On March 27, 2026, the U.S. Department of Labor published a Notice of Proposed Rulemaking (NPRM) that would dramatically raise the minimum wages employers must pay H-1B, H-1B1, E-3, and PERM workers — with entry-level (Level I) requirements potentially increasing by more than 30%. The average H-1B worker's offered wage currently falls roughly $14,000 below the proposed new floor. This rule is still a proposal — it is not final law — but employers and HR teams should audit their LCA exposure now before it becomes binding.
What the DOL Actually Proposed
On March 27, 2026, the Department of Labor published Docket No. ETA-2026-0001 in the Federal Register. The official title is "Improving Wage Protections for the Temporary and Permanent Employment of Certain Foreign Nationals."
The rule would restructure how "prevailing wages" are calculated for H-1B labor condition applications (LCAs) and PERM labor certifications. Currently, employers are required to pay at least the prevailing wage for the occupation in the geographic area — set using percentile thresholds of the Bureau of Labor Statistics' Occupational Employment and Wage Statistics (OEWS) survey. The proposal raises those thresholds substantially across all four wage levels.
DOL's own analysis found that average H-1B wages are approximately $10,191 below the OEWS average for similar occupations. The agency argues the current system allows below-market wages that undercut American workers. Critics argue it would price out small and mid-size businesses from sponsoring workers in critical roles.
How Much Would Wages Increase?
The NPRM restructures the four-tier prevailing wage system. Under the current framework, Level I wages are set at the 17th percentile of OEWS wages; under the proposal, that baseline shifts significantly higher. Here's the estimated impact by wage level:
| Wage Level | Worker Description | Current Percentile | Proposed Percentile | Estimated Increase |
|---|---|---|---|---|
| Level I | Entry-level, routine tasks, limited judgment | ~17th | ~34th | 30%+ |
| Level II | Mid-level, some independent judgment | ~34th | ~50th | ~21% |
| Level III | Experienced, significant judgment | ~50th | ~67th | ~20% |
| Level IV | Fully competent, advanced expertise | ~67th | ~88th | ~33% |
The Level I increase is the most significant for employers. The majority of entry-level H-1B workers — fresh graduates in tech, engineering, and finance roles — are currently placed at Level I or Level II. A 30%+ floor increase could require substantial salary adjustments or force employers to reclassify positions at higher wage levels, which triggers additional scrutiny from USCIS adjudicators.
Who Is Affected?
The rule covers four visa categories that rely on DOL prevailing wage determinations:
The practical impact falls most heavily on mid-market tech companies, consulting firms, and staffing agencies — businesses that rely heavily on H-1B workers at entry and mid-wage levels and operate on tighter margins than large tech employers who already pay well above the current floors.
What Is NOT Affected — FY 2027 Filers Are Safe
The proposed rule also explicitly states it does not apply retroactively to:
- Already-approved LCAs (even if pending or newly approved)
- Approved PERM certifications
- Existing H-1B status or extensions based on already-filed LCAs
- Current petitions in the USCIS queue as of the effective date
Your existing authorization is locked in for the duration of your current LCA. The new wages only kick in for new LCA filings and new prevailing wage determination requests submitted on or after the effective date. This means extensions and transfers filed under existing LCAs are protected — until those LCAs expire and need renewal.
The LCA Renewal Exposure Window
Here's where employers need to plan ahead: most H-1B LCAs have a 3-year validity period. If a final rule takes effect in late 2026 or 2027, employers who need to renew expiring LCAs will face the new higher wage floors at renewal time — even if their worker's situation hasn't changed. This is the real medium-term cost exposure for HR teams managing large H-1B populations.
Now is the time to audit your LCA renewal calendar and model the salary budget impact under the proposed new floors.
Historical Context: The 2020 Rule That Got Struck Down
This isn't the first time DOL has tried to overhaul H-1B wages. In October 2020, the Trump administration issued a similar wage hike as an Interim Final Rule — bypassing the standard notice-and-comment rulemaking process by invoking "good cause." That rule set Level I wages at roughly the 45th percentile (more aggressive than this 2026 proposal) and Level IV near the 95th percentile.
Federal courts struck it down within weeks because DOL skipped required procedural steps. The Biden administration formally abandoned the effort in 2022.
This 2026 NPRM is different because it follows proper rulemaking procedure — publishing the proposed rule, accepting public comments, and allowing 60 days for input before finalizing. That procedural compliance makes it far more legally durable than its 2020 predecessor. However, industry groups are expected to challenge it in court regardless, which adds uncertainty to the effective date.
The rule was initiated under Presidential Proclamation 10973, which directed DOL to initiate this rulemaking as part of a broader "Buy American, Hire American" executive policy framework.
Timeline and Key Dates
What Should Employers Do Now?
Your Action Plan
- 1 Submit comments by May 27. Business-specific impact data is the most persuasive evidence DOL considers. Quantify salary cost increases, competitive impact, and workforce planning challenges. Comments from individual employers carry real weight.
- 2 Audit your LCA portfolio. Identify all LCAs expiring in the next 18–24 months. Model the wage gap between current offered salaries and the proposed new prevailing wage floors. Prioritize LCAs with large gaps.
- 3 Consult your immigration attorney. Evaluate whether to accelerate LCA renewals before the effective date, adjust job duty descriptions, or reclassify wage levels for upcoming positions.
- 4 Check your PERM pipeline. If you have pending PERM cases in the pipeline, confirm their status and prevailing wage determinations. Cases already in process will not be affected retroactively.
- 5 Use the H-1B Analyzer to confirm eligibility. Our tool assesses employer-worker fit against current H-1B criteria and provides a detailed report. Good baseline documentation before any regulatory change.
The Broader Impact: Mid-Market Employers Hardest Hit
Large tech employers — Google, Meta, Amazon, Microsoft — already pay H-1B workers well above current prevailing wage floors. For them, this rule is largely a compliance paperwork update. The real burden falls on smaller employers who hired H-1B workers precisely because they could meet the current wage requirements.
Industries most exposed include:
- IT consulting and staffing firms — typically hire at Level I or II, with thinner margins
- Healthcare systems — physicians, nurses, and allied health professionals on H-1B
- University research programs — postdocs and research scientists often classified at lower wage levels
- Regional tech companies — competing with Big Tech for talent without Big Tech salaries
- Professional services firms — accounting, finance, management consulting roles
Staffing agencies that place H-1B workers at third-party client sites face a particularly complex exposure: their LCAs often cover multiple locations with different prevailing wage rates. A 30% increase at the floor level could fundamentally change the economics of those arrangements.
The Effect on H-1B Workers
For workers already employed on H-1B status, the short-term impact is limited — existing LCAs and their wage obligations are unchanged. But renewal time brings new requirements. Workers whose employers cannot or will not meet the new wage floors may face a difficult choice: accept lower-than-market wages (because the employer's obligation at renewal may be less than the new floor, if they choose not to renew), find a new employer willing to sponsor at the new rates, or pursue other status options.
For prospective H-1B workers and their employers, the rule creates a higher bar at the initial hiring stage. Entry-level roles that were previously financially viable to sponsor may no longer pencil out, which could reduce overall H-1B demand — or shift hiring toward senior-level positions where wage floors represent a smaller proportional increase.