Hiring highly skilled international workers under the H-1B visa program comes with a lot of regulatory compliance. One of those key compliance aspects: strict compliance with wage rules. One of the most important — and sometimes misunderstood by the general public— requirements is ensuring that H-1B workers are paid the required wage.

This article is designed for HR representatives who manage H-1B sponsorships. It explains how to determine the proper prevailing wage, what the “actual wage” means in practice, how to select the right Standard Occupational Classification (SOC) code, and how to follow official Department of Labor (DOL) guidance step-by-step. Along the way, we’ll cover common pitfalls and compliance strategies so your company can confidently navigate the process.

The Required Wage: Higher of Prevailing or Actual Wage

The foundation of H-1B wage compliance is simple in theory: employers must pay the higher of the prevailing wage or the actual wage for the position. Let’s unpack what that means.

What Is the Prevailing Wage?

The prevailing wage reflects the average wage paid to similarly employed workers in the same occupation and geographic area. The DOL determines this figure based on large-scale wage surveys, most commonly the Occupational Employment Statistics (OES) survey from the Bureau of Labor Statistics. The prevailing wage can also come from union contracts or private wage surveys that meet DOL criteria.

Prevailing wages are specific: they are tied to an SOC code, a geographic area, and a wage level (I–IV). They are updated annually. For example, the prevailing wage for a Level II Software Developer in Houston, Texas might differ significantly from that for the same code in San Francisco, California.

What Is the Actual Wage?

The actual wage requirement is where many HR teams stumble because it is less about market data and more about the company’s internal pay practices. The actual wage is the pay rate that your organization offers to employees who are similarly employed at the same worksite.

This means the government expects you to look inward, not outward, and ask: What are we already paying our U.S. workers in this role?

Who Is “Similarly Employed”?

“Similarly employed” doesn’t mean “anyone with the same title.” It means workers who:

• Perform substantially the same duties
• Work at the same worksite or location
• Have similar experience and qualifications

For example:

• If you employ five Mechanical Engineers in Dallas, all with 3–5 years of experience and similar job duties, their pay range establishes the actual wage.
• If one Mechanical Engineer is a senior lead with supervisory responsibilities, their salary may fall outside the comparison group — and should be separated from the analysis.

How to Calculate the Actual Wage

1. Identify the Position. Define the job duties, responsibilities, and scope of work clearly.
2. Group Similarly Employed Workers. Look for employees in the same role, same location, with roughly equivalent experience and responsibility.
3. Determine the Range. Collect their salaries or hourly rates and establish a pay range.
4. Set the Wage. If your comparison group shows a salary range of $85,000–$100,000, and the H-1B worker has qualifications and experience aligning with mid-level employees, the actual wage may be closer to $92,000 rather than the lowest figure. The H-1B worker’s wage should fit appropriately within the established pay structure, based on legitimate factors such as education, prior experience, seniority, or performance. The key is that the wage offered is not lower than what you pay U.S. workers with comparable qualifications in the same role and location.

Documentation Requirements

Employers must create and maintain an actual wage memorandum to show how the H-1B wage was determined. This is kept in the public access file required under H-1B regulations. The memorandum should include:

• The job title and description
• Salaries or salary ranges
• Factors that explain variations (e.g., seniority, merit, experience, education, performance-based pay systems)
• The resulting actual wage range

This documentation proves that the H-1B worker’s wage was fairly benchmarked against U.S. workers.

Common Pitfalls in Actual Wage Analysis

• Using titles only. Just because someone is a “Software Engineer” doesn’t mean they belong in the same comparison group if their duties differ significantly.
• Overly broad groupings. Lumping together engineers across multiple worksites or divisions can distort the wage calculation.
• Failing to update. Actual wage analyses must be refreshed as the workforce changes (e.g., raises, promotions, or new hires).
• Remote work complications. If the H-1B worker is remote, the actual wage analysis may depend on the location of similarly employed remote workers — not just the headquarters.
• Ignoring incentive systems. If your pay structure includes merit increases, bonuses, or tiered pay systems, those must be documented to explain why salaries vary among similarly employed workers.

Actual vs Prevailing Wage in Practice

Once the actual wage is determined, compare it with the prevailing wage. You must pay the higher of the two.

• Scenario A: Prevailing wage = $92,000; Actual wage = $100,000 → Pay at least $100,000.
• Scenario B: Prevailing wage = $105,000; Actual wage = $95,000 → Pay at least $105,000.
• Scenario C: Prevailing wage = $80,000; Actual wage = $88,000 → Pay at least $88,000.

This safeguard ensures H-1B workers are not underpaid compared to your U.S. workforce or the local labor market.

Selecting the Right SOC Code

The SOC code you choose on the Labor Condition Application (LCA) is one of the most consequential HR decisions in the H-1B process.

Why SOC Code Selection Matters

• Controls Wage Level: The SOC code links directly to the DOL wage database, dictating the prevailing wage options.
• Defines Job Duties: USCIS and DOL will cross-check whether your described job duties align with the chosen code.
• Impacts Case Strength: Misclassification is one of the leading causes of H-1B denials and Requests for Evidence (RFEs).

How to Identify the Correct SOC Code

1. Review Job Duties Carefully. Focus on day-to-day functions, not just job titles.
2. Use O*NET OnLine. Match duties to the SOC description, reviewing Tasks, Knowledge, Skills, and Job Zone.
3. Avoid Wage Shopping. Do not pick a lower-paid SOC just to save money. This can result in denials, audits, and penalties. This is something that USCIS has templates for requesting additional evidence for, so be sure to pick properly. DOL guidance is clear, if you are looking at two options, pick the one with the higher wage.  
4. Double-Check Degree Requirements. Ensure the occupation is typically recognized as requiring a bachelor’s degree or higher.

 

Focus on Job Requirements, Not Employee Qualifications

A critical compliance principle is that the wage analysis must be based on the job requirements, not the employee’s personal background.

Example: A Ph.D. nuclear engineer with 30 years’ experience takes an Engineering Intern job. The analysis follows the job — entry-level intern — not the candidate’s credentials.

This is why drafting job descriptions carefully is key: the requirements you list directly drive the wage level.

Best Practices for HR Compliance

• Maintain updated actual wage memoranda in your public access files.
• Refresh your prevailing wage checks regularly.
• Draft accurate job descriptions that reflect real duties.
• Conduct internal audits to ensure consistency.
• Consult counsel for hybrid or complex roles.

FAQs for HR Professionals

Q1: What if my company has no “similarly employed” workers?
You must still determine a reasonable actual wage, often by documenting pay systems, levels, or ranges for comparable roles in your organization.

Q2: How does remote work affect prevailing wage?
The prevailing wage is tied to the worksite location. If the H-1B worker is remote, use the location where they report or where your other remote workers in that role are based.

Q3: Can bonuses count toward meeting the wage requirement?
Sort of, but only if they are guaranteed. Discretionary bonuses or stock options cannot be used to satisfy the required wage.

Q4: What happens if wages fall below the required rate after filing?
You must immediately correct the wage, retroactively if necessary, to remain compliant.

Conclusion: Building Confidence in H-1B Wage Compliance

Getting the prevailing wage and actual wage right is more than a box-checking exercise — it is the foundation of a compliant and defensible H-1B sponsorship program. By understanding how the Department of Labor sets prevailing wages, carefully documenting actual wage systems, and choosing the correct SOC code, HR professionals can avoid common pitfalls that trigger audits, penalties, or Requests for Evidence (RFEs).

Ultimately, wage compliance ensures not only that your organization remains in good standing with federal regulations, but also that your international hires are paid fairly and consistently with your U.S. workforce. With clear documentation, regular internal audits, and accurate job descriptions, employers can confidently navigate the complexities of the H-1B process.

For HR leaders and immigration teams, staying proactive on wage issues is the best way to reduce risk and support a global workforce strategy. If your organization is preparing for H-1B filings or facing challenges in determining the prevailing or actual wage, consulting with experienced immigration counsel can provide clarity and protection.

By applying these best practices, your company will not only stay compliant with H-1B prevailing wage and actual wage requirements, but also strengthen its ability to attract and retain top international talent — a competitive advantage in today’s global economy.

By : Steven Brown

Steven A. Brown is a Partner at Reddy Neumann Brown PC, where he leads the firm’s Litigation Team, addressing delays and denials of immigration benefits, FOIA requests, and policy and regulatory challenges. Steven is dedicated to delivering practical and effective solutions for clients facing unreasonably delayed or unlawfully withheld immigration benefits, including Employment Authorization Documents (EADs), advance parole, green cards, 221(g) decisions, EB-5 delays, and other immigration-related matters. His litigation efforts were instrumental in Shergill, et al. v. Mayorkas, a landmark case that led to the U.S. government recognizing that under the INA, L-2 and E visa spouses are authorized to work incident to their status, eliminating the need for separate EAD applications. This case has transformed work authorization for thousands of families across the United States.

About Reddy Neumann Brown PC: Reddy Neumann Brown PC is a leading immigration law firm based in Houston, Texas, specializing in business and family immigration matters. Founded in 1997, the firm has decades of experience helping businesses secure work visas and permanent residency for their employees, as well as assisting individuals with all facets of U.S. immigration. Our attorneys combine deep legal knowledge with a client-focused approach, providing reliable solutions and up-to-date guidance in a complex and ever-changing immigration landscape.