Understanding the concept of prevailing wage for H-1B and TN visas is indispensable for any company hiring international talent in the United States. This is because it impacts costs, hiring times, and compliance with legal requirements, especially when comparing visas of this nature.
What is a prevailing wage, and why does it matter?
The prevailing wage for H-1B is the typical minimum salary that workers in similar occupations typically receive. This relates to the precise geographical zone where the employee works, as resolved by the U.S. Department of Labor (DOL).
It protects the U.S. labor market by ensuring that the employment of foreign workers doesn’t negatively disturb the earnings standards of domestic workers. Employers must obey this obligation. Otherwise, they could face rejection of their visa solicitation, fines, and audits of their hiring practices.
Therefore, knowing the correct fundamental wage is a step that guarantees the request procedure is legally binding on the authorities. It also permits the transparency of the selected personnel.
Furthermore, fulfilling these standards from the outset will demonstrate the employer’s significance and diminish legal uncertainty.
Wage obligations for H-1B versus the flexibility of TN
The prevailing wage requests for H-1B and TN visas are the main difference between the two types. In the case of the H-1B procedure, the rules are severer. Furthermore, the employer must obtain a Labor Certification (LCA) from the DOL in advance.
Additionally, the engaging company must provide a written statement confirming that the employee’s pay is competitive. Authorities consider this when comparing the primary salary with how the business pays staff with similar knowledge or in the same field. Below, you can see this in detail:
- H-1B. This requires a more formal procedure for payment levels 1 to 4, based on the employee’s position and experience. Moreover, LCA compliance (Labor Certification) is compulsory, and authorities also conduct audits.
- TN. In this case, there is no mandatory requirement to file an LCA or certify wages to the DOL. This allows companies to offer salaries more in line with market reality without the need to adhere to established levels.
However, the flexibility that the TN visa procedure offers does not mean there is no thorough evaluation process. A very low salary offer for the position will raise suspicions that the position isn’t genuine or that the company doesn’t value its staff.
This considerably raises the probability of the document being denied to the employee you want to hire. Therefore, the key to this type of visa is to set a competitive salary, even if the employee lacks formal certification.
How wage considerations influence hiring decisions
Planning for international hiring involves a strategy to warrant cost-effectiveness. This factor is not the only one to consider; legal fees and the time required for the entire procedure are also necessary. The H-1 as a whole B visa process can delay the hiring process for months due to its annual lottery and strict deadlines.
Furthermore, the obligation to pay a high prevailing wage for H-1B substantially increases payroll costs. On the other hand, the TN visa has certain advantages that the previous one cannot offer, which consist of the following:
- Lower total cost. The lack of a formal LCA decreases legal fees and related administrative costs. Payment flexibility enables companies to make a compelling proposal without being tied to a potentially inflated federal minimum level.
- Faster processing time. Businesses can hand out TN requests at any time of the year. Frequently, authorities process it in hours for Canadian citizens, in 15 business days (premium) or in several months for regular USCIS petitions.
However, regardless of the document, keeping the best talent comprises reasonable compensation. A small agreement, although adequate for a TN, can result in the candidate being overlooked by other companies. Additionally, this can lead to low morale, which may necessitate an early rotation.
Therefore, businesses must model situations that consider both regulatory compliance and competitiveness in the market to choose the fastest, most efficient, and lowest-cost hiring route.
Tools and resources for determining wage levels
Determining the correct figure, whether to comply with the H-1B condition or to achieve a defensible range for the TN wage requirements, requires reliable data. Therefore, the strategy is to use multiple sources to create a complete picture of the market. These primary sources include the following:
DOL Wage Data
The Department of Labor’s (DOL) wage data serves as the official basis for determining prevailing salaries in Labor Certification Applications (LCAs). The DOL administers key systems such as the BLS’s Occupational Labor Statistics (OES) Database.
These provide incomes broken down by occupation, geographic area, and four experience levels. It also administers the FLC Data Center, which specializes in conducting detailed payment surveys for cases that require greater specificity.
Hence, these systems help determine the local wage level, protecting both domestic and foreign workers.
O*NET
The Occupational Information Network (O*NET) is a detailed database that provides job descriptions for each position. It also identifies skills and experience levels to align them with job duties and a Standard Occupational Category (SOC).
This system complements salary sources like the OES by providing qualitative information for classifying occupations when requesting an LCA.
Private Market Surveys
Data from reputable providers such as Radford and Mercer offer information by industry type and company size. This ensures that salaries provided to foreign workers under visa programs do not disrupt local wage standards.
This relates to both the national labor force and the visiting workers themselves. Defining the prevailing wage for H-1B workers is a central requirement in processes such as labor certification.
Internal Salary Bands
The company’s payment structure is the standard for confirming core equity and the defensibility of the proposal. Additionally, the combination of these foundations enables the creation of a consistent salary snapshot as the basis for HR decisions and legal planning.
This permits companies to comply with salary requirements for TN and H-1B visas in a well-informed and planned manner. Hence, employers agree that the compensation offered is in accordance with obligatory legal criteria and measures.
This comprehensive approach not only facilitates regulatory compliance but also strengthens the company’s position in the event of potential audits or immigration reviews.
Properly handling the prevailing wage H-1B and NT is a successful and legally compliant international hiring strategy. Furthermore, while the H-1B requires a rigid and mandatory process, the NT allows for flexibility that can translate into cost savings and process agility.
