The U.S. Department of Labor (DOL) released new H-1B visa regulations on October 8, 2020, introducing major changes that impact both employers and foreign professionals. These updates—outlined in the rule titled “Strengthening Wage Protections for the Temporary and Permanent Employment of Certain Aliens in the United States”—raise the minimum wage requirements for H-1B, H-1B1, and E-3 visa holders.
While the intention is to ensure fair compensation for foreign workers, many experts believe that these wage increases could discourage U.S. companies from hiring as many H-1B professionals, potentially worsening the already significant H-1B visa backlog.
Table of Content
- New H-1B Wage Rules and Levels
- Redefining “Specialty Occupation”
- Restrictions on Third-Party Worksites
- Impact on Pending H-1B Petitions
- What Happens Next?
New H-1B Wage Rules and Levels
Prevailing Wage vs. Actual Wage
Previously, employers sponsoring H-1B workers could base salaries on either the prevailing wage—as determined by the Foreign Labor Certification Data Center—or the actual wage, which reflects what other employees with similar qualifications earn at the same company.
Under the new rule, employers must now pay whichever wage is higher. This change ensures greater pay equity but significantly increases hiring costs for employers who rely on skilled foreign professionals.
Increases in Prevailing Wage Levels
This rule marks the first prevailing wage adjustment in more than two decades. Each wage level is determined as a percentile of the national wage distribution for a specific occupation. The revised percentile thresholds are as follows:
Wage Level | Previous Percentile | New Percentile (as of Oct 8, 2020) |
Level 1 (Entry-Level) | 17th | 45th |
Level 2 | 34th | 62nd |
Level 3 | 50th | 78th |
Level 4 (Highly Experienced) | 67th | 95th |
While these increases benefit foreign professionals in the long term, they may discourage employers—particularly in entry-level (Level 1) or mid-level (Level 2) positions—from sponsoring H-1B candidates due to higher payroll obligations.
Redefining “Specialty Occupation
Starting December 7, 2020, the new rules also narrow the definition of “specialty occupation” for H-1B visa eligibility.
To qualify, an applicant’s degree field must directly correspond to the job’s specific duties. General degrees—such as business administration, mathematics, or engineering—will no longer suffice unless the coursework directly aligns with the job requirements.
Moreover, a bachelor’s degree is now the minimum qualification, and applicants must satisfy multiple specialty criteria instead of just one.
Foreign professionals with prior H-1B approvals or those considering applying under this category should consult with immigration attorneys at Green Card Link to determine whether their educational and professional backgrounds still meet the updated criteria.
Restrictions on Third-Party Worksites
The U.S. Citizenship and Immigration Services (USCIS) now limits H-1B employees from working primarily at third-party client sites.
This restriction significantly impacts IT consulting firms and outsourcing companies that traditionally assign employees to client offices.
If most of the work is to be performed at a third-party location, USCIS may deny the H-1B petition entirely.
Employers must provide detailed evidence of employer-employee relationships, project durations, and specific work duties to remain compliant under the new policy.
Impact on Pending H-1B Petitions
Among all the changes, only the wage level increases took immediate effect on October 8, 2020.
Depending on your situation, you may or may not be affected—even if your petition is still pending.
Not affected:
- You submitted a complete ETA Form 9035/9035E Labor Condition Application (LCA) before October 8, 2020.
- Your LCA was certified, but your H-1B, H-1B1, or E-3 visa has not yet been issued.
- Your ETA Form 9141 (for PERM Labor Certification) was certified before October 8, 2020.
Affected:
- You filed ETA Form 9141 but have not yet received a wage determination from the DOL.
Given these nuances, consulting an immigration attorney at Green Card Link can help you determine your next steps and ensure compliance with the new wage requirements.
What Happens Next?
Many of these rule changes are expected to face legal challenges in federal court. Judges may temporarily block certain provisions while the cases proceed through the judicial system. However, if the rules are ultimately upheld, they could have lasting effects on both foreign professionals and U.S. employers.
The DOL itself acknowledged the potential challenges in its rule preamble:
“The Department acknowledges that the existing wage levels—set at approximately the 17th, 34th, 50th, and 67th percentiles—have been in place for over 20 years… Adjusting the levels to the 45th, 62nd, 78th, and 95th percentiles represents a significant change, and may result in higher personnel costs for some employers.”
In other words, while the intention is to protect U.S. workers, the new rule could make H-1B hiring more complex and expensive, limiting access to top international talent in critical industries such as technology, engineering, and healthcare
What You Should Do Now
- Stay Informed: Immigration regulations can change quickly. Check back with Green Card Link regularly for updates on the latest H-1B developments.
- Consult an Immigration Attorney: The immigration attorneys at Green Card Link can help you evaluate how these wage increases and policy changes affect your current or future H-1B petition. Whether you’re an employer or an employee, getting professional legal advice is crucial to ensure compliance and minimize delays.