When a U.S. employer hires H‑1B workers, they must pay at least the prevailing wage for the job. The U.S. Department of Labor (DOL) sets this wage using a strict formula. Personal deals, market swings, or company budget problems do not matter. The law focuses on the job itself, the Geographic Area of Employment, and the type of work being done. This system is meant to protect both foreign workers and U.S. workers from unfair pay.
According to analysis by VisaVerge.com, many employers still think they can argue that “the market is down” or “we couldn’t afford more” when setting pay. Under DOL rules, those reasons are not accepted. If the offered wage is lower than the prevailing wage, the job does not meet H‑1B standards, and the case can be denied or lead to serious penalties.
Who must follow prevailing wage rules
These rules apply whenever an employer wants to hire or keep a worker in H‑1B status in the 🇺🇸 United States.
Key requirements in plain terms:
- The job must qualify as a “specialty occupation.”
- The worker must be offered at least the prevailing wage for that occupation.
- The wage must match the location where the person will actually work.
If a company has several offices, the Geographic Area of Employment matters a lot. A software engineer in a high‑cost city will often have a higher prevailing wage than someone with the same title in a smaller town. The employer cannot simply choose the cheaper location’s wage if the work is performed in the higher‑cost area.
For the DOL’s official explanation, see: Foreign Labor Certification – Prevailing Wages.
How DOL classifies the job itself
To set the prevailing wage, the DOL first decides what kind of job it is. Officers do not look at the individual worker’s entire resume; they look at the job description and its requirements.
Key steps include:
- Occupational classification (O*NET‑SOC code)
The job is matched to the closest Standard Occupational Classification (SOC) code in the O*NET system. DOL compares the job duties, required education, skills, and experience with what appears in that code. - Job requirements, not the person’s background
If the employer says the job is entry‑level and the duties match that description, the case is treated as entry‑level even if the worker has a Ph.D. The DOL does not raise the prevailing wage because the worker is highly qualified, and it does not allow the employer to lower the wage because the worker agreed to accept less.
This emphasis on the position (not the person) prevents employers from underpaying by claiming that a newly arrived worker will accept less.
Why geographic area of employment changes the wage
The Geographic Area of Employment is the second main part of the calculation. The DOL relies on wage data from Metropolitan Statistical Areas (MSAs) and other sub‑state regions. The prevailing wage reflects what similarly employed workers earn in that specific area.
Examples:
- A civil engineer in a major coastal city may have a much higher prevailing wage than a civil engineer in a rural area.
- If a worker is assigned to a client site in another city, that new location can trigger a different prevailing wage.
Because of this, employers must be precise when defining where work will be done. Remote work does not remove this duty — the location where the H‑1B worker actually performs work is what counts.
When filing I-129, include a precise job description, all work locations in the Geographic Area of Employment, and attach the wage data sources showing the offered wage meets the prevailing wage.
Wage Levels I–IV and how they are chosen
Once the DOL has the correct SOC code and area, it assigns a wage level from I to IV. Each level reflects the complexity of the job and how much independence is expected.
Wage level descriptions:
| Level | Description |
|---|---|
| Level I | Entry‑level, routine tasks, close supervision. |
| Level II | Some experience, moderately complex duties. |
| Level III | Advanced knowledge, independent judgment. |
| Level IV | Expert or fully competent, often with supervisory duties. |
The level is based entirely on the job’s requirements compared against normal O*NET descriptions. If the employer describes a senior role that includes training others and making key decisions, Level I will not be appropriate.
DOL mainly uses data from the Occupational Employment Statistics (OES) survey and, in some cases, approved union contracts or private wage surveys.
Why market conditions do not matter
DOL rules are clear: market conditions are not a valid excuse for paying below the prevailing wage. The Immigration and Nationality Act requires that hiring foreign workers must not harm the wages and working conditions of U.S. workers. Allowing lower pay during a soft market would undercut that purpose.
The following reasons cannot justify a lower wage:
- Low demand in the industry
- Company budget cuts or start‑up status
- A worker’s personal willingness to accept less
- “We negotiated this salary with the employee”
The system is designed to prevent employers from gaining an unfair cost advantage by paying H‑1B workers less than U.S. workers in the same roles.
Important: Even if an H‑1B worker agrees to a lower salary, the employer is still legally required to pay at least the prevailing wage. Failure to do so can lead to audits, back‑pay orders, denials, and other penalties.
Do not justify below-prevailing wages with market swings or budget woes; violations can trigger audits, back pay orders, denials, and penalties for the employer.
Practical documentation and process tips for employers
To meet prevailing wage rules, employers should build a clear paper trail. While procedures can involve several forms, these basic steps are essential:
- Write a precise job description.
Include duties, minimum education, years of experience, and special skills that reflect the business’s true needs. - Specify all work locations.
List the main office and any client sites where the worker will be placed in the Geographic Area of Employment. -
Keep evidence of wage data used.
Save screenshots or printouts if using official DOL wage data, and keep copies of any approved surveys.
When filing the H‑1B petition with USCIS using Form I‑129, the offered wage must meet or exceed the prevailing wage already determined. Form I‑129 is available here: Petition for a Nonimmigrant Worker.
Common concerns from workers and how to respond
Many H‑1B workers ask whether they can accept a lower salary to “help” the employer or to keep their job. Under DOL rules, the answer is no. Even if the worker agrees, the employer must still pay at least the prevailing wage.
Remind HR to document the job requirements and SOC code, and save official wage data or surveys as part of the H-1B filing evidence.
Recommended actions for workers:
- Ask how the employer determined the wage level.
- Confirm that the pay meets the official prevailing wage for the occupation and location.
- Keep copies of offer letters, pay stubs, and any wage‑related documentation in case questions arise later.
Knowing how prevailing wage works gives both employers and workers a clearer path to safe, lawful H‑1B employment.
The DOL determines prevailing wages for H‑1B positions using occupational classification, the Geographic Area of Employment, and wage levels I–IV. Employers cannot rely on market downturns, budgets, or an employee’s willingness to accept less; the law protects both foreign and U.S. workers. Employers should prepare precise job descriptions, list all work locations, and retain wage-source evidence. Noncompliance risks denials, audits, back pay, and penalties, while workers should keep documentation of offers and pay.
