20 CFR 655.731: H-1B Wages, Deductions, and Debarment

20 CFR 655.731 is the federal wage rule for H-1B, H-1B1, and E-3 employers. It requires the employer to pay each nonimmigrant worker at least the “required wage rate,” which is the higher of two figures: the employer’s own actual wage for similar workers at the same location, or the prevailing wage for the occupation in the area of intended employment.¹ The regulation also controls when pay must begin, what an employer can deduct, and what documentation must sit in a public access file. Falling short can trigger back-pay orders, civil fines up to $67,367 per violation, and debarment from sponsoring future petitions.

Two Wages, and the Higher One Wins

Before hiring, the employer files a Labor Condition Application (LCA) attesting it will pay at least the required wage for the entire period of employment.² The “greater of” test compares two numbers.

The actual wage is what the employer already pays other workers with similar experience and qualifications who hold the same or a substantially similar job at the same worksite. Pay differences among those workers are permitted only when tied to objective factors like education, years of experience, specific duties, specialized knowledge, or other legitimate business criteria. A vague sense that one employee is worth more will not survive an audit; the employer needs a documented pay system. If the H-1B worker is the only person in that role at the location, the actual wage is simply what the employer pays that individual.¹

The prevailing wage is what other employers in the same geographic area typically pay workers in the same occupation at a comparable skill level. If a collective bargaining agreement covers the occupation at the worksite, the bargained rate controls and no further analysis is needed. Otherwise, most employers rely on Bureau of Labor Statistics Occupational Employment and Wage Statistics (OEWS) data, which the Department of Labor uses to issue prevailing wage determinations.³ OEWS breaks each occupation into four skill-based levels, from Level I entry work to Level IV fully competent work. The gap between the lowest and highest level for the same job can run tens of thousands of dollars in a major metro area, so choosing the correct level matters.⁴

An employer may also use an independent authoritative wage survey rather than OEWS. To qualify, the survey must cover the same occupation and area, use data collected within the past 24 months, and have been published within the past 36 months.¹ A flawed or stale survey is grounds for rejecting the LCA.

Whichever figure is higher becomes the required wage. It applies for the full period the worker holds that status with the employer and cannot be lowered mid-employment because business slows or duties shift, unless the employer amends or withdraws the LCA and follows the proper termination process.

When Pay Has to Start, and Why It Cannot Stop

The wage clock starts when the worker first makes themselves available for work. As a backstop, pay must begin no later than 30 days after a worker admitted from abroad enters the United States on the petition, or 60 days after a worker already in the country becomes eligible to work for the employer, generally the approval date on the USCIS Form I-797 or the petition start date, whichever is later.¹ Practical delays like waiting for a state license do not pause the clock.

Once pay starts, it cannot stop for “benching.” If the worker sits idle because the employer has no project, is between clients, or is waiting on a permit, the employer must keep paying the full required wage.⁵ Staffing and consulting firms are the most common offenders. The only exception is genuinely voluntary time off the worker requests for personal reasons unrelated to the job.

For part-time positions, the employer pays for at least the number of hours listed on the I-129 petition. If the petition shows a range, pay covers the worker’s average hours within that range, never less than the minimum.⁵

What Can and Cannot Come Out of the Paycheck

The regulation treats prohibited deductions the same as underpaying the required wage. Getting this wrong is a wage violation.

Legally required withholdings are fine: federal and state income tax, Social Security, and Medicare. Voluntary deductions that benefit the worker, such as health insurance premiums or retirement contributions, are also allowed when documented in writing.⁶

Employer business expenses cannot be shifted to the worker. That includes attorney fees for preparing the LCA or petition, the USCIS filing fee, the fraud prevention and detection fee, and the ACWIA training fee ($750 for employers with 25 or fewer full-time employees, $1,500 for larger employers). Early-termination penalties are also prohibited if they push pay below the required wage. Any deduction for a business expense that drops compensation below the required wage counts as nonpayment, regardless of what the employer labels it.⁶

Moving the Worker to a New Location

Because the prevailing wage is tied to a geographic area, a worksite change can create new obligations. A move within the same Metropolitan Statistical Area as the location on the LCA stays inside the same area of intended employment, so no new LCA is required.⁷

For placements outside that area, a short-term placement exception allows up to 30 workdays in a calendar year without a new LCA, provided the employer continues paying the required wage and covers lodging, travel, and meals. The window extends to 60 workdays if the worker keeps an active workstation at the permanent site, spends substantial time there, and lives in the permanent location’s area.⁸ Beyond that, the employer must file a new LCA reflecting the prevailing wage of the new area.

Ending Employment Early

If the employer dismisses an H-1B worker before the authorized stay expires, federal regulations require the employer to pay the reasonable cost of return transportation to the worker’s last foreign residence.⁹ The obligation covers the worker, not a spouse, children, or household goods. It does not apply when the worker resigns. The employer should make the offer in writing, keep a record of the response, and notify USCIS at the service center that approved the petition that employment has ended.

The Public Access File

For each LCA, the employer must maintain a public access file that anyone can request to inspect, including workers, unions, competitors, and members of the public. The file must contain:

A copy of the certified Form ETA 9035 or 9035E with cover pages.
A statement of the wage paid to the worker and how it was determined.
A description of the pay system used to set the actual wage, such as a summary memorandum or the employer’s pay scale.
The source and methodology used to establish the prevailing wage.
Proof that union or employee notification requirements were satisfied.
A summary of benefits offered to U.S. workers in the same occupation, with an explanation of any differences in allocation.¹⁰

Individual payroll records identifying specific employees stay out of the public file. Those come out only if the Department of Labor requests them during an enforcement action.

Penalties and Debarment

The Department of Labor’s Wage and Hour Division enforces these rules. It can order back pay, assess civil fines, and recommend that an employer be barred from sponsoring future petitions. Fines run in three tiers:

Up to $2,364 per violation for standard violations such as LCA misrepresentation, charging the worker the filing fee, or imposing early-termination penalties.
Up to $9,624 per violation for willful violations involving wages, working conditions, displacement, or retaliation against a worker who reports a violation.
Up to $67,367 per violation when an employer willfully displaces a U.S. worker within the 90-day window before or after filing an H-1B petition.¹¹

Debarment layers onto the fines. An employer found in violation can be disqualified from having any immigrant or nonimmigrant petitions approved for at least one year for standard violations, at least two years for willful violations, and at least three years for displacement violations.¹¹ For a company that depends on foreign talent, losing the ability to sponsor anyone, including employment-based green card petitions, often does more damage than the fines themselves.

1
eCFR. 20 CFR 655.731 – What Is the First LCA Requirement, Regarding Wages?
2
U.S. Department of Labor. Fact Sheet 62G – Must an H-1B Worker Be Paid a Guaranteed Wage?
3
U.S. Department of Labor. Prevailing Wage Information and Resources
4
U.S. Department of Labor. Employment and Training Administration Prevailing Wage Determination Policy Guidance
5
U.S. Department of Labor. Fact Sheet 62I – Must an H-1B Employer Pay for Nonproductive Time?
6
U.S. Department of Labor. Fact Sheet 62H – What Are the Rules Concerning Deductions From an H-1B Worker’s Pay?
7
U.S. Department of Labor. OFLC H-1B, H-1B1, E-3 FAQs Round 4
8
eCFR. 20 CFR 655.735 – What Are the Special Provisions for Short-Term Placement of H-1B Nonimmigrants at Place of Employment Outside the Area of Intended Employment Listed on the LCA?
9
eCFR. 8 CFR 214.2 – Special Requirements for Admission, Extension, and Maintenance of Status
10
eCFR. 20 CFR 655.760 – What Records Are to Be Made Available to the Public and What Records Are to Be Made Available to Federal Government Officials?
11
eCFR. 20 CFR 655.810 – What Remedies May Be Ordered if Violations Are Found?