The proposed rule would apply broadly to employers sponsoring foreign workers under several visa categories.

On March 26, 2026, the U.S. Department of Labor (DOL) issued a notice of proposed rulemaking that would substantially revise the methodology for calculating prevailing wages under the H-1B, H-1B1, E-3 and PERM programs. If finalized, the proposed rule would represent one of the most significant changes to H-1B and PERM wage requirements in over two decades, with entry-level salary requirements potentially increasing by more than 30 percent. The rule was published in the Federal Register on March 27, 2026, and carries a 60-day public comment period. Below is an outline of the key details of the proposal and practical steps employers should consider in response.

Overview of the Proposed Changes

The DOL currently uses a four-tiered prevailing wage structure based on data from the Bureau of Labor Statistics’ Occupational Employment and Wage Statistics (OEWS) survey. The proposed rule retains this four-tier framework but significantly raises the percentile thresholds used to set each wage level. Under the current methodology, which has been in place since 2005, the Level I (entry-level) wage is set at the 17th percentile of the OEWS wage distribution for a given occupation and geographic area. The DOL contends that this threshold is far too low and does not accurately reflect the wages of similarly employed U.S. workers.

The proposed wage levels are as follows:

Wage Level	Current Percentile	Proposed Percentile
Level I (entry)	17th percentile	34th percentile
Level II (qualified)	34th percentile	52nd percentile
Level III (experienced)	50th percentile	70th percentile
Level IV (fully competent)	67th percentile	88th percentile

Under the proposed regulatory text, the Level I wage would be anchored at the 34th percentile and the Level IV wage at the 88th percentile, with Levels II and III calculated using the statutory formula that divides the difference between Levels I and IV by three. Based on the DOL’s analysis of prevailing wages data from fiscal years 2020 through 2024, the agency estimates that the proposed adjustments would increase the average certified wage by approximately $14,000 per year per worker.

Who Would Be Affected

The proposed rule would apply broadly to employers sponsoring foreign workers under several visa categories. H-1B employers would constitute the largest affected group by far, but the rule would also affect H-1B1 employers sponsoring nationals of Chile and Singapore, E-3 employers sponsoring nationals of Australia, and employers pursuing PERM labor certification for EB-2 and EB-3 employment-based green cards.

Applicability and Timing

Importantly, the proposed rule would not apply retroactively. The new wage levels, if finalized, would apply only to prevailing wage determination applications pending with the OFLC National Processing Center as of the effective date, as well as to new labor condition applications (LCAs) and prevailing wage requests filed on or after that date. Existing permanent labor certifications, approved LCAs and previously approved PERM prevailing wage determinations would not be affected.

Employers should also note that H-1B cap petitions for fiscal year 2027, which must be filed by June 30, 2026, are expected to remain unaffected, as LCAs would have been filed prior to the rule’s anticipated effective date.

Private Wage Surveys Remain Available – For Now

The DOL considered eliminating the ability for employers to use private wage surveys as an alternative to OEWS-based prevailing wages but ultimately chose not to do so in this rulemaking. The proposed rule preserves employer flexibility to rely on acceptable alternative wage survey data, provided regulatory criteria are met. However, the DOL indicated that it intends to monitor the use of private surveys to prevent abuse and reserves the right to reject surveys that do not meet its methodological standards.

Broader Policy Context

This proposed rule does not exist in isolation. It is part of a broader set of regulatory and policy measures by the current administration aimed at raising the costs and qualifications associated with employing H-1B workers. These include the weighted selection process for the annual H-1B cap lottery, which now favors beneficiaries offered higher wages, and the $100,000 fee imposed on certain H-1B petitions by the September 2025 presidential proclamation. The current notice of proposed rulemaking was itself prompted in part by the September 2025 proclamation directing the Secretary of Labor to initiate rulemaking to revise prevailing wage levels.

The proposal also revives a similar initiative from the first Trump administration. In October 2020, the DOL issued an interim final rule, which in January 2021 it published as a final rule. This rule would have set comparable wage levels (Level I at the 35th percentile, Level IV at the 90th percentile), but that rule was challenged in court on procedural reasons and ultimately vacated. The Biden administration did not pursue further rulemaking on prevailing wages, making this the first formal proposal since the 2021 rule was vacated.

Steps Employers Should Consider

In light of this significant proposed change, employers who rely on H-1B, H-1B1, E-3 or PERM programs should consider taking the following steps.

First, employers should review their current foreign national workforce and identify positions classified at Level I or Level II, where the proposed increases would be most pronounced. Understanding by how much current offered wages exceed the proposed new floors will help gauge financial exposure.

Second, employers should evaluate the potential impact of the new rule once finalized on upcoming H-1B filings and PERM labor certification cases and revise compensation structures and budgets as needed. Given employers’ exposure to employee complaints and discrimination claims if they favor foreign workers over U.S. workers, this rule could force employers using the H-1B program to adjust upward their compensation structure for all employees, not just H-1B workers. Likewise, for employers in states with pay transparency laws requiring salary ranges as part of recruitment efforts, this rule may result in wage inflation for its workforce as the low end of any salary range must equal or exceed the prevailing wage level determined by the DOL.

Third, employers should consider whether submitting public comments during the 60-day comment period would be advisable. The DOL is specifically soliciting feedback on whether the proposed percentiles appropriately reflect statutory requirements, the viability of an alternative “experience benchmarking” methodology, the continued use of private wage surveys and any data sources that could improve wage-setting accuracy. Data-supported comments carry more weight in the rulemaking process, and employer coalitions and industry associations may coordinate responses.

Conclusion

While the proposed rule is not yet final and must undergo notice-and-comment rulemaking before taking effect, its direction is clear: The DOL intends to significantly raise the wage floor for foreign workers in the H-1B and PERM programs. Employers should treat this as a near-term planning issue rather than a distant possibility, as the comment window is relatively short and final implementation could follow within months.

About Duane Morris

Duane Morris will continue to monitor this rulemaking and provide updates as the process unfolds. Our immigration attorneys assist clients and answer their questions about the impact of this proposed rule alongside other recent changes to the H-1B program, including the weighted lottery and the new petition fee, and evaluate employer-specific considerations in order to develop a comprehensive workforce strategy.

For More Information

If you have any questions about this Alert, please contact Ted J. Chiappari, Denyse Sabagh, Maxine D. Bayley, Guilherme Massetti, any of the attorneys in our Immigration Law Group or the attorney in the firm with whom you are regularly in contact.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.