Guide to Prevailing Wage Determination

Updated on June 19, 2023
At a Glance: To obtain an employment-based green card, finding an employer willing to sponsor your visa is the first step. The employer must go through the PERM (Program Electronic Review Management) process, which involves checking for qualified U.S. workers to ensure they aren’t adversely affecting the American workforce. Prevailing wages, determined by the Department of Labor, play a crucial role in employment-based visa programs. Employers must comply with prevailing wage rates, and the rates are determined based on factors like occupation, location, skills, and experience. Employers can request prevailing wages from the NPWC or use other approved sources. The prevailing wage is valid for 90 days, and employers must submit the PERM labor certification and recruitment file within that period. Incorrect prevailing wages can lead to audits and possible rejection of the PERM application by the DOL.

People coming into the U.S. through an employer consider their prevailing wage rate very important. This directly impacts their PERM Labor Certification and, ultimately, their living standards in the U.S. But many individuals only have a vague idea of how this wage is calculated.

In this article, we’ll explain the calculation procedure adopted by NPWC (National Prevailing Wage Center) and other things you need to know about PREM.

PERM Overview

As you might be aware, if you’re looking for an employment-based green card, then the first step is finding an employer who will be sponsoring your visa status. The employer then needs to work with the Department of Labor to arrange a Labor Certification that will make you eligible to work in the U.S. Without this sponsorship, the USCIS will not allow you to work in the U.S.

For the certification, a system called PERM is used. PERM stands for Program Electronic Review Management. The process requires your potential employer to go through an extensive process to check if there’s an availability of qualified U.S. workers who are able to fill the position for which you are being considered.

So, in a way, this process prohibits U.S.-based employers from using the immigration system to adversely affect the local American workforce directly or indirectly. This is part of the Immigration and Nationality Act, which aims to protect domestic workers against abuse.

Thus, there are laws in place which help determine the wage paid to foreign workers coming into the U.S. This is known as the prevailing wage rate.

How Are Prevailing Wages Determined?

The wage rates for each occupation are supplied by the Department of Labor. The rates are determined by analyzing data collected from various sources. The rates can be accessed from the Foreign Labor Certification Data Center Wage Library website.

The center also utilizes metrics like geographic location, skillset, experience, expertise, and supervision, among other factors.

Which Programs Require a Prevailing Wage Determination?

Nearly all employment-based visa programs require the prevailing wage to be determined first. This is true for H1B, H1B1, and E3 visa programs. A prevailing wage application has to be submitted to the NPWC first. Alternatively, the employer can also independently determine the prevailing wage and then file for the Labor Condition Application.

But it’s worth noting here that the NPWC doesn’t issue prevailing wages for H2A temporary visas. So that’s something employers have to work on by themselves.

PERM Prevailing Wage

The prevailing wage rate is the average rate of local workers who are employed in the same occupation. So the wages you are being offered should be in accordance with the wages that local workers are earning in the same time period. If the wage offered is less than your American peers, then this may affect the marketplace.

Prevailing Wage Determination Process

When obtaining your certificate, your employer will simultaneously post the position as a job order through State Workforce Agencies for at least 30 days. Along with that, the same job will be posted on local newspapers in their Sunday editions. But that’s not all. Your employer will also need to utilize any of the three from the following methods to try to fill the position with a U.S.-based worker:

  •  Job fair
  • Employer’s website or job portal
  • Job search engines
  • On-campus recruitment drives
  • Trade or professional organization
  • Employee referral programs
  • Campus placement representatives
  • Local or ethnic newspapers
  • Radio or TV advertisement

If everything fails, only then can you be awarded the position. This is called the U.S. Labor Market Test.

 To obtain the prevailing wage rates, employers have the following options:

  •  Request the wage rate from the NPWC
  • Use independent research by employing authoritative sources (one of which is the Labor Market Test)
  • Use another legitimate source of information approved by the DOL

To request the wage for a non-agricultural immigration visa, employers are required to fill out form ETA-9141, Application for Prevailing Wage Determination. If the employer successfully receives the wage from the NPWC, they are given a “safe-harbor status.” In case the wage compliance is investigated in the future, your employer and you will not be scrutinized in the process. But wages obtained through other sources do attract some form of scrutiny.

Since the NPWC does not provide wage rates for agricultural employment (H2A visa status), the wages are the highest of:

  •  The AEWR (Adverse Effect Wage Rate)
  • Prevailing piece rate
  • Prevailing wage
  • Bargaining wage which was previously agreed upon
  • Minimum wage as determined by the federal or state government

Payment of the Prevailing Wage

The employer is required to pay the foreign worker once they become a permanent resident. But before the employer can initiate payments, they have to submit proof of a viable, sustainable business and that they can afford to hire someone from a foreign country and clear their wages on time. Financial documents and labor certification are more than enough for this cause.

PERM Prevailing Wage Validity Period

The prevailing wage is valid for a period of 90 days. Since the economy fluctuates intermittently, the employer is allowed to make adjustments to the payments after 90 days, under correct circumstances. Also, within the validity period, your employer must submit the PERM labor certification and recruitment file.

What if the Prevailing Wage Is Wrong?

In certain cases, the prevailing wages are incorrect, either on purpose or not. So you might receive less than the prevailing wage from your employer. This attracts the attention of the DOL and could call for an audit and investigation. All the procedures used for determining the rates must be submitted along with any other pertinent documents.

If the prevailing wage is indeed found to be wrong, then the DOL will either ask for a rework or wholly reject the PERM application.

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When obtaining a job through PERM services, it’s important to get in touch with an attorney specializing in immigration-related employment practices. This will help you and your potential employer get through the process without any hiccups.

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Frank Gogol

I’m a firm believer that information is the key to financial freedom. On the Stilt Blog, I write about the complex topics — like finance, immigration, and technology — to help immigrants make the most of their lives in the U.S. Our content and brand have been featured in Forbes, TechCrunch, VentureBeat, and more.