H-1B Wage Levels and OEWS Prevailing Wage Explained

The U.S. Department of Labor proposed on March 27, 2026, to raise the prevailing wage levels used in H-1B and related immigration filings, a shift that would move wage floors to higher Occupational Employment and Wage Statistics, or OEWS, percentiles and could lift some entry-level salaries by more than 30%.

The proposal would change Level I wages to the 34th percentile from the 17th, Level II to the 52nd from the 34th, Level III to the 70th from the 50th, and Level IV to the 88th from the 67th. The department said the changes would apply to new and pending prevailing wage determinations, Labor Condition Applications and PERM filings after any rule takes effect, while existing approvals would be spared.

For employers and foreign professionals, the change would raise costs and alter hiring strategies at the same time that U.S. Citizenship and Immigration Services has tightened petition review through new Form I-129 requirements effective April 1, 2026. Those changes demand more detailed job duty documentation to support the wage level selected.

How the H-1B Wage System Works

The H-1B program requires employers to pay the higher of the prevailing wage for the occupation and location or the actual wage paid to similarly qualified U.S. workers. Employers first file a Labor Condition Application with the Labor Department, then submit a petition to USCIS.

Labor Department analysis of more than 3 million Labor Condition Applications from FY2020-2025 found a $19,000 gap between average prevailing wages and OEWS means. Average prevailing wages were $111,717 certified and $121,908 offered, compared with an OEWS mean of $130,219.

That gap sits at the center of the new proposal. The department argued that the methodology adopted in 2005 set wage floors too low, included non-specialty workers in OEWS data and failed to reflect the Immigration and Nationality Act’s four-tier wage structure.

If finalized after a 60-day comment period due around May 2026, the rule would affect H-1B, H-1B1, E-3 and PERM cases. The department estimated average certified wages would rise by $14,000 a year.

Expected Effects on Wages and Hiring

The immediate impact would be sharpest at the lower end of the scale. Level I, which covers entry-level roles, would rise by 33% in sample calculations, while Level II would rise by 24% and Level IV by 21%.

In one example cited in the guidance, a software developer classified under SOC 15-1252 in Hattiesburg, Mississippi, carries a Level IV wage of $80,122 a year. The same occupation and level in San Jose, California, carries a wage of $264,514, a gap of $184,392 that shows how heavily pay levels depend on location.

Those wage floors matter not only for compliance but also for selection odds in the H-1B cap process. Since FY2025, USCIS has used a wage-weighted lottery that gives registrations at higher wage levels more chances in the annual selection process.

Under that system, Level I receives 1x entries, with selection odds of 15.29%. Level II receives 2x entries, with odds of 30.58%, Level III receives 3x entries, with odds of 45.87%, and Level IV receives 4x entries, with odds of 61.16%.

That structure favors employers willing and able to sponsor workers at higher wage levels. It also places more pressure on companies to align the wage level claimed at registration with the duties and pay later listed in the petition.

USCIS reviews whether the selected wage level matches the position described in the filing. Mismatches can trigger denials or revocations. If multiple registrations are filed for one beneficiary, the system uses the lowest level.

For the FY2027 cap season and beyond, the Labor Department’s proposed OEWS percentile changes could sharpen that divide. Higher wage floors may improve parity with U.S. workers, but they also risk pricing some entry-level positions out of the H-1B market.

Fresh graduates in STEM fields could feel that first. The proposal would push Level I closer to the old Level II standard, narrowing the room employers have used for junior roles.

Documentation, Compliance and Form I-129

Employers have long relied on prevailing wage data that combines occupation, geography and skill level. The four tiers reflect differences in experience, education and supervision, and companies must match the level to the job’s actual demands rather than to salary alone.

That distinction now carries more weight because the new Form I-129 takes effect April 1, 2026. Petitioners must specify the education and field required for the job, the years of experience needed, any special skills and whether the worker will supervise others.

Those details give USCIS more information to compare duties against the wage level listed in the petition. A filing that describes sophisticated work but uses a Level I wage could draw closer scrutiny.

How Employers Determine Prevailing Wages

Employers can use several tools to determine and verify a prevailing wage. The Labor Department’s FLAG system remains the preferred electronic platform for prevailing wage determinations, while OEWS wage data can be checked through OFLC tools and the wage search functions at FLCDataCenter.com.

The process starts with identifying the right Standard Occupational Classification code, then matching the job’s duties, education and experience to the proper skill tier. Geography comes next, because the metropolitan area or balanced metropolitan area can change the wage sharply even within the same occupation.

Independent surveys and other legitimate sources remain available for H-1B and E-3 cases. Whatever source an employer uses, the rule remains the same: the company must pay the higher of the prevailing wage or its actual wage.

That can make compliance expensive in fast-moving labor markets. It can also complicate filings in lower-wage regions, where the proposed percentile shifts could eliminate some salaries that previously supported an H-1B petition.

PERM Cases and Green Card Pathways

The effects stretch beyond temporary visas. The proposed rule also covers PERM filings tied to employment-based green card cases, and more than 57% of FY2024 PERM applications were H-1B extensions.

By aligning the wage tiers across H-1B and PERM, the department aims to prevent what it described as wage arbitrage between temporary and permanent pathways. For workers, that means the salary assumptions used at the H-1B stage may follow them into the green card process.

For some, higher wages could strengthen long-term cases by bringing pay closer to U.S. peers. For others, especially workers early in their careers, the same rule could delay or block the transition from H-1B status to an employment-based green card.

The current system already rewards higher wages in the lottery, and the proposal would raise the salary needed to reach those favored levels. That gives an edge to workers at Levels III and IV and to employers with larger compensation budgets.

At the same time, the guidance cautions employers not to treat salary alone as a shortcut. Paying above the prevailing wage does not, by itself, change the proper wage level for Labor Department purposes, though a higher offered salary can improve lottery weighting if the duties support it.

That creates a narrow lane for companies trying to improve selection odds. A business might offer a Level III wage for a job that otherwise sits near Level II, but USCIS can still question the case if the record does not support the higher classification.

Risks, Penalties and Policy Direction

The compliance risks remain steep. Employers that underpay can face back wages, fines, debarment and petition denials, and the guidance warns that penalties can reach $10K+.

Revocation is also possible when a company inflates a wage level to improve lottery odds and later reduces pay after selection. The wage-weighted system makes that type of scrutiny more important because the benefit of claiming a higher level is immediate and measurable.

The proposal lands amid a wider policy push under President Trump that places more emphasis on wage protections and scrutiny of employment-based immigration filings. In practice, that means higher labor costs, more documentation and less room for error.

Employers preparing cases now must contend with both tracks at once: a proposed wage rule that may lift salary floors and a petition process that demands more precise explanations. Even before the rule is finalized, the message from Washington is clear.

Companies filing H-1B cases will need to show why a role fits a particular OEWS level, how the pay was set and why the petition matches the registration. Workers, meanwhile, may find that the jobs with the best odds are those that already command higher wages and stronger qualifications.

That could reshape the profile of future H-1B beneficiaries. The system already favors experienced candidates through the weighted lottery, and the proposed prevailing wage increases would reinforce that tilt by making lower-paid entry roles harder to sponsor.

For many petitioners, the practical question is no longer simply whether a job qualifies for H-1B. It is whether the employer can support the salary, justify the level, document the duties on Form I-129 and carry the case through both the lottery and later review.

Those choices will play out across thousands of filings in the next cap cycle and in green card cases that follow. With wage floors poised to rise and review standards tightening, the path looks narrower for entry-level cases and stronger for workers whose skills place them at Levels III and IV.