New and Lower Prevailing Wages Expected for H1Bs & Labor Certifications for University and Government Researchers
Prior to May 1998

The Employment and Training Administration (ETA) of the Department of Labor (Department or DOL) is publishing a final rule relating to labor certification for permanent employment of immigrant aliens in the United States. The amendments change the way prevailing wage determinations are made for researchers employed by colleges and universities, Federally Funded Research and Development Centers (FFRDC's) operated by colleges and universities, and Federal research agencies.

The final rule also changes the way prevailing wages are determined for these institutions when filing for H1B labor condition applications on behalf of researchers. Effective from May 4, 1998, prevailing wage determinations for researchers employed by colleges and universities will be based solely on the wages paid by such institutions and no longer on prevailing wages as determined by SESAs and no longer will such wages have to compete with the private industry.

The Department of Labor Regulations sets forth the responsibilities of employers who desire to employ foreign nationals permanently in the United States. Such employers are required to demonstrate that they have attempted to recruit U.S. workers through advertising, through the Federal-State Employment Service System, and by other specified means.

The purpose of these regulations is to assure an adequate test of the availability of qualified, willing, and able U.S. workers to perform the work, and to ensure that aliens are not employed under conditions that would adversely affect the wages and working conditions of similarly employed U.S. workers.

Employers seeking a permanent labor certification must recruit for U.S. workers at prevailing wages. The local Department of Labor Offices in each State --the State Employment Service Agencies (SESAs)-- survey prevailing wage rates on behalf of DOL.

The prevailing wage methodology set forth is used not only in determining prevailing wages for the permanent labor certification program, but is also followed in determining prevailing wages for the H2B temporary nonagricultural certification program and the H1B labor condition application (LCA) program.

Effects of Hathaway Children's Services on Prevailing Wages

In accordance with the en banc decision of the Board of Alien Labor Certification Appeals (BALCA or Board) in Hathaway Children's Services (91-INA-388, February 4, 1994), prevailing wages are calculated by using wage data obtained by surveying employers across industries in the occupation in the area of intended employment. In Hathaway, the BALCA overruled its decision in Tuskegee University (87-INA-561, Feb. 23, 1988, en banc), which had interpreted Sec. 656.40 to permit an examination of the nature of the employer's business in ascertaining the appropriate prevailing wage.

In Tuskegee, the Board had said, in relevant part:

Thus to be "similarly employed'' for purposes of a prevailing wage determination, it is not enough that the jobs being compared are in the same occupational category; they must also be "substantially comparable." Accordingly, it is wrong to focus only on the job title or duties; the totality of the job opportunity must be examined. It is clear that it is not only the job titles, but the nature of the business or institution where the jobs are located -- for example, public or private, secular or religious, profit or non- profit (sic), multinational corporation or individual proprietorship -- which must be evaluated in determining whether the jobs are "substantially comparable.''

The Board stated in Hathaway that its holding in Tuskegee was ill- advised and explicitly overruled it. The Board went on to say that:

In accordance with the holding in Hathaway, SESA's were instructed to survey all employers, without regard to the nature of the employer, in the area of intended employment in determining prevailing wages for an occupation.

It was subsequently asserted that implementation of this policy resulted in considerably higher prevailing wage determinations for research positions in colleges and universities. The higher education community maintained that this policy jeopardized its ability to recruit foreign researchers with talents and skills not readily available in the U.S.

Further, following the decision in Hathaway, the DOL received comments and inquiries from Congress and other Federal agencies and organizations, such as the Council of Economic Advisors (CEA); National Science Foundation (NSF); Department of Defense, Defense Research and Engineering (DRE); Office of Science and Technology Policy (OSTP); National Institutes of Health (NIH); National Aeronautics and Space Administration (NASA); United States Department of Agriculture (USDA); United States Geological Survey (USGS), Department of Energy (DOE), and Department of Transportation (DOT), expressing concern about the Department's change of policy in determining prevailing wages for researchers employed by universities.

Bases for Proposed Rule

The Department believed there were substantial policy reasons to propose an exception to the current rule. Among the bases of the proposed rule were:

The nonproprietary nature of academic research as articulated by the American Association of Universities. The Department specifically requested comments on whether there are attributes of academic research that distinguish it from research conducted by private, for-profit employers. This was a factor in determining that such workers are not similarly employed.

Other Federal agencies. Other Federal agencies and organizations with an interest in the research talent, knowledge, skills and abilities available to the U.S. academic community expressed concerns that the Hathaway decision could interfere with the ability of institutions of higher education to obtain the services of talented foreign scholars and researchers.

The belief of the academic community and others that intangible, non-pecuniary factors that are incentives for working in an academic environment should be considered in determining prevailing wages for researchers employed by institutions of higher education.

In sum, the proposal reflected a determination that consideration of all of the above factors supported a conclusion that researchers employed by colleges and universities may not be similarly employed to researchers employed by private, for-profit employers.

Criticism against the DOL has been levied for taking over 2 years to publish its final rule.

Although at present the DOL is satisfied that it has undertaken an exhaustive review of this matter, however, it plans to study the impact of the final rule over the next 5 years, and determine whether the bases for promulgating the rule continue to remain valid.