Prevailing Wage Determination for H-1B Explained

Updated on April 12, 2024

Understanding the process for determining the prevailing wage is essential for employers involved in hiring foreign workers or engaging in government contracts in the U.S. The U.S. Department of Labor provides guidelines for obtaining the prevailing wage rate for various labor certification programs, aiming to ensure that workers are paid fairly in accordance with local wage standards. This process protects both U.S. and foreign workers from wage undercutting, promoting fair labor practices across industries.

30 Second Recap:

This article offers a comprehensive overview for employers on navigating the prevailing wage determination process in the U.S., crucial for hiring foreign workers or participating in government contracts. It outlines the roles of the Wage and Hour Division, the National Prevailing Wage Center, and key legal frameworks including the Davis-Bacon Act and Service Contract Act. Furthermore, it addresses the responsibilities of contractors, the importance of correct wage and fringe benefit payments, compliance mechanisms, and real-world challenges faced by H-1B visa applicants related to wage determinations.

 

In navigating the landscape of prevailing wage determination, you need to grasp the bedrock principles, legislative directives, and classification intricacies. This foundation prepares you to understand how wages are set and regulated for public works projects.

Understanding Prevailing Wage

Prevailing wages are the hourly wages, overtime, and benefits that contractors and subcontractors must pay laborers and mechanics on public works projects. These wages are established by the Wage and Hour Division (WHD) of the U.S. Department of Labor (DOL) and are intended to reflect the current wages received by individuals in similar occupations within a specific geographic area.

Legislation Governing Prevailing Wages

The cornerstone of prevailing wage regulations in the U.S. is the Davis-Bacon Act (DBA), which requires payment of local prevailing wages on federally funded construction projects. The DBA works alongside the Service Contract Act (SCA) and other statutes such as the Immigration and Nationality Act to ensure that workers are paid fairly based on the prevailing standards in their geographic area.

Classification Systems and Wage Surveys

For the application of prevailing wage rates, jobs are categorized into various labor classifications, which is crucial because an incorrect classification can lead to improper wage rates being applied. The Davis-Bacon and Related Acts (DBRA), for example, include over a hundred different classifications. Prevailing wage rates are determined based on wage surveys conducted by the Bureau of Labor Statistics (BLS) or the governing state’s department, reflecting the wages paid to diverse classes of laborers and mechanics in that area.

Need help with your H-1B visa?

The H-1B visa process is complex, but it doesn’t have to be difficult. If you’re struggling to understand all of the moving parts, let Stilt help. Our team of H-1B visa experts can help you make sense of all the eligibility requirements, documents, and the application process.

Implementation and Compliance

When you’re involved with federal contracts, it’s crucial to understand how prevailing wage determination is implemented and what compliance entails. Ensuring the correct wages are determined and upheld is not just about adhering to laws—it directly affects the livelihood of workers on public works projects.

Determining Applicable Wages

You’re required to obtain the prevailing wage rates from the Department of Labor’s website, or SAM.gov, before bidding on a project. These wages vary by county and state and are often based on surveys of wages paid in the area. You must pay attention to both the basic hourly wage rate and fringe benefits. The applicable wages must reflect the type of work performed and be incorporated into contracts from the date they are put into effect.

Responsibilities of Contractors and Subcontractors

As a contractor or subcontractor, your responsibilities include paying the appropriate prevailing wage rate and fringe benefits from the project’s start. You are obligated to submit certified payroll records to demonstrate compliance with labor laws. It’s your duty also to inform all your workers of the wages to which they’re entitled. For accuracy, always seek the most up-to-date wage determinations, as they are subject to change.

Compliance Mechanisms and Remedies

Compliance with prevailing wage laws is non-negotiable. Mechanisms in place include random audits by the Department of Industrial Relations or the Labor Commissioner’s Office. If you’re a worker experiencing retaliation for asserting your right to the correct wages, the Office of the Director provides remedies. For contractors and subcontractors, non-compliance can lead to serious consequences, including penalties, withheld payments, and even debarment from future contracts.

Guidance Based on Real H-1B User Experiences

When it comes to securing an H-1B visa and negotiating a fair salary, understanding the prevailing wage requirements can be a complex and confusing process. In this post, we’ll explore the real-world experience of one individual who recently encountered a challenging situation related to H-1B prevailing wages.

The Offer and the Setback

The individual, who has 7 years of related experience but no direct experience as a Sales Engineer, received an offer for a Systems Engineer/Solutions Engineer role in San Francisco with an on-target earnings (OTE) of $150,000. However, the company later rescinded the offer, stating that the H-1B minimum wage for the role was $180,000, which they could not meet.

Understanding Prevailing Wage Levels

To determine the appropriate prevailing wage for an H-1B position, employers must consider the job requirements and the overall “standard” of the job. The DOL uses a four-level system to categorize wages based on experience, education, and the complexity of the role.

As one commenter explained:

“In general, the DOL considers that Job Zone 4 positions (such as Sales Engineers) require a Bachelor’s degree and between 0 – 4 years of experience. If the specific position requires 0 – 2 years of experience, Level 1 is the appropriate wage level. If it requires at least 2 years but less than 3, it will be a Level 2 position. At least 3 years but less than 4 is Level 3. 4 years or more experience will be a Level 4 PW.”

Navigating the Prevailing Wage Data Center

To find the prevailing wage for a specific role and location, individuals can use the Foreign Labor Certification Data Center. However, navigating the categories and determining the appropriate job title can be challenging.

In this case, the individual found that a Sales Engineer position requiring more than 4 years of experience in San Francisco had a Level 4 prevailing wage of $182,187 per year. However, with 0-1 years of sales experience required for the role, it was unclear which level would be appropriate.

Seeking Guidance and Advocating for Oneself

When faced with confusion or uncertainty around H-1B prevailing wage requirements, it’s important to seek guidance from experienced professionals and advocate for oneself. As one commenter suggested:

“Speak to your own immigration attorney and ask which other similar titles are at 150k. You may request the employer to tweak the title.”

Another commenter pointed out that remote work arrangements can add an additional layer of complexity to the prevailing wage determination process

Need help with your H-1B visa?

The H-1B visa process is complex, but it doesn’t have to be difficult. If you’re struggling to understand all of the moving parts, let Stilt help. Our team of H-1B visa experts can help you make sense of all the eligibility requirements, documents, and the application process.

Frequently Asked Questions

This section provides concise, authoritative answers to common inquiries regarding Prevailing Wage Determinations. Each query is answered with precise detail to ensure you have the necessary guidance.

What process is followed for obtaining a Prevailing Wage Determination for a green card application?

To obtain a Prevailing Wage Determination (PWD) for a green card application, you will submit a request to the Department of Labor (DOL) using Form ETA-9141. The DOL evaluates the job requirements and compares them to similar positions in the geographic area to issue a PWD.

How can one check the status of a Prevailing Wage Determination?

You can check the status of your Prevailing Wage Determination by accessing the iCERT Visa Portal System where you initially submitted your PWD request. The system lets you track the progress and view updates.

What steps are involved in calculating the prevailing wage level?

Calculating the prevailing wage level involves analyzing the job duties, education, experience requirements, and comparability to similar positions within the geographic area. The wage is set based on these factors to align with industry standards.

What are the different wage levels and types in wage determination?

There are typically four wage levels, ranging from Level I (entry-level) to Level IV (experienced), given to jobs based on complexity, supervision required, and education/experience needed. Wage types might be hourly or annual, depending on the determination.

How long is the processing time for a Prevailing Wage Determination in the context of PERM labor certification?

The processing time for a Prevailing Wage Determination as part of the PERM labor certification varies, but it can take several months. The exact timeframe depends on the DOL’s current workload and processing speed.

What factors influence the determination of prevailing wages in the construction industry?

In the construction industry, prevailing wages are influenced by factors such as the location of the project, the type of construction work, the job classification, and current wage rates determined by collective bargaining agreements or other surveys.

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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.

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