US Department of Labors Prevailing Wage Changes Impact on E-3 Visas [Update]

The Trump admiration recently announced two related rules that will impact numerous employment-based visa categories to the United States.  The main thrust of these new regulations is directed mostly towards visas that involve specialty occupations in the US including the widely used H-1B, the H-1B1 visa for Singapore and Chile, and the Australia specific E-3 visa.  In this series, we are going to focus on the impacts of these and other proposed changes on the E-3 visa program.

New Regulations for Prevailing Wage Requirements

The first set of these changes are related to Department of Labors (DOL) prevailing wage requirements.  The DOL announced immediate changes in a new regulation to the way the prevailing wage is determined for visa applications that require a Labor Condition Application (LCAs).  This is now required for all E-3 visa applications – including E-3 renewals and extensions.  This new regulation took effect immediately without advance notice on October 08, 2020. 

The original purpose of prevailing wage requirements for many visa holders is to ensure that visa holders are paid a similar salary to what an American citizen or resident would receive in a similar position in a specific location in the United States.  The goal was to ensure that US employers do not hire immigrants at a lower wage than the U.S. workers in a similar role.   

The Trump administration’s new requirements substantially raise the prevailing wage levels in all job classifications.  It is clear that the goal of the new regulation is to make these visas (H-1B, H-1B1, and E-3) significantly more expensive for employers by requiring a much higher rate pay compared to the market rate for a similarly situated US worker.  

The DOL calculates the prevailing wage from the US government’s survey data in the Occupational Employment Statistics (OES) wage survey and assigns the minimum prevailing wage to four separate wage levels.  Under the DOL definitions, the four levels are: Level 1 “entry level,” Level 2 “qualified,” Level 3 “experienced,” and Level 4 “fully competent.”  In order  to greatly increase the prevailing wage requirements the new regulation changed the formula to determine the minimum prevailing wage of each wage level as follows:

The National Foundation for American Policy (NFAP) released a chart of how much the prevailing wages have increased inline with the new requirements.  The analysis from NFAP concludes: “For all occupations and geographic locations, the new minimum salary that employers are required to pay when compared with the system in place prior to the new DOL wage rule is, on average, 39% higher for Level 1 positions, 41% higher for Level 2, 43% higher for Level 3 and 45% higher for Level 4.” 

Push back on Changes to Prevailing Wage Requirements 

There already have been several lawsuits filed challenging the Administration’s changes to the prevailing wage requirements.  This is because the DOL did not use the usual notice and comment period making to give the public and stakeholders time to comment on the possible negative impacts of the changes.  Additionally, the DOL did not undertake economic impact assessments since the Administration wanted the rules to go into immediate effect. Hopefully, these pending lawsuits will lead to a temporary and eventual permanent injunction of this new regulation. 

What These Changes Mean for E3 Visa Holders 

The new prevailing wage requirements make the rate of pay US employers are obligated to pay employees under a E3 visa significantly higher than under the previous system. All LCA’s that are filed after October 8th will be  subject to the new prevailing wage.  In many situations, employers of E-3 visa holders will be faced with either substantially increasing an E-3 visa employee’s salary or may not be able to continue their offer of employment.

Thus, it will be important for employers and employees to understand that these changes may impact any planned employment or continuation of employment when a renewal or extension of the E-3 visa is needed.  This is yet one more challenge in the current circumstances with COVID-19 for renewals of any current E-3 visa.  

Our team of Australian based U.S. lawyers are well versed in the processing of new E-3 visas and E-3 renewals. Please contact Worldwide Migration Partners for a consultation as to how these new changes may impact your E-3 employment. 

Please stay tuned to our blog for additional upcoming changes to E-3 visas regarding the proposed regulations defining a “Specialty Occupation”.