The total price tag? Up to $46 billion – and HR teams have until May 26 to respond
The Department of Labor wants to raise H-1B prevailing wages by as much as 33 percent – and every HR team in the country should be paying attention.
On March 27, 2026, the DOL published a proposed rule that would fundamentally change how prevailing wages are calculated for the H-1B, H-1B1, E-3, and PERM visa programs. If finalized, the changes would push wage floors significantly higher across all four tiers of the prevailing wage structure, a system that has remained essentially untouched since 2005.
The proposal would move Level I wages – those assigned to entry-level positions – from approximately the 17th percentile of the OEWS wage distribution to the 34th percentile. At the top end, Level IV wages for the most experienced workers would jump from the 67th percentile to the 88th. The two middle tiers would land at approximately the 52nd and 70th percentiles, up from the 34th and 50th.
For HR departments, the math is straightforward and unforgiving. The DOL estimates an average annual wage increase of roughly $14,000 per affected worker. Across the system, the agency projects annualized wage transfers – meaning higher costs flowing from employers to workers – of up to $6.56 billion. Over ten years, that figure climbs to as much as $46 billion.
The DOL grounded the proposal in its own analysis of more than three million Labor Condition Applications filed between fiscal years 2020 and 2025. The agency found that the average prevailing wage assigned to H-1B workers was approximately $10,191 lower than the actual wage employers ended up offering – a gap that, according to the DOL, indicates the prevailing wage is set below the market value of comparable U.S. workers. The disparity ran even deeper when measured against the broader labor market: the average of mean OEWS salaries for comparable U.S. workers in the same occupations and locations was roughly $19,000 higher than the prevailing wages assigned under the current system. In computer-related occupations, the gap between offered wages and OEWS averages was $10,972. The agency also noted that 63 percent of certified LCAs in fiscal year 2024 were classified at the two lowest wage tiers, a concentration the DOL argues enables employers to bring in foreign workers at wages well below what the market would otherwise require.
The proposal arrives against a labor market backdrop that the DOL painted in sharp terms. The agency cited Federal Reserve Bank of New York data showing unemployment rates of 7.5 percent for recent computer science graduates and underemployment rates exceeding 17 percent. It referenced ADP payroll figures showing that employment of software developers – the single largest occupational category in the H-1B system – was lower in 2024 than it was in 2018. And it pointed to a 2023 Economic Policy Institute study finding that the top 30 H-1B employers laid off at least 85,000 workers in 2022 and early 2023 while simultaneously hiring 34,000 H-1B workers.
The DOL also flagged the Palmer v. Cognizant case, where a federal jury found that the employer had engaged in a pattern of intentional discrimination against non-South Asian and non-Indian employees. A subsequent court ruling found those employees were roughly seven times more likely to face involuntary termination. The agency separately noted that the EEOC has issued guidance making clear that favoring visa holders over American workers is illegal.
For small businesses, the impact could be especially acute. The DOL identified more than 13,600 unique small employers that use the H-1B program, with custom computer programming firms making up nearly 30 percent of that group. Among the smallest firms in that sector – those with less than $1 million in annual revenue – 91 percent would see costs exceeding 3 percent of total revenue.
The proposal also floated an alternative approach the DOL called Experience Benchmarking, which would match prevailing wages to the actual education and experience of the sponsored worker rather than relying on the employer's description of minimum job requirements. The agency said this method would effectively end wage arbitrage and make it harder for employers to strategically classify positions at lower wage levels.
The proposed rule was prompted by Presidential Proclamation 10973, issued September 19, 2025, which directed the Secretary of Labor to revise prevailing wage levels under the H-1B program.
The comment period is open until May 26, 2026. After that, the DOL must review public input before issuing any final rule. There is no set timeline for when that might happen. A previous attempt to raise prevailing wages through an October 2020 Interim Final Rule was set aside by federal courts on procedural grounds, and a subsequent January 2021 Final Rule was vacated by the Northern District of California at the DOL's own voluntary request. Neither rule ever took effect.
Nothing in the proposal would apply retroactively. If finalized, the new wage methodology would cover prevailing wage determination applications pending with the OFLC National Processing Center as of the effective date, as well as new applications and LCAs filed thereafter.
