H-1B Prevailing Wage: How It’s Set and How to Stay Compliant
The H-1B prevailing wage is the federally mandated minimum salary that employers must pay H-1B workers based on what similarly employed US workers earn in the same geographic area for comparable work. Rates are determined through the Department of Labor's wage determination process using occupation classification, location, and four experience-based skill levels. Employers must obtain official prevailing wage determinations through the National Prevailing Wage Center, ensure that wages match job duties and employee qualifications, and update determinations when work locations or responsibilities change in order to avoid audits, back-pay liabilities, and visa denials.
If you employ H-1B workers, getting the H-1B prevailing wage right isn't optional. This federally mandated minimum protects foreign workers and the US labor market, but it creates serious compliance obligations for employers. Mistakes trigger Department of Labor audits, back-pay liabilities, and visa denials. Recent policy shifts have increased scrutiny, including proposals to rank H-1B selections based on wages.
This article explains how the prevailing wage is calculated, where the data comes from, and the exact steps to obtain your determination. You'll learn the most common compliance mistakes employers make and how to avoid them, especially when managing complex payroll across multiple projects or job sites.
Understanding H-1B Prevailing Wage Basics
Before jumping into determination processes and compliance requirements, let's establish what the H-1B prevailing wage actually is and why it exists. Understanding these fundamentals will help you navigate the more technical aspects that follow.
What Is the H-1B Prevailing Wage?
The H-1B prevailing wage is the average wage paid to similarly employed workers in a specific geographic area for a given occupation. It's a floor, not a ceiling, so you must pay your H-1B employee at least this amount, though you're free to pay more. This wage reflects what American workers in comparable positions earn, ensuring that foreign workers aren't hired at artificially low rates that would undercut the local labor market.
The prevailing wage is a benchmark that adjusts based on three key factors: the job's duties and complexity, the geographic location where the work is performed, and the employee's experience level. For example, a software engineer in San Francisco commands a different H-1B prevailing wage than one in Nashville even if their job titles match.
The H-1B prevailing wage is the minimum salary you must pay an H-1B worker based on what similarly employed US workers earn in the same geographic area for comparable work.
How H-1B Prevailing Wage Determination Works
The H-1B prevailing wage determination follows a structured process that combines government wage surveys, geographic data, and job classification rules. Employers submit detailed information about the position, and the Department of Labor (or sometimes a third-party source) returns the minimum wage you must pay.
Where Prevailing Wage Data Comes From
The Department of Labor maintains the Foreign Labor Certification Data Center, which houses wage information from two primary sources: the Occupational Employment Statistics (OES) survey conducted by the Bureau of Labor Statistics, and wage surveys submitted by private entities or state workforce agencies. The OES survey tracks wage data across hundreds of occupations and metropolitan statistical areas, with annual updates to reflect current market conditions.
When the OES lacks sufficient data for a particular occupation or location, which happens frequently with specialized roles or rural areas, employers can request a prevailing wage determination directly from the National Prevailing Wage Center (NPWC). The NPWC will either use available OES data or, in rare cases, accept an alternative survey if it meets Department of Labor standards for sample size, methodology, and recency.
If you manage field workers across multiple counties or states, pay close attention here. As mentioned earlier, the H-1B prevailing wage determination is location-specific. When your employee's work location changes mid-contract, verify whether the H-1B prevailing wage for the new area exceeds what you're currently paying and adjust accordingly.
The Four H-1B Prevailing Wage Levels Explained
Every H-1B prevailing wage determination assigns one of four skill levels to the position, each reflecting education, experience, and job complexity. These levels directly determine the wage floor, with Level I representing entry-level roles and Level IV encompassing highly specialized positions requiring advanced expertise.
The table below breaks down how each wage level corresponds to specific experience requirements and job characteristics:
Misclassifying an experienced engineer as Level I to lower costs invites serious problems. If the job description outlines duties that require independent problem-solving or project leadership, the Department of Labor expects a Level III or IV classification, and a corresponding H-1B prevailing wage. This is where many employers trip up: They draft a robust job posting to attract top talent, then select a lower wage level to cut costs, creating an inconsistency that auditors catch immediately.
The wage level you choose must align with the actual duties and experience outlined in your job description. Having inconsistencies between the two is one of the fastest ways to trigger a Department of Labor audit.
Step-by-Step: Obtaining Your H-1B Prevailing Wage Determination
Securing an H-1B prevailing wage determination requires attention to detail and accuracy at every stage. Employers obtain this determination through the Department of Labor's online system or by using other approved wage sources. The process calls for specific information about the job, the work location, and the employee's qualifications. Here's how to handle it properly.
Filing Through the FLAG System
The Foreign Labor Application Gateway (FLAG) is the Department of Labor's online portal for submitting prevailing wage determination requests. Start by creating an account, then complete Form ETA-9141 with precise details about the position in question. You'll need the Standard Occupational Classification (SOC) code that best matches the job duties, the primary worksite address (including the zip code), and a thorough job description covering daily responsibilities and required qualifications.
The National Prevailing Wage Center (NPWC) will review your submission and issue a determination, usually within a few weeks, though complex cases or high-volume periods can extend this timeline. The determination letter specifies the H-1B prevailing wage amount, the wage level assigned, and the expiration date (it is typically valid for the period requested but never exceeding the duration of the petition).
Follow these steps to ensure that your determination goes smoothly:
- Identify the correct SOC code: Review the Occupational Employment Statistics database to match your job duties with the appropriate classification.
- Draft a detailed job description: Include specific tasks, required education, and experience.
- Submit Form ETA-9141 via FLAG: Enter the worksite address, select the wage level that matches your job requirements, and upload supporting documents if requested.
- Review the determination carefully: Verify that the wage level, location, and occupation align with your expectations. If the determination seems incorrect, you can request reconsideration with additional documentation.
- Track expiration dates: The H-1B prevailing wage determination expires after a set period. Start the renewal process early if your employee's visa extends beyond the determination's validity.
A complete and accurate job description is the foundation of a defensible H-1B prevailing wage determination. Rushed or generic descriptions create compliance gaps that auditors quickly identify.
Using Alternative Wage Surveys
When OES data falls short, which is common with specialized roles or in less populated areas, employers may reference alternative wage surveys. These must meet strict Department of Labor criteria, including statistically valid sample sizes and current data.
If you choose this route, document your rationale clearly and retain copies of the survey source. An H-1B prevailing wage determination based on alternative data receives heightened scrutiny, so precision matters even more. For additional guidance on managing wage determinations efficiently, especially when tracking multiple employees across projects, see our prevailing wage software article.
Who Sets the H-1B Prevailing Wage?
Multiple entities influence the H-1B prevailing wage, but the Department of Labor holds final authority over determinations. Understanding which agencies collect data, which ones issue official determinations, and how employers can verify wage accuracy helps you navigate the system correctly and avoid costly compliance errors.
The Department of Labor's Role
The NPWC has final authority over H-1B prevailing wage determinations. It uses data from the Bureau of Labor Statistics’ Occupational Employment Statistics program to establish wage levels and verify employer submissions made through the FLAG system. While the Online Wage Library offers quick estimates, only an official NPWC determination satisfies Labor Condition Application requirements.
State Workforce Agencies and Private Surveys
State workforce agencies occasionally conduct their own wage surveys, particularly for industries with strong regional presence like construction or healthcare. These surveys can supplement OES data when geographic coverage is sparse. However, the NPWC must approve any state-conducted survey before it can support an H-1B prevailing wage determination. Employers cannot unilaterally adopt state wage data without NPWC validation.
Private wage surveys published by professional associations, industry groups, or compensation consultancies face even stricter scrutiny. The Department of Labor requires documentation proving the survey's methodology, sample demographics, and data recency. For project-based businesses managing field workers across state lines, tracking which wage sources apply to each location adds administrative complexity.
This is where automation becomes essential, maintaining accurate wage records, tracking expiration dates, and linking pay rates to specific job codes demands more than spreadsheets. Tools that integrate payroll systems with compliance tracking reduce the risk of underpayment or missed updates. See how prevailing wage forms fit into broader compliance workflows.
Comparing Wage Determination Sources
Understanding which wage source applies to your situation helps you choose the right path for compliance. Here's how the main sources compare.
Only an official NPWC determination satisfies Labor Condition Application requirements. Informal wage estimates from the Online Wage Library or private surveys cannot substitute for the formal process.
If you manage workers across different job sites or handle evolving project assignments, integrating wage compliance into your broader payroll and job costing systems prevents gaps. Dapt connects payroll platforms like ADP and Paychex with time tracking and accounting tools, ensuring that when an H-1B employee's location or duties change, the system flags potential wage adjustments before they become compliance issues. This integration eliminates manual cross-checking and reduces the risk of underpayment. Need help automating wage compliance alongside job costing? Contact us to see how Dapt streamlines these workflows for project-based businesses.
Conclusion: Staying Ahead of H-1B Prevailing Wage Requirements
Managing H-1B prevailing wage compliance requires precision when handling job classifications, geographic tracking, and wage adjustments over time. When employees move between project sites or take on expanded responsibilities, recalculating the H-1B prevailing wage becomes a regulatory requirement that protects your business from audits and penalties.
Start with an audit of your current H-1B workforce. Verify that each employee's actual duties match their assigned wage levels, confirm that work locations align with the determination on file, and identify any positions approaching determination expiration dates. Automation eliminates guesswork and keeps wage data synchronized with real-time labor assignments for project-based businesses managing multiple job sites and complex payroll structures.
FAQs
What is the minimum salary for an H-1B visa?
There's no single minimum salary for all H-1B positions: The required wage depends on the H-1B prevailing wage determination for your specific occupation, geographic location, and experience level. For example, an entry-level software engineer in San Francisco will have a different wage floor than a senior engineer in a rural area.
Can H-1B workers be paid hourly?
Yes, H-1B workers can receive hourly pay as long as their total compensation meets or exceeds the required H-1B prevailing wage when calculated on an annual basis. Employers must track hours carefully and ensure that any hourly rate, when multiplied by expected annual hours, satisfies the wage determination.
Do bonuses count toward the H-1B wage requirement?
Guaranteed bonuses that are non-discretionary and part of the compensation structure can count toward meeting the prevailing wage, but discretionary or performance-based bonuses typically do not. The base salary alone should meet the required wage floor to avoid compliance issues during audits.
Does H-1B have a salary cap?
There is no maximum salary cap for H-1B workers; the prevailing wage sets only the minimum floor, and employers are free to pay above that amount. Paying significantly above the prevailing wage can actually strengthen your petition by demonstrating the specialized nature of the role.
What happens if an employer pays below the H-1B prevailing wage?
Paying an H-1B worker less than the required prevailing wage can trigger Department of Labor audits, back-pay liabilities, fines, and even debarment from future visa sponsorships. It may also lead to H-1B petition denials or revocations. Employers should regularly review wage determinations, especially when job duties or locations change, and use automated systems to ensure ongoing compliance across all payroll and project sites.
