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The Labor Department’s plan to raise the H-1B prevailing wage floor has reached its last checkpoint before publication. Employers sponsoring H-1B, H-1B1, E-3 and PERM workers should expect higher required salaries once it takes effect.
The H-1B prevailing wage rule is now a final rule under White House review. The Office of Information and Regulatory Affairs (OIRA) logged the Labor Department’s final rule, “Improving Wage Protections for the Temporary and Permanent Employment of Certain Foreign Nationals in the United States” (RIN 1205-AC30), on Nov. 6, 2026, and lists it as economically significant and pending review. The rule would lift the minimum wages employers must offer or pay in the H-1B, H-1B1 and E-3 programs and in PERM labor certification, the first step in most employment-based green cards.
The timing matters because this is the stage at which the policy stops being a proposal. The Labor Department published the plan on March 27, 2026, at 91 FR 15454 (docket ETA-2026-0001), and the comment period closed May 26. A rule sent to OIRA as “final” means the department has settled on the text it intends to enforce, subject to changes made during interagency review. (See coverage of the March proposal.)
What the H-1B prevailing wage rule would change
Prevailing wages are set by occupation and area at four skill levels, drawn from the Bureau of Labor Statistics’ Occupational Employment and Wage Statistics survey. Since 2005 guidance, Level I has sat at roughly the 17th percentile of local wages and Level IV at roughly the 67th. The proposal moves every level up. The final text sent to OIRA has not been released, so the figures below are the proposed ones.
| Wage level | Current (approx. percentile) | Proposed (percentile) |
|---|---|---|
| Level I (entry) | 17th | 34th |
| Level II | 34th | 52nd |
| Level III | 50th | 70th |
| Level IV (fully competent) | 67th | 88th |
The reach is broad. In fiscal 2024 the department certified 502,374 H-1B labor condition applications, 3,368 for H-1B1 and 9,154 for E-3, plus 35,505 PERM applications, according to figures in the proposed rule. The same document puts 19 percent of certified H-1B applications at Level I and 44 percent at Level II, so 63 percent sit in the two tiers that would see the steepest relative increases. Because a Level I wage would land roughly where Level II sits today, entry-level hires, graduates moving off OPT and employers that cluster at the low end would feel it first.
The department’s stated rationale is that the 2005 methodology set wages too low, and that higher floors will better align foreign worker pay with what comparable U.S. workers earn and reduce any incentive to use the programs to replace rather than supplement domestic staff. The final rule must respond to the significant comments filed on the docket, and how it does so will matter if the rule is challenged.
Why this attempt may hold up better than 2020
The last effort collapsed in court. An October 2020 interim final rule that skipped public comment was struck down by a federal court in California, and a January 2021 final rule setting Levels I and IV at the 35th and 90th percentiles was later vacated at the government’s own request. This time the department used full notice and comment, which removes the procedural defect that sank the 2020 rule. Any lawsuit would more likely turn on substance: whether the Immigration and Nationality Act’s reference to wages for “similarly employed” workers lets the department pin entry-level pay well above the bottom third of the market, and whether its economic analysis answers the comments it received.
Executive Order 12866 gives OIRA up to 90 days, though reviews often finish sooner. An economically significant rule is generally treated as a major rule under the Congressional Review Act, which typically delays its effective date at least 60 days after publication. H-1B workers seeking an extension or a change of employer would usually need a new certified labor condition application, so they are likely to meet the new floor sooner than workers who stay put.
The rule also lands on top of other cost increases. Employers are already absorbing the $100,000 H-1B fee proclamation, and a separate PERM overhaul has already cleared White House review as a proposal. The department’s wage rule is one of the larger pieces of the H-1B changes that congressional researchers counted as not yet in force last month. Once it is published, budgets for 2027 hires and green card sponsorships will rest on actual numbers rather than projections.
This rule will adversely impact IT consulting firms since they go through various layers to deploy H-1b workers with end-clients. Multiple layer means every layer takes a cut from the hourly rate and that significantly reduces the wages of the H1b beneficiary. Even with the current wage levels, IT consulting firms are not able to pay anything more than wage level 2 and in some cases not more than wage level 1 in Silicon Valley or New York metro. Is it going to be the end of IT consulting model or H-1b program itself? To some extent these wage levels are going to be even difficult for companies like Microsoft or Google to sustain. Only next few months will tell and lot hinges on if there is an avenue to stay this proposed rule attacking it on merits. One cannot deny the fact that the new wage level artificially inflate the wage levels and has no bearing to the actual wages that US workers command. Start ups are also going to be impacted since their funds are limited and they cannot get a chance to use H-1b program at this high wage rate.
This article is for general information and is not legal advice.
Sources
- OIRA (Reginfo.gov): EO 12866 review entry for RIN 1205-AC30, final rule received Nov. 6, 2026
- Federal Register: Improving Wage Protections for the Temporary and Permanent Employment of Certain Foreign Nationals in the United States, proposed rule, 91 FR 15454 (March 27, 2026)
- Regulations.gov: docket ETA-2026-0001
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