We get this question a lot from employers. The certified LCA lists $85,000. The employee has been paid $100,000 for two years. Business slows, a major account goes away, and the employer asks the obvious question: can we go back down to the $85,000 we certified?
Usually the answer is no.
The LCA wage is a floor, not the whole obligation
H-1B employers must pay the required wage, which is the higher of the prevailing wage or the actual wage. Most employers watch the prevailing wage closely, because that is the number printed on the LCA. The actual wage is where the trouble starts.
The actual wage is what you pay your other employees with similar experience and qualifications performing the same job at the same worksite. You may set it using experience, qualifications, education, job responsibility and function, specialized knowledge, and other legitimate business factors. But the regulation contains a sentence that catches smaller employers: where no comparable employees exist at that worksite, the actual wage is the wage you pay the H-1B employee.
Read that again. If your H-1B worker is the only person doing that job, whatever you pay that person is the actual wage. Pay $100,000, and $100,000 becomes the number you can obligated to pay.
Example:
A ten-person marketing analytics company sponsors a data scientist. The certified LCA lists $85,000. The market is competitive and the budget is there, so the company pays $100,000. Eighteen months in, a major account leaves and the company wants to move her back to $85,000.
It cannot. There are no comparable employees at that worksite, so her own $100,000 is the actual wage, and the required wage is the higher of that and the prevailing wage. Dropping to the LCA number is a wage violation resulting in potential back wages, civil money penalties, and possible debarment, even though $85,000 is the LCA wage.
So what does justify a reduction?
The common thread in every lawful reduction is that something about the job, the hours, or the worksite changed. Not your margin. In practice, that leaves a short list.
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A documented wage system, applied consistently. If you set pay using written bands tied to experience, education, responsibility, and scope, and the employee genuinely moves down a band, the reduction follows the system instead of overriding it. The system has to exist in writing before the decision, and it has to apply to your U.S. employees the same way.
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A genuine reduction in responsibility. Coming off a senior assignment and returning to baseline duties can support a lower wage, provided the role stays within the same occupational classification.
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A reduction in hours. This is the cleanest option and the one employers most often miss. The wage obligation is a rate, not an annual figure, so a genuine move to part-time lowers total pay without touching the rate. It requires a new LCA and an amended petition, and the reduced schedule has to be real.
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A move to a lower-cost worksite. The comparison is worksite-specific, so relocating to a different metropolitan area with a new LCA can legitimately reset the number.
An employer with one person in a role has no flexibility, because that person’s own pay sets the standard. An employer with an established pay structure and several people in the role has a number that does not depend on one payroll decision. That is an argument for building your compensation structure before you sponsor, not after.
Two practical notes. Nearly every legitimate reduction generates paperwork including a new LCA, an amended petition, or both, plus an update to your public access file. And a reduction is always prospective. There is no such thing as a valid retroactive wage cut.
Reasons that do not work
- Our client cut the bill rate.
- He is between projects.
- Revenue is down this quarter.
None of these are wage-setting factors.
The amendment is the second problem, not the first
A reduction in pay is a material change, and we have written before about when an H-1B amendment is required. But an approved amendment does not cure a Department of Labor problem. You would be asking USCIS to approve a wage cut you still cannot justify to the Wage and Hour Division. Two agencies, two separate obligations.
If you have questions regarding the above contact PSBP Law Partner, Chris Prescott at cprescott@psbplaw.com
Related reading
Is an H-1B Amendment Really Required?
Employer’s Responsibility to Maintain a Public Access File (PAF)
Preventing a Wage Level Request for Evidence