FLSA Reform of Wage Standards for Foreign Workers
On January 12th the US Department of Labor announced a new rule to protect the wages and job prospects of American workers by changing the metric previously used to set the general wage rates. The DOL stated that it implemented these changes to prevent potential abuses of its Permanent Employment Certification, H-1B, H-1B1 and E-3 Visa foreign worker programs. The primary purpose of the new rule is to disincentivize the preferential hiring of foreign workers who may be chosen for employment over American workers on the basis of cost saving. The current rule requires that wages for foreign workers be brought in line with wages currently paid to U.S. Workers who are similarly employed. The program requires that employers certify that nonimmigrant employees be paid the higher of prevailing wages, or the actual wage paid to similarly qualified employees. Additionally, employers who desire to hire immigrants under an EB-2 or Eb-3 classification must be hired at the prevailing wage used by the department in question.
This comparative wage requirement was implemented for the purpose of preventing the undercutting of American labor by foreign labor. The department also provided a detailed metric that can be utilized when calculating the required wage standards under the new rule. The metric is divided into four tiers, with the first level considered entry level, and the stipulated wage requirement now in the 45th percentile. The actual wages are calculated by determining the prevailing wage for foreign national workers with comparable education, experience with the foreign workers.
The level II wage considered for “qualified” workers has increased from the 34th percentile to the 62nd percentile and utilizes the previous calculation. The level III wage considered for “experienced” workers increased wage levels from the 50th percentile to the 78th percentile and is calculated using the existing formula for determining wage levels. Finally, the level IV wage for “competent” workers has been increased from 67th percentile to the 95th percentile. The Department of Labor stipulates that it will calculate this tier of wage by taking the mean of wages paid to the most highly paid workers within occupational employment statistics. An important thing to note however is that the new rule does not preclude the use of alternative wage calculations that are permitted under 20 CFR § 656.40. U.S. employers are still permitted to use alternative sources to determine the prevailing wage for the stipulated category of foreign employee. As the new rules require specific compliance with particular wage percentages, implementation may seem like a daunting task.
If you or your company have any questions concerning the implementation of the Department of Labor’s current rules in your workplace, please do not hesitate to call us at 516-888-1208 or email Cynthia Augello at [email protected]
Thank you to Joel Thomas, JD for his assistance with this post.
