California Federal Court Rejects New Prevailing Wage Rules


On December 1, 2020, a California federal district court (the United States District Court for the Northern District of California) has rejected the new prevailing wage rules promoted by two United States agencies, the Department of Labor and the Department of Homeland Security. Both were fast-tracked in the early part of October 2020. The rules suppressed the hiring of mainly H-1B workers by raising wages and changing eligibility requirements. The federal court ruling sets aside the changes for now, but the U.S. government is expected to appeal.

The Department of Labor rule took effect quickly on October 8 as soon as the decision by the government agency was made. However, the Department of Homeland Security enforcement of rule changes was delayed 60 days and was expected to become effective on December 7.

What the New Prevailing Wage Rules Did

The new prevailing wage rules restricted previous qualifications and wage structures. Specifically,

  • The rule changes issued by the Department of Labor changed the prevailing wage structure for H-1B, E-3 and H-1B1 and that of the PERM labor certification which is required for most EB-2 and EB-3 immigrant petitions. This would have increased the minimum prevailing wage significantly for professional workers and other types of alien workers.
  • The rule changes issued by the Department of Homeland Security affected H-1B applicants. It changed the eligibility standards for jobs that fall within this category. It also put new restrictions into play for H-1B workers at third-party sites. Evidentiary policies were reinstated after having been relaxed in the past.

Why the Federal Court Rejected the New Prevailing Wage Rules

The court’s action was in response to a lawsuit filed by the National Association of Manufacturers, the Chamber of Commerce and several academic institutions. The lawsuits stated that the Department of Labor and Homeland Security did not follow proper federal procedures. These procedures usually allow for notice in advance of the bill, which gives the public ample time for discussion and feedback.

In addition, the lawsuits said that the new rules were capricious and arbitrary and relied on inaccurate facts and poor logic in designing the changes. All the plaintiffs in the various lawsuits are asking the court to stop the enforcement of the rules.

Work Visas

The H-1B is one type of work visas that allows foreign workers to go to the United States and work for an American company. The field the worker is qualified to work in must require specialized knowledge for which no American worker can be found. Employers who hire an H-1B visa worker must comply with the prevailing wage issued by the Department of Labor.

Employment-Based Immigrant Visas

There are several categories of employment-based immigrant visas such as:

  • EB-1: Such applicants are considered to be extraordinary in their fields such as celebrities, scientists and inventors.
  • EB-2: Employers often use this category to file immigrant petitions for alien workers. Minimum requirements for the alien worker are a master’s degree or a bachelor’s with five years of experience.
  • EB-3: This category has fewer requirements and is commonly used. It requires the alien workers to have a bachelor’s degree or experience in the field for two years.

Most EB-2 and EB-3 immigrant petitions must obtain prevailing wage determination from the Department o f Labor at the early beginning of their green card applications.

How Did the Government Justify the Prevailing Wage Rule Changes?

The government agencies said that the prevailing wage rule changes were necessary due to the economic issues caused by Covid-19 and the need to give support to American workers.

Where Does It Go From Here?

The government appeal of this federal court decision could limit its movement forward. There is no guarantee that the rules will not be reissued either. Good news is that the Department of Labor is working on pushing out a public notice as a result of the decision out of the United States District Court for the Northern District of California. We at DYgreencard will keep monitoring this situation and provide our readers with updates as they appear.

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