Employment and Training Administration
Washington, D. C. 20210






October 1, 1996




September 30, 1997












for Regional Management




Changes in the Prevailing Wage Process for Labor Certification During Fiscal Year 1997


  1. Purpose. To provide guidance to State Employment Security Agencies (SESAs) and Regional Offices for changes in the prevailing wage process during Fiscal Year 1997, the initial period of data collection for the expanded Occupational Employment Statistics (OES) program to be used for prevailing wage purposes.

  2. References. 20 CFR Part 656, the Technical Assistance Guide (TAG) for Labor Certifications, GAL No. 4-95, and State Reimbursable Grants Agreements for FY 1997.

  3. Background. Over the past 18 months, the Employment and Training Administration (ETA) has been considering proposals for reengineering the process used by the States to determine prevailing wages in order to increase timeliness, insure the use of a consistent methodology by all States, and to maximize accuracy. As a result of the reengineering activity, it was determined that the most efficient way to develop consistently accurate prevailing wages is to use the Bureau of Labor Statistics' expanded Occupational Employment Statistics program.

    To obtain prevailing wages for labor certification purposes using the expanded OES, the Labor Certification reimbursable grant will include specific funds to be used by the state to provide the Labor Certification unit with a database usable for this purpose. Because the expanded OES is under the auspices of a work statement between the State and the Bureau of Labor Statistics, it is anticipated that the survey will be done by the State organization already working with BLS for earlier OES surveys, i.e., the Labor Market Information unit, the Research and Analysis unit, etc. The Labor Certification Unit will continue to be the official provider of prevailing wage levels for labor certification purposes, and therefore the user of data resulting from the expanded OES. It may be necessary, therefore, for the Labor Certification Unit to enter into a formal agreement with the appropriate unit producing the expanded OES data base. That agreement should specify that in return for funds for conducting the survey, the unit conducting the survey is responsible for providing the Labor Certification Unit with the BLS approved prevailing wage database in such a manner as to be accessible to Labor Certification staff.

    It is necessary that the survey begin as soon as possible in order for the OES to have data for prevailing wages in time for their use by October 1, 1997. The data being collected will not be usable until that time, since it must first be reviewed and approved by BLS before it can be considered valid for the expanded OES.

    Because the data from the expanded OES is not available for use at this time, the Labor Certification Unit must continue to use current references to provide prevailing wage information during FY 1997 to employers requesting it for the purposes of alien labor certification. The greatly reduced level of funding available for labor certification in FY 1997 may make it difficult for States to provide timely prevailing wages under the guidance which currently exists. The following changes are being made in prevailing wage guidelines issued in GAL 4-95, in order to allow States to meet their prevailing wage determination responsibilities under the current budget constraints. It has been estimated by States that these measures alone can save from 25 to 40 per cent of the cost of determining prevailing wages.

  4. Action Required. In order to permit States to provide timely prevailing wage determinations in a cost effective manner during FY 1997, the following policy changes are to be implemented beginning October 1, 1997:

    The changes contained herein are temporary and are valid only for requests received in FY 1997. In FY 1998, prevailing wages will be determined by using the output from the expanded Occupational Employment Statistics program with guidance to be provided later in FY 1997.

    We believe these changes will not adversely affect wage protection for U.S. workers because of the limited time in which they will be in effect. Also, an analysis of earnings data indicates that the increase in earnings between 1995 and 1996 in the occupations for which labor certifications are generally requested is in most cases lower than 3%. Therefore the impact of using data one year older than is permitted under current standards should be minimal.

    States are reminded that, as currently stated in 20 CFR 656.40, if a Davis Bacon Act or Service Contract Act wage determination exists for the occupation in the area of intended employment, that wage determination is considered the prevailing wage. Also, if the occupation falls under an "arms-length" negotiation between the employer and its union, the prevailing wage is the wage applicable to the occupation as set forth in the agreement.

    States are also reminded that in the event surveys are necessary, the surveys must be done in compliance with 20 CFR 656.40, GAL 4-95, and other directives currently active.

  5. Inquiries. Questions may be addressed to Patrick Stange or Scott Cote at 202-219-5263.