DOL Update : Prevailing Wage Determination Guidance
Posted Mar 11, 2005
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The U.S. Department of Labor (DOL) provided guidance on the new prevailing wage levels on March 8, 2005. As regular readers of MurthyDotCom and the MurthyBulletin know, the H1B Visa Reform Act was passed on December 8, 2004 as part of the Omnibus Appropriations Act. The signing of the Act was addressed the our December 8, 2004 article, Omnibus Bill Signed - USCIS Clarifications, available on MurthyDotCom. The changes implemented by the DOL as a result of this new Act and the PERM regulation are highlighted below.
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Applicability of New Prevailing Wages
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The new prevailing wage guidance applies to permanent labor certifications (pre-PERM and PERM), H1Bs, and H2Bs. Note that employers filing H1Bs may request a State Workforce Agency (SWA) prevailing wage determination, but they are not required to do so. Should an H1B employer request an SWA prevailing wage determination, and pay that wage for the position, the employer is generally protected from claims that it did not pay the beneficiary a sufficient wage for the job. This is referred to as the "safe harbor" rule.
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100% of Prevailing Wage Must Be Paid
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As of March 8, 2005, the employer must pay the beneficiary at a rate equal to 100% of the prevailing wage. This supersedes the old rule permitting payment of only 95% of the prevailing wage rate.
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SWAs Make Wage Determinations
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When the SWAs make prevailing wage determinations, they must use the prevailing wage from any properly negotiated collective bargaining agreement (CBA). If there is no CBA, the employer may ask the SWA to use an alternative wage survey submitted by the employer or request that the SWA use the Davis-Bacon Act or Service Contract Act for the prevailing wage. If there is no CBA and the employer does not request that the SWA use one of these other sources, the SWA must use the Occupational Employment Statistics (OES) wage component program to determine the prevailing wage.
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Relevant Factors for Determining Prevailing Wage
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The regulations provide that the relevant factors for determining a prevailing wage rate are the nature of the job offer, the area of intended employment, and the job duties for workers who are similarly employed. The DOL has made clear that the size of the employer and/or its financial viability should not be taken into account when determining the prevailing wage.
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Nature of the Job Offer
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The DOL has an Occupational Information Network, better known as O*Net, which the SWAs will rely heavily upon in making an OES wage determination. When an employer submits a prevailing wage determination request, the SWAs will use O*Net to search for the appropriate occupation and code. Should the job fall into multiple occupations, the DOL has directed the SWAs to automatically default to the code for the highest paying occupation. The DOL has indicated that SWAs will not just use the job title to determine the O*Net Code, but should compare tasks, knowledge required, and work activities associated with the various codes to find the best fit.
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Area of Intended Employment
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The area of intended employment is the area within the normal commuting distance of that employer's address, as defined under regulation. Normal commuting distances may vary according to geographic area.
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Job Duties for Workers who are Similarly Employed
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Similarly employed workers are defined by regulation as those in substantially comparable jobs in the occupational category in the area of intended employment. If there are no such workers in that area, then it means jobs requiring substantially similar levels of skills within the area of intended employment. If there are none, then it means substantially comparable jobs in the occupational category with employers outside of the area of intended employment.
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If the job is for an employee of an institution of higher education, its affiliated or related nonprofit entity, a nonprofit research organization, or a governmental research organization, then the prevailing wage level for these individuals should only be determined by comparing the wage levels of employees of such institutions and organizations within that area of intended employment.
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OES Wage Level One
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The OES changed from two wage levels to four wage levels. When the SWAs make a prevailing wage determination, they must determine the wage level that is appropriate for the job offer. The Level One wage rate is for beginning level employees who perform tasks that require limited, if any, exercise of judgment. Level One employees generally are closely supervised and receive specific instructions on their assignments. The job offers may be for research fellows, workers-in-training, or internships.
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Few, if any, labor certification jobs will have Level One wages, as it is unlikely that many companies are seeking to hire permanent interns or workers-in-training. Therefore, it is more likely that Level One wages will be appropriate for limited H1B and some H2B positions.
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OES Wage Level Two
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The Level Two wage rate is for employees who have a good understanding of the occupation through education, experience, or a combination of the two. They perform moderately complex tasks that require limited judgment. If position requirements fall within those described in the O*Net Job Zone for education and experience, the Level Two wage rate may be appropriate.
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OES Wage Level Three
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The Level Three wage rate is for experienced employees who have a sound understanding of their occupations. Their tasks require exercising judgment and they may coordinate the tasks of other employees. If a job requires a higher level of education and experience as listed in the O*Net Job Zone for that occupation, and/or the job title includes terms such as "Lead," "Senior," "Head," "Chief," or "Journeyman," the wage may be Level Three.
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OES Wage Level Four
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The Level Four wage rate is the highest level. It is for employees who have sufficient experience to plan and conduct work requiring judgment and independent work. Level Four employees generally have management and/or supervisory job duties, and their work receives minimal review.
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Determining OES Wage Level
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The DOL has directed the SWAs to use a worksheet to determine the appropriate OES wage level for a job opportunity. On the worksheet, the SWA will identify the education and experience requirements that are in O*Net. The SWA will then assign a number from 0 to 3 for the experience requirement. Generally, the higher the experience requirement, the higher the number that will be assigned.
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Next the SWA will look at the education requirement. For professional occupations, if the job offer requires a higher degree than the one that is generally required under O*Net, the SWA will assign a 1 or 2 value to the education requirement. For other occupations, if the job offer requires more education or training than the general requirement under O*Net, the SWA will also assign a 1 or 2 value to the education requirement.
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Additionally, the SWA will assign a value of 1 to any job offer that has special skills not listed in tasks, work activities, knowledge, and job zone examples in O*Net. If the job requires any certifications or licensure beyond those required by national or state licensing laws and regulations, the SWA will assign a 1 or 2 value. Finally, if the job requires the beneficiary to supervise one employee or more, the SWA will assign a 1 value unless the job normally requires a person in that position to supervise other employees.
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Once the values have been assigned in all categories, as appropriate, the SWA will add the numbers. The total number will be the level assigned to the job. If the number is greater than 4, the job will be considered an OES Wage Level Four position.
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Alternative Wage Surveys
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The employer may provide an alternative wage survey and ask the SWA to use this for any position if a CBA does not apply. In cases where the employer submits an alternative wage survey, the SWA must determine whether the survey is acceptable under the regulations. If the survey is deemed acceptable, the SWA will use the alternative wage survey to make its prevailing wage determination.
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The survey must have been published within 24 months of the date of the submission of the prevailing wage request, be the most current edition of the survey, and be based on data collected within 24 months of the date of the publication of the survey. If it is an employer-conducted survey, the data must have been collected within the 24 months prior to submitting the prevailing wage request.
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The wage data in the alternative wage survey must be for the area of intended employment. If the intended employment is within a Metropolitan Statistical Area (MSA), or Primary Metropolitan Statistical Area (PMSA), any location inside the MSA or PMSA is considered within normal commuting distance of a place of intended employment. This will not always be the case with Consolidated Metropolitan Statistical Areas (CMSAs). The confines of the MSAs, PMSAs, and CMSAs alone, however, will not control whether a location is within normal commuting distance from the place of intended employment.
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The alternative wage survey must provide a job description to show that the workers in the survey are in a job similar to the one offered to the beneficiary. The wage data must also have been collected across industries that employ workers in that occupation.
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Generally, the prevailing wage in an alternative wage survey must be based on the arithmetic mean (weighted average) of wages of workers who are similarly employed in the area of intended employment. A median wage may be used if an arithmetic mean wage is not provided in the survey. In all cases where the employer wishes to use an alternative wage survey, the employer must provide data showing the methodology for the survey.
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SWAs may determine that an alternative wage survey is not acceptable but must provide the employer with a written explanation for its decision not to accept the survey.
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Data to Determine Prevailing Wage
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The DOL has indicated also that the title for the job must be provided by the employer, as well as a brief description of the job duties, education, and experience requirements; special skills, licenses, or certifications required; supervisory duties; and other information deemed necessary by the SWA for case processing or tracking. The name and address of the employer, contact person and telephone number, and the city or county of intended employment should also be included.
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SWA Response Time
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Neither the regulation nor the DOL policy mandates a specific prevailing wage determination response time for the SWAs. The guideline, however, provides that the SWAs should send a response within 14 days of receipt of the prevailing wage determination request. If the employer provides an alternative wage survey, the DOL has requested that the SWAs provide a response to the prevailing wage determination request within 30 days.
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Validity of Prevailing Wages
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The SWA must indicate how long the prevailing wage determination is valid; a period of no fewer than 90 days and no more than one year. The SWA must keep a dated copy of the prevailing wage determination for two years. This requirement is separate from the employer's requirement to keep all documentation related to a PERM filing, including the prevailing wage determination, for five years.
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Conclusion
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We at The Law Office of Sheela Murthy appreciate the DOL's guidance on the new prevailing wage levels and how they will be determined. An employer should speak with a qualified immigration attorney regarding the intricacies of the prevailing wage determination process, since the prevailing wage may determine whether the employer remains interested in continuing with the temporary job under the H1B or H2B program or the permanent job offer under PERM.