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H-1B Employees Must Be Paid The Local Prevailing Wage Or The Actual Wage (Whichever Is Higher)

Posted on Friday, January 21, 2011

If you have ever worked in H-1B status, you may have wondered what your employer’s obligations were regarding wages. An H-1B employer’s wage obligations can hardly be summarized in a three-paragraph blog posting, but the following is a short explanation of arguably the most important obligation. Every H-1B petition must be filed with a Labor Condition Application (“LCA”) that has been certified by the U.S. Department of Labor. The LCA contains several statements that the employer must agree to, including that the employer will pay nonimmigrants at least the local prevailing wage or the employer’s actual wage (whichever is higher).

The prevailing wage refers to the average wage paid to similarly employed workers in a specific occupation in an area of intended employment as determined by a legitimate source of wage data. The actual wage refers to the wage rate paid by the employer to all other individuals with similar experience and qualifications for the specific employment in question. In determining the wage rate, employers may consider experience, education, job responsibility and function, specialized knowledge, and other legitimate business factors. Where there are other employees with substantially similar duties and responsibilities as the H-1B nonimmigrant, the actual wage rate shall be the amount paid to these other employees. Where there are no other employees with substantially similar duties and responsibilities as the H-1B non-immigrant, the actual wage shall be the wage paid to the H-1B non-immigrant by the employer.

For example, suppose an information technology company located in Chicago, IL has offered a foreign national a position as a Software Developer. Suppose further that this company has four other employees working as Software Developers and is paying each of them $25.00 per hour. The FLC Data Center, which reflects wage data collected by the U.S. Department of Labor, indicates that the level 1 prevailing wage in the Chicago area for a Software Developer is $29.55 per hour. Given that the prevailing wage is higher than the employer’s actual wage rate, to satisfy the LCA wage requirement, the employer must pay the foreign national a wage rate of $29.55 per hour for the entire period of authorized employment. Now suppose that the company is paying its four existing Software Developers $35.00 per hour. If these employees all have similar experience and qualifications as the foreign national, then to satisfy the LCA wage requirement, the employer must pay the foreign national a wage rate of $35.00 per hour for the entire period of authorized employment.

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