Mimi Tsankov
Private practitioner, New York^[1]

In mid-2026, the Department of Labor (DOL) reintroduced a significant regulatory shift intended to fundamentally alter the economic landscape for high-skilled foreign labour in the US. The proposed rule, titled ‘Improving Wage Protections for the Temporary and Permanent Employment of Certain Foreign Nationals’, seeks to restructure the prevailing wage system for the H-1B, E-3, H-1B1 and PERM programmes.^[2] While the DOL frames these changes as a necessary measure to protect domestic workers and prevent wage undercutting, the proposal has ignited a fierce debate, drawing over 1,300 comments from individual tech workers, global corporations and academic institutions.

What the proposed rule changes

At the heart of the proposal is a dramatic upward shift in the four-tier wage system used by the DOL to determine minimum salary requirements for foreign workers. Currently, the DOL uses Occupational Employment and Wage Statistics (OEWS) data from the Bureau of Labor Statistics (BLS) to set these floors by geographic area and specific occupation. The prevailing wage is defined as the average wage paid to similarly employed workers, divided into four skill levels ranging from entry-level to experienced.

The proposed rule would increase the mandatory percentiles for each level as follows:

• Level I (Entry-Level): Increases from the 17th percentile to the 34th percentile (+17 points).
• Level II (Qualified/Moderate Experience): Increases from the 34th percentile to the 52nd percentile (+19 points).
• Level III (Experienced): Increases from the 50th percentile to the 70th percentile (+20 points).
• Level IV (Expert/Fully Competent): Increases from the 67th percentile to the 88th percentile (+21 points).

Under these new mandates, a Level I entry-level wage would jump to the current minimum for a Level II worker. Because the rule is not retroactive, a prudent approach is to lock in current rates while they are still available and begin planning to adapt to the new adjustments as soon as they take effect.

Implementation and scope

The proposed changes are intended to apply prospectively. This means the new wage levels would only affect applications for prevailing wage determinations (PWD) and Labor Condition Applications (LCA) filed on or after the rule’s effective date. Notably, the proposed rule does not include a multi-year phased implementation. So, because prevailing wage determinations for LCAs and PERMs are not technically ‘renewable’, H-1B and E-3 extensions – which require new LCAs – would likely be subject to the higher wage requirements.

Nothing is final yet – commenter responses

During the comment period, which ended on 26 May 2026, the DOL received over 1,300 submissions, a review of which suggests an ideological and economic divide. Supporters of the proposed regulation focus on protecting domestic workers from what they view as a long-overdue correction to reset a system that supports ‘cheap foreign labor’. They argue that the current proposed percentiles don’t go far enough – especially the 17th-percentile floor for Level I workers, which they view as artificially low, allowing firms to hire foreign nationals at rates far below what a qualified American would accept.

They point to perceived flaws in the system, which, for example, permit firms to post jobs in obscure locations in a concerted effort to ensure no Americans apply, and consulting companies to hire and then ‘bench’ low-cost foreign labor to win favourable low-bid contracts, often keeping workers without pay until a contract is secured. Some urge the final percentiles to rise even higher than currently proposed.

Opponents, specifically institutional commentors, forecast economic disruption, a major contraction in talent acquisition, stifled future innovation and operational instability. Local economic conditions, they argue, don’t support the proposed increase in wage floors, especially given the vast differences in compensation structures across business development stages, role specialisation and geographic realities. The rule would incentivise companies to shift roles to other countries where labour costs are more predictable. A number of smaller companies, such as Forward X Robotics and Leaptran, suggested that limited access to global talent would reduce their competitiveness and limit job creation.

Proposed compromises and alternative frameworks

Amidst the polarisation, some commenters have suggested middle-ground solutions. For example, an Electronics Assembly Company urged the DOL to adopt a ‘tailored and evidence-based approach’ that distinguishes between different types of foreign workers. They proposed a ‘safe harbor’ for US-educated graduates in shortage occupations, arguing that foreign students who have earned degrees from accredited US institutions in critical-shortage-area fields such as robotics, semiconductors and cybersecurity have already been integrated into the domestic workforce pipeline and bring unique value, thereby supporting the substantial investment they have made in the US education system. Other proposals included a more moderate ten per cent increase, and another focused on a phased approach.

The role of institutional vs individual feedback

The vast majority of comments posted came from individuals (largely international students and small business owners sharing personal stories), with a small, yet vocal percentage submitted by institutional groups which may carry more legal weight, as they typically submit high-density technical reports filled with economic data and legal arguments.

The DOL is legally required to provide a specific, reasoned response to every unique technical objection raised by these groups. A single detailed report from an institution can sometimes have more impact on the final regulation than thousands of ‘form letter’ comments from individuals.

Timeline and next steps

Now that the public comment period has closed, the DOL must review and consider all feedback. While there is no strict deadline for this review, the agency typically takes a period similar to the 60-day comment window, though it can be shorter or longer depending on the volume of technical objections.

Following the review, the regulation will be finalised and published in the Federal Register. The effective date is typically 30 to 60 days after publication. However, legal challenges are highly likely once the rule is finalised. In fact, this proposal is a reboot of a similar initiative from the first Trump administration, which the Biden administration eventually abandoned after successful court challenges.

What the final rule will look like is hard to predict. It could be implemented in its current form. Or the wage floors could be watered down in response to comments, bringing welcome relief to many firms. Employers need to plan for both scenarios.

What US employers should consider doing today, before the proposed rule goes into effect

Given the uncertainty surrounding the proposed rule, employers need to plan as if it will go into effect, in its current form. With that in mind, here is a list of the top five actions employers should consider to limit exposure:

1. File extensions for any workers whose status expires in 2026 or early 2027; doing so will lock in the prevailing wages in LCAs for up to three years.
2. For employees eligible to pursue a green card, start the PERM process by filing the prevailing wage determination before the rule is finalised to avoid the anticipated higher percentile wage floor.
3. If you have F-1 student employees on OPT, consider filing their H-1B petitions now.
4. Analyse whether your employees can shift out of the DOL four-tier wage system and into the Managers/Executives Category (L-1A) or Individuals of Extraordinary Ability Category (O-1).
5. Run a report of all foreign workers on the payroll subject to the regulations – and calculate how much their salaries will need to rise to ensure future compliance.

What employers can do the day after the rule goes into effect?

Employers should:

1. Check the final rule and its implementation date to determine whether the percentage points have shifted downward. The comments filed during the period may have been persuasive enough to impact the final numbers, and you’ll be able to recalculate your firm’s exposure.
2. Watch for litigation in federal court seeking to pause the regulation's implementation. If an injunction against the rule is issued, employers may be successful at filing applications under the legacy lower rates.
3. Consider whether any workers can shift to a lower-cost metropolitan area with significantly lower mandatory minimum wages.
4. Prepare for anticipated ‘Experience Benchmarking’ audits, as the DOL may want to determine whether all of your workers’ actual experience matches their wage levels. You’ll want to ensure that records are complete and contain copies of all degree and experience letters for each employee.
5. If you have a pending PERM case that fails the new wage test, work with counsel to explore alternative requirements that may keep the role at a lower, more sustainable wage level.

Conclusion

The proposed wage rule represents a significant attempt by the DOL to recalibrate the US labour market's reliance on foreign talent. By significantly raising the cost of employing visa holders, the government is prioritising domestic workers and addressing practices it deems exploitative. Yet the intense pushback from the business and academic communities underscores the potential for unintended consequences, including a possible ‘brain drain’ and increased offshoring of tech roles.

As the comment period has drawn to a close, the DOL faces the challenging task of balancing these competing interests in a way that protects workers without stifling the innovation that drives the American economy. Employers will want to remain vigilant as they develop strategies to minimise exposure amid anticipated changes.