Proposed Rule Could Significantly Raise Costs for Sponsored Employees

A significant regulatory development could impact your company’s foreign talent recruitment and future personnel costs.

The U.S. Department of Labor (DOL) has issued a proposed rule aimed at significantly raising the required minimum salary (known as the “prevailing wage”) for sponsored foreign workers. This proposed rule would directly affect the H-1B, H-1B1, and E-3 visa programs, as well as permanent residence sponsorship via the PERM labor certification program.

What is Changing?

Currently, the government calculates the prevailing wage for a given occupational classification (e.g., Software Developer, Accountant and Auditors) across four skill tiers based on regional occupational surveys. The new rule proposes a substantial upward shift for all four wage levels:

  • Wage Level I (Entry-level): Increases from the 17th percentile of local occupational wages up to the 34th percentile.
  • Wage Level II (Qualified): Increases from the 34th percentile up to the 52nd percentile.
  • Wage Level III (Experienced): Increases from the 50th percentile up to the 70th percentile.
  • Wage Level IV (Fully Competent): Increases from the 67th percentile up to the 88th percentile.

It is important to note that this proposed change in the prevailing wage calculations is separate from, and in addition to, the standard prevailing wage updates issued annually in July to reflect market changes and inflation based on updated wage surveys.

Effect on Sponsored Cases

If this rule is finalized as proposed, the legally required minimum wage you must pay sponsored employees will increase significantly across the board. For entry-level positions, the offered wage would need to meet at least what the 34th percentile of local U.S. workers earn in that occupation. DOL estimates that these adjustments will raise the average prevailing wage by approximately $14,000 per year per worker. As one example, the Level I wage for Software Developers in the Washington, D.C. area would increase from $101,421 to $126,090 (plus the annual increase that will occur in July).

When This Rule Will Go into Effect

While a definitive implementation date has not been set, a final rule is likely to be published and take effect during the second half of 2026.

How This impacts your business and next steps

It is important to note that the proposed changes would apply prospectively, but this looks different for Labor Condition Applications (LCAs) versus DOL-issued Prevailing Wage Determinations (PWDs):

  • LCAs (H-1B, H-1B1, E-3 classifications): The updated prevailing wages would likely only apply to LCAs filed on or after the rule’s effective date.
  • PWDs (PERM/Green Cards): DOL issues PWDs in accordance with the prevailing wages in effect at the time the PWD is issued. This means that the new, higher prevailing wages are likely to apply to any application for a PWD still pending with DOL as of the rule’s effective date. As such, time is of the essence to file and obtain PWDs before the rule goes into effect in order to guarantee a prevailing wage based on the current, lower percentile calculations.
  • Existing Cases: Any existing, previously approved petitions, certified LCAs, or completed PWDs should not be retroactively impacted.

Our Recommendation

Because current prevailing wage levels remain in effect for the time being, there is a narrow window of opportunity to “lock in” current wage thresholds for foreseeable visa needs. If you have or are considering upcoming candidate hires, lateral changes, or extensions planned for H-1B, H-1B1, or E-3 employees, or if you are considering sponsoring any employees for a green card in 2026, obtaining LCAs and PWDs for those employees as soon as possible is highly advisable.

Please reach out to our office to discuss your current workforce strategy, review your upcoming immigration needs, and help protect your business from these anticipated cost increases.

www.grossmanyoung.com  |  info@grossmanyoung.com  |  (240) 403-0913  |  (301) 917-6900

*Disclaimer: This information is presented for the purposes of general education and does not constitute legal advice.   

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