DOL's Universal Wage Hike Deals a Double Blow to H-1B and PERM, Creating New Variables for Korean IT Self-Employed and Employment-Based Green Cards

Korean IT consulting firm presidents in Fort Lee, New Jersey, and Flushing, New York, share a common sentiment: “We managed to get through this year's H-1B lottery, but what comes next is even more daunting.” Following the implementation of the wage-based lottery system on February 27, 2026, which reduced the selection rate for entry-level (Level I) positions to approximately 15%, the U.S. Department of Labor (DOL) unveiled a major change within a month. They issued a proposed rule to revamp the prevailing wage calculation method itself for the first time in 20 years. The impact extends beyond H-1B, encompassing H-1B1, E-3, and permanent residency PERM labor certifications. This means that the two main avenues heavily relied upon by the Korean community are narrowing simultaneously.

Within a month, the conversation shifted from comforting those who didn't get selected in the lottery to discussing companies that, even if selected, abandon hiring due to unaffordable wages. The nature of the inquiry calls coming into our office has also changed. They've gone from “What if I get selected in the lottery?” to “What happens if we get selected but can't afford the wages?”.

17, 34, 50, 67 will be changed.

“A ruler left untouched for twenty years will eventually lengthen or shorten someone's height.”

On March 26, 2026, the DOL issued an official press release and formally published the proposed regulation in the Federal Register on March 27 (RIN 1205-AC30, Docket ETA-2026-0001). The official title is “Improving Wage Protections for Temporary and Permanent Employment of Aliens.” The core of the proposal is to raise the percentiles for each of the four tiers of the prevailing wage.

The current Level I is the 17th percentile of wage distribution by occupation and region, Level II is the 34th, Level III is the 50th, and Level IV is the 67th. The proposal raises these to the 34th, 52nd, 70th, and 88th percentiles, respectively. This structure uses the Bureau of Labor Statistics (BLS) Occupational Employment and Wage Statistics (OEWS) as is, simply shifting the benchmark up by one level. It's akin to understanding that while the same table is used, some are classified as new hires and others as experienced workers; this classification method remains the same, with only the wage numbers in each tier moving up one step.

When converted based on certified LCAs from fiscal years 2020-2024 analyzed by the DOL, an average of approximately $14,000 more in wages per position is incurred annually. An estimate suggests that the increase for entry-level positions will be over 30%. The DOL's NPRM analyzes that approximately 63%of FY2024 certified LCAs are concentrated in Levels I and II, and only the prevailing wage for Level I is projected to increase by about 33% compared to the current rate. This is not merely an adjustment of “a small increase,” but a change that will alter the number of digits in the budget companies must create to retain the same person in the same position. The numbers 17, 34, 50, and 67 have remained unchanged for 20 years since 2005. At that benchmark, the wage curve for the U.S. IT industry has rapidly curved upward, and with it, the room for downward adjustment from the standard has widened, according to the DOL's diagnosis.

Five years ago, there was a similar attempt.

“The path that has been walked does not disappear. Someone will walk that path again.”

This proposal is not the first time. In October 2020, at the end of the first Trump administration, the DOL implemented an impression in the same direction through an Interim Final Rule (IFR). At that time, it raised Level I to the 45th percentile and Level IV to the 95th percentile, but Judge Jeffrey White of the U.S. District Court for the Northern District of California invalidated it in December of that year, citing the E.O. bypass of the notice-and-comment procedure under the Administrative Procedure Act (APA). The argument of “urgency” due to the COVID-19 pandemic was deemed difficult to accept in light of the situation at the time, when the unemployment rate for workers with a bachelor's degree remained at 4.8%.

The DOL issued a final rule on January 14 of the following year, lowering the percentiles to approximately 35, 53, 72, and 90. However, this was also withdrawn through a voluntary remand in June of the same year, and the invalidation process was completed in December. The current NPRM in 2026 appears to have been resubmitted with a formal comment period of 60 days to eliminate the flaw of procedural defects from back then. The deadline for submitting comments is May 26, 2026. In other words, this time it is structured in a way that makes it difficult to be easily blocked due to procedural issues.

Of course, having procedures in place does not eliminate substantive disputes. The statistical validity of wage calculation methods, the differential burden on small businesses, and the limitations of the OEWS data itself can all become issues in comments and subsequent lawsuits. Although the comment period is only 60 days, the material submitted within that timeframe can be re-invoked later, during legal challenges to the substantive legality of the final regulation. Therefore, who submits comments with what materials has become more important than before.

3. The Burden Placed On Top of the H-1B Lottery System

“Two doors, narrow when seen separately, become narrower still when placed together before the same person.”

It is necessary to separately address how these proposed regulations tie into the H-1B lottery. The wage-based preferential lottery system, implemented starting February 27, 2026, works by placing Level IV registrations into the draw four times, Level III three times, Level II two times, and Level I one time. FY2027 registrants have already received the results of this in the spring.

If the universal wage percentile shifts upwards, it becomes possible for a position that was previously Level II to be downgraded to Level I, even with the same salary number. Even if the lottery weights remain unchanged, an increase in the proportion of Level I positions will mathematically decrease the selection probability. For example, if a job category that applied Level II at a salary of $110,000 is now classified as Level I under the new percentile standards, the number of lottery entries could decrease from two to one.

Conversely, there are also situations where a company that had been paying wages equivalent to the previous Level II must now re-price wages corresponding to Level III. From the company's perspective, this results in an increase of over $10,000 in labor costs for the same employee doing the same job. These two effects are not separate but two sides of the same coin. Korean new applicants find themselves in a situation where raising wages to receive a higher weighting is a financial burden, while keeping them the same reduces their chances of being selected. However, many analyses suggest that this NPRM will not directly apply to the FY2027 cap petition (closing on 6/30/2026). This is because the new regulation's effectiveness will occur after the public comment and finalization process. The direct impact is expected to fully materialize starting from FY2028.

4. The burden of permanent residency with PERM/LCA

“If the employment visa is the starting line, PERM is the last hill just before the finish line.”

The scope of these regulations extends beyond H-1B visas. The prevailing wage determination (PWD) for PERM labor certification for EB-2 and EB-3 green cards will also be directly affected on the same terms. Korean small business owners in fields such as IT consulting, accounting, healthcare, and education, as well as Korean and Japanese restaurants that have increased their PERM applications since last year, will all fall within the direct impact zone.

As stated in the proposal, previously issued PWDs and approved LCAs, and already certified PERMs will not be retroactively applied. However, new PWD requests and new LCAs that are filed after the effective date will be subject to the new wage. Summing up NPRM Exhibit 19, it is calculated that approximately 49%of small businesses in computer programming services (NAICS 541511) will incur burdens exceeding $3%in revenue. The same table directly indicates that 61%of businesses with less than $1 million in revenue will bear burdens exceeding $10% in revenue.

One reality in the Korean community is that even for the same job type, the OEWS wage itself has been set lower when working in a small office in the outskirts of New Jersey compared to Manhattan, New York. Given that the upper end of this gap becomes steeper as you move up the percentiles, it's highly likely that the burden on small businesses is never reflected in the average value. Considering that a significant number of our Korean IT companies are small businesses with less than $1 million in revenue, the figure of $14,000 on average will feel more than twice as significant. In the PERM stage, job postings must also be re-issued according to the new PWD, which increases costs for advertising and recruitment.

Closing remarks

First, submitting an opinion is the first step. Anyone can submit comments with data on the Federal Register portal (regulations.gov) by the deadline of May 26, 2026. If our data, such as the sales ratio of Korean IT consulting firms, wage distribution in small businesses, and actual wage levels of self-employed individuals in the food service and medical fields, is included, there's a chance it will be reflected when the DOL finalizes the regulations. The opinion doesn't need to be elaborate. Even if you keep the company name anonymous, it is sufficient to specifically state the sales, number of employees, job type, region, and an estimation of the impact when the new wage standards are applied.

From a practical standpoint, it's reasonable to prepare in two ways. For ongoing PERM or new H-1B applications, scheduling adjustments are needed to confirm the PWD (Prevailing Wage Determination) as much as possible before its effective date. Once a PWD is issued, that wage will be applied to subsequent LCAs and PERM applications, so obtaining it in advance goes beyond mere administrative convenience and directly relates to cost savings. For new cases starting in the latter half of 2026, job titles, recruitment postings, and financial plans must be re-examined based on the new wage.

Rather than relying on the memory of previous regulations being blocked due to procedural issues, it seems a different type of preparation is needed this time. When the voices of those who know the landscape of wages and labor within the Korean community most accurately are honestly gathered in the opinion-gathering process, the final form of the regulation itself may change slightly. I hope this column serves as a small guide for that first step.

Disclaimer: This column is for general information purposes only and is not legal advice for your specific case. You should always consult with an attorney who specializes in immigration law for your individual case.

Law Offices of Jin D. Cho

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