On March 27, 2026, the U.S. Department of Labor (DOL) published a Notice of Proposed Rulemaking (the “NPRM”). The proposed rule would revise the methodology used to calculate prevailing wages for the H‑1B, H‑1B1, E‑3, and PERM labor certification programs by increasing all four Occupational Employment and Wage Statistics (OEWS) wage levels.1
WHY THIS MATTERS
If implemented, the proposal would raise required wage levels for many employment‑based immigration filings, particularly for entry‑level and mid‑level roles. Higher prevailing wage thresholds would lead to increased labor costs for U.S. employers and affect sponsorship strategies, hiring timelines, and long‑term workforce planning. Global mobility, human resources, and compensation teams may wish to evaluate the potential operational and compliance impacts associated with the proposed changes.
Key Highlights
Proposed prevailing wage (PW) adjustments
The NPRM would shift all four wage levels to higher OEWS percentiles, as follows:
Wage level | Current percentile | Proposed percentile | Percent increase over old PW |
Level I (Entry) | ~17th | 34th | +33.4% |
Level II | ~34th | 52nd | +24.5% |
Level III | ~50th | 70th | +20.8% |
Level IV (Senior) | ~67th | 88th | +21.7% |
OEWS data would remain the default source for prevailing wage determinations.
Programs affected
- H-1B
- H-1B1
- E-3 (labor condition application-based filings)
- PERM labor certification for EB-2 and EB-3 classifications
DOL justification for proposing revisions
Documented wage gap
The DOL states that it has identified wage disparities between foreign national workers and similarly situated U.S. workers. According to the NPRM, H-1B workers are paid approximately $10,000 less on average than comparable U.S. workers. In certain occupations, the average wage gap exceeds $10,900.
Additionally, the DOL states that current framework results in prevailing wages below the broader market averages, especially at Wage Level I and Wage Level II.
Statutory alignment with the Immigration and Nationality Act
The NPRM emphasizes that the revised methodology is intended to better align prevailing wage determinations with requirements and objectives of the Immigration and Nationality Act. Specifically, provisions in the act that require the employment of foreign workers to not adversely affect U.S. wages and that require wage levels to appropriately reflect experience, education, and supervisory responsibility.
The DOL states that the current wage structure does not adequately meet these statutory standards and that recalibration of the wage levels is necessary to support wage protection objectives.
Policy direction
The DOL also explains that the proposed rule responds to the Presidential Proclamation issued on September 19, 2025, which directed the agency to review and revise H-1B wage levels due to concerns regarding program misuse.
Impact of revisions if implemented
H-1B, H-1B1, and E-3 programs
For labor condition application-based programs, employers would still be required to pay the higher of:
- the actual wage paid to similarly employed workers; or
- the applicable prevailing wage determined under the revised percentile framework.
For Wage Levels I and II filings, many employers could experience material increases in required wage levels when compared with past filings. In some instances, there are narrow exceptions for wages set under a valid collective bargaining agreement.
PERM labor certification
For permanent labor certification cases, the proposed changes would apply to prevailing wage determinations used in recruitment and ETA 9089 filings. Higher wage requirements could increase recruitment costs, affect the availability of U.S. workers during recruitment, and increase the overall cost of EB-2 and EB-3 sponsorship.
Implementation and timing
The proposed rule would apply prospectively:
- Revised wage levels would apply to prevailing wage determinations that are pending or filed on or after the effective date of the final rule.
- For labor condition application-based filings, the changes would apply to prevailing wage requests filed on or after the effective date where no prior prevailing wage determination exists.
- There would be no retroactive effect. Existing approved prevailing wage determinations, labor condition applications, and PERM certifications would not be reopened or revised.
The proposed rule is subject to a 60-day public comment period following publication in the Federal Register. The effective date is expected to be specified in the final rule after consideration of public comments.
Business and compliance implications
The proposed wage adjustments could increase costs for employers, particularly for entry-level and mid-level roles that would experience the largest relative increases under the revised framework. Employers may also reassess job leveling practices, location strategies, and reliance on H-1B and PERM sponsorship pipelines.
The DOL indicates that the revised structure may result in greater scrutiny of wage level selection, making misclassification into lower wage levels more difficult to support under the updated methodology.
KPMG LAW LLP INSIGHTS
The DOL’s proposal to recalibrate prevailing wage levels represents a significant policy shift with meaningful implications for employers that rely on employment‑based immigration programs.
First, the increase in entry‑level (Level I) wage thresholds may reduce H‑1B sponsorship, particularly in the sectors that heavily rely on immigrants to fill entry-level or junior roles.
Second, the proposal is conceptually aligned with the Department of Homeland Security’s weighted H‑1B lottery framework, which prioritizes higher‑wage registrations. Together, these measures reinforce a broader policy objective of steering the H‑1B program toward higher‑skilled, higher‑paid roles and reducing perceived incentives for wage arbitrage.
Additionally, although employers would retain the ability to rely on alternative wage surveys, greater divergence between employer‑provided survey data and DOL‑published OEWS wage levels may lead to increased scrutiny. In practice, this could result in a higher incidence of Requests for Evidence (RFEs) from U.S. Citizenship and Immigration Services or Request for Information (RFIs) from DOL where wage credibility is questioned.
Finally, for PERM‑based permanent residence sponsorship, the rule signals a potential shift toward increased reliance on DOL‑generated wage data. Employers may face additional challenges in justifying reliance on private wage surveys, particularly where DOL data vastly differs for the occupation and geographic area.
If assignees and/or their program managers have any questions or concerns about the scope of the update, its application and potential impacts, and appropriate next steps, they should consult with their qualified immigration advisers or with a member of the immigration team at KPMG Law LLP in Canada (see the Contacts section).
ENDNOTE:
1 Federal Register website (proposed rule by Department of Labor, Employment and Training Administration, U.S.), “Improving wage protections for the temporary and permanent employment of certain foreign nationals in the United States,” published on March 27, 2026.
Contacts
Disclaimer
* Please note the KPMG International member firm in the United States does not provide immigration or labour law services. However, KPMG Law LLP in Canada can assist clients with U.S. immigration matters.
The information contained in this newsletter was submitted by the KPMG International member firm in Canada.
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