A Primer For Prevailing Wage Issues In H-1B Cases
It's not uncommon for there to be a discrepancy between what an employer thinks a foreign worker should be paid and what the State Workforce Agency (SWA) says they MUST be paid. This is a basic conflict in many employment-based cases, and the resolution isn't always obvious.
An employer's confusion at being told their wage is not "prevailing" is understandable - after all, since they are a part of their local industry, and they go to great lengths to ensure their wages are in line with their competitors, they consider their wage to be in line with the "prevailing" standards for their geographic area.
However, the notion of a "Prevailing Wage" is more subtle than just reflecting the standards of the local wages for a position. Specifically, it is the wage rate at which the wages of U.S. workers are not adversely affected. The agencies involved, whether state or federal, have been directed by Congress to protect U.S. workers from having their wages undercut by foreign workers. Thus the prevailing wage line for a professional position may be higher than expected.
We examine two areas in immigration where Prevailing Wages frequently come into play: H-1B Nonimmigrant Visa Petitions and Labor Certification Applications. Each requires a different approach when there is a discrepancy between the Employer's offered wage and what the SWA wants it to be.
This month, we will deal with H-1B Nonimmigrant Visa wages.
How can you find out what a prevailing wage will be for a specific position? The Employer can request a Prevailing Wage Determination from their state's SWA by fax. Each State's SWA is different, but most have a fax form available online for requesting prevailing wage determinations. For example, the form in California may be accessed online at:
As an alternative, the employer may determine the prevailing wage by relying on a published survey. Examples include private data sources such as the Watson-Wyatt Survey and the Employer's Group. Public databases, including the one maintained by the U.S. Bureau of Labor Statistics (BLS), can be accessed from our "Department of Labor" page at the address listed above.
Once the prevailing wage is determined, both the wage and its source must be included by the employer on the Labor Condition Application (LCA) which underlies every H-1B Petition. A copy of the data used for the determination, whether a private survey or a Prevailing Wage Determination from the SWA, should be kept in the worker's file, so that it will be handy should the U.S. Department of Labor request justification of the wage.
There is another factor to consider in determining the prevailing wage before filing the LCA. The employer is required to pay a rate determined by either a prevailing wage or the employer's actual wages * whichever is higher. Why is this? The government agencies involved do not want employers to use the OES/SOC survey or other wage data to undercut U.S. worker wages where the employer is paying more than the prevailing wage.
How are actual wages determined? Very simply, by averaging the wages of workers in similar positions at the company to that of the H-1B worker. For example, if you employ six Jr. Engineers, only one of which is in H-1B visa status, you may simply average the wages of the remaining five. If this figure is higher than the prevailing wage, the employer is required to pay the H-1B worker at the actual wage rate.
A prudent employer, with several workers in the same position as the H-1B worker, will provide actual wages to support the LCA as well as a survey or other data regarding the prevailing wage. In case the U.S. Department of Labor questions the wage offered for the position, the employer will not have to go back through their archives to justify their figures.
Why all these number games? Let's look at some possible outcomes.
If both the prevailing wage and the actual wage are lower than the wage being offered for the H-1B position, there is no problem. The employer should feel confident requesting a Prevailing Wage Determination from their state's SWA. This will give them a greater degree of protection (a "safe harbor") should the U.S. Department of Labor ever inquire as to how the H-1B wage was determined.
What if the actual wage is lower, but the prevailing wage is higher than the wage being offered? When this happens, one possible solution is to use the "95% rule". Because the prevailing wage is based on survey data that can be flawed, there is a 5% cushion that can cover wages very close to the prevailing wage. Thus, the employer can offer a wage on the LCA that represents 95% of the prevailing wage figure.
What if the actual wage is higher and the prevailing wage is lower than the wage offered to the H-1B worker? When this happens, the employer must pay the H-1B worker at the actual wage rate. Employers can double check to see if their actual wage figures really represent the wages of the H-1B worker's peers. Are they all in the same profession and skill level? Are there employees factored into the actuals that are senior to the H-1B worker's position?
Where both the prevailing wage and the actual wage are higher than the H-1B wage there is a concern. It will look like the employer is trying to undercut the wages of U.S. workers * exactly the situation the government wants to prevent. The employer may wish to re-visit their job offer, and adjust the wage upward.
To learn more about immigration laws and regulations relating to H-1B status and LCAs, see
Carl Shusterman is a certified Specialist in Immigration Law, State Bar of California
The opinions expressed in this article do not necessarily reflect the opinion of ILW.COM.