The U.S. Department of Labor has introduced a proposed rule that will significantly increase the wages required (by around 25%) for H-1B workers and employment-based permanent labor certification (PERM) filings. The impact is immediate and practical: H-1B extensions, amendments, and transfers will all require substantially higher wages once this rule becomes final in 30 to 60 days. For the cases selected under the lottery this new wages will not impact, as far as the cases are filed by end of April 2026. Basically try to file H1bs within the next 30 days to be on the safer side.
The proposed changes will make it increasingly difficult to justify lower wage levels, particularly in the technology sector. In many cases, only highly experienced, senior-level professionals will be able to command wages that meet the revised thresholds. As a result, employers and H-1B workers may need to evaluate whether extensions or changes of employer should be filed under the current wage system before the new rule takes effect.
Government statements accompanying the proposal make clear that the intent is to prevent employers from paying substandard wages to foreign workers and to ensure that wages offered under employment-based visa programs more closely reflect those paid to similarly employed U.S. workers. The proposal was announced in a press release dated March 26, 2026.
Change in Wage Percentiles
Under the current framework, prevailing wages are assigned as follows:
Level 1 – 17th percentile
Level 2 – 34th percentile
Level 3 – 50th percentile
Level 4 – 67th percentile
The proposed rule revises these percentiles upward:
Level 1 – approximately 35th percentile
Level 2 – approximately 53rd percentile
Level 3 – approximately 72nd percentile
Level 4 – approximately 90th percentile
The revised methodology relies on wage data from the Bureau of Labor Statistics and applies statistically derived percentile thresholds to determine prevailing wages. The stated goal is to bring wages paid to foreign workers in line with those earned by U.S. workers in comparable roles.
Timeline for Implementation
The proposed rule is scheduled for publication in the March 27, 2026 edition of the Federal Register. A 60-day public comment period will follow. After considering public input, the Department of Labor may issue a final rule, which would generally become effective within 30 to 60 days after publication.
This creates a relatively short window for employers to plan and act.
Reference to Prior Rulemaking
This is not the first attempt to increase prevailing wage levels. A similar rule was introduced during the Trump administration through an interim final rule that raised wage percentiles significantly. That rule was invalidated by federal courts, largely due to the failure to follow proper notice-and-comment procedures.
In contrast, the current proposal has been issued through the formal rulemaking process with a full comment period, suggesting that the Department of Labor is attempting to address the procedural deficiencies that led to the earlier rule being struck down.
Government’s Rationale
The Department has indicated that existing wage levels have been set below what many U.S. workers earn in the labor market, particularly at entry levels in fields such as science and technology. The revised framework is intended to modernize the prevailing wage methodology, improve alignment with market wages, and reduce the risk of displacement of U.S. workers.
The proposal also reflects a policy position that certain hiring practices have allowed employers to rely on lower-wage foreign labor, thereby distorting the intent of employment-based visa programs. The revised wage structure is designed to address these concerns by establishing a higher wage floor.
Estimated Wage Impact Across Major Markets
The effect of the proposed percentile changes can be seen clearly in Software Developer wages (SOC 15-1252) across major metropolitan areas.
New York Metro (Middlesex County)
| Wage Level | Current Wage | Estimated Under New Rule |
|---|---|---|
| Level 1 | $103,210 | ~$133,798 |
| Level 2 | $131,997 | ~$165,885 |
| Level 3 | $160,805 | ~$198,059 |
Santa Clara County (San Jose–Sunnyvale–Santa Clara)
| Wage Level | Current Wage | Estimated Under New Rule |
|---|---|---|
| Level 1 | $149,365 | ~$191,233 |
| Level 2 | $187,741 | ~$232,910 |
| Level 3 | $226,138 | ~$270,716 |
Seattle Metro (King County)
| Wage Level | Current Wage | Estimated Under New Rule |
|---|---|---|
| Level 1 | $117,749 | ~$150,093 |
| Level 2 | $149,240 | ~$186,267 |
| Level 3 | $180,710 | ~$217,827 |
Washington, DC Metro Area
| Wage Level | Current Wage | Estimated Under New Rule |
|---|---|---|
| Level 1 | $101,421 | ~$128,992 |
| Level 2 | $126,090 | ~$155,111 |
| Level 3 | $150,758 | ~$179,125 |
Across these regions, Level 2 wages increase by approximately 23% to 25%, often translating into $30,000 to $45,000 in additional annual salary obligations per employee.
Implications for Filing Strategy
Once this rule becomes final, employers will need to reassess how and when they file H-1B petitions. Filing extensions, amendments, or transfers before the new wage levels take effect may allow employers to retain current wage obligations for the duration of the approval period.
The increased wage thresholds will also affect hiring decisions, internal compensation structures, and long-term workforce planning.
Increased Scrutiny on Wage Level Selection
The revised wage structure will bring heightened scrutiny to wage level selection.
H-1B regulations require that wage levels reflect the actual nature of the position, including job complexity, required experience, supervision, and independent judgment. Under the new system, the financial gap between wage levels becomes much larger.
As a result, any movement from a higher wage level to a lower one—such as from Level 3 to Level 2 or from Level 2 to Level 1—is likely to draw closer examination. Adjudicators may question whether the position has genuinely changed or whether the wage level is being lowered to avoid increased salary requirements.
Wage Level Guidance and Proper Classification
The core guidance on wage levels remains unchanged but becomes more critical under the new system.
Level 1 applies to entry-level roles involving basic tasks under close supervision.
Level 2 applies to positions requiring some experience and involving moderately complex duties performed with limited supervision.
Level 3 applies to experienced professionals who exercise judgment and handle complex responsibilities.
Level 4 applies to highly experienced individuals who exercise significant discretion and may lead projects or functions.
Given the increased wage differentials, accurate classification will be essential to withstand scrutiny.
Private Wage Surveys
The rule continues to allow private wage surveys but makes clear that stricter standards will be applied. Surveys must be statistically valid, methodologically sound, and properly aligned with occupational classifications and geographic areas. Surveys that fail to meet these criteria may be rejected.
Impact on Staffing and Consulting Models
Staffing firms and consulting companies are likely to face greater challenges under the new wage structure. These models often involve multiple layers, with margins distributed among vendors, subcontractors, and end clients. Higher wage requirements will compress these margins.
This may encourage end-client companies to file H-1B petitions directly rather than rely on third-party staffing arrangements.
Broader Implications
The rule is expected to reshape the economics of the H-1B program. Smaller employers may find it more difficult to participate, while larger organizations may be better positioned to absorb higher wage costs.
At the same time, the increased wage thresholds may limit access to H-1B visas for less experienced workers, effectively shifting the program toward more senior and specialized talent.
Conclusion
The proposed rule represents a significant shift in the H-1B and PERM landscape. By raising prevailing wage percentiles, the Department of Labor is increasing the cost of employing foreign workers and tightening the standards for wage level selection.
It is likely that business associations and trade organizations will challenge this rule in federal court. However, there is no assurance that any litigation will result in the rule being delayed or put on hold. Unlike prior attempts, the Department of Labor has followed the formal notice-and-comment process, which may strengthen the rule’s legal footing.
Employers should plan on the assumption that the rule will take effect. Strategic timing of filings, careful wage level selection, and proactive workforce planning will be critical in navigating the changes ahead.
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