H-1B Salaries in Downturns: Legal Limits You Must Know

(UNITED STATES) Employers that sponsor workers in the H‑1B program often feel strong pressure during economic downturns. Revenue drops, clients cancel projects, and leadership looks for fast ways to cut costs. Salary reductions may seem like the simplest step. But U.S. law treats H‑1B wages very differently from most at‑will employment, and there is far less flexibility than many managers think. In most cases, an employer cannot legally reduce an H‑1B worker’s pay, even when the company is cutting salaries for everyone else.

At the center of these rules is the required wage. For every H‑1B employee, the employer promises the government that it will pay at least the required wage for the entire period of authorized employment. That promise does not change just because the economy weakens or a project fails. The U.S. Department of Labor (DOL) and U.S. Citizenship and Immigration Services (USCIS) can both step in if an employer breaks that promise, and the penalties can be serious.

How the required wage works for H‑1B workers

The law does not let an employer choose any salary it wants. Instead, the employer must pay the higher of two numbers:

1. The prevailing wage for that type of job in the same local area, as set under DOL rules, or
2. The employer’s actual wage, meaning what it normally pays other workers in similar positions with similar experience and skills.

The result of that comparison is the required wage, and that is the minimum lawful salary for the H‑1B worker. If the company reduces pay for some U.S. workers in similar roles, the actual wage might fall. But if that lower amount is now below the prevailing wage, the employer must still pay at least the higher prevailing wage to the H‑1B employee. The required wage does not drop just because coworkers’ salaries drop.

These protections apply regardless of economic conditions. A recession, a funding crisis, or a sudden collapse in demand does not change the legal floor set by the required wage. Employers that treat H‑1B salaries as if they were fully flexible can quickly fall out of compliance, even if their intent was to treat everyone “equally” in a round of salary cuts.

Who must follow these H‑1B wage rules

Any employer that has filed an H‑1B petition and obtained approval for a foreign worker is bound by these wage commitments. It does not matter:

• Whether the company is large or small
• Whether the worker is in tech, finance, healthcare, or another field
• Whether the job is at a client site or the company’s own office

If a worker is in H‑1B status based on that company’s petition, the company must meet the required wage for the full period listed on the approval notice, unless there is a proper change in the terms of the job backed by new filings.

These duties also continue even when business is slow. For example, if an IT consulting firm places an H‑1B software engineer “on the bench” because there is no client project, the firm still has to pay the required wage, as long as the worker is available and ready to work. The company cannot avoid its wage duties by saying the worker is unassigned or waiting for the next contract.

Common downturn scenarios and what the law allows

During an economic downturn, managers often consider a few standard options. The law treats each one differently for H‑1B workers:

• Across‑the‑board salary cuts. If a company cuts pay by, say, 15% for all staff, it still may not cut an H‑1B worker’s salary below the required wage. If the cut would push the worker’s pay under the prevailing wage or the employer’s actual wage level for similar jobs, the cut is not allowed. The company must either keep pay at the required wage or take a different step.

• Benching or unpaid idle time. Some employers try to stop paying H‑1B workers when they have no billable work. This is not allowed unless the worker is voluntarily absent for personal reasons (for example, a long vacation or leave the worker requested). If the lack of work is the employer’s choice or the result of the business slowdown, nonproductive time must still be paid at the required wage.

• Reducing hours from full‑time to part‑time. Moving an H‑1B employee from full‑time to part‑time is a material change in the job. Under the rules, this change requires an amended H‑1B petition. Even after hours are reduced, the hourly or pro‑rated pay still has to meet or exceed the required wage for the new schedule. Simply cutting hours and pay without updating the government filings leaves the employer exposed.

• Furloughs and unpaid leave. If the company imposes unpaid furloughs on everyone during a downturn, it still cannot treat an H‑1B worker like an at‑will employee. Unless the furlough is truly voluntary from the worker’s side, unpaid time may violate the required wage promise. Employers that want to pause work for H‑1B staff often need legal advice before acting.

According to analysis by VisaVerge.com, these issues often surface during audits or after a complaint, when DOL reviews payroll records and compares them to the wage promises made in the original H‑1B paperwork.

Prevailing wage, actual wage, and required wage in plain language

Because these terms confuse many people, here is a concise breakdown:

Once the required wage is fixed at the start of the H‑1B job, the employer must keep paying at least that amount for the entire approved period, unless there is a proper change with new filings. Even if new data later shows a lower prevailing wage, or the company’s internal pay scale drops, that does not lower the required wage for the current H‑1B worker.

Records, audits, and government enforcement

Employers must keep detailed records showing how they set the wage and how they pay the worker. One key file is the Public Access File, which must document how the wage level was chosen and how it compares to both the prevailing wage and the actual wage.

DOL can investigate based on:

• A complaint from the worker or a coworker
• Tips from others with knowledge of the pay practices
• Targeted or random audits

If DOL finds that an employer has paid less than the required wage, it can order back wages, meaning the company must pay the missing amounts to the worker. DOL can also impose civil money penalties and, in serious cases, debar the employer from filing future H‑1B petitions.

USCIS may also question wage issues when the employer later files extensions or new H‑1B petitions for the same worker. A pattern of underpayment can lead to closer review and more requests for evidence.

For official guidance on H‑1B wage and program duties, employers and workers can review the information on the USCIS H‑1B specialty occupations page.

Practical steps for employers during a downturn

When business conditions worsen, employers that rely on H‑1B workers should plan carefully instead of rushing into across‑the‑board cuts. Practical steps include:

• Review the original wage commitments for each H‑1B worker and confirm the current required wage.
• Check whether planned pay cuts would push any H‑1B salary below the required wage.
• Consider alternatives, such as reducing bonuses for other staff, cutting other costs, or restructuring teams in ways that do not violate wage rules.
• If a real change in the job is needed (for example, fewer hours or a move to a different location), seek legal advice on whether a new or amended petition is needed.

Employers that ignore these rules risk not only government penalties but also business problems if key foreign staff lose status or must leave the country because of unlawful wage changes.

Key employer takeaway: Treat prevailing wage and required wage obligations as binding legal commitments — don’t assume H‑1B pay is as flexible as at‑will staff pay, especially in downturns.

Practical tips for H‑1B workers facing salary pressure

H‑1B workers often feel caught between fear of job loss and fear of losing legal status. When managers raise the idea of a pay cut, it helps to know the basic wage rules.

Workers can:

• Ask politely whether the proposed salary is still at or above the required wage for their role.
• Keep copies of offer letters, pay stubs, and any written notice of salary changes.
• Seek private legal advice if they believe the employer has dropped their pay below the required wage.
• Remember that nonproductive time caused by the employer, such as benching without work, must still be paid.

In 2025, DOL has continued to enforce these rules firmly, and penalties for noncompliance have grown. At the same time, the H‑1B program itself has become more expensive, with a $100,000 fee for new H‑1B petitions taking effect on September 21, 2025. That added cost can make employers even more cautious about hiring or keeping H‑1B staff.

In this environment, both employers and workers need to treat the prevailing wage and required wage rules as fixed legal obligations, not flexible suggestions, no matter how rough the economy becomes.