The Department of Labor (DOL) has released its FY 2014 statistics on prevailing wage determinations for U.S. employers in connection with the sponsorship for foreign workers. This report provides interesting insight into prevailing wage requests by U.S. employers and their representatives for H-1B petitions, H-2B petitions and PERM labor certifications. It also reveals some broader business immigration trends.

By way of background, all U.S. employers must first establish that the wages it is offering foreign national employees are the same level as or higher than the “prevailing wage” for any given position before securing certain temporary (e.g., H-1B and  H-2B visas) and permanent (e.g., PERM labor certifications) employment-based benefits for them. For temporary visas the employer is given a choice of either performing a self-determination of the appropriate prevailing wage or requesting a prevailing wage determination from the DOL. If the employer receives the determination from the DOL this determination cannot be challenged in a future investigation, providing the employer a “safe harbor”. For the PERM process, however, the employer is required to obtain the prevailing wage determination from the DOL directly and is not permitted to perform a self-determination.  There is no fee to request a prevailing wage determination from the DOL, but the wait time to receive a determination is a burdensome six to eight weeks.

Some highlights of the report include:

Only 6,894 H-1B-related prevailing wage requests were made by U.S. employers. Therefore, only 1.49 percent of the 464,068 (here) Labor Condition Applications (LCAs) filed by U.S. employers in the same fiscal year were protected by the safe harbor provision. The statistics get worse when you consider that the 464,068 LCAs filed were for a total of 926,332 positions. The vast majority of safe harbor prevailing wage requests were made by universities and research organization that are H-1B cap-exempt.  This number represents a 15 percent drop in requests from last year. Some assumptions and takeaways:

• A significantly higher percentage of employers that are exempt from the H-1B cap (universities, research organizations, etc.) are benefiting from the DOL’s “safe harbor” provision than cap-subject employers. Many cap-exempt organizations have internal policies mandating that safe harbor prevailing wage determinations be secured from the DOL unless a business necessity requires otherwise. Even among cap-exempt employers, however, the number of institutions benefiting from the safe harbor provision has dropped by 15 percent. This indicates higher compliance concerns in this area for all US employers across all industries.

• Virtually all cap-subject employers are self-selecting prevailing wage determinations when filing H-1B petitions. In turn, these employers face higher compliance challenges without “safe harbor” protections than cap-exempt employers.

• The excessive wait time of six to eight weeks to secure a prevailing wage determination from the DOL encourages U.S. employers to perform self-assessed prevailing wage determinations which in turn creates higher risk levels of noncompliance with wage and hour laws. U.S. employers that choose to wait six to eight weeks for the DOL to issue prevailing wage determinations face a competitive disadvantage because they may lose much sought after talent to competitors willing to proceed at a faster pace. Additional adverse consequences include: (a) foreign workers may be unable to renew drivers licenses in a timely manner or travel abroad if another six to eight weeks is added to a process that already takes three to five months to be approved; and (b) increased immigration costs due to premium processing or last minute foreign travel adjustments.

• The vast majority of law firms assisting employers in the filing of H-1B petitions are self-selecting prevailing wage determinations and not securing “safe harbor” determinations from the DOL. With U.S. employers relying on their outside counsel to file Labor Condition Applications with the correct prevailing wage information, law firms and companies alike must have heightened compliance protocols in place.

Unlike H-1B filings, the PERM process requires U.S. employers to secure prevailing wage determinations from the DOL. Ninety-one percent of prevailing wage requests were made in connection with PERM labor certification filings, totaling 104,309.  However, the DOL’s Office of Foreign Labor Certification only received 67,691 PERM filings in FY 2014 (here), which is 36,618 less than the number of PERM prevailing wage requests.

• Nearly 10 percent of all PERM-related prevailing wage requests were made by the top 5 volume filing employers.

• Many large employers use bulk prevailing wage determinations, so the percentage of filings by the top volume filing employers is likely even higher than 10 percent. For example, an employer’s single prevailing wage determination for the occupation of Software Engineer can be used for multiple Software Engineer positions at the employer, so long as the job duties, requirements, and location are the same across the positions. The figures released by the DOL do not provide information about the number of workers covered in each prevailing wage request.

• The top 5 volume filing employers for PERM labor certifications are all U.S.-based corporations; whereas the majority of the top H-1B volume filers are IT outsourcing companies with their primary base of employment in India.  Based on the DOL report, it appears that U.S.-based corporations invest in the long-term future of their foreign workers much more than Indian IT outsourcing entities, as evidenced by the number of PERM labor certifications filed by U.S.-based corporations in comparison to Indian outsourcing companies.

• The difference in the number of PERM prevailing wage requests and the number of PERM filings, totaling 36,618, is of concern and is a likely source of delay and inefficiency for the DOL. No doubt some of the 36,618 PERM prevailing wage requests do not result in a PERM filing because the process was stopped by the U.S. employer for a variety of reasons, such as the employee left the company during the PERM process, there was a lay-off in the same occupational classification, or the employee changed positions. However, this is no way accounts for such a large difference between the number of requests made by employers and the number of PERM filings. It is highly likely that the real reason behind this troubling number is because U.S. employers and their representatives file more than one PERM prevailing wage request (in some instances multiple) for the same PERM filing due to one of the following:

  • A disagreement with the DOL’s job classification selection. This is particularly true for positions that involve a hybrid of job classifications, such as marketing and information technology. Many U.S. employers and their representatives will submit another prevailing wage request with the job description and minimum requirements slightly modified in the hope of getting a different assessment from the DOL.

  • A prevailing wage that is too high for the position in question. The DOL sometimes makes mistakes and selects the wrong wage level for a position leaving the U.S. employer no choice but to resubmit the prevailing wage request.  Unfortunately, in some cases employers will increase the years of experience or minimum education requirements for a position in an effort to appease foreign nationals who want their PERM applications filed under the EB-2 category and avoid EB-3 visa retrogression. This often results in prevailing wage determinations that are higher than the salary being offered to the employee. Unless the employer is willing to pay the higher salary, employers and their representatives will file more than one round of prevailing wage requests and lower the years of experience and/or education with each subsequent request until a suitable prevailing wage is issued. Not only does this practice raise concerns about the integrity of an employer’s overall immigration program as tailoring applications to an individual’s background and/or requiring excessive skills are strictly prohibited by the DOL, but it also creates unnecessary processing delays and over burdens the DOL.

  • Correcting errors caused by the employer and/or the DOL.

Finally, the report indicates a 55 percent increase in prevailing wage requests for H-2B petitions compared with FY 2013. The H-2B visa category is used by U.S. employers to hire lesser-skilled workers in non-agricultural positions in industries like landscaping, construction and hospitality. This sharp increase in usage is likely due to a combination of the hold placed on prevailing wage determinations for H-2B petitions being lifted by the DOL, an improved U.S. economy and more effective enforcement actions by Immigration and Customs Enforcement against employers in these industries for hiring undocumented workers.