) in order to implement the regulatory requirement that the area encompass "normal commuting distance." MSAs usually are counties with populations of about 50,000 or more. PMSAs are generally larger, more populous (1 million +) metropolitan areas. Areas that do not come under an MSA or PMSA are characterized as "Balance of State" (BOS) areas. The OES attempts to keep BOS area designations at a size staying within "normal commuting distance." Because these are more sparsely populated areas with lower levels of economic activity, in many cases the BOS will not have sufficient survey response data to establish a prevailing wage in a particular occupation. Then the OES system will use data from a contiguous area, or if necessary, from statewide data.

The final variable to establish under G.A.L. No. 2-98 is the skill level of the job. The SESA will make this determination based on the employer's description of the job duties and the stated position requirements. There are only two levels used in the OES system, "beginning" (Level I) and "fully competent" (Level II).

Level I employees are defined as:
"Beginning level employees who have a basic understanding of the occupation through education or experience. They perform routine or moderately complex tasks that require limited exercise of judgment and provide experience and familiarization with the employer's methods, practices, and programs. They may assist staff performing tasks requiring skills equivalent to a Level II and may perform higher level work for training and developmental purposes. These employees work under close supervision and receive specific instructions on required tasks and results expected. Work is closely monitored and reviewed for accuracy."
Level II employees are defined as:
"Fully competent employees who have sufficient experience in the occupation to plan and conduct work requiring judgment and the independent evaluation, selection, modification and application of standard procedures and techniques. Such employees use advanced skills and diversified knowledge to solve unusual and complex problems. They may supervise or provide direction to staff performing tasks requiring skills equivalent to a Level I. These employees receive only technical guidance and their work is reviewed for application of sound judgment and effectiveness in meeting the establishment's procedures and expectations."
The primary consideration for the Level I/Level II analysis will be which of these definitions the employer's description fits most closely. Thus, the employer should pay careful attention in preparing the job description to the level of independent responsibility and judgment, level of supervision, and nature of skills required. Strategic drafting of the job description is necessary if the employer wishes to convey that a job is entry level, and obtain a Level I prevailing wage designation. The description should include terms such as "use basic understanding of . . . ," "perform range of moderately complex assignments in . . . ," "work under supervision of manager. . . ," etc. There is necessarily an element of judgment in an SESA decision between assigning Level I or Level II, and some SESAs are more flexible than others in applying the distinction.

The stated position requirements are also a major factor in the analysis. A Level I position generally must require no more than the usual minimum entry-level academic requirement in the occupation, usually a bachelor's degree. Depending on the circumstances and the view of the particular SESA, a requirement of one to two years of relevant experience in addition to the academic qualification may also be permissible. Requiring additional experience or an academic degree that is more advanced than the usual entry-level qualification will convert the position into Level II. Under G.A.L. No. 2-98, for example, if a bachelor's degree is the normal minimum requirement for entry into the occupation, any position stating an advanced degree requirement (Masters or Ph.D.) must be assigned to Level II.

However, in certain fields an advanced degree is normally required for entry into the occupation. In those cases a position stating that requirement may be assigned to Level I, provided there are no other requirements contained in the job offer or its components which require Level II skills. Librarian, market research analyst, management consultant, research scientist and attorney are examples of positions which may normally require an advanced degree as an entry-level qualification. Whether an advanced degree is acknowledged to be a usual entry level qualification in an occupation can be determined through the Occupational Outlook Handbook ("OOH"). The OOH was described in more detail in the August 26, 2002 article in this series, and is available on-line at

Finally, on the basis of the "crosswalked" SOC occupational code, the area of employment designation, and the Level I/Level II assignment, the OES database will designate a prevailing wage based on the BLS employer surveys. The database lists most wages both as an hourly figure and as an annual salary. Under G.A.L. No. 2-98 the hourly figure is multiplied by 2080 (40 hours per week x 52 weeks) to determine annual salary for a regular fulltime position. For jobs which are not regular salaried 40 hour positions, the hourly figure may be used as the prevailing wage basis.

The SESA will then issue its determination report to the employer, which will be valid for the employer to use as the stated prevailing wage on an LCA filed with DOL for ninety days. For an LCA filed within that period, the SESA determination provides the employer with a "safe harbor" that establishes compliance with DOL prevailing wage rules for any H-1B worker employed in the job stated on the LCA and paid the stated wage. The DOL will accept the prevailing wage as correct and will not question its validity or investigate any complaint alleging inaccuracy of the SESA determination.

This all may sound like a very mysterious process, with a veritable alphabet soup of databases, code numbering systems, and government publications to understand. However, to its credit DOL has made the OES database available to the public in the "On-line Wage Library" ("OWL" - that's right, still another acronym to remember), found at Very helpful background information on the prevailing wage calculation along with access to all of the "crosswalk" databases is found at

The OES system has been widely criticized by employers for two major perceived flaws. First, allocating wage data between only the two skill levels of "beginning" and "fully competent" fails to reflect the normal progression of skills advancement and pay increases in the professional workplace. The definitions encompass only entry-level, straight out of college positions and senior-level, fully independent, highly experienced employees. There are no mid-level professional descriptions for employees who have worked their way beyond the entry-level years but do not yet function on a completely independent senior level.

In practice, the OES Level I wages are generally perceived to be fair, where the experience and skill that level purports to reflect is discrete and easily defined. Level II wages, however, are perceived as unfair and inaccurate for many mid-level positions, where the level they purport to reflect combines data for everyone having more than a bachelor's degree plus approximately two years' experience, up to persons operating at the most senior levels in a profession who have advanced academic qualifications and ten, twenty, or more years of experience. The actual numbers bear this out: Level II wages reported by the system average 60% or more higher than Level I. It is not realistic to expect that within two to three years of starting in an occupation after college the average worker receives pay increases of 60%, yet the OES data suggests that the employer must indeed pay such amounts. Consequently, employers preparing an LCA for a mid-level position must generally rely on another source to establish the prevailing wage.

The Level I/Level II dichotomy has also been faulted for inconsistent practices in SWA or DOL offices around the country in assigning the Level designation based on job responsibility. In some regions, for example, a seemingly harsh policy had developed that any job which involved work at a client site automatically called for Level II designation, ostensibly because of the level of "independent" responsibility, even where the opportunity is open to persons just graduated from college and is very closely supervised by the employer. Recently, DOL released a Question and Answer formatted memorandum, entitled "Training and Employment Guidance Letter No. 5-02" which addresses some of these inconsistencies and controversial policies in assigning the Level I or Level II skill designations for the purposes of prevailing wage determinations. The memorandum clarifies, for instance, that not all management jobs are per se Level II, on the common sense basis that "there must be entry level managers for there to be experienced managers." Similarly, for a job that involves work at a client or customer site, Level II is "not necessarily" the correct designation, because it is "possible for employers to provide close supervision to employees even if the employees are working offsite."

The other criticism is that in the "crosswalk" between the 12,700 DOT job titles and the 900 SOC job titles, the OES system goes too far in aggregating multiple, at best marginally related or different-level DOT titles into "catch-all," generic categories. The reported wage data in certain titles must therefore be viewed as too general to be of use, and this problem is most obvious in several "remainder" OES categories.[1] In such cases the reported prevailing wage may be higher than realistic, or it may be lower.

The OES system has had the positive benefit that employers now can determine the DOL methodology both because it has been published in G.A.L. No. 2-98 and, more important, because employers may perform research in the OES database in advance in the system through the On-line Wage Library at to determine the likely prevailing wage before beginning the SESA process. In some cases, this will enable the employer to merely use OES data on the LCA and proceed comfortably without actually obtaining a SESA determination, as will be described further in the next article. In other cases, it will quickly alert employers to problems with the offered wage level so that another source of data can be located without losing precious time in the overall LCA and H-1B process.

In a more recent enhancement the OWL now contains SCA data as well as the OES database, so it can be quickly determined if a job is subject to the SCA list, and if so what is the wage under that source.

The OES system also recognizes a special set of wage data for certain types of nonprofit and government employers, where prevailing wages for certain types of positions are typically lower than those for similar positions in the private, for-profit sector. In response to criticism that these employers were unfairly penalized by DOL rules which subjected them to the same prevailing wage criteria as private employers, Congress added the following provision to the H-1B rules in the American Competitiveness and Workforce Improvement Act of 1998 (ACWIA):
"(1) In computing the prevailing wage level for an occupational classification in an area of employment for purposes of [the H1B program] in the case of an employee of -

"(A) an institution of higher education (as defined in section 101(a) of [the Higher Education Act of 1965]), or a related or affiliated nonprofit entity; or

"(B) a nonprofit research organization or a Governmental research organization,

"the prevailing wage level shall only take into account employees at such institutions and organizations in the area of employment."
Thus, when the applicant to SESA for a prevailing wage determination establishes that it is (1) an institution of higher education, (2) a nonprofit entity affiliated with an institution of higher education, (3) a nonprofit research organization, or (4) a governmental research organization, the SESA uses a special OES source known as the "EDC" database which contains only data collected from these types of institutions.[2] Use of the special data applies to all occupations with these types of employers, not just to research positions. The Level I/Level II distinction applies in the same manner as with other OES data.

Finally, G.A.L. No. 2-98 allows employers to furnish wage data themselves to the SESA and request that the SESA make the prevailing wage determination based on that data rather than the OES system." The wage data may be contained in a published wage survey or in a survey that has been conducted by or for the employer. G.A.L. No. 2-98 states that "[the use of such employer-provided wage data is an employer option." However, the employer must provide extensive information about the survey methodology to the SESA, satisfying a strict seven-point set of criteria. The SESA must then make a determination with regard to the adequacy of the data provided and its adherence to these criteria before accepting the data. The G.A.L. specifically warns that, "[i]nformation from employers that consists merely of speculation, subjective impressions, or pleas that it cannot afford to pay the prevailing wage rate determined by the SESA cannot be taken into consideration in making a wage determination."

In practice, SESA acceptance of employer-submitted surveys has been limited or, in some states, virtually nonexistent. In other states a few well-known published surveys have been accepted, but only after extensive persuasion of the SESA and corresponding DOL Regional Office of the survey's compliance with the seven points. Consequently, this means of obtaining prevailing wage determination has been limited.

Most recently, however, the DOL issued a policy memorandum entitled "Prevailing Wage Policy Q's and A's" as part of G.A.L. No.1-00, which provides extensive explanation of the criteria for acceptance of an employer-provided survey and appears to offer a more "user-friendly" tone than G.A.L. No. 2-98. It answers recurring questions that have arisen since release of the earlier memorandum, with a more flexible approach than heretofore. It appears to instruct SESAs to be more open in considering employer-provided surveys."

Briefly, the seven criteria for acceptance of an employer's offered survey are as follows:
  1. The data must have been collected within twenty-four months.
  2. If it is a published survey, it must have been published within twenty-four months.
  3. The survey must reflect the area of intended employment.
  4. The employer job description must adequately match the survey job description.
  5. The survey must include industries that employ workers in the occupation.
  6. The wage determination must be based on an arithmetic mean.
  7. The survey must identify a statistically valid methodology that was used to collect the data.
Extensive discussion of these points is found in the two G.A.L. memoranda.

When the SESA does accept an employer-submitted survey and issue a prevailing wage determination on that basis, the determination is acceptable only that one time for the employer that submits the survey and for the single submitted job. If another employer wishes to use the survey, or the same employer wishes to use it again for another position, it must be resubmitted in a new application.

Next: More Options for Determining the "Prevailing Wage"

[1] One in particular, a classification for "All Other Professional, Paraprofessional and Technical Workers Not Classified Separately," combines forty-three DOT titles into one data set. Under this category a technical translator will be assigned the same prevailing wage as a crossword puzzle maker, circus agent, taxidermist, and fireworks display specialist. It will also be assigned the same wage as a director of translation, certainly a related position but one where the wage should be higher because a director of translation would normally supervise a technical translator.

[2] The main OES source for all other employers is known as the "ALC" database. Further explanation is contained in a pair of DOL policy memoranda which instruct the SESAs on implementation of the separate data sets: G.A.L. No. 2-99 (Apr. 23, 1999) and G.A.L. No. 1-00 (May 16, 2000).

About The Author

George N. Lester IV is of the Immigration Practice Group (the "Group") of the law firm of Foley, Hoag & Eliot LLP. Foley, Hoag & Eliot LLP is a full-service law firm of 200 lawyers in Boston and Washington, D.C. It was the first large law firm in Boston to develop an expertise in business immigration law, and for over thirty years its Group has represented employers in a full range of procedures to obtain temporary or permanent authorization to employ foreign professionals. Mr. Lester has practiced immigration law for ten years, and regularly speaks to business, academic, and professional groups on immigration topics. As part of his regular AILA activities, Mr. Lester meets with officials of the INS Vermont Service Center to discuss H-1B and other liaison topics. He also serves as Treasurer and a Board Member of the Political Asylum/Immigration Representation Project (PAIR) in Boston, and received that organization's Pro Bono Attorney Award for Dedication and Commitment to Human Rights in May 1996. Mr. Lester is a 1989 graduate of Northeastern University School of Law.

This article is the fourteenth in a series by George N. Lester of the Foley Hoag LLP Immigration Practice Group based on a chapter he authored titled "Specialty Occupation Professionals," in the treatise Business Immigration Law: Strategies for Employing Foreign Nationals, edited by Rodney A. Malpert and Amanda Petersen, and appears here with the permission of the publisher. Published by Law Journal Press. Copyrighted by NLP IP Company. All rights reserved. Copies of the complete work may be ordered from Law Journal Press, Book Fulfillment Department, 105 Madison Avenue, New York, New York 10016 or at or by calling 800-537-2128, ext. 9300.

For the latest updates from the Foley Hoag Immigration Practice Group, particularly including weekly Process Time Updates from the Vermont Service Center, click here.

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