Raymond Windmiller, Executive Officer
Executive Secretariat
U.S. Equal Employment Opportunity Commission
131 M Street, NE
Washington, DC 20507

Re: Proposed Rule for Removal of Reporting Requirements (RIN 3046-AB37)

Dear Commissioners,

I write to submit this comment on behalf of the Economic Policy Institute (EPI), responding to the Equal Employment Opportunity Commission’s proposed rule to rescind and remove the requirements for filing the EEO-1, EEO-2, EEO-3, EEO-4, EEO-5, and EEO-6 reports1, and the recordkeeping and record preservation requirements related to these reports, under 29 CFR part 1602.

EPI is a nonprofit, nonpartisan think tank created in 1986 to include the needs of low- and middle-income workers in economic policy discussions. EPI conducts research and analysis on the economic status of working America, proposes public policies that protect and improve the economic conditions of low- and middle-income workers, and assesses policies with respect to how well they further those goals. For 18 years, EPI’s Program on Race, Ethnicity and the Economy (PREE) has been a nationally recognized source for expert analysis of the many ways that race, ethnicity, gender, class and policy decisions intersect to affect economic outcomes.

We strongly oppose the EEOC’s proposal to rescind the EEO reporting, recordkeeping and record preservation requirements. If implemented, this rule would undermine the Commission’s capacity to enforce federal laws against employment discrimination. Furthermore, this rule would deprive employers, researchers, policymakers and advocates of their ability to independently analyze and use this unique data source to develop and advocate for policies that support the EEOC’s mission of ending workplace discrimination.

The U.S. Equal Employment Opportunity Commission (EEOC) is a cornerstone in upholding the civil rights of U.S. workers. Established under the same law that officially prohibited employment discrimination (Title VII of the Civil Rights Act of 1964), the EEOC embodies the fact that effective federal laws against employment discrimination require consistent enforcement. For the last 60 years, EEO reports have been central to the agency’s capacity to enforce the law and to monitor and track the nation’s progress toward ending workplace discrimination.

That goal is still a work in progress, as documented in an extensive body of methodologically rigorous research by economists, sociologists and other social scientists. In what follows, we explain why the Commission’s proposal to rescind all EEO data collection would be counterproductive to reaching that goal and detrimental to the U.S. economy by:

• Summarizing the research on labor market discrimination that justifies the ongoing need for EEO reporting requirements;
• Describing how broad EEO reporting requirements help to rebalance power and information asymmetries between employers and employees; and
• Presenting estimates of how much discrimination costs the U.S. economy in economic output and average living standards.

Research and national data provide compelling evidence of persistent labor market discrimination against “minorities”

In their proposed rule, the Commission claims that EEO Reports “may encourage employers to discriminate against employees who are not considered ‘minorities,’ may promote racial stereotyping, and may encourage employers to engage in discrimination to avoid potential EEOC enforcement actions or to address perceived inequitable outcomes.” In addition to this being highly speculative, it is also inconsistent with what we know from research and national statistics. Large and persistent disparities in employment and pay of Black workers relative to white workers are among the most durable features of the U.S. labor market. Compelling empirical evidence points to discrimination as a significant factor in the persistence of those disparities.

EPI’s detailed expert analysis of Bureau of Labor Statistics (BLS) data shows that the significant racial disparities in unemployment that are observed at each level of education, across age cohorts, and among both men and women strongly suggest that education or skills differentials alone can’t account for the near constant 2-to-1 Black-white unemployment gap2.

These findings are consistent with field experiments revealing that Black job applicants with equivalent, and sometimes superior, credentials to white applicants are less likely to receive job callbacks3. One of the starkest audit study findings in this regard concludes that employers treated white applicants with criminal records more favorably than Black applicants without criminal records4. Researchers also found that when résumés of Black and Asian job applicants were stripped of clues of their racial identity, they received callbacks at a much higher rate than those that clearly indicated an applicant’s racial identity5.

While audit and correspondence studies have been criticized for not adequately capturing unobserved characteristics that might influence hiring decisions, newer studies have shown how robust these findings can be to such considerations6. In fact, subsequent field experiments reveal a pattern of hiring discrimination experienced by Black and Hispanic job seekers that remained remarkably constant over time, with white applicants receiving 36% more callbacks than Black applicants and 24% more callbacks than Hispanic applicants7.

EPI’s analysis has also shown that since 1979, less than half of the observed black-white difference in average hourly wages can be explained by differences in education, experience, or region—the main factors presumed to determine pay – and discrimination has consistently played a major role8. However, changes in this racial wage gap track closely with changes in policy, including civil rights enforcement, and with structural factors that affect wage inequality. According to trend analysis research, the narrowing of the gap from the late 1960s through the 1970s can be attributed to the passage of important civil rights legislation9, combined with the 1960s economic boom, active enforcement of anti-discrimination10 and affirmative action policy11, and the narrowing of the educational attainment gap between Black and white workers12. On the other hand, retrenchment on anti-discrimination policy was found to be a significant factor in the widening of the gap during the 1980s13. Since 2000, research has shown a troubling trend of larger discriminatory differentials among the more highly educated14.

Contrary to the Commission’s proposed justification for ending EEO reporting requirements, the research literature cited above offers no evidence of systemic discrimination “against employees who are not considered minorities”. The research, however, underscores the need for ongoing monitoring of employment and pay discrimination through the collection of EEO data.

Elimination of EEO data would worsen power and information asymmetries that undermine worker protections

In an essay published under EPI’s Unequal Power project, former EEOC Chair Jenny Yang explains that “in a system that places the primary responsibility for enforcing anti-discrimination laws on individual workers, who must file complaints with their employer or a government agency, the government plays a fundamental role in rebalancing the power disparities between workers and employers.”15 She further concludes that “policies that encourage employer transparency and require data collection to support prevention and accountability are essential to addressing the inherent information asymmetry workers face.”16

EEO data helps to provide the necessary transparency and accountability across major segments of the U.S. labor market, including private employers with 100 or more employees and federal contractors with 50 or more employees (EEO-1), apprenticeship programs (EEO-2), labor unions (EEO-3), state and local governments (EEO-4), elementary and secondary schools (EEO-5) and institutions of higher education (EEO-6)17.

While the Commission now argues that reporting requirements are too broad because they include non-discriminating employers along with those accused of discrimination, that feature is actually a strength of EEO data. As the nation’s only federally collected source of firm-level information on employment by race, ethnicity, sex, and job category, the EEO-1 provides EEOC investigators with the information they need to assess each individual claim within the context of a larger group of employers.

In addition to being used in this important first step of the charge intake process, these data can also identify potential patterns of systemic discrimination within an industry, occupation, or worksite location. This information helps to direct EEOC systemic enforcement and commissioner’s charges, enabling the EEOC to investigate and address discriminatory practices in cases where workers either lack information or fear retaliation for filing an individual charge of discrimination. Many state and local government Fair Employment Practices Agencies (FEPAs) also have data sharing agreements with EEOC, allowing them to utilize EEO data for local enforcement activities. Similar data collections are too costly for most FEPAs to undertake on their own. As such, EEO data address information and power asymmetries that make it difficult and costly for workers to identify and prove discrimination.

Elimination of EEO data would limit EEOC’s ability to support economic growth through reduced discrimination

Finally, the Commission claims that elimination of the EEO surveys is consistent with the policy underlying E.O. 14192, “Unleashing Prosperity Through Deregulation,” requiring agencies to be “prudent and financially responsible in the expenditure of funds . . . to alleviate unnecessary regulatory burdens placed on the American people.” However, the Commission is overlooking the cost discrimination imposes on the economy and the long-term consequences ending EEO data collection would have on the EEOC’s ability to reduce discrimination through the enforcement mechanisms described above.

Research shows that since the 1960s, the decline in workplace discrimination has contributed to a stronger economy and more inclusive labor force. A widely cited 2019 report concludes that reduced discrimination alone accounted for almost 8% of GDP per capita growth between 1960 and 201018. Extrapolating this estimate through 2024 and applying it to published national estimates of real GDP per capita, we estimate that reduced discrimination boosted average living standards by $4,932 per person since 196019. While it is difficult to precisely measure the EEOC’s impact apart from other forces, assuming the Commission’s role in reducing discrimination accounts for 10–25% of that growth, we estimate that EEOC enforcement, aided by EEO data, helped to boost average living standards by $493 to $1,233 per person since 1960. This estimated increase in average living standards applies to all people, not just those with proven claims of discrimination. Elimination of EEO data would compromise many of the EEOC’s tools for enforcing laws against employment discrimination, and as a result, undermine economic growth.

Conclusion

For years, the EEOC has been vastly under-resourced relative to the magnitude of its enforcement responsibilities, and EEO data is essential to directing those limited resources. Changes to the categories and definitions used in EEO forms over time represent the ways in which Commissioners have grappled with how to accurately capture individual markers of identity useful in detecting unfair influence over employment opportunities for members of legally protected classes.

Under prior administrations, EEOC has convened expert panels to evaluate EEO data collections. These panels were comprised of statisticians, economists, sociologists, legal scholars, and other practitioners with decades of expertise in statistical analysis, labor and civil rights law and the study of labor market discrimination. I have had the privilege of serving on two of these panels. In both instances, panel members expressed differing opinions with respect to data quality, what conclusions could be reliably drawn from the data, and how to best improve the data collection process. Undoubtedly, there were also likely differences in panel members’ political views, but I don’t ever recall any assertion that the problem discrimination had been sufficiently reduced to justify removal of EEO reporting requirements.

In conclusion, EPI strongly urges the Commission to withdraw its proposal to eliminate all six of the EEO surveys. Failure to do so would renege on the promise of our nation’s anti-discrimination laws for workers, their families and the economy.

Sincerely,

Valerie Wilson, PhD
Director, Program on Race, Ethnicity and the Economy
Economic Policy Institute

1. The EEO-2 remains authorized under Title VII of the Civil Rights Act of 1964 but has not been collected since 1981. In this case, our recommendation to continue the surveys is a recommendation to reinstate it.

 The EEO-6 remains authorized under Title VII but has not been collected since 1993. In this case, our recommendation to continue the surveys is a recommendation to retain this authorization and reinstate the survey to the extent that it is not superseded by the Integrated Postsecondary Education Data System (IPEDS) Staff Survey of the U.S. Department of Education.

2. Valerie Wilson and William Darity Jr., Understanding black-white disparities in labor market outcomes requires models that account for persistent discrimination and unequal bargaining power, Economic Policy Institute, March 2022.

3. Examples include: Michael Fix, George C. Galster, and Raymond J. Struyk, “An Overview of Auditing for Discrimination.” in Michael Fix and Raymond Struyk, eds., Clear and Convincing Evidence: Measurement of Discrimination in America, Urban Institute Press, 1993; Marc Bendick, Jr., Charles W. Jackson, and Victor Reinoso, “Measuring Employment Discrimination Through Controlled Experiments” in James B. Stewart, ed., African-Americans and Post-Industrial Labor Markets, Transaction Publishers, 1994; Michael Fix, George C. Galster, and Raymond J. Struyk, “An Overview of Auditing for Discrimination” in Michael Fix and Raymond Struyk, eds., Clear and Convincing Evidence: Measurement of Discrimination in America. Urban Institute Press, 1993; and Margery Turner, Michael Fix, and Raymond Struyk, Opportunities Denied, Opportunities Diminished: Racial Discrimination in Hiring, Urban Institute Press, 1991.

4. Devah Pager, “The Mark of a Criminal Record,” American Journal of Sociology 108 (March 2003): 937–75.

5. Sonia Kang, Katy DeCellesa, András Tilcsika, and Sora Jun, “Whitened Résumés: Race and Self-Presentation in the Labor Market,” Administrative Science Quarterly 61, no. 3 (March 17, 2016): 469-502.

6. David Neumark, “Detecting Discrimination in Audit and Correspondence Studies,” Journal of Human Resources 47 (Fall 2012): 1128–57. 

7. Lincoln Quillian, Devah Pager, Ole Hexel, and Arnfinn H. Midtbøen, “Meta-Analysis of Field Experiments Shows No Change in Racial Discrimination in Hiring Over Time,” Proceedings of the National Academy of Sciences 114, no. 41 (October 10, 2017): 10870-875.

8. Valerie Wilson and William Darity Jr., Understanding black-white disparities in labor market outcomes requires models that account for persistent discrimination and unequal bargaining power, Economic Policy Institute, March 2022.

9. Examples include: John Bound and Richard Freeman, “Black Economic Progress: Erosion of the Post-1965 Gains in the 1980s?” in Steven Shulman and William Darity, Jr., eds., Question of Discrimination: Racial Inequality in the U.S. Labor Market, Wesleyan University Press, 1989; David Card and Alan Krueger, “School Quality and Black-White Relative Earnings: A Direct Assessment,” Quarterly Journal of Economics 107 (February 1992): 151–200; and John Donohue and James Heckman, “Continuous vs. Episodic Change: The Impact of Civil Rights Policy on the Economic Status of Blacks,” Journal of Economic Literature 29 (December 1991): 1603–43. 

10. Examples include: Augustin K. Fosu, “Occupational Mobility of Black Women, 1958–1981: The Impact of Post-1964 Antidiscrimination Measures,” Industrial & Labor Relations Review 45, no. 2 (1992): 281–94; and James J. Heckman and Brook Payner, “Determining the Impact of Federal Antidiscrimination Policy on the Economic Status of Blacks: A Study of South Carolina,” National Bureau of Economic Research Working Paper no. 2854, 1989. 

11. Examples include: Charles Betsey, “Litigation of Employment Discrimination Under Title VII: The Case of African American Women,” American Economic Review 84, no. 2 (1994): 98–102; and Jonathan S. Leonard, “The Impact of Affirmative Action Regulation and Equal Employment Law on Black Employment,” Journal of Economic Perspectives 4, no. 4 (1990): 47–63. 

12. Examples include: Leonard Carlson and Caroline Swartz, “The Earnings of Women and Ethnic Minorities, 1959–1979,” Industrial & Labor Relations Review 41, no. 4 (1988): 530–46; James S. Cunningham and Nadja Zalokar, “The Economic Progress of Black Women, 1940–1980: Occupational Distribution and Relative Wages,” Industrial & Labor Relations Review 45, no. 3 (1992): 540–55; and Nadja Zalokar, The Economic Status of Black Women: An Exploratory Investigation. U.S. Commission on Civil Rights, 1990.

13. Jonathan S. Leonard, “The Impact of Affirmative Action Regulation and Equal Employment Law on Black Employment,” Journal of Economic Perspectives 4, no. 4 (1990): 47–63. 

14. Examples include: Donald Tomaskovic-Devy, Melvin Thomas, and Kecia Johnson, “Race and the Accumulation of Human Capital Across the Career: A Theoretical Model and Fixed-Effects Application,” American Journal of Sociology 111, no. 1 (2005): 58–89; and Valerie Wilson and William M. Rodgers III, Black-White Wage Gaps Expand with Rising Wage Inequality, Economic Policy Institute, September 2016. 

15. Jenny R. Yang and Jane Liu, Strengthening Accountability for Discrimination: Confronting Fundamental Power Imbalances in the Employment Relationship, Economic Policy Institute, January 2021. 

16. Ibid.

17. See endnote 1.

18. Chang-Tai Hsieh, Erik Hurst, Charles I. Jones and Peter J. Klenow. “The Allocation of Talent and U.S. Economic Growth”, Econometrica, Vol. 87, No. 5 (September 2019), 1439-1474.

19. Adewale A. Maye and Valerie Wilson, Trump is Making it Easier for Employers to Discriminate. This Stifles Equity and Hurts Economic Growth. Economic Policy Institute, May 2025.

Director, Product Classification
U.S. Postal Service
475 L’Enfant Plaza S.W., Room 4446
Washington, DC 20260-5015
PCFederalRegister@usps.gov 

Re: Proposed Rule: Ballot Mail for Federal Elections

The Economic Policy Institute (EPI) is a nonprofit, nonpartisan think tank that for 40 years has centered working families in economic policy discussions. EPI is submitting these comments in response to the Postal Service’s proposed rule on Ballot Mail for Federal Elections,1 which would have a disparate impact on Americans who face barriers to voting in person, including workers with disabilities, working parents, and workers with long and unpredictable work shifts. For this and other reasons outlined below, we believe that the proposed rule should be abandoned permanently and in its entirety.

The proposed rule follows a March 31, 2026, executive order from President Trump2 that would require the Postal Service to set new standards for the design of ballot envelopes used by state and local jurisdictions to facilitate centralized tracking of ballots to and from individual voters, thus encroaching on the authority to regulate and administer elections that the Constitution assigns to Congress and the states. The proposed rule also directs the Postal Service to compile a national voter list from state voter rolls and to reject ballots addressed to voters who are not on the list or that do not conform to the new envelope standard.

Tellingly, the proposed rule does not instruct the Postal Service to notify voters whose ballots were not delivered so that voters can challenge these decisions and correct errors caused by typos and similar discrepancies, which are vastly more common than deliberate fraud. Discrepancies and gaps in government records are not purely random, but are more likely to affect people with uncommon or hyphenated names (including many foreign-born citizens), married women who changed their names, and elderly and low-income Americans, among others.3

The proposed rule would misuse government data for political purposes.

The proposed rule should be viewed in the larger context of actions taken by this administration to use government data for unauthorized purposes, including voter suppression.

In addition to directing the Postal Service to compile a list of registered voters and use it to restrict mail voting, other provisions of the president’s executive order direct the United States Citizenship and Immigration Services (USCIS) and the Social Security Administration (SSA) to compile lists of voting-age citizens in each state, even though there is no evidence that fraudulent voting by noncitizens is a problem in U.S. elections.4 However, purging voter lists of suspected noncitizens could be used to disenfranchise eligible voters.

A case pending before the U.S. Supreme Court that would weaken the National Voter Registration Act could enable voter purges of suspected noncitizens close to elections when voters have little time to challenge errors that are common in such purges.5 Since some groups are more likely to vote for particular parties, purges can be weaponized for partisan advantage, a problem that would be magnified if done on a national scale.

The executive order adds to previous efforts by this administration to use SSA and other sensitive personal data for purposes beyond their intended use. It also risks another data breach in violation of federal privacy laws similar to an earlier breach of SSA data by a DOGE operative.6

The proposed rule would discourage voting by mail and harm working families who are more likely to face barriers to in-person voting.

Importantly, the harm inflicted by the proposed rule would extend beyond eligible voters who are directly prevented from voting by mail because they do not appear on the Postal Service list of registered voters. By casting doubt on the integrity and impartiality of mail voting, the rule would increase the number of voters dissuaded from voting by mail who later find themselves unable to vote in person.

Thirteen states, along with Puerto Rico and the Virgin Islands, restrict absentee voting to voters who know they will be out of the county on election day, or, in some states, who face barriers related to age, health, disability, work schedules, or other conflicts, such as jury duty.7 In my personal capacity as a volunteer on a voter assistance hotline, I can attest that many, if not most, people who face barriers to in-person voting could not have predicted them in advance. Voters frequently fall sick, face long lines at the polls that threaten to make them late for work, or find themselves with last-minute childcare and transportation problems.

Even voters who face predictable barriers that are valid reasons for absentee voting in their state can find it difficult to determine whether they qualify since specifics are not spelled out or are buried in dense legal language. What counts as a disability? Is documentation required? What if an anticipated work shift, jury duty, or vacation does not happen?

As the Institute for Policy Studies has pointed out, working-class voters are more likely to face barriers to voting in person due to work and family obligations.8 The Shift Project at the Harvard Kennedy School has documented the large number of low-wage workers, disproportionately workers of color, who work long and unpredictable shifts with little input into their schedules.9 In-person voting hours vary by state, but typically span a 12- or 13-hour time period.10 For working parents transporting children to school, workers with long commutes, and workers who face mobility challenges, it can be difficult if not impossible to vote in person within the designated window, especially if lines at the polls are long. Though some white-collar workers face these challenges, low-wage workers are less likely to work from home, have predictable schedules, or be given flexibility by employers to vote.

The Postal Service should scrap the proposed rule.

The above-mentioned constitutional, voting rights, and logistical problems with the proposed rule have been described in lawsuits and in commentary from a wide range of stakeholders and perspectives, including Lawfare,11 the Cato Institute,12 and the American Postal Workers Union.13 Twenty-three states and the District of Columbia successfully sued to temporarily block the executive order on which the proposed rule is based.14 However, the administration has said they will challenge the ruling, and regardless the rule could still take effect after the upcoming November election (the focus of the temporary injunction).

EPI believes that the proposed rule should be abandoned permanently and in its entirety for the following reasons:

• It is an unlawful attempt by the executive branch to seize control of elections from states and Congress.15
• It would inflict reputational damage on the Postal Service by involving it in decisions about who can and cannot receive ballots and vote by mail.16
• It would impose financial and logistical burdens on the Postal Service, which is already stretched to its limit.17
• It could jeopardize the timely delivery of all mail ballots, including those that conform to the requirements of the rule.18
• In combination with other provisions of the executive order, it could facilitate systematic voter purges for partisan advantage.
• It would cast doubt on the integrity and impartiality of mail voting.
• It would dissuade eligible voters from voting by mail, many of whom will face barriers to voting in person.

The Postal Service is an independent agency that, by design, is not under the direct control of the president and therefore not subject to his executive order.19 It has impartially delivered mail ballots to voters since the Civil War, when states introduced absentee voting for soldiers, a right later extended to other absentee voters. Some states have also extended vote by mail to voters who face specific barriers to in-person voting, such as people with disabilities. Other states and the District of Columbia have gone much further, mailing ballots to all registered voters. This is by far the fairest solution, but until it is the law of the land, we should work to extend, not restrict or suppress, mail voting.

Respectfully submitted,

Monique Morrissey
Senior Economist

Endnotes 

1. “Ballot Mail for Federal Elections: A Proposed Rule by the Postal Service on 06/02/2026,” Federal Register Published Document: 2026-10968 (91FR 32915). https://www.federalregister.gov/documents/2026/06/02/2026-10968/ballot-mail-for-federal-elections

2. Donald J. Trump, “Ensuring citizenship verification and integrity in federal elections,” March 31, 2026. https://www.whitehouse.gov/presidential-actions/2026/03/ensuring-citizenship-verification-and-integrity-in-federal-elections/

3. Monique Morrissey and Daniel Costa, “Cleaning up administrative records or targeting immigrants?” https://www.epi.org/blog/cleaning-up-administrative-records-or-targeting-immigrants/ 

4. See, for example, Wren Orey, Theresa Cardinal Brown, Feyisayo Oyolola, and Theo Menon, “Four Things to Know about Noncitizen Voting,” Bipartisan Policy Center, February 20, 2026. https://bipartisanpolicy.org/article/four-things-to-know-about-noncitizen-voting; Michael Waldman, “Why the Myth of Noncitizen Voting Persists,” Brennan Center for Justice, August 21, 2024. https://www.brennancenter.org/our-work/analysis-opinion/why-myth-noncitizen-voting-persists. Stephen Richer, “Trump’s Claims About Noncitizens Voting Are False. We Can Prove It.” Cato Institute, February 5, 2026. https://www.cato.org/commentary/trumps-claims-about-noncitizens-voting-are-false-we-can-prove-it

5. Jim Saksa, “Supreme Court will hear Arizona case that could badly weaken key federal law protecting voter registration,” Democracy Docket, June 29, 2026. https://www.democracydocket.com/news-alerts/supreme-court-will-hear-arizona-case-that-could-badly-weaken-key-federal-law-protecting-voter-registration/

6. Stephen Fowler and Jude Joffe-Block, “The Trump administration admits even more ways DOGE accessed sensitive personal data,” Weekend Edition, National Public Radio, January 30, 2026. https://www.npr.org/2026/01/23/nx-s1-5684185/doge-data-social-security-privacy

7. National Council of State Legislatures, Table 2: Excuses to Vote Absentee, website accessed July 2, 2026. https://www.ncsl.org/elections-and-campaigns/table-2-excuses-to-vote-absentee

8. Sarah Anderson, “Attacks on Mail Voting are Attacks on the Working Class,” Institute for Policy Studies, April 6, 2026. https://ips-dc.org/attacks-on-mail-voting-are-attacks-on-the-working-class/

9. Daniel Schneider and Kristen Harknett, “It’s About Time: How Work Schedule Instability Matters for Workers, Families, and Racial Inequality,” October 16, 2019. https://shift.hks.harvard.edu/its-about-time-how-work-schedule-instability-matters-for-workers-families-and-racial-inequality/

10. Ballotpedia, “State Poll Opening and Closing Times (2026),” website accessed July 2, 2026. https://ballotpedia.org/State_Poll_Opening_and_Closing_Times_(2026)

11. Molly Roberts, “What’s up with Trump’s Mail-In Voting Executive Order?” Lawfare, Monday, June 29, 2026. https://www.lawfaremedia.org/article/what-s-up-with-trump-s-mail-in-voting-executive-order

12. Stephen Richer, “USPS Issues Proposed Mail Voting Rules Pursuant to Trump Executive Order,” Cato at Liberty blog, May 29, 2026. https://www.cato.org/blog/usps-issues-proposed-mail-voting-rules-pursuant-trump-executive-order

13. Jonathan Smith, APWU Comments on Proposed Rule: Ballot Mail for Federal Elections, June 29, 2026. https://apwu.org/wp-content/uploads/2026/06/APWU-Comments-VBM-Rulemaking.pdf

14. Dion Nissenbaum, “Federal judge blocks key pillars of Trump executive order restricting mail voting in 2026 election,” VoteBeat, June 25, 2026. https://www.votebeat.org/national/2026/06/25/trump-election-overhaul-mail-voting-executive-order-blocked-talwani-usps-dhs/

15. Molly Roberts, “What’s up with Trump’s Mail-In Voting Executive Order?” Lawfare, Monday, June 29, 2026. https://www.lawfaremedia.org/article/what-s-up-with-trump-s-mail-in-voting-executive-order

16. Smith, op. cit.

17. Ibid.

18. Ibid.

19. Ibid.

June 22, 2026

Daniel Navarrete
Director of the Division of Regulations, Legislation, and Implementation
Wage and Hour Division
U.S. Department of Labor
Room S-3502
200 Constitution Avenue NW
Washington, DC 20210

Re: Proposed Rule: Joint Employer Status Under the Fair Labor Standards Act, Family and Medical Leave Act, and Migrant and Seasonal Agricultural Worker Protection Act (RIN 1235-AA48)

Dear Mr. Navarrete,

We write to submit this comment on behalf of the Economic Policy Institute (EPI), responding to the Department of Labor’s proposed rule on Joint Employer Status Under the Fair Labor Standards Act (FLSA), Family and Medical Leave Act (FMLA), and Migrant and Seasonal Agricultural Worker Protection Act (MSPA). EPI is a nonprofit, nonpartisan think tank created in 1986 to include the needs of low- and middle-income workers in economic policy discussions. EPI conducts research and analysis on the economic status of working America, proposes public policies that protect and improve the economic conditions of low- and middle-income workers, and assesses policies with respect to how well they further those goals.

EPI strongly opposes the Department of Labor’s (DOL’s) proposed rulemaking and urge the agency to withdraw this rule. If implemented, we conservatively estimate this rule would cost workers roughly $1 billion annually through increases in workplace fissuring and exposure to wage theft. Further, the FLSA’s joint employer definition is also used to apply protections under FMLA, MSPA, the Providing Urgent Maternal Protections (PUMP) for Nursing Mothers Act (now part of the FLSA), and the Equal Pay Act. Under the proposed rule, workers thus would not only be at risk of losing full protections to their right to earn the minimum wage over overtime pay, but also their right to unpaid but job-protected family and medical leave, pay discrimination protections, and the right to pump breastmilk while at work. Agricultural workers, already operating in notoriously underpaid and hazardous conditions, will also find it harder to enforce or get compensation for violations of their rights to the basic pay and housing requirements for agricultural workers under MSPA. Because of the broad impacts of structural racism and sexism on labor market outcomes, women and people of color are overrepresented in low-wage jobs overall, which are particularly vulnerable to fissuring and wage theft. As a result, women workers and workers of color are likely to be disproportionately harmed if this rule is finalized.

The proposed rule would undermine the original intent of the FLSA

At its most basic, the joint employer standard simply requires that when multiple employers co-determine or share control over a workers’ terms of employment (such as pay, schedules, and job duties), each of those employers is responsible for compliance with worker protection laws. Given the realities of the modern workplace, in which employees often find themselves subject to more than one employer, workers deserve a joint employment standard under the FLSA that guarantees these basic rights and protections.

As the American Civil Liberties Union (ACLU) has argued in their joint comments, also cosigned by EPI, the NPRM contravenes the statutory definition of “employ” under the FLSA, Supreme Court precedent. This rule also shares the same substantive defects as DOL’s 2020 Final Rule, which was largely invalidated by a federal district court in New York v. Scalia, 490 F. Supp. 3d 748 (S.D.N.Y. 2020).

EPI has conducted extensive research and policy analysis on the harms to workers from weakened labor standards and weakened enforcement of those standards. There is no question that this proposed rule would weaken labor standards. As with the first Trump administration’s attempt at weakening these regulations, this rule would dramatically narrow the set of circumstances whereby a firm can be found to be a joint employer under the FLSA. The FLSA is our nation’s fundamental worker protection statute, providing wage and hour protections to the vast majority of U.S. workers. The FLSA was drafted broadly, and its definition of an employer was intended to cover most workplaces and most workers. The intention was and should remain that companies that use staffing agencies, temporary workers, or subcontractors in their business operations are held accountable for complying with the FLSA’s basic provisions, including minimum wage, overtime, and child labor protections. The proposed rule will make it nearly impossible for many workers in those types of workplaces to enforce these rights. It would also take away the ability of workers to recover unpaid wages from firms who use undercapitalized contractors in their work.

We believe it is also important to acknowledge some of the most frequently referenced critiques of a broad, protective joint employer standard, from those who would like to see that standard weakened. One argument, already present in some of the comments that the Department has received on this rule, is that this weakened standard is necessary to provide regulatory clarity for franchisee employers in particular. The International Franchise Association, for example, says this proposed rule “protects the independence of franchise small businesses.”1 However, these arguments obscure the fact that it is already large corporate franchisors who stand to benefit the most from having this “independence” protected.

Franchisee operators already bear the full responsibility for violations of the FLSA that occur on their watch, even if those violations may have been more likely to occur because of requirements or pressure exerted on them in their business agreements with the large corporate franchisors. Nothing in the FLSA’s current joint employer standard automatically labels a franchisor-franchisee relationship as a joint employment scenario. On the contrary, the longstanding joint employer standard is not one-size-fits-all, and always requires looking at multiple factors to determine how much control each entity is actually exerting on a worker. We urge the Department not to adopt a proposed rule that would continue to allow large employers to conceal their real interest—minimizing their own liability for FLSA violations—as a goal that is aligned with the best interests of small business owners and franchise operators.

The Department’s flawed economic analysis overlooks that workers will lose pay if this rule is implemented

DOL continues its misguided evaluation of the likely impacts of the proposed joint employer standard in its economic impact analysis. DOL has a responsibility to consider all relevant data in advancing this regulatory standard, but it fails to do so. The NPRM states that “the Department does not expect that there would be significant transfer effects as a consequence of the proposed rule,” explaining that “nothing in the proposed rule would reduce the wages owed to employees under the FLSA or MSPA [emphasis added].”2 

However, even if the proposed rule would not change the wages due to a worker under the FLSA or MSPA, this does not mean that the proposal will not result in transfers between employers and employees. It would, in at least two ways.

First, this rule would incentivize workplace “fissuring,” i.e., employers increasing their reliance on contractors, subcontractors, temporary help agencies, and franchises rather than hiring employees directly—a practice that suppresses workers’ wages.  The Department dismisses the idea that the rule would incentivize fissuring by essentially simply asserting that such concerns are “largely inapplicable” to this rulemaking.3  We, however, conservatively estimate that in the long run, the increase in workplace fissuring as a result of the rule would result in a transfer of at least $772.0 million from workers to employers annually. This calculation is discussed in depth below.

Second, this rule would increase losses due to wage theft by employers. The Department acknowledges that this is an issue when it states that “some workers in vertically-tiered industries may, in some cases, have more or less difficulty collecting their owed wages,” 4 but, astonishingly, dismisses this concern by stating, without evidence, that “the magnitude of this effect is unlikely to be significant.”5  We conservatively estimate that an increase in losses due to wage theft as a result of the rule will result in a transfer of at least $225.6 million from workers to employers annually. This calculation is discussed in depth below.

Putting together these two estimates—more than $772.0 million lost by workers as a result of the rule due to an increase in workplace fissuring and more than $225.6 million in losses by workers as a result of wage theft—we estimate workers will lose roughly one billion dollars ($997.6 million) annually as a result of this rule if it is finalized.

Quantifying the transfers from workers to employers due to an increase in fissuring

According to data from the Bureau of Labor Statistics’ 2023 Contingent Worker Supplement (CWS), there are 862,000 workers who work for contract firms and 945,000 workers who work for temporary help agencies.6 However, the CWS undercounts these workers. This is due in part to the fact that workers self-report what kind of firm they work for and may erroneously report that they work for the company where they are doing their work instead of for the contract firm or temporary help agency that placed them at that site. Establishment surveys—where the firm, not the worker, does the reporting—get around this problem. High-quality establishment data on employment in contract firms do not exist to our knowledge, but there are excellent establishment data on employment in temporary help agencies from the Bureau of Labor Statistics’ Current Establishment Survey (CES). These data show that there were 2.50 million workers in temporary help agencies in 2025,7 well over double (2.64 times) what is reported in the latest CWS. Adjusting the number of contract workers by the same multiple (2.64) results in an adjusted estimate of the number of contract workers of 862,000 * 2.64 = 2.28 million.

It is important to note that we believe this estimate still undercounts contract workers, because the CWS includes only one very specific type of contract worker in its count of workers employed by contract firms—workers who are usually assigned to only one client and usually work at the client’s worksite. That excludes the many contract workers who work for multiple clients (e.g., janitorial workers or IT consultants) or offsite (e.g., call center workers or industrial laundry workers). We do not attempt to quantify this undercount.

Another important form of fissuring in the workplace is the increasing reliance on franchising models. Data from the U.S. Census Bureau’s 2017 Economic Census Franchise Statistics Report show that franchise employment in 2017 in key sectors where franchising is common was 9.59 million.8  Since 2017 is the latest year these data are available, we inflate the value by the growth rate in overall payroll employment between 2017 and 2025, 8.1%, from the Current Employment Statistics establishment survey of the Bureau of Labor Statistics.9  This results in an estimated level of franchise employment for 2025 of 10.36 million.

Putting this all together, we conservatively estimate that in 2025, there were a total of 15.14 million employees working in “fissured establishments”—working for temporary help agencies (2.50 million), working for contract firms (2.28 million), or working for franchises (10.36 million). It is important to note the degree to which this estimate of the fissured workplace is likely an undercount. David Weil estimated that in 2017, 18.9 percent of private-sector production and nonsupervisory workers—20.8 million workers in 2025—were in highly fissured industries, and that if additional fissured workers in occupations and in industries with mixed use of practices were included, that share could easily double.10

Because the rule would mean that employers would be able to avoid liability for FLSA violations for many workers in fissured establishments while still substantially controlling the wages and working conditions of those workers, companies will be incentivized to restructure and outsource parts of their business. Research shows that the wage losses associated with this kind of domestic outsourcing are substantial, on the order of 5% long-run earnings losses.11 Thus the rule will result in a substantial transfer away from workers whose firms decide, as a result of the rule, to outsource the work that they do.

CES data show that the average weekly earnings of production and nonsupervisory workers in temporary help services in 2025 was $932.12 A 5% penalty (noted above) for working in a fissured workplace implies that these workers would be earning $981 if they were directly hired, a difference of $49 per week. Combined with our estimate of 15.14 million employees working for fissured establishments, we find that every percent increase in fissuring as a result of the rule would, in the long run, lead to a wage loss of $386.0 million annually.13 That means that an increase in domestic outsourcing of just 2 percent as a result of the rule—an implausibly conservative increase considering employers would newly be able to avoid liability for FLSA violations while still substantially controlling the wages and working conditions of domestically outsourced workers—would lead to a transfer of $772.0 million annually from workers to employers. Further, it is important to note that using the broader estimate, described above, of 20.8 million private-sector production and nonsupervisory workers in the fissured workplace, that number would be $1.1 billion.

Quantifying the transfers from workers to employers due to an increase in wage theft

Wage theft—the practice of employers failing to pay workers the full wages to which they are legally entitled—is a widespread and deeply rooted problem that directly harms millions of U.S. workers each year. Employers refusing to pay promised wages, paying less than legally mandated minimums, failing to pay for all hours worked, or not paying overtime premiums deprives working people of billions of dollars annually. It also leaves hundreds of thousands of affected workers and their families in poverty.14 Wage theft does not just harm the workers and families who directly suffer exploitation; it also weakens the bargaining power of workers more broadly and puts downward pressure on hourly wages in affected industries and occupations. For many low-income families who suffer wage theft, the resulting loss of income forces them to rely more heavily on public assistance programs, unduly straining safety net programs and hamstringing efforts to reduce poverty.

In 2008, Bernhardt et al. surveyed front-line workers in low-wage industries in the cities of Chicago, Los Angeles, and New York and found that two-thirds (68 percent) of these workers experienced at least one pay-related violation in any given week.15 The researchers estimated that the average cost to these workers over a year was $2,634 out of a total earnings of $17,616—15.0 percent of their wages. This adds up to a total of nearly $3 billion annually stolen across all forms of wage theft among these workers in 2008. Generalizing these three-city, 2008 results to the nationwide 2025 workforce, we estimate that low-wage workers in the U.S. lost $52.5 billion to all forms of wage theft in 2025.16

It is worth noting that though the Bernhardt et al. study is somewhat dated, more recent studies show that labor violations remain so prevalent that it is likely that simply extrapolating from the Bernhardt et al. study, as we have, will generate conservative numbers.  For example, a 2024 study out of the Shift Project at Harvard Kennedy School found that nearly all (91%) hourly service sector workers in California experienced at least one labor violation in the prior year.17

The proposed rule would increase losses due to wage theft by employers in at least three ways. Each of these impacts will be particularly acute in industries in which there is high reliance on subcontracting, temporary work, and other alternative work arrangements, where there is already a disproportionate occurrence of wage theft.18

First, the proposal would severely limit the ability of millions of workers to get justice when they are victims of wage theft. By limiting workers’ ability to recover wages from firms that contractually have the right to act with respect to the terms and conditions of employment, DOL is depriving workers of long-held rights to recover unpaid wages from their employers.

Second, there will be a reduction in wage theft deterrence caused by the reduction, as a result of the rule, of workers’ ability to recover wages. This reduction in wage theft deterrence will likely lead to an increase in wage theft.

Third, by allowing firms that hire contractors to avoid legal liability for wages, the rule would give these firms greater incentive to award contracts to undercapitalized firms that are more likely to have low bids on the basis of not paying their workers what they are owed. And, absent the legal liability stemming from being a joint employer, if the contractor goes out of business, the lead business is not liable for the lost wages of the workers. In other words, this rule would increase the incentive for firms to seek out undercapitalized contractors who will provide lower bids to the companies that use them—bids that are able to be so low because the contractors plan to steal from their workers (by underpaying them or not paying them at all).19

As described above, an estimated $52.5 billion was lost by low-wage workers to all forms of wage theft in 2025. We use several sources of data to estimate how much of that $52.5 billion was lost by workers in fissured establishments. As noted above, we conservatively estimate that in 2025, there were a total of 15.14 million employees working in “fissured establishments”—working for temporary help agencies (2.50 million), working for contract firms (2.28 million), or working for franchises (10.36 million).

To determine how many of these 15.14 million workers are low-wage, we turn to CWS microdata, which allow us to calculate the share of workers in contract firms and temporary help services who are low wage workers.  Unfortunately, microdata from the most recent (2023) CWS survey have not yet been released, so we use microdata from the 2017 CWS survey. We find that the share of workers in contract firms or in temporary help services who are low-wage—defined as earning $12 per hour or less in 2017—is 36.3 percent. Given wage growth between 2017 and 2025, $12 in 2017 was roughly equivalent to $17 in 2025.20 

Franchise workers are not identified in the CWS, so we simply assume that the share of workers in franchise firms who are low-wage is the same as the share of workers who are low-wage in contract firms and temporary help services. Multiplying 36.3% by our estimate of 15.14 million total workers in fissured establishments, we estimate that there are 5.5 million low-wage workers in fissured establishments.

There were 25.6 million workers who made less than $17 an hour in 2025,21 which means that 21.5 percent (5.5 million/25.6 million) of low-wage workers are in fissured establishments. Assuming that the incidence of wage theft among low-wage workers is no higher in fissured establishments than in traditional establishments (an extremely conservative assumption), we can simply multiply this 21.5 percent by the total amount of wage theft from low-wage workers—$52.5 billion—to estimate the amount of wage theft in fissured establishments. This comes out to $11.28 billion.

Annual wage theft of $11.28 billion in fissured establishments means that every percent increase in losses due to wage theft would lead to an aggregate transfer from workers to employers of $112.8 million annually. This means that an increase in losses due to wage theft of just 2 percent as a result of the rule—an implausibly conservative increase considering many former joint employers would newly be able to avoid liability for FLSA violations—would lead to an aggregate transfer from workers to employers every year of $225.6 million. Further, it is important to note that using the broader estimate described above of 20.8 million private-sector production and nonsupervisory workers in the fissured workplace, that number would be $309.8 million.

Conclusion

DOL’s proposed rule undermines the original intent of our nation’s fundamental worker protection laws and, if implemented, its impact on working people will be negative and significant. The proposed rule would incentivize the further “fissuring” of the workplace, putting strong downward pressure on wages, and it would make it nearly impossible for millions of workers to get justice when they are the victims of wage theft. Conservatively, we estimate that, if implemented, this rule would cost workers just under $1.0 billion annually—more than $772.0 million due to wage suppression from an increase in workplace fissuring and more than $225.6 million from an increase in wage losses due to wage theft by employers. We urge DOL to abandon this flawed rulemaking and ensure a meaningful joint employer standard under the FLSA, our nation’s fundamental worker protection law.

Sincerely,

Heidi Shierholz, Ph.D.
President
Economic Policy Institute

Samantha Sanders
Director of Government Affairs & Advocacy
Economic Policy Institute

Endnotes

1. International Franchise Association (IFA). 2026. “IFA Praises Trump Administration Joint Employer Rule” (press release). April 22, 2016.

2. 91 Fed. Reg. 21909

3. 91 Fed. Reg. 21909

4. 91 Fed. Reg. 21909

5. 91 Fed. Reg. 21910

6. Bureau of Labor Statistics, “Table 5. Employed workers with alternative and traditional work arrangements on sole or main job by selected demographic characteristics, July 2023,” Contingent and Alternative Employment Arrangements, November 2024.

7. U.S. Bureau of Labor Statistics, All Employees, Temporary Help Services [TEMPHELPS], retrieved from FRED, Federal Reserve Bank of St. Louis. Accessed June 2026 at https://fred.stlouisfed.org/series/TEMPHELPS. 

8. U.S. Census Bureau, “Franchising in America: Key Data from the 2017 Economic Census,” September 2021.

9. U.S. Bureau of Labor Statistics, All Employees, Total Nonfarm [PAYEMS], retrieved from FRED, Federal Reserve Bank of St. Louis. Accessed June 2026 at https://fred.stlouisfed.org/series/PAYEMS.

10. David Weil, “Understanding the Present and Future of Work in the Fissured Workplace Context,” Working Paper, Brandeis University, May 2019.

11. Dorn, D., Schmieder, J. F., Spletzer, J. R. (2018). Domestic Outsourcing in the United States. Chief Evaluation Office, U.S. Department of Labor; Deborah Goldschmidt and Johannes F. Schmieder, “The Rise of Domestic Outsourcing and the Evolution of the German Wage Structure,” Quarterly Journal of Economics 132, no. 3 (August 2017): 1165–1217; Arindrajit Dube and Ethan Kaplan, “Does Outsourcing Reduce Wages in the Low-Wage Service Occupations? Evidence from Janitors and Guards,” ILR Review 63, no. 2 (January 2010): 287–306.

12. Bureau of Labor Statistics, Current Employment Statistics (BLS-CES). Table B-8, Average hourly and weekly earnings of production and nonsupervisory employees on private nonfarm payrolls by industry sector, seasonally adjusted. Various years. Accessed June 2026 at https://www.bls.gov/webapps/legacy/cesbtab8.htm.

13. $386.0 million = 15.14 million * $49 * 52 weeks in a year * 1%.

14. Margaret Poydock and Jiayi (Sonia) Zhang, More than $1.5 billion in stolen wages recovered for workers between 2021 and 2023, Economic Policy Institute, December 2024; David Cooper and Teresa Kroeger, Employers Steal Billions from Workers’ Paychecks Each Year: Survey Data Show Millions of Workers Are Paid Less Than the Minimum Wage, at Significant Cost to Taxpayers and State Economies, Economic Policy Institute, May 2017.

15. Annette Bernhardt et al., Broken Laws, Unprotected Workers: Violations of Employment and Labor Laws in America’s Cities, 2009, Center for Urban Economic Development, National Employment Law Project, and UCLA Institute for Research on Labor and Employment, 2009.

16. Generalizing the three-city, 2008 results to the nationwide 2025 workforce required several adjustments. The low-wage workforce in the Bernhardt et al. study represented 15.1% of all workers in those cities, and 68% of those workers experienced at least one pay-related violation in the prior week. This implies that at least 15.1%*68% = 10.3% of all workers experienced wage theft in a given week. Data from the BLS Current Employment Statistics (CES) survey shows there were158.5 million nonfarm payroll employees in 2025 nationwide. Applying the 10.3% estimate to that workforce yield 16.3 million workers, meaning that at least 16.3 million workers nationwide likely experienced wage theft in any given week in 2025. Bernhardt et al. found that workers who experienced wage theft lost, on average, 15% of their weekly earnings. Using the BLS Current Population Survey (CPS), we find that the lowest-paid 15.1% of workers who are 18 years old or older and worked at least five hours per week —a conservative proxy for the population surveyed in Bernhardt et al.—had median weekly earnings of $352 in 2025. Assuming 15% losses due to wage theft, the earnings of workers experiencing wage theft would have been $414 if wage theft hadn’t occurred, an average loss of $62. Multiplying the estimated16.3 million workers experiencing wage theft by the average loss of $62, we find that the total amount lost by low wage workers to wage theft in a given week is $1.01 billion. Annualized, this amounts to $52.5 billion in wages stolen from low-wage workers each year.

17. Daniel Schneider, Elizabeth Kuhlman, Kristen Harknett, and David Weil. 2024. Compliance and the Complaint Gap: Labor Standards Violations in the California Service Sector. The Shift Project at Harvard Kennedy School, May 2024.

18. Annette Bernhardt et al., Broken Laws, Unprotected Workers: Violations of Employment and Labor Laws in America’s Cities, 2009, Center for Urban Economic Development, National Employment Law Project, and UCLA Institute for Research on Labor and Employment, 2009.

19. This is an argument made by Judge Easterbrook in Reyes v. Remington Hybrid Seed Co. 495 F.3d 403 (7th Cir. 2007). In that decision, Easterbrook notes, “If Zarate [the labor broker in the case] had been solvent, Remington [the lead business in the case] would have to offer him enough that he could pay all the workers’ wages (including the minimum wage and any overtime premium), cover the costs of fringe benefits such as housing, and still be able to make a profit. But when a contractor has no business or personal wealth at risk, he may be tempted to stiff the workers (as Zarate did) and then treating the principal firm as a separate employer is essential to ensure that the workers’ rights are honored.”

20. $12 was 66.1% of the median wage in 2017, and 66.1% of the median wage in 2025 was $16.97.  Economic Policy Institute, State of Working America Data Library, “Hourly wage percentiles – Nominal hourly wage,” 2026.

21. Low-Wage Workforce Tracker, Economic Policy Institute, January 2026.

June 1, 2026

The Honorable Daniel Aronowitz
Assistant Secretary
Employee Benefits Security Administration
U.S. Department of Labor
200 Constitution Avenue NW
Washington, DC 20210

Re: Fiduciary Duties in Selecting Designated Investment Alternatives, RIN 1210-AC38

Dear Assistant Secretary Aronowitz:

I submit these comments on behalf of the Economic Policy Institute (EPI) on the Department of Labor’s (DOL) Notice of Proposed Rulemaking on Fiduciary Duties in Selecting Designated Investment Alternatives.

EPI is a nonprofit, nonpartisan think tank that has worked for 40 years to center working families in economic policy discussions.

EPI strongly opposes the Employee Benefits Security Administration’s (EBSA’s) proposed rule on Fiduciary Duties in Selecting Designated Investment Alternatives. The rule would gut protections for retirement savers in 401(k) and other participant-directed plans covered by the Employee Retirement Income Security Act of 1974 (ERISA). In addition to our comments here, EPI has signed onto a joint comment letter with other consumer, retiree, and worker advocacy organizations expressing concern that the rule would add complexity, raise fees, and return us to an era when retirement plan participants had little protection from poor investment choices. This letter will expand on that letter to critique some of the economic arguments made in support of the proposed rule.

This letter will focus on risk, questioning EBSA’s claim that loosening protections for retirement savers will maximize risk-adjusted returns by providing access to alternative investments.

• EBSA attempts to redefine fiduciaries’ duty of prudence in selecting investment options as “maximizing risk-adjusted returns net of fees” no matter the risk rather than balancing the goals of maximizing returns and minimizing risk. (Unless otherwise noted, quotations are from the proposed rule.)
• EBSA ignores the fact that retirement savers face a worse principal-agent problem than defined benefit pension funds, since investment options are chosen by plan fiduciaries but participants bear the risk of losses.
• EBSA ignores the fact that even if pension funds that invest in alternative assets earn an illiquidity and risk premium (a big “if”), and even if individual retirement savers retire at the time they planned to (another big “if), individual retirement savers with limited investment horizons face greater timing risk and should be more risk averse.
• EBSA assumes that any asset class that does not move in sync with stock and bond markets adds useful diversification even if it is a speculative asset with a zero expected real return that only adds volatility.
• EBSA’s case for asset class diversification rests on modern portfolio theory, which assumes investors are well-informed and risk-averse, which is not a realistic description of markets for alternative assets.
• EBSA focuses narrowly on asset class diversification, ignoring the fact that adding alternative assets can concentrate rather than spread risk if these assets cannot be indexed.

Plan fiduciaries must adhere to a duty of prudence and a duty of loyalty.

Under ERISA, fiduciaries may be sued by participants or the Department of Labor (DOL) for breach of these duties when selecting investment options for participant-directed plans. Fiduciaries are required to have or obtain the expertise and information to make substantively sound decisions—going through the motions or acting with good intentions is not enough.

With minor exceptions, such as limits on employer stock, ERISA does not specify what types of investments may be included in 401(k) and similar plans. Nevertheless, plan fiduciaries, using their good judgement and leery of lawsuits, have generally avoided alternative investments that cannot be marketed to small and unsophisticated (nonaccredited) investors in other contexts. Instead, fiduciaries have increasingly moved toward low-cost index funds and similar broadly diversified and publicly traded investments that are recognized as appropriate options for retirement savers.

Lawsuits on behalf of plan participants who suffer losses from fiduciaries’ failure to uphold their duties are a critical enforcement tool. According to AARP, “Courts have repeatedly recognized that these cases play a meaningful role in improving plan governance, reducing excessive fees, and protecting participants’ long-term retirement security, without burdening employers that comply with the law.”1

The stated purpose of the proposed rule is to expand access to alternative investments.

EBSA claims that the threat of lawsuits harms retirement savers by limiting investment options available to plan participants. EBSA claims that “regulatory burdens and litigation risk…interfere with the ability of American workers to achieve…the competitive returns and asset diversification necessary to secure a dignified and comfortable retirement.”

The proposed rule includes a list of alternative assets that President Trump earlier mentioned in an executive order, including private equity, private credit, digital assets (“crypto”), and commodities.

EBSA notes that under ERISA these assets are not explicitly prohibited from being included among investment options in participant-directed plans. However, EBSA warns that plan fiduciaries may be excluding more complex investment options “not necessarily in response to a prudent assessment of whether the features in those investments are best suited to the needs of plan participants and beneficiaries, but rather because of the risk of litigation if plan fiduciaries depart from more traditional investments in favor of more creative or novel options.” It provides no evidence for that assertion and does not rebut the valid presumption that this could be the framework operating as intended: fiduciaries have made prudent assessments, found these assets wanting, and decided against them— recognizing that doing otherwise would appropriately expose them to litigation risk.

EBSA reframes the goal as maximizing risk-adjusted returns” no matter the risk rather than balancing risk and return.

According to EBSA, ERISA gives fiduciaries “maximum discretion and flexibility” to determine which investment options “offer the opportunity for participants to maximize risk-adjusted returns on their retirement assets net of fees.”

However, the goal of ERISA, as the name makes clear, is retirement income security, not “maximizing risk-adjusted returns net of fees.” Under ERISA, fiduciaries are required to select a diversified menu of investment options that minimize the risk of large losses for retirement savers.2 Such losses can be caused by sharp downturns or by cumulative underperformance over many years. Retirement savers will face both types of risk if they invest directly or indirectly in the alternative assets listed in the proposed rule.

Leverage is the most obvious way to maximize risk-adjusted returns, but also the most obvious way to amplify the risk of large losses. Reputable financial advisors do not advise retirement savers to maximize risk and return through leverage, even in the case of early career workers who have more time to adjust their contributions to the plan if their risky strategy fails.

EBSA ignores the subject of leverage entirely in the proposed rule, as well as any discussion of the appropriate level of portfolio risk for retirement savers (except to claim that asset diversification reduces it). Implicitly, then, EBSA’s self-described “asset-neutral” approach is also neutral with respect to the amount of risk retirement savers should face, focusing only on maximizing returns for any level of risk. This is especially dangerous given the widespread but mistaken belief that investment returns will average out over long investment horizons.3

Encouraging risky investments harms not only unsophisticated retirement savers, but also taxpayers who subsidize accounts intended to help ordinary workers save for retirement.

Though certain risky investment options may benefit wealthy participants with a high risk tolerance, the tax advantage is intended to promote retirement savings, and retirement security, for ordinary workers, not amplify wealth inequality.

Regulatory agencies have repeatedly warned of alternative asset risks.

DOL and other regulators previously acknowledged the risks associated with private market investments, including opacity, lack of regulatory oversight, complexity, illiquidity and high fees. In a June 3, 2020, letter to private equity managers, DOL noted that private equity investments had longer time horizons, higher fees, no easily observed market value, and were subject to different regulatory requirements and oversight than publicly traded securities.4

The letter suggested that plan fiduciaries might want to limit private equity investments to a specified percentage of a fund, have the investments independently valued according to agreed-upon financial standards, and require additional disclosures to meet the plan’s ERISA obligations to report information about the current value of the plan’s investments. These suggestions were generally ignored in the proposed rule.

After the Securities and Exchange Commission (SEC) issued a risk alert on June 23, 2020,5 warning that private equity and hedge fund investors may have paid more in fees and expenses than they should have and may not have been informed of conflicts of interest,

DOL issued a supplemental statement on December 21, 2021,6 citing the SEC warning and stakeholder comments challenging the earlier letter’s uncritical acceptance of some industry talking points, notably the claim that private equity could “offer plan participants who have longer investment horizons an equities-based investment choice that may enhance retirement outcomes when compared to investment choices containing only publicly traded securities.” The DOL statement also noted that while some fiduciaries have experience evaluating private equity investments for defined benefit pensions, many fiduciaries of small individual account plans do not.

The DOL statement was rescinded in response to President Trump’s executive order of August 7, 2025,7 without addressing any of the issues raised about the advisability of including private market investments among 401(k) plan options.

DOL and other regulators have also previously been highly skeptical of crypto as an investment, let alone one offered to retirement savers. On May 11, 2021, the SEC issued a staff statement warning that Bitcoin and Bitcoin futures were highly speculative investments.8 On January 10, 2024, SEC Chair Gary Gensler went further, describing Bitcoin as “primarily a speculative, volatile asset that’s also used for illicit activity including ransomware, money laundering, sanction evasion, and terrorist financing.”9 The Federal Reserve and other bank regulatory agencies also issued multiple warnings about crypto assets.10

Citing the SEC warnings, DOL issued guidance on March 10, 2022, advising 401(k) plan fiduciaries to exercise “extreme care” before adding cryptocurrencies to plan options, noting that they were difficult to valuate, even by experts, and posed custodial and recordkeeping concerns.11

The Federal Reserve and other bank regulators rescinded their guidance on April 24, 2025, and DOL followed suit on May 28, 2025, without addressing any of the issues raised about crypto risks. Beginning in 2025, the SEC also adopted a more accommodating stance toward crypto, for example, asserting that meme coins were not subject to federal securities laws12 and dismissing an enforcement action against Coinbase.13

The SEC prevents firms from marketing private assets to small (“retail”) investors for good reasons.

Laws including the Investment Company Act and Investment Advisers Act, both enacted in 1940, give the SEC the authority to regulate securities marketed to retail investors.14 In addition to requiring consistent valuations and disclosures, these laws—and regulations and guidance based on them—limit the use of leverage and guard against potential conflicts of interest.15 The sale of private funds that do not meet these requirements is generally limited to sophisticated “accredited” investors or “qualified purchasers.”

These laws are intended to protect investors who are not equipped to assess the value or risk of private market investments. During the Biden administration, the SEC proposed rules that recognized that even accredited investors in private funds were not provided with sufficient information or protection from conflicts of interest.16 The rules were overturned by the Fifth Circuit Court of Appeals based on the assumption that investors in these funds were sophisticated and able to bear losses, not that they had adequate information and protection.17

Are risk, illiquidity, and complexity opportunities to earn higher returns?

EBSA acknowledges some of the obvious disadvantages of alternative investments, but frames these as opportunities to earn a premium for accepting these risks:

Alternative asset investments are often less liquid than the publicly traded stock and bond funds that are held by funds that plan fiduciaries often make available to plan participants. Illiquid investments generally offer an illiquidity premium to investors who are willing to hold their investment, for some time, without selling it for cash. Many retirement savers, particularly younger workers, have long investment time horizons until retirement and, therefore, fit the profile of an investor who can benefit from a liquidity premium.

EBSA elsewhere alludes to “obstacles that cause a relatively higher risk premium when compared to traditional investments, such as illiquidity or information asymmetry,” but suggests that an expanded market tailored to the needs of retirement savers could reduce liquidity and valuation risks:

As this market matures a new equilibrium should be reached where there is a larger pool of viable and vetted investments, expanded by alternative assets, for asset managers to o􀆯er to plan sponsors. The tradeoff for this increased market penetration is a reduction in illiquidity premium. As the risks associated with investment in alternative assets falls, so too does the risk premium investors in the assets will enjoy.

The idea that retirement savers could knowledgeably accept such tradeoffs ignores the fundamental problem that information asymmetry, complexity, and lack of regulatory oversight make reliable ex ante valuation of private market assets impossible.18 Expanding the market, whether or not it improves liquidity, does not address this fundamental problem.

Private market investments should be niche products for sophisticated investors.

The accurate valuation of public assets is made possible by the mandatory disclosure of relevant information and market signals from daily trading. A key feature of public markets is two-sided competition, wherein knowledgeable buyers and sellers eliminate biased prices so that even unskilled and uninformed investors can get a fair shake.19 These sources of information are generally unavailable to private market investors, who in most cases must also contend with complex structures, strategies, and incentives.

Private markets are characterized by asymmetric information, so outside investors cannot assume that investment opportunities are fairly priced. Institutional investors instead rely on private fund managers’ past performance, reputational risk, and performance incentives in deciding whether to enter into limited partnerships with fund managers, known as general partners. Institutional investors with clout can also demand access to information that may not be provided to all limited partners and would not be made available to retirement savers. However, general partners’ incentives are blunted and distorted by their ability to earn millions in fees, and often in related party transactions, even when funds underperform or sustain losses, a problem exacerbated by the favorable tax treatment of fund managers’ share of investment returns, known as carried interest. Past performance, meanwhile, has been found to be a weak predictor of future performance.

In a comment submitted about the proposed rule, former investment banker Jeffrey Hooke and business school professor Michael Imerman estimated that private market investments should earn a premium of 200-500 basis points over their public counterparts to compensate for illiquidity, leverage and opaque financial reporting. Far from earning such a premium, Hooke and Imerman estimate that over 95% of state pension plans investing in private assets fail to beat a 60-40 stock-bond benchmark over long periods.20 Even if some institutional investors with superior clout and expertise can expect higher risk-adjusted returns by investing in private market assets, the wide dispersion in fund performance suggests that other institutional investors are not assured of benefiting from these investments and that retirement savers would fare even worse.21

The expected real return on purely speculative assets is zero.

With private market investments, the challenge lies in gauging the expected risk and return of underlying assets. With most crypto and other speculative assets, there is no expectation of profit unless the buyer has better information than the seller. At best, these assets are “digital gold,” used as a store of value, a means of exchange, or a hedge against inflation, but with added risks associated with custody, safekeeping, and regulatory uncertainty.22

As the SEC acknowledged last year, some crypto assets can be compared to physical collectibles like rare tulip bulbs, baseball cards, and Beanie Babies because they are nonproductive investments.23 Under the Economic Recovery Tax Act of 1981, most physical collectibles are banned from tax-favored retirement plans because they “do not contribute to productive capital formation.”24 Though digital collectibles, unlike physical collectibles, are not currently banned from investment options offered to participants in tax-favored retirement plans, it is not clear why they should be exempted.25

Similar to much crypto, commodity futures are largely speculative and regulated by the Commodities Future Trading Commission (CFTC), though investors may be compensated for hedging the risk of producers or consumers. The New York Times recently described how the CFTC’s enforcement capacity has been hollowed out and the agency has become captive of crypto and prediction markets.26

A market for speculative assets exists for the same reason there are casinos, racecourses, and prediction markets: A subset of the population, rather than being risk averse, likes to gamble. However, gambling does not belong in tax-subsidized accounts intended to promote retirement income security.

Assessing the performance of private funds poses serious challenges.

The debate around whether investing in private market assets is worth the high fees, risk, and illiquidity is complicated by a lack of consistent disclosure requirements. As documented by Oxford University professor Ludovic Phalippou and others, private equity general partners, when marketing themselves to pension funds and other potential investors, cite irrelevant or misleading statistics, sometimes manipulating the timing of valuations or excluding funds that have been committed but not yet invested to inflate reported returns.27

Given the subjectivity of internal valuations and evidence that they are misleading and manipulated, limited partners’ return on investment can only be known once assets have been sold and the proceeds distributed. This happens too infrequently to be useful in making investment decisions, a problem exacerbated by the fact that private fund managers can prevent limited partners from fully exiting.28

Even after the return on investment is known to limited partners, it is difficult to know whether the return was sufficient to compensate for risk and illiquidity, since the degree of leverage and other risk factors is generally unknown to outside investors.

The available evidence does not show that alternative assets improve risk-adjusted returns. Because performance metrics reported by private equity and other alternative assets are unreliable, researchers have looked at whether institutional investor portfolios that include these investments have outperformed benchmarks composed of broad stock and bond indices. Many found that they did not, especially in the years since the 2008 financial crisis.29

For example, a 2022 report from the Center for Retirement Research at Boston College found that public pension funds that invested more in alternative investments did not have higher returns, though the investments may have served to dampen reported volatility.30 Similarly, researchers at the Canada Pension Plan Investment Board found that while private equity appeared to outperform stocks before the financial crisis, it did not do so on a risk-adjusted basis.31

A more positive study published by the Georgetown Center for Retirement Initiatives found that 401(k) participants would have seen slightly higher returns over a 20-year period if target date funds had included private equity and other alternative investments.32

However, even this industry-funded study showed that large-cap U.S. stocks outperformed private equity in the decade after 2011. The study relied on a proprietary database of pension fund returns that is subject to major revisions and may not include a representative sample of pension funds.

Perhaps the most telling indicator of private funds’ mediocre performance is the industry’s resistance to providing comparable metrics even to their own investors. In 2024, after the SEC attempted to standardize information about fees and performance provided to limited partners in private funds,33 the industry challenged the rule before the Fifth Circuit Court of Appeals, which sided with the industry on the basis that access to the funds was generally limited to “some of the most sophisticated and wealthiest investors.”34 Of course, this will no longer be true if private assets are marketed to retirement savers.

The proposed “safe harbor” does not protect retirement savers—or fiduciaries.

At the heart of the proposed rule is what EBSA describes as a process-based “safe harbor” that would shield fiduciaries who adhere to the process from liability even if the investment options they select for the plan are poor choices. EBSA lists six factors that fiduciaries should consider when selecting investment options: performance, fees, liquidity, valuation, benchmarking, and complexity.

In EBSA’s view, fiduciaries who follow the six-step process should be granted a “presumption of prudence” and given “the discretion and flexibility to determine when designated investment alternatives, including those that contain alternative investments, offer the opportunity for participants to maximize risk-adjusted returns on their retirement assets net of fees.”

This check-the-box process does not give fiduciaries the tools they need to assess opaque, complex, illiquid, and largely unregulated investments. The proposal also does not address disclosures to plan participants, who would be even less prepared to make informed decisions.

The types of alternative investments listed in the proposal, by their nature, cannot be reliably evaluated according to the criteria in the process-based rule, even assuming fiduciaries have the skill and experience to understand complex structures and incentives.

Without additional disclosure requirements and regulatory oversight, for example, it is impossible to reliably assess risk and liquidity in private assets in order to choose a comparable benchmark.

ERISA lawyers warn that the regulatory “safe harbor” may give fiduciaries a false sense of security without shielding them from lawsuits.35 The proposed rule assumes that courts will defer to the agency in granting a “presumption of prudence” to fiduciaries, even though no such presumption exists in the statute and the U.S. Supreme Court recently ruled in Loper Bright that courts should exercise independent judgement in interpreting laws rather than deferring to agency interpretations.

EBSA assumes that diversifying across asset classes reduces risk.

EBSA emphasizes that ERISA does not restrict plan fiduciaries from considering any type of asset class, suggesting that all types should be made available to retirement savers. This is akin to arguing that since USDA dietary guidelines do not explicitly ban junk food, it should be part of every diet.

EBSA cites modern portfolio theory to argue that “the optimal constrained portfolio will have lower risk-adjusted returns than that of an unconstrained portfolio.” Modern portfolio theory is a highly abstract model that relies on unrealistic assumptions, including perfect information and perfectly liquid markets, that clearly do not describe private markets.

Though markets for crypto and other speculative assets can be highly liquid and do not depend on access to information, modern portfolio theory also assumes that investors are risk averse, and risk-averse investors do not engage in pure speculation.

Modern portfolio theory can be a useful approximation of reality, for example, in support of passive investment in publicly traded securities. But it cannot preclude the existence of overpriced assets designed to lure naïve investors into private markets where information is asymmetric and the “smart money” has no way to capitalize on better information through short selling.

Diversification across asset classes does not necessarily reduce risk, especially if the asset that is added is itself not diversified.

Diversification across asset classes can be a valid reason to expand the range of available investment options to retirement savers. However, whether an asset class will improve risk-adjusted returns depends on net returns, volatility, and correlation with stocks and other portfolio assets.

Alternative investments are often touted for their supposed low volatility and low correlation with stocks. But as Morningstar and others have pointed out, this reflects infrequent valuations and should not be mistaken for low risk: “With low disclosure and transparency, frequent use of leverage, and valuations that are both lower in scale and frequency than public markets, [private investments] should be considered one of the riskiest asset classes in an investor’s portfolio, despite often being sold as having lower risk profiles.”36

Private assets tend to be correlated with their public counterparts: private equity with stocks, private credit with bonds, etc. Speculative assets such as crypto may be less correlated with traditional investments, but the volatility in returns is essentially noise— adding risk without a risk premium since investors in these assets are not risk averse. EBSA’s narrow focus on asset class diversification ignores the fact that adding alternative assets can concentrate rather than spread risk if the assets themselves are not diversified.

A major concern is that indexing is generally not possible with private assets. A target date fund composed of broad market indices is more diversified than one that includes a 15% private equity fund with holdings in 10 companies selected and overseen by the same general partners.

There are important differences between pension funds and individual retirement savers.

The proposed rule implements a section of President Trump’s August 7, 2025 Executive Order, “Democratizing Access to Alternative Assets for 401(k) Investors,” which argues that that since most defined benefit (DB) pension funds invest in alternatives, participants in 401(k) and other defined contribution (DC) plans are being disadvantaged.37

This ignores key differences between DB pensions and DC plans, notably the fact that fiduciaries who select DB pension investments are employed by the party that bears the risk (the plan sponsor). In contrast, DC plan sponsors and their fiduciary advisors choose the investment options but the risk of losses falls on retirement savers.

Illiquid investments can trip up retirement savers who need to tap their savings earlier than planned due to unanticipated health shocks, job loss, or caregiving responsibilities. Firms marketing target date and asset allocation funds with limited private asset “sleeves” assure retirement savers that between the more liquid assets in the fund and incoming contributions, cashing out early will not be a problem. However, this assumes a stable market—no panic selling—and that investors who cash out will not be saddled with high fees with little to show for it.

Less often noted than the illiquidity issue is the fact that timing (or “sequence-of-returns”) risk should make retirement savers more risk averse than pension funds and other institutional investors with indefinite investment horizons even if they do not cash out early.38 Whereas pension funds and university endowments continuously buy and sell assets on behalf of overlapping generations of beneficiaries, retirement savers are more sensitive to poor investment performance over limited investment horizons, especially once workers have built up savings and are approaching retirement.

Retirement savers will be defaulted to high-cost and risky investments.

EBSA suggests that both direct and investments in alternative assets should be permitted, raising the possibility that retirement savers—including those close to retirement—could put all their retirement savings in crypto and other risky assets. However, EBSA suggests that “a more likely scenario…is that these alternatives would be included as one part of a menu option,” citing as examples target date funds and asset allocation funds with annuity or private equity components similar to those the industry has begun marketing to retirement savers. Target date and balanced asset allocation funds can be “qualified default investment alternatives” (QDIAs) into which participants can be defaulted unless they opt out.

The idea that alternative investments could be embedded in target date and similar funds is not reassuring. Retirement savers who are defaulted into QDIAs are generally unsophisticated investors who will need to rely on their investments to cover living expenses in retirement and have been led to believe that these defaults are relatively safe. DOL’s website describes default investments as investments “that generally minimize the risk of large losses and provide long term growth.”39

If the proposed rule takes effect, many workers could unknowingly invest 15% or more of their retirement savings in assets that DOL has previously characterized as high-cost, complex, illiquid, and difficult to evaluate, reversing what has been a welcome shift to low-cost passive investments.

401(k) investment options have improved in recent years with the widespread adoption of target date and balanced funds composed of low-cost stock and bond indices and similar broadly diversified passive investments. This has enabled retirement savers to lower costs, automatically rebalance portfolio allocations, adjust portfolio risk as workers approach retirement, and maximize diversification across publicly listed securities.

The rule would harm not only retirement savers, but also the broader economy.

The aggregate value of largely unregulated private funds, including both private equity and private credit, now approaches that of regulated public funds.40 While it is highly concerning that unregulated private markets are growing at the expense of public ones, the solution is extending disclosure requirements and other investor protections to private markets, not increasing the size of unregulated markets that expose investors and other economic actors to exploitation and excessive risk.

Private equity has often been a destructive force in the economy. It has a reputation for loading companies up with debt, stripping them of assets, and often driving them into bankruptcy, leaving workers, suppliers, and other stakeholders high and dry.41 Businesses destroyed by private equity often operate in sectors like hospitals and newspapers where the damage to communities extends far beyond workers and suppliers.

Private equity’s fee structure incentivizes risk because general partners reap a share of gains when gambles pay off but are largely insulated from losses, which are borne by lenders and other investors. This is exacerbated by the preferential tax treatment of general partners’ share of earnings. Experts have also expressed alarm over the rapid expansion of unregulated private credit, which poses a threat to financial stability.

The proposed rule comes at an especially bad time. Agency understaffing, weakened enforcement, federal legislation, and a Supreme Court decision in Anderson v. Intel could exacerbate the potential effects of the rule.

Experts warn that deregulation could fuel a speculative bubble like the one in the roaring 1920s.42 When the bubble pops, everyone will pay, whether they were playing or not. As University of Chicago Law School Professor William Birdthistle, the former director of the SEC’s Division of Investment Management, warns:

The administration is…encouraging individual retirees to vouchsafe their life savings to exotic financial offerings like private equity. Private equity is, as the name suggests, notoriously opaque, which means retirees would know little about what they’re investing in. The White House and the private fund lobby argue that this policy will “democratize” access to alternative assets and promote “better returns.” But such a plan, which comes with neither the information nor the protections needed to defend investors from serious economic risks, is as compelling as a plan to “democratize” brain surgery. 43

The proposed rule is supported by a financial industry seeking new investors and plan sponsors hoping to reduce litigation risk, not retirement savers.

Whether or not alternative investments have performed well in the past, market saturation, higher interest rates, and other factors will likely reduce future returns. A shrinking client base has made it hard for private equity funds to exit their investments and return funds to clients. Investors in private credit funds have also become skittish due to concerns about lending standards and valuations, prompting some firms to restrict redemptions.44

A survey conducted on behalf of AARP found that “Americans have little interest in adding private market investments and cryptocurrency to workplace retirement accounts.”45 As institutional and wealthy investors try to o􀆯load underperforming funds, retirement savers will be given access to the dregs even as overall quality declines. Retirement savers will be “buying a pig in a poke”—assuming they are even aware they are buying a pig.

We need to better regulate alternative investments, not to loosen regulations protecting retirement savers.

Financial regulations, including disclosure requirements and fiduciary rules, serve multiple purposes. They protect investors, prevent systemic risks such as bank runs, and disclose information needed for financial markets to direct capital to productive uses, rather than activities that do not promote economic growth but simply transfer wealth to insiders from those with less information like most retirement savers and small investors.

Without reliable and comparable information, it is difficult for even sophisticated investors to know whether alternative investments are worth their high cost. We need better regulations to help all investors make informed decisions and guard against conflicts of interest; to fix incentives that encourage value-destroying business practices by private equity and other underregulated financial industries; and to curtail abuse of tax-favored plans by wealthy investors, who have an incentive to load 401(k) accounts up with assets that are difficult to value in order to skirt contribution limits and take maximum advantage of tax subsidies tied to investment returns.

Rather than weakening protections for retirement savers, DOL should work with other agencies to regulate private markets to enable all investors to make informed decisions and protect the economy.

For these reasons, I urge EBSA to withdraw the proposal. Working families need retirement income security, not risky and costly investments ill-suited for small investors.

Thank you for considering my comment.

Respectfully submitted,

Monique Morrisey, Ph.D.
Senior Economist
Economic Policy Institute

1. AARP, “ERISA Litigation Reform: Myth vs. Fact,” accessed June 1, 2026. https://www.aarp.org/content/dam/aarp/politics/advocacy/2026/03/erisa-litigation-reform-myth-v-fact.pdf

2. DOL, “Fiduciary Responsibilities,” web page accessed May 25, 2026. https://www.dol.gov/general/topic/retirement/fiduciaryresp

3. Paul Samuelson, “Risk and Uncertainty: A Fallacy of Large Numbers,” Scientia, Vol. 98, pp. 108-113. https://www.casact.org/sites/default/files/database/forum_94sforum_94sf049.pdf. John Rekenthaler, “How Time Horizon Affects the Odds of Equity Investing,” Morningstar, October 19, 2023. https://www.morningstar.com/columns/rekenthaler-report/how-time-horizon-affects-odds-equity-investing

4. Louis J. Campagna, Information Letter 06-03-2020, EBSA, June 3, 2020. https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/resource-center/information-letters/06-03-

5. SEC Office of Compliance Inspections and Examinations, Risk Alert, June 23, 2020. https://www.sec.gov/files/Private%20Fund%20Risk%20Alert_0.pdf

6. DOL, “Supplement Statement on Private Equity in Defined Contribution Plan Designated Investment Alternatives,” December 21, 2021. https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/resourcecenter/information-letters/06-03-2020-supplemental-statement

7. DOL, “US Department of Labor Rescinds 2021 Supplemental Statement on Alternative Assets in 401(k) Plans,” August 12, 2025. https://www.dol.gov/newsroom/releases/ebsa/ebsa20250812

8. SEC, “Staff Statement on Meme Coins,” February 27, 2025. https://www.sec.gov/newsroom/speechesstatements/staff-statement-meme-coins

9. Gary Gensler, “Statement on the Approval of Spot Bitcoin Exchange-Traded Products,” January 10, 2024. https://www.sec.gov/newsroom/speeches-statements/gensler-statement-spot-bitcoin-011023

10. Board of Governors of the Federal Reserve System, “Federal Reserve Board announces the withdrawal of guidance for banks related to their crypto-asset and dollar token activities and related changes to its expectations for these activities,” April 24, 2025. https://www.federalreserve.gov/newsevents/pressreleases/bcreg20250424a.htm

11. EBSA, “401(k) Plan Investments in “Cryptocurrencies,” Compliance Assistance Release No. 2022-01, March 10, 2022. https://www.dol.gov/agencies/ebsa/employers-and-advisers/plan-administration-andcompliance/compliance-assistance-releases/2022-01

12. SEC Division of Corporation Finance, “Staff Statement on Meme Coins,” February 27, 2025. https://www.sec.gov/newsroom/speeches-statements/staff-statement-meme-coins

13. SEC, “SEC Announces Dismissal of Civil Enforcement Action Against Coinbase,” February 27, 2025. https://www.sec.gov/newsroom/press-releases/2025-47

14. Caroline Crenshaw, Remarks at the Investment Company Institute’s 2025 Investment Management Conference, March 26, 2025. https://corpgov.law.harvard.edu/2025/03/26/remarks-by-commissioner-crenshaw-at-the-investmentcompany-institutes-2025-investment-management-conference/

15. Caroline Crenshaw, Remarks at the Investment Company Institute’s 2025 Investment Management Conference, March 26, 2025. https://corpgov.law.harvard.edu/2025/03/26/remarks-by-commissioner-crenshaw-at-the-investmentcompany-institutes-2025-investment-management-conference/

16. SEC, “SEC Enhances the Regulation of Private Fund Advisers,” August 23, 2023. https://www.sec.gov/newsroom/press-releases/2023-155

17. United States Court of Appeals for the Fifth Circuit, “National Association of Private Fund Managers et al. v. Securities and Exchange Commission,” June 5, 2024. https://www.govinfo.gov/content/pkg/USCOURTS-ca5-23-60471/pdf/USCOURTS-ca5-23-60471-0.pdf

18. American Federation of Teachers, Americans for Financial Reform Education Fund, and American Association of University Professors, “From Public Pensions to Private Fortunes: How Working People’s Retirements Line Billionaire Pockets,” July 2025. https://ourfinancialsecurity.org/resources/publicpensionsprivatefortunes; Stephen Deane, “Private Markets: Governance Issues Rise to the Fore,” CFA Institute Research and Policy Center, June 2024. https://rpc.cfainstitute.org/sites/default/files/-/media/documents/survey/private-markets-governanceissues-rise-to-the-fore.pdf; Alexander Ljungqvist, “The Economics of Private Equity: A Critical Review,” CFA Institute Research Foundation Literature Review, 2024. https://rpc.cfainstitute.org/sites/default/files/-/media/documents/article/rf-brief/economics-of-private-equity.pdf.

19. Holger Spamann, Indirect Investor Protection: The Investment Ecosystem and Its Legal Underpinnings, Journal of Legal Analysis, Volume 14, Issue 1, 2022, Pages 17–79, https://doi.org/10.1093/jla/laac003

20. Jeffrey Hooke and Michael Imerman, comment on proposed regulation RIN 1210 AC 20, April 13, 2026. https://www.regulations.gov/comment/EBSA-2026-0166-6564

21. Jeffrey Ptak, “Look Before You Leap When Investing in Private Funds,” Morningstar, July 29, 2025. https://www.morningstar.com/funds/look-before-you-leap-when-investing-private-funds; Linge Sun and Nicholas Reade, “Performance Dispersion in Alternative Asset Classes, CAIS, November 18, 2022. https://www.caisgroup.com/articles/performance-dispersion-in-alternative-asset-classes

22. Stephen Deane and Olivier Fines, “Cryptoassets: Beyond the Hype,” CFA Institute, January 2023. https://rpc.cfainstitute.org/sites/default/files/-/media/documents/article/industry-research/crypto-beyondthe-hype.pdf

23. SEC, “Staff Statement on Meme Coins,” February 27, 2025. https://www.sec.gov/newsroom/speechesstatements/staff-statement-meme-coins

24. Internal Revenue Service, “Retirement topics – Plan assets,” web page accessed May 25, 2026. https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-plan-assets

25. In 2023, the Treasury Department and Internal Revenue Service (IRS) announced that they planned to issue guidance relating to the treatment of nonfungible tokens as collectibles. IRS, “Treatment of certain nonfungible tokens as collectibles,” Notice 2023-27, March 21, 2023. https://www.irs.gov/pub/irs-drop/n-23-27.pdf; David Block and Davide Levine, “IRS Announces Intention to Issue Guidance on NFTs,” Groom Law Group, March 29, 2023. https://www.groom.com/resources/irs-announces-intention-to-issue-guidance-onnfts/

26. Sharon LaFraniere and David Yaffe-Bellany, “How Prediction Markets and Crypto Firms Steamrolled a Watchdog Agency,” The New York Times, May 24, 2026. https://www.nytimes.com/2026/05/24/us/howprediction-markets-and-crypto-firms-steamrolled-a-watchdog-agency.html

27. Ludovic Phalippou, “An Inconvenient Fact: Private Equity Returns & The Billionaire Factory,” University of Oxford, Said Business School, Working Paper, June 10, 202. https://dx.doi.org/10.2139/ssrn.3623820; American Federation of Teachers et al., op. cit. July 2025.

28. Robert S. Harris, Tim Jenkinson, Steven N. Kaplan, and Ruediger Stucke, “Has Persistence Persisted in Private Equity? Evidence from Buyout and Venture Capital Funds,” Journal of Corporate Finance, Volume 81, August 2023. https://doi.org/10.1016/j.jcorpfin.2023.102361.

29. American Federation of Teachers et al., op. cit. 2025; Dan Chung and Brad Neuman, “Debunking Private Equity Prestige,” Alger Insights, April 2024. https://www.alger.com/Pages/Content.aspx?pageLabel=Insights-Commentary-Debunking-Private-Equity-Prestige

30. Jean-Pierre Aubry, “Public Pension Investment Update: Have Alternatives Helped or Hurt?” Center for Retirement Research at Boston College Issue in Brief 22-20, November 22, 2022. https://crr.bc.edu/publicpension-investment-update-have-alternatives-helped-or-hurt/

31. Jean-François L’Her, Rossitsa Stoyanova, Kathryn Shaw, William Scott, and Charissa Lai, “A Bottom-Up Approach to the Risk-Adjusted Performance of the Buyout Fund Market,” Financial Analysts Journal, 72(4), 36–48, December 27, 2018. https://doi.org/10.2469/faj.v72.n4.1https://www.tandfonline.com/doi/abs/10.2469/faj.v72.n4.1

32. Angela M. Antonelli, “Has the Lack of Asset Diversification in DC Retirement Plans Been a Costly Missed Opportunity?” Georgetown University Center for Retirement Initiatives in Conjunction with CEM Benchmarking, June 2023. https://cri.georgetown.edu/wp-content/uploads/2023/06/GeorgetownCRI-CEm- Benchmarking_Lack-of-Asset-Diversification-CRI-paper.pdf

33. SEC, op. cit., August 23, 2023.

34. U.S. Court of Appeals for the Fifth Circuit, op. cit., June 5, 2024.

35. James Van Bramer, “Unpacking the DOL ‘Safe Harbor’ for Alternative Investments,” Plan Advisor, April 14, 2026. https://www.planadviser.com/unpacking-the-dol-safe-harbor-for-alternative-investments/

36. Amy C. Arnott, Christine Benz, David Reyna, and Jack Shannon, “2026 Diversification Landscape,” Morningstar, April 14, 2026. https://www.morningstar.com/content/csassets/v3/assets/blt9415ea4cc4157833/blta0fddf23ec4df239/69ddb33e160be843c15e5ad3/Diversification_Landscape_2026.pdf

37. United States, Executive Office of the President. Executive Order 14330: Democratizing Access to Alternative Assets for 401(k) Investors, August 7, 2025. https://www.whitehouse.gov/presidentialactions/2025/08/democratizing-access-to-alternative-assets-for-401k-investors/

38. Amy C. Arnott, “Sequence of Returns: What It Means and How to Deal,” Morningstar, August 9, 2021. https://www.morningstar.com/retirement/sequence-returns-what-it-means-how-deal

39. EBSA, “FAQs about Retirement Plans and ERISA,” web page accessed May 25, 2026. https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/resource-center/faqs/retirement-plans-anderisa

40. SEC Office of the Advocate for Small Business Capital Formation, Annual Report 2024. https://www.sec.gov/files/2024-oasb-annual-report-print.pdf

41. Eileen Appelbaum and Rosemary Batt, Private Equity at Work, The Russell Sage Foundation, May 2014. https://www.russellsage.org/publications/book/private-equity-work

42. Andrew Ross Sorkin, “The Rules of Investing Are Being Loosened. Could It Lead to the Next 1929?” The New York Times, October 13, 2025. https://www.nytimes.com/2025/10/13/magazine/investing-private-equitycrypto-crash-1929.html

43. William A. Birdthistle, “Trump Is Pushing Us Toward a Crash. It Could Be 1929 All Over Again,” The New York Times, November 7, 2025. https://www.nytimes.com/2025/11/07/opinion/donald-trump-great-gatsbyroating-20s-sec.html

44. Maureen Farrell, “New Limits on Investors and a Debt Downgrade Add to Private Credit Woes,” The New York Times, March 24, 2026. https://www.nytimes.com/2026/03/24/business/moodys-private-creditdowngrade.html

45. Bryan Miller, “Americans Have Little Interest in Adding Private Market Investments and Cryptocurrency to Workplace Retirement Accounts,” AARP, November 20, 2025. https://www.aarp.org/pri/topics/work-financesretirement/financial-security-retirement/private-market-and-cryptocurrency-investments/

Brian D. Pasternak,
Administrator, Office of Foreign Labor Certification
Employment and Training Administration
Department of Labor
Room N-5311
200 Constitution Avenue NW
Washington, DC 20210

RE: Department of Labor, Employment and Training Administration, Improving Wage Protections for the Temporary and Permanent Employment of Certain Foreign Nationals in the United States, Notice of Proposed Rulemaking, DOL Docket No. ETA-2026-0001, RIN 1205-AC30 (March 27, 2026)

Dear Brian Pasternak:

The Economic Policy Institute (EPI) is a nonprofit, nonpartisan think tank established in 1986 to include the needs of low- and middle-income workers in economic policy discussions. EPI conducts research and analysis on the economic status of working America, proposes public policies that protect and improve the economic conditions of low- and middle-income workers—regardless of immigration status—and assesses policies with respect to how well they further those goals. EPI submits these comments on the Department of Labor’s (DOL) Notice of Proposed Rulemaking (NPRM) regarding the updated four-tiered wage structure for H-1B, H-1B1, and E-3 nonimmigrant workers and DOL permanent labor certifications for employment-based permanent immigrant visas (i.e. green cards) in the second and third employment-based preference categories (EB-2 and EB-3). EPI has researched, written, and commented extensively on the U.S. system for labor migration, including in particular, the H-1B program and other temporary work visa programs and green cards. EPI has published extensively on H-1B wage levels and employer usage and abuse of H-1B and other visa programs.1

EPI generally supports the main substance of the NPRM and believes it is an improvement as compared to the status quo for the current four-tiered wage structure for H-1B, and will also improve H-1B1 and E-3 nonimmigrant visas, and permanent labor certifications in EB-2 and EB-3, because the NPRM will make incremental progress towards ensuring that the wages of U.S. workers are safeguarded and that the Labor Condition Application (LCA) and PERM programs are not hijacked by employers as a loophole to underpay migrant workers according to U.S. wage standards. The proposal will also help disincentivize firms from using H-1B visas as a primary tool to outsource professional jobs and send them overseas.

However, as we will detail in this comment, we believe DOL should go beyond what the NPRM proposes by setting the wage floor—i.e. the Level I wage—at the 50^th percentile so that no H-1B, H-1B1, E-3, EB-2, or EB-3 jobs are ever certified at a wage that is below the local median wage for the occupation. If DOL implements such a rule in the final version of the regulation, the rule would address a major critique EPI has long held about the program, and which Members of Congress from both major parties have attempted to address through repeatedly proposed legislation that was first introduced nearly two decades ago.

It must also be noted at the outset of these comments that recent actions taken by DOL with respect to wages for migrant workers in temporary work visa programs have been inconsistent and confusing. While DOL is considering action proposed in this NPRM that will raise wage rates closer to true market rates for migrant workers in the H-1B, H-1B1, and E-3 visa programs, as well as those with labor certifications for EB-2 and EB-3 green cards, it is important to note that in October of 2025, DOL issued a new wage rule for the H-2A program that will cut wages dramatically for the migrant farmworkers in that program and unfairly charge them for lodging2—which, as EPI has estimated—will lead to a pay cut of roughly $2 billion for H-2A farmworkers and $3 billion for U.S. farmworkers per year.3 DOL should issue regulations that lead to improved labor standards and fair wages for all work visa programs, and not treat workers differently based on their education levels, occupations, and nationalities. All temporary migrant workers deserve to be paid fairly for their work, and no work visa programs should operate as loopholes that allow employers to legally underpay migrant workers.

The NPRM is an improvement on the status quo but DOL should amend the proposal to better protect workers

In general, the NPRM improves upon the current wage structure but should be further enhanced to better protect workers and align the program with congressional intent and the goals of the H-1B statute. The principal change made by the NPRM is to update the four prevailing wage levels required in the H-1B, H-1B1, and E-3 visa programs—temporary work visa programs for college-educated migrant workers—setting levels at higher percentiles in the Occupational Employment and Wage Statistics (OEWS) survey distribution of wages, in order to more adequately reflect market wage rates in the U.S. labor market. The NPRM also applies the new wage rates/percentiles to the permanent labor certification requirements for employment-based (EB) green cards in the EB-2 and EB-3 preference categories (sometimes referred to as the PERM process).4

The current and newly proposed wage level percentiles are as follows:

Table 1

As we have detailed in published research,5 the two lowest wage levels in the current wage computation method are below the local median wage according to the occupation and local area based on DOL wage survey data in the OEWS, allowing employers to undercut U.S. wage standards. The NPRM sets the lowest wage level at the 34^th percentile, previously the Level II wage, thereby continuing to permit employers to pay H-1B workers at below-market wage rates—but not at the absurdly low levels allowed by the current Level I wage at the 17^th percentile.

DOL’s faulty prevailing wage computation has cost foreign-born workers at least $6.56 billion annually (see NPRM Exhibit 1). Even that is likely to be a serious underestimate for two reasons. First, it does not account for the losses suffered by U.S. workers and students who have had their wages, job opportunities, and career development suppressed and undermined as a result of the current wage methodology. Second, it does not estimate the costs incurred due to foreign-born workers’ weakened bargaining power vis-à-vis their employment through nonimmigrant visa programs. Employers exert much more control over visa workers than U.S. workers and permanent residents. Foreign-born workers on nonimmigrant visas have less opportunity to, and are far less likely to, switch jobs. Switching jobs, or the threat of switching jobs, is fundamental to any worker’s ability to demand higher wages and better working conditions. Professor George Borjas estimates that, in fiscal year (FY) 2024, visa holders had an annual separation rate of 9.4%, less than half of comparable U.S. workers.6 Workers also face dire circumstances should they be terminated. They must find a new job within 60 days or else leave the United States. All these conditions place foreign-born workers in the H-1B, H-1B1, and E-3 visa programs in a much weaker position than similarly situated U.S. counterparts when bargaining for wages and working conditions. Simply put, foreign-born visa workers have fewer employment rights than U.S. citizens and permanent residents, and employers rationally take advantage of their relatively weak position when setting employment terms. Further, the agency has never enforced the Labor Condition Application’s (LCA) Working Conditions attestation, where employers promise to “not adversely affect the working conditions of workers similarly employed,” so employers disregard it.

In addition, the ability of H-1B workers to become lawful permanent residents and remain in the United States is entirely up to the whims of their employers. Even after working for an employer for six years in H-1B status, the employer has the power to decide if an H-1B worker can remain in the country—in many cases after an H-1B worker has established firm roots in the United States. That power keeps H-1B workers from complaining and asserting their employment rights. That leaves H-1B workers in a difficult position where they might decide, rationally, to abandon any demands for higher wages and better working conditions in exchange for the possibility of being sponsored for lawful permanent residence.

Prevailing wages must be raised sufficiently to compensate for this government-created labor market distortion, to protect both foreign-born workers with nonimmigrant visas and U.S. workers who already reside in the United States. 

DOL’s proposal to increase the wage-level percentiles is the best approach. It is straightforward and understandable to implement. The effects are easily modeled. Employers can respond to it predictably and effectively. It will improve the quality and skill mix of the pool of workers who are issued visas, pay those workers fairer salaries, and have fewer adverse impacts on the domestic workforce and labor supply. Recent results reported by United States Citizenship and Immigration Services (USCIS), from the fiscal year (FY) 2027 H-1B lottery, the first to use the new wage-level weighting process, show that a large majority of H-1B registrations selected met at least the 34th percentile threshold, 82%, while also increasing the share of F-1 advanced degree graduates selected from 57% to 71.5%.7 The latter demonstrates that concerns about this proposal shutting off the foreign student pipeline are overblown and misguided.

However, as noted above, the increases don’t go far enough. We believe that the Level I wage should be set no lower than the median (50th percentile) to effectively adjust for the non-compensated effects of limited job-switching, an absent or ineffective labor market test, weaker bargaining position, and non-enforcement of the actual wage requirement. Recent college graduates, especially those earning degrees in computer science and computer engineering, are facing the highest unemployment rates amongst all majors according to analysis by the New York Federal Reserve Bank, and the worst job market in recent memory according to dozens of media accounts.89 Most analysts and executives predict that artificial intelligence (AI) will only make that labor market segment even worse. Major firms have laid off thousands of workers, citing AI the reason they need fewer workers. Many of those same firms employ thousands of H-1B workers. AI is predicted to reduce labor demand especially of recent graduates, the very U.S. workers competing for Level I jobs. The rules should ensure that workers assigned at Level I wages have truly special skills and will not undercut opportunities for recent university graduates.

Analysis of the NPRM: “Improving Wage Protections for the Temporary and Permanent Employment of Certain Foreign Nationals in the United States”

1. Raising wages for H-1B workers and permanent labor certifications will benefit migrant workers and protect wage standards for U.S. workers

For years, H-1B employers have been allowed to pay their H-1B workers at wage rates that do not reflect local market rates, by having an option to pay them at the two lowest permitted wage levels. Our 2020 report discusses the available data, the mechanics of the current rule, and why it is important to modify the H-1B wage levels to adequately reflect market wages and ensure that H-1B workers are paid fairly, and to preserve U.S. wage standards.10 In the report, we recommend that DOL prohibit any H-1B job from being certified at a wage that is below the local median for the occupation and region. In that respect, by proposing to set the lowest wage level (Level I) at the 34^th percentile, DOL’s NPRM fails to do enough to protect wage standards in H-1B jobs. In the report we also recommend that DOL prohibit downward pressure on wages at the national level by requiring that every H-1B job be certified at a wage that is no lower than the national median wage for the occupation.

Many commentators on this NPRM, especially from the business community, including universities, are likely to claim that raising wages for migrant workers and safeguarding U.S. wage standards will harm the U.S. economy. When the misleading rhetoric is stripped away, the employers who oppose higher wage percentiles for H-1B, H-1B1, and E-3 visas, and EB-2 and EB-3 green cards, are simply claiming, in essence, that employers will only hire workers in the LCA and PERM programs if they are underpaid relative to similarly situated U.S. workers, and portray higher wages as an obstacle to migration or to the hiring of adequate talent that will prevent them from being successful and innovating.

Accepting this argument leads to a race to the bottom in terms of labor standards and excuses the co-optation of the immigration system in order to pad corporate profits. And such a line of argumentation is not supported by the available evidence. In fact, many advocates on all sides of the current H-1B debate now agree that the current H-1B wage rules are undercutting U.S. wage standards and should be updated. Even previous staunch defenders of the status quo, such as those representing or funded by the tech industry, as well as representatives of major employer associations, now admit that U.S. wages and U.S. workers are being undercut via the current prevailing wage rule.11

Adequate labor standards are never a barrier to migration or economic success—instead, they are a prerequisite to fair treatment for the migrant workers who are recruited by employers into the U.S. labor market and similarly situated U.S. workers.

Under the current rule, the wages of H-1B workers are being kept artificially low. The higher wage levels in DOL’s NPRM are more reasonable and closer to reflecting market wages in particular occupations and specific geographic regions. In other words, DOL’s proposal will push wage levels toward market wages, meaning it will increase labor market efficiency. It will also improve the quality and skill mix of the pool of foreign-born workers who are hired, increasing the productivity and innovation spillovers that skilled immigration promises.

2. DOL should raise the wage percentiles so that Level I is set no lower than the 50^th percentile of total wages surveyed in an occupation and region and prohibit any LCA or PERM approval for a wage that is lower than the national average for the occupation

The purpose of the H-1B and related programs is to “help employers who cannot otherwise obtain needed business skills and abilities from the U.S. workforce.”12 Specialized skills should command high wages; such skills are typically a function of inherent capability, education level, and experience. It would be reasonable to expect that these workers should receive wages higher than the local median wage. One would therefore expect most H-1B positions to be assigned as Level IV (the only current wage level above the median), but as DOL and USCIS data show, H-1B employers as a whole assign only a very small minority of H-1B positions as Level IV, usually roughly 15% or less in recent fiscal years, while as DOL notes in the NPRM, 63% of H-1B positions were assigned at Levels I and II. For all LCA programs, DOL notes in the NPRM that in FY 2024, 16% of all LCA positions were certified at Level IV. At the USCIS petition level, Level IV wages are even less common: data disclosed by USCIS shows that in 2019 and 2020, only 4% of approved petitions for new employment under the regular cap were assigned at Level IV and only 2% of approved new H-1B petitions under the advanced degree exemption cap were assigned at Level IV.13 We also know from more recent data from DHS that the five-year average of H-1B registrations at Level IV was just 5% over the FY 2020 to 2024 period.14

The data presented in our reports over the past decade and a half and more recently, the data reported by USCIS on the distribution of H-1B petitions by wage level, all point to the obvious fact that nearly all H-1B employers, but especially the largest employers, use the H-1B program either to hire relatively lower-wage workers (relative to the wages paid to other workers in their occupation) who possess ordinary skills or to hire skilled workers and pay them less than the true market value of their work. Either possibility raises important policy questions about the use and allocation of H-1B visas.

By setting two of the H-1B prevailing wage levels so low relative to the median and not requiring that firms pay at least market wages to H-1B workers, DOL has incentivized firms to earn extraordinary profits by legally hiring much-lower-paid H-1B workers instead of workers earning at least the local median wage. The fact that firms earn those profits through poorly crafted wage rules and by underpaying H-1B workers—instead of by offering a better or more innovative product or service—means DOL has, in effect, made wage arbitrage a feature of the H-1B program. And as the wage-level data we have reported on and cited here clearly shows, nearly all H-1B employers are exploiting these H-1B wage rules in order to pay below-median wages.15 We believe the evidence is clear that these firms are not using the H-1B program sparingly to hire truly specialized workers, nor are they using it only when U.S. workers are unavailable. Given the business models and occupations, it is likely that the H-1B1 and E-3 programs are being abused similarly.

So how should DOL set a wage rule that guards against this and complies with the statutory requirement to prevent adverse effects on wages and working conditions?

The existing statutory language that sets out the H-1B prevailing wage requires four H-1B wage levels, but it does not prescribe specific percentiles, and no law requires DOL to set any of these prevailing wage levels below the local median wage. To ensure that H-1B workers possess specialized skills and are fairly paid, and to protect local wage standards and eliminate wage arbitrage as a feature of the H-1B program, DOL should issue a final rule that sets the lowest (Level I) wage for the LCA programs and EB-2 and EB-3 green cards at the 50th percentile for the occupation and local area, at least, and require that wage offers to workers in the LCA and EB-2 and EB-3 programs never be lower than the national median wage for the occupation, in order to prevent downward pressure on wages nationwide.

Requiring and enforcing above-median wages for H-1B and other LCA and PERM program workers would disincentivize the hiring of workers with nonimmigrant visas and green cards as a money-saving exercise, ensuring that companies will use the program as intended—i.e., to bring in workers who have special skills—instead of using them as a way to hire underpaid indentured workers for jobs that require at least a college degree.

3. DOL should set the updated wage percentiles at the 50^th, 62^nd, 75^th, and 90^th percentiles according to the total surveyed wages for the occupation and local area in the OEWS

As noted and discussed above, the lowest wage level, Level I, should be set no lower than at the 50^th percentile. Instead of the proposed four wage levels in the NPRM, DOL should set the lowest wage level, Level I, at the median wage (at the 50^th percentile), Level II at the 62^nd percentile, Level III at the 75^th percentile, and Level IV at the 90^th percentile—according to the overall distribution of OEWS wages for each occupation and region. (See table below.)

Table 2

These levels would ensure that no LCA or EB-2 or EB-3 positions are certified at a wage that is below the overall local median wage for an occupation, which in turn will prevent downward pressure on U.S. wage rates in such occupations. An additional benefit of using the 50^th, 62^nd, 75^th, and 90^th percentiles, as DOL points out, is “that they are close to dividing the upper half of the distribution equally.”16

4. DOL’s experience benchmarking proposal is inferior to the NPRM’s core proposal on wage levels and should not be implemented

The NPRM requests comments on ‘experience benchmarking’ as an alternative computational method to the core proposal of Level I at the 34^th percentile, Level II at the 52^nd, Level III at the 70^th, and Level IV at the 88^th percentile, based on the overall OEWS wages by occupation and region. We believe that this experience benchmarking alternative is significantly inferior to the core proposal and urge DOL to reject it for four main reasons. First, the methodological description is insufficient to evaluate, with just two pages of text. This is especially troublesome since it is an entirely novel method of setting prevailing wages that has never been rigorously tested or examined. It will impact literally millions of workers and hundreds of thousands of employers. To our knowledge, Mincer equations have never been used to this large an extent for setting wages in any government program. Second, the data necessary to calculate prevailing wages do not exist; they must be synthesized through estimation procedures after marrying two distinct surveys that were never designed for these purposes. Are the sample sizes sufficient? There’s no exploration of these potential flaws in the NPRM. Third, the method biases against women. The method does not directly measure experience; instead, it estimates experience by the age of the candidate. Women are more likely than men to have gaps in their labor force participation. The agency does not provide a method for adjusting the calculations based on gender. Fourth, this method would surely fuel age discrimination by allowing firms to legally pay younger H-1B workers less than U.S. workers doing the same job. Professor Norman Matloff, one of the leading scholars of the H-1B program, has repeatedly expressed concerns that firms prefer to hire H-1B workers because they are younger, and therefore lower-paid, than equivalent Americans.17 The government would be endorsing such behavior by adopting experience benchmarking.

More broadly, adopting benchmarking to set prevailing wages rests on the assumption that labor markets are highly segregated by age and educational attainment. Is it true that a 28-year-old does not compete with a 35-year-old? Is it true that someone with a master’s degree does not compete with someone with a bachelor’s degree? The DOL provides no evidence to test this hypothesis with a single occupation or example, let alone whether it would hold across the roughly 400 occupations eligible for visa programs covered by this NPRM.

The example provided in the NPRM, of an accountant working in Dayton, Ohio, illustrates the difficulty for anyone to assess the accuracy of the procedure.

If ACS data and Mincer wage equation estimated that U.S. accountants with 10 years of experience and a master’s degree typically earn 20 percent more than the median accountant nationwide, the Experienced Benchmarked ratio for that education-experience combination in accounting would be expressed as a wage premia factor of 1.2. Then, to compute the Level I prevailing wage for an employer seeking visa labor certification to employ an alien worker as an accountant in Dayton, Ohio, with 10 years of experience and a master’s degree, the Department would take the OEWS 50th percentile for accountants in the Dayton MSA (currently $78,710) and multiply it by 1.2, yielding an experience-benchmarked Level I prevailing wage of $94,452. The Level II prevailing wage would apply the same 1.2 ratio to the OEWS 62nd percentile; Level III to the 75th percentile; and Level IV to the 90th percentile.18

This hypothetical example presents several shortcomings.

First, we encounter problems with identifying the data. The NPRM reports the OEWS 50^th percentile wage in Dayton MSA of $78,710. We are unable to validate this wage using the OFLC Wage Search page.19 The OEWS 50^th percentile wage (current Level III) for the occupation is shown below, with the results listed for three different years of data available in the database:

Occupations: SOC 13-2011.00 – Accountants and Auditors
Location: Dayton OH BLS Areas Montgomery County
Series: All Industries

7/2023-6/2024 Level III Wage: $77,251.00
7/2024-6/2025 Level III Wage: $82,576.00
7/2025-6/2026 Level III Wage: $86,403.00

Further, based on the absence of data and sparse description of the methodology, there’s no way for us, or anyone else, to test or examine the method used to calculate the wage premia/discount using the Mincer equations. The “hypothetical” example claims a premia of 20%, but it is unclear whether this result comes from real calculation or if it’s a fabrication created to illustrate a point. If it is the latter, that raises serious questions about the agency’s ability to implement experience benchmarking across hundreds of occupations, thousands of locations, four skill levels, and a half-dozen educational levels.

More importantly, is the example, and its wage outcomes, representative of the universe of covered workers and the U.S. workers they compete with? The evidence shows that this hypothetical example is neither typical of H-1B workers nor their U.S. counterparts. The description of experience benchmarking does not investigate its implications, but such testing is fundamental to validating the method across occupations, locations, and skill levels. The hypothetical worker has 10 years of experience, which, if they had no gaps in labor force participation, would put them at 34 years old. A 34-year-old worker is older than most new H-1B workers approved for initial employment, ranking near the 68^th percentile by age.20 We also know that this worker is not typical of U.S. accountants. Most practicing accountants hold no more than a bachelor’s degree, 59%, and are older—with a median age of 45—than this candidate.21 The example raises many more questions than it answers.

The median age of all H-1B workers approved for initial employment is approximately 31, whereas the median age of an American worker in an H-1B eligible occupation is approximately 40, even in STEM occupations.22 H-1B workers are generally significantly younger than the typical U.S. worker with whom they compete. Experience benchmarking would favor H-1B workers by offering them a significant wage discount, based on the Mincer method, over the U.S. workers with whom they compete. The upshot is that experience benchmarking would surely fuel age discrimination in these labor markets.

It is likely that experience benchmarking would yield substantial wage discounts (premia ratios <1.0) for H-1B workers, compared with the NPRM’s core approach. But we simply do not know because DOL has not compared the wage outcomes between experience benchmarking and raising the wage level percentiles. DOL has not published experience benchmarking wage tables for every occupation, geography, skill level, experience, and education.

One think tank, the Institute for Progress (IFP), a supporter of the experience benchmarking alternative, attempted to simulate the method using FY 2024 approved petitions and found that experience benchmarking wages for most H-1B workers are substantially lower than the NPRM’s core proposal. Contrary to IFP, we believe experience benchmarking should be rejected, in part for that reason. See its report, specifically the scatterplot chart “Blind Benchmarking misses underpaid H-1B workers” on page 20, where the number of red dots (i.e., experience benchmarking yields a lower prevailing wage than NPRM core proposal) far outnumbers the green dots (i.e., experience benchmarking yields a higher prevailing wage than NPRM core proposal).23 Even these analysts admit they don’t know whether their calculations are consistent with DOL’s sparse description of experience benchmarking. If this think tank’s analysis is roughly correct or on the right track, then experience benchmarking will yield much lower prevailing wages than the core NPRM proposal. If this is true, then the experience benchmarking method undermines the goals of this rulemaking.

In its justification for considering experience benchmarking, the NPRM states that “the methodology employed under the current rule may allow positions to be classified at wage levels that are less comparable to the actual education and experience of the alien worker.” Experience benchmarking, on the other hand, would “address this limitation by comparing the sponsored alien worker’s wage to the wages earned by U.S. workers with comparable education and experience…”24

But elsewhere, the NPRM undermines the case for experience benchmarking by noting that educational attainment is often a poor determinant of wages:

an examination of the top end of the wage distribution within the H–1B program shows that, for H–1B nonimmigrants with graduate and bachelor’s degrees, the association between education and income level begins to break down to some extent. An analysis of the highest earners within the H–1B program reveals that H–1B workers—particularly those with bachelor’s and graduate degrees—can be among the most skilled and capable in their fields. Interestingly, at this top end of the wage distribution, the typical link between education level and income begins to weaken. Among the most highly compensated H–1B workers, the higher the income level, the more likely the alien worker only has a bachelor’s degree.25 (Emphasis added.)

While skill-level misclassification is a major problem, experience benchmarking is the wrong solution because it creates new, unnecessary loopholes. Instead, as we describe below, we recommend that you require employers document their Prevailing Wage Determination (PWD) aligned with the National Prevailing Wage Center (NPWC) guidance and provide it for inspection.

The NPRM’s core proposal—the 34^th, 52^nd, 70^th, and 88^th percentiles based on the overall OEWS wages by occupation and region—coupled with skill classification oversight and accountability, better achieves the program goals than the experience benchmarking proposal discussed in the NPRM.

5. DOL should calculate an additional amount of compensation based on available data on the cost of benefits for workers in private industry and add a reasonable amount to the required prevailing wage

While we believe utilizing the OEWS data set and wage percentiles within the distribution is reasonable and preferable to other data sources and methods, the OEWS falls very short in terms of providing a holistic and realistic picture of what U.S. workers earn in H-1B occupations, as well as those in other LCA programs and PERM programs, by virtue of not including fringe benefits. We urge that DOL also calculate an additional amount of compensation based on available data on the cost of benefits for workers in private industry. If employers do not have to provide fringe benefits to the college-educated migrant workers they recruit or reasonable compensation that accounts for those fringe benefits, that will result in employers underpaying or undercompensating workers with visas vis-à-vis their U.S. worker counterparts, thereby causing adverse effects on workers in occupations covered by H-1B and the other LCA programs. The fissuring of the U.S. workforce has been abetted in part by employers practicing benefits’ arbitrage—in other words, employers seeking a workforce they do not need to provide benefits for—the H-1B, H-1B1, E-3, EB-2, and EB-3 program should not facilitate it.

Davis Bacon and Service Contract Act wage determinations—which are both valid wage sources for determining H-1B wage rates under current H-1B rules—include an additional hourly monetary value that is owed to the worker in “fringe benefits.” Under both Acts, the employer must pay the fringe benefits either in the form of a permissible fringe benefit listed by the applicable Act, or any combination of benefits thereof, or with an equivalent cash payment.26 The lack of any fringe benefits in OEWS prevailing wage determinations27 constitutes a severe deficiency in the OEWS wage data that conflicts with and undermines the statutory requirement that the H-1B prevailing wage will not adversely affect the wages and working conditions of similarly employed U.S. workers. 

Reliance on the OEWS to determine prevailing wages—without an adjustment for fringe benefits—is not an adequate method to set prevailing wages for LCA and PERM programs. If the prevailing wages and benefits for a particular occupation in a particular Metropolitan Statistical Area (MSA) are, for example, $30 per hour plus $10 per hour in leave, pension, and health benefit costs, but DOL determines the prevailing wage to be simply $30, U.S. workers will be adversely impacted. Employers will be encouraged to hire H-1B workers instead of U.S. workers, saving themselves $10 in benefit costs per hour and putting downward pressure on the locally prevailing compensation. Hiring H-1B workers at $30 an hour for example, with no benefits, would allow employers to underprice labor by 30%—which is the average benefit share of total compensation costs for private industry workers28—and it could encourage employers to replace U.S. workers with H-1B workers, or hire H-1B workers instead of U.S. workers, since employers are not required to recruit and hire U.S. workers before hiring H-1B workers. H-1B workers and those employed through other LCA programs cannot be expected to complain about this or have the bargaining power to negotiate adequate fringe benefits, because their employers control and have near-total power over their immigration status, and some workers will be also willing to accept the lower compensation, because it will likely be far more than they could earn in their country of origin.

BLS already collects the necessary data to determine the appropriate amount of fringe benefits that should be required as a supplement to the OEWS wages used to set a prevailing wage. The Employer Costs for Employee Compensation (ECEC) report from the Bureau of Labor Statistics (BLS) “provides the average employer cost for wages and salaries as well as benefits per employee hour worked” for workers in the civilian economy.29 The ECEC reports the total average wages and benefits paid by employers and lists these data as they correspond to broad occupational employment categories. These data are also differentiated according to the average amount paid for the major categories of fringe benefits: paid leave, supplemental pay, insurance, retirement and savings and legally required benefits. The ECEC also reports the average total compensation, wages and salaries, and total costs of fringe benefits paid by employers, broken down by geographic region, census division, and locality.30

Using the aforementioned data sets from the ECEC, DOL can determine the appropriate level of fringe benefits that must be offered and paid to LCA and PERM program workers. The ECEC provides data on health and retirement benefits, and wages and wage-related pay such as paid leave and supplemental pay. The wages reflected in the OEWS survey capture the wages and wage-related parts of total compensation. Employers paying wages will already be paying the ‘legally required’ payroll taxes. Therefore, the compensation missing from the OEWS wage rates is the cost of retirement and health benefits, which are about 11% of private sector compensation. The amount of pay reflecting these benefits that employers of LCA and PERM program workers should pay can easily be determined by taking the ratio of the sum of health and retirement benefits to the wages paid (the sum of wages, paid leave and supplemental pay). This can be determined for a broad occupational grouping and perhaps done at a regional level as well. This ratio when multiplied by the OEWS wage shows the amount of benefits that would be comparable to that earned in the private sector or civilian sector.

Although the occupational groups and geographic areas listed and reported in the ECEC are not as numerous and detailed as those in the OEWS’s occupational categories and geographical areas, this should not deter the DOL from utilizing these data to calculate the percentage of wages that should be added on as fringe benefits to the OEWS wage. Only a percentage to be added on must be determined – not an exact dollar amount. 

Thus, the ECEC data are sufficient to provide DOL–by region and broad occupational group–an average level of insurance and retirement benefits received by employees in that job and in that area. Following precedent from the DBA and SCA, the fringe benefits could be paid by the employer through any combination of a variety of options, such as paid leave, health and life insurance, retirement and savings accounts, etc., or the employer could simply pay the benefits in cash.

Unfortunately, there is very little transparency regarding whether employers using the H-1B, H-1B1, E-3, and EB-2 and EB-3 programs are offering fringe benefits, or to what extent. A requirement that these fringe benefits be offered to LCA and PERM program workers would ensure that the wages and working conditions of similarly employed workers are not adversely impacted. 

The current DOL compliance guidance on benefits for H-1B workers encourages benefits arbitrage through outsourcing and fissuring. The Wage and Hour Division fact sheet on the subject (#62L) reads, “The employer must offer benefits to H-1B workers on the same basis, and in accordance with the same criteria, as the benefits the employer provides to similarly employed U.S. workers.”31 By defining similarly employed workers as restricted only to those directly employed by the H-1B employer, DOL is encouraging benefits arbitrage by outsourcing firms, which can offer substandard benefits to all its employees and still comply with this interpretation of the H-1B rules.

6. DOL should prohibit employer-provided private wage surveys from being used as alternative sources of wage data to set prevailing wages

Under the main H-1B prevailing wage regulation language at 20 C.F.R. §655.731, an employer has a number of options at their disposal to determine a prevailing wage for an LCA. In other words, the OEWS wage levels are just one of the available options. The employer may use one of the following sources to establish a prevailing wage: the OEWS wage, the wage set in an applicable Collective Bargaining Agreement, an applicable wage set by the Davis-Bacon Act or McNamara-O’Hara Service Contract Act, an Office of Foreign Labor Certification National Processing Center prevailing wage determination, or a wage set by an independent authoritative source or another legitimate source of wage data. However, if the employer is paying a higher wage to similarly situated U.S. workers that it already employs, then it must pay the H-1B worker same higher “actual wage,” that it is paying the U.S. worker. (Specifically defined as “the wage rate paid by the employer to all other individuals with similar experience and qualifications for the specific employment in question.”)

Therefore, employers do not need to use the OFLC’s calculated levels from OEWS data to determine a prevailing wage for an LCA or permanent labor certification application. The NPRM would improve the longstanding problems in how the prevailing wage is determined when using the OFLC-generated OEWS wage rates, but in the NPRM, DOL states that it considered whether to prohibit—but ultimately decided to permit—the continued use of an independent authoritative source or another legitimate source of wage data, which includes private wage surveys provided by employers and accepted by DOL. Standards for such alternative sources of wage data are described in 20 CFR § 655.731. In our 2020 report, we showed in Table 1 that in 2019, at least 9% of all certified wages for H-1B positions on LCAs were set by a private wage survey or other source accepted by the OFLC as legitimate.32

We strongly urge DOL to eliminate the use of private wage surveys provided by employers for setting wage rates in the LCA programs or for EB-2 and EB-3 green cards. While the share of LCAs approved with wages set by private wages surveys is relatively small at the moment, it is likely that the use, and abuse, of private wage surveys will expand substantially after publication of a final rule that is consistent with the wage level percentiles proposed in the NPRM. This will occur because employers will be motivated to use private surveys as a loophole to avoid paying the new higher wage percentiles.

DOL’s justification for continuing to allow private wage surveys is based on an analysis that is confusing. On the one hand, the agency claims that private surveys yield a wage 20% higher on average than the OEWS equivalent, but also says that wage surveys are necessary for niche or very specialized markets where, “occupations [are] not well represented in OEWS datasets.”33 The two claims are in contradiction. If a private wage survey is used to establish a wage in a niche job market, presumably not covered by the OEWS, then how can DOL feasibly calculate the differences? Footnote 211 in the NPRM does not provide sufficient detail to test this claim.

If DOL does not immediately eliminate the use of private surveys, it should at least ensure that usage of such surveys are rare and approved in only exceptional cases. Employers should be required to provide extensive documentation and justification for why the OEWS is an inadequate data source for determining the prevailing wage.

The recent history of the use of private wage surveys to set wages in the H-2B visa program—a temporary work visa program for lower-wage jobs outside of agriculture including in landscaping, forestry, hospitality, and construction—is instructive and should inform DOL’s review of wage surveys and other sources of wage data for setting H-1B wages. The evidence is clear in the H-2B context that when employers use private wages surveys, they primarily use them to pay lower wages than would otherwise be required.

In 2013 when DOL raised the minimum H-2B prevailing wage from the 17^th wage percentile to the mean wage for the occupation and local area, H-2B employers immediately and en masse, shifted their business model to use private wage surveys to set H-2B wage rates at below-average wage rates. Evidence revealed in federal litigation clearly suggests that the shift to the use of private wage surveys was a systematic response to higher wage rates, and one that was clearly successful. Specifically, in the nine months beginning soon after the H-2B wage rule was updated—between July 1, 2013, and March 31, 2014—employers increased their submissions of private wage surveys for H-2B prevailing wage determinations by 3,182%, as compared with the 12 months leading up to the federal court decision that invalidated the previous H-2B wage rule. In 21.1% of those prevailing wage determinations set by private wage surveys, the certified H-2B wage was lower than the previous prevailing wage system where the Level I H-2B prevailing wage was set at the 17th percentile wage by occupation and local area, according to OFLC-generated OEWS wage survey data, and 94.4% of the determinations were for a wage that was lower than the Level II wage, at the 34th percentile.34 Despite the fact that the H-2B prevailing wage has been set at the local average wage and DOL restricted the use of private wage surveys in 2015, they are still commonly used and successful at lowering wages for H-2B workers. One clear example of this which has been detailed, is a group of H-2B workers employed as crabpickers in Maryland—they earned roughly 25% less per hour than they should have been paid according to the local corresponding OEWS wage.35

The downside risk of continuing to allow private wage surveys—creating loopholes and administrative burdens—outweighs the risk to workers that the OEWS prevailing wage results in lower wages. If DOL’s calculations are accurate, employers should welcome the elimination of private wage surveys because the OEWS provides lower wage requirements and reduced costs in terms of purchasing survey data and/or conducting entirely new surveys.

7. If DOL considers permitting the use of employer provided private wage surveys, it should first conduct a detailed analysis of their usage and impact on H-1B wage rates, make the findings public, and issue a separate NPRM focused solely on private wage surveys

In order to promote transparency and comport with the statutory requirement that H-1B employers “will provide working conditions for [H-1B workers] that will not adversely affect the working conditions of workers similarly employed,”36 DOL should immediately prohibit the use of private wages surveys. However if DOL wishes to still consider their usage, DOL should conduct a study to benchmark the use of alternative wage data and especially private wage surveys against the OFLC-generated OEWS prevailing wages, to identify whether there are any systematic biases in such sources. If such biases are found, DOL could propose a new NPRM with additional guidance and safeguards to ensure that the alternative wage sources are not undermining U.S. wage standards. DOL should also conduct an analysis on the occupations that have been approved for wage setting with private wages surveys, to examine which occupations employers are claiming to be so unique that they do not fit within the definitions of over 800 occupations available in BLS’s Standard Occupational Codes, as well as analyze whether private wage surveys have negatively impacted conditions for H-1B workers and similarly situated workers.

It is important to note that, while in the aggregate, the use of private wage surveys is roughly 6.5% according to the NPRM, we know from our own reviews of LCA disclosure data that some firms rely on private wage surveys extensively. DOL should examine how private wage surveys vary across firms, industries, and occupations. Firms that rely on private wage surveys for more than 3% of the positions in their LCAs should be scrutinized and audited to ensure they are not being utilized to undercut the standards set by OEWS wage data. 

8. DOL must put measures in place that would prevent employer misclassification of H-1B workers at the wrong wage levels

As noted earlier, the NPRM requires that minimum H-1B, H-1B1, E-3, EB-2, and EB-3 salaries are set at more realistic wage rates that reflect the local market rates for the jobs they fill. While each wage level is intended to correspond to the position description, in practice the employer has substantial discretion choosing the skill level and DOL does not verify that a prevailing wage is appropriate unless a lawsuit or a complaint is filed by a worker. Such complaints are unlikely since it would require a migrant worker to blow the whistle on their own employer, the same employer that controls the worker’s visa status and ability to remain in the United States. We are unaware of any cases in which DOL has investigated an LCA-stage misclassification of an H-1B wage level, but there have been reports of, for example, H-1B employers receiving approval for LCAs that certify they will pay employees at the same prevailing wage level despite having job titles that clearly warrant different wage levels.

Simply put, employer selection of skill levels should be anchored to the actual duties of the position and verified by DOL and USCIS. There is no reason to allow employers to identify a skill level on a whim. If DOL does not fix this obvious problem, then the NPRM’s core objective of eliminating wage arbitrage will be undermined.

Skill level misclassification and inconsistencies undermine good governance of the H-1B program. Even a cursory examination of the LCA and I-129 data shows that such misclassifications, whether purposeful or inadvertent, are common. For example, positions with job titles leading with ‘senior’ are frequently misclassified as Level I. And even within the same employer, identical job titles are classified under different skill levels.

Yet the effectiveness of this NPRM hinges on ensuring that employers properly and consistently classify their positions at the correct skill level. DOL should take two actions. First, it should update and expand the NPWC’s Prevailing Wage Determination Policy Guidance.37 Second, it must hold employers accountable for their skill level selections.

The policy guidance should be rewritten and expanded so that it not only serves PWD adjudicators but also all employers, whether they use the OEWS or a private wage survey to determine the prevailing wage. The document should clarify skill level classification and serve as compliance guidance for all employers. The most recent NPWC policy guidance, published in 2009, is obviously inadequate and outdated. Employers are not effectively or consistently interpreting and identifying skill levels. The description of each skill level, Levels I through IV, consists of a single paragraph of ambiguous language. For example, how many years of experience should Level II consist of? Can an employer’s position that requires two to three years of experience ever be classified as Level I (Entry-Level)? If a worker with a master’s degree is filling a position that typically requires only a bachelor’s degree, can they be bumped up in skill level?

All employers should be required to follow the five-step Prevailing Wage Determination process outlined on pages 9 through 13 to identify the position’s skill level. Employers should be required to document and retain those records for inspection by USCIS when the I-129 petition for the LCA is filed. This will ensure consistent skill level identification within and across companies whether the firm uses the OEWS, private wage survey, a CBA, or requests a PWD.

Then USCIS should ensure that the worker being placed in the position is not overqualified in terms of education and experience for the position’s skill level.

Consider this example: A well-known firm received approval for two different LCAs at the same wage level (Level II), even though one LCA had the job title Senior Software Engineer and the other had the job title Software Engineer.38 The firm, a major employer of H-1B workers, is not accounting for differences in skill levels as evident from its own job titles when selecting the wage level for the LCA. Both engineers and senior engineers are receiving the exact same salary and wage level, and they are approved by DOL with zero scrutiny. Using the DOL Prevailing Wage Determination Policy Guidance, the LCAs in this case should be instantly flagged by identifying keywords such as senior, head, chief, and lead in job titles, and should be checked to determine whether the prevailing wage levels are appropriate. This example underscores a broader need for DOL to create a more robust compliance system to ensure employers do not misclassify workers at inappropriate wage levels. Our own cursory review has found hundreds of similar examples.

As a result, the LCA and petition process should be updated so that DOL reviews the qualifications of individual workers before USCIS approves a petition, to ensure that wage levels match up with the age, education, and experience of the workers being hired through the LCA and PERM programs. While USCIS currently performs this role to some extent, its adjudicators lack expertise in wage-and-hour issues and do not have the same mandate to protect labor standards as DOL staff. Therefore, these functions should be undertaken by the proper agency. DOL and USCIS already have a mandate to cooperate on H-1B applications and enforcement; a memorandum of understanding between the Secretaries of Homeland Security and Labor could detail a process where DOL plays a prominent role in ensuring that H-1B workers are classified at the appropriate wage levels. Published guidance from DOL on skill levels that is more detailed, clearer, and more realistic would also be helpful for everyone involved—employers and adjudicators alike.

9. DOL has failed to enforce the “actual wage” component of the H-1B prevailing wage rule and should begin enforcing it immediately

Under the prevailing wage statute, although an employer has several options at their disposal to determine a prevailing wage for an LCA, they must offer the higher of either the prevailing wage or the “actual wage,” which the corresponding regulation at 20 C.F.R. §655.731 defines as “the wage rate paid by the employer to all other individuals with similar experience and qualifications for the specific employment in question.”

DOL has not exercised its authority to enforce the actual wage requirement. This is a wasted opportunity for one of the most important tools DOL has at its disposal to hold employers accountable for required wages. In order to ensure that H-1B employers are not undercutting the wage rates they pay H-1B workers, DOL should immediately begin enforcing this requirement.

In late 2021, we published a report detailing how thousands of skilled migrants with H-1B visas working as subcontractors at well-known corporations like Disney, FedEx, Google, and others appear to have been underpaid by one firm to the tune of at least $95 million in one single year.39 The victims likely included not only the H-1B workers but also the U.S. workers who were either displaced or whose wages and working conditions were degraded when employers were allowed to underpay skilled migrant workers with impunity. The workers in question were employed by HCL Technologies, an India-based IT staffing firm that earned $11 billion in revenue in 2020. HCL is consistently one of the top 20 H-1B employers and appears to have engaged in the systematic and strategic wage theft of its H-1B workers by exploiting the lax to nonexistent enforcement of the actual wage requirement. According to its own internal documents, HCL targeted its new H-1B hires expressly based on the spread between what it paid its own U.S. employees versus what it pays its own H-1B workers.

The report discusses our analysis of an internal HCL document, released as part of a whistleblower lawsuit against the firm. The document suggests that HCL—and perhaps other firms with similar business models—are not paying the legally required amount that corresponds to what is being paid to U.S. worker employees at HCL. The HCL document revealed that the large-scale illegal underpayment of H-1B workers that appears to be occurring is a core part of the HCL’s competitive strategy, and likely facilitated $95 million in stolen wages from HCL’s H-1B employees in just one year. Such abuses are surely widespread among H-1B employers because DOL has done virtually nothing to ensure program integrity by enforcing the H-1B wage rules, in particular the actual wage rule.

DOL could easily begin enforcing the actual wage provision by requiring H-1B employers to submit evidence documenting the wage rates paid to U.S. workers who are similarly employed in occupations for which the employer is also hiring H-1B workers. Employers must already “keep records for how they calculate the actual wages.” To our knowledge, DOL has never initiated an investigation regarding compliance with the “actual wage” provision of the law. The DOL Secretary should exercise their authority to inspect the actual wages paid by H-1B employers. The Secretary can do so without a complaint from a worker, under their authority to certify investigations, and should do so if presented with credible evidence of violations. DOL should provide clear compliance guidance for the actual wage provision and then require that H-1B employers attest to the wage rates they pay similarly situated U.S. workers and include them in the LCA documentation, and DOL should conduct audits of employers on a regular basis to ensure compliance. The audits could begin with the employers that hire large numbers of H-1B workers, for example, those that employ more than 25 H-1B workers, as well as H-1B dependent firms.

Secondary employers should also be required to submit LCAs and evidence documenting the wage rates paid to U.S. workers in the occupations that H-1B workers will be hired for through an outsourcing firm. Otherwise, some H-1B outsourcing firms—which almost exclusively pay H-1B workers at the two lowest wage levels, and employ H-1B and L-1 workers almost exclusively—will be able to game the system by using the actual wage paid to their own employees to meet the requirement, and not the employees of the secondary employer, where the H-1B workers will be placed—and where wages paid to the U.S. workforce are likely to be higher.

10. DOL should require secondary employers of H-1B workers to attest that they will not adversely affect wages and working conditions

Outsourcing companies are using the H-1B program to underpay H-1B workers, replace U.S. workers, and send tech jobs abroad. Typically, in this scenario, H-1B workers do computer and engineering work at the office of a U.S. employer but are employed by an outsourcing company, some of which are based abroad or have major operations abroad.40 The many reported cases of U.S. workers being laid off and replaced by H-1B workers have all been facilitated by this arrangement. In multiple incidents, the H-1B workers have been hired with annual wages of around $30,000 to $40,000 less than the workers they have replaced. Before they are laid off, the U.S. workers are often forced to train their own H-1B replacements as a condition of their severance packages; this is euphemistically known as “knowledge transfer.” Major, profitable U.S. employers like Disney and Toys “R” Us—as well as public employers and institutions like the University of California and Southern California Edison—have laid off thousands of U.S. workers who were forced to train their own replacements. Eventually, many of the outsourced jobs filled by H-1B workers get moved offshore.41

Contrary to the popular narrative proffered by corporations that support expanding and deregulating the H-1B visa program—the staffing firms that use H-1B visas are not using them to keep technology jobs in the United States—instead they are using them precisely to facilitate the offshoring of as many of those jobs as they can. That is in fact, the business model of those firms. News reports, including from the New York Times and Bloomberg, have shown that outsourcing companies “game the system” in order to obtain a high share of H-1B visas, which leaves fewer available for the firms that directly employ H-1B workers.42

The outsourcing/staffing model of employment generally may increase the incidence of labor and employment law violations by separating the main beneficiary of the labor provided by H-1B workers—the third-party firm that hires the outsourcing firm, i.e. the “lead” employer—from the H-1B workers who perform the work. Firms that rely on outsourced H-1B workers are a textbook example of what former DOL Wage and Hour administrator David Weil calls a “fissured” workplace, where the relationship between the worker and the lead employer is fissured, or broken, via the use of a temp agency or subcontractor43 (in this case the temp agency or subcontractors are the H-1B outsourcing firms). Research shows that fissuring leads to a wage penalty for workers who are subcontracted, employed as temps, and work for staffing firms,44 in part because the subcontractor keeps a percentage of the wages earned by the workers. It is also common knowledge that employers use this model to avoid paying for benefits like health care, retirement funds, and to avoid liability for labor violations. Because the staffing and outsourcing model contributes to the fissuring of the labor market, it should not be allowed as part of the U.S. immigration system—not in H-1B or in any other temporary or permanent immigration programs.

One way to address the abuses of the outsourcing/staffing firms, which operate as secondary employers, would be to issue policy guidance and update the appropriate DOL ETA application forms so that secondary employers to which H-1B workers are outsourced will be required to file Labor Condition Applications with DOL. Such guidance, which was considered in 2021 but then abandoned,45 would close the loophole that allows firms like Disney and Southern California Edison to replace its U.S. employees with H-1B workers by employing them through an outsourcing firm.46 Using Disney as an example, implementing this rule would require client firms like Disney—that benefit and profit from hiring outsourcers—to acknowledge their employment relationship with H-1B workers who are employed by outsourcers like Infosys and Tata, by requiring Disney to file its own LCA. By doing so, Disney would attest that hiring the H-1B worker through the outsourcer is not adversely affecting the wages and working conditions of the Disney workforce.

11. DOL should publish Labor Condition Application and permanent labor certification data in real-time on a central database

DOL publishes detailed LCA and permanent labor certification (PERM) disclosure data, but it is typically lagged by at least one quarter, and often much longer. The agency should publish LCA and PERM public access file applications in real-time to enable U.S. workers to apply for these positions. This would enhance the integrity of the programs and better align them to their purposes by ensuring that workers hired with temporary visas and green cards are filling true labor shortages.

U.S. workers have long complained loudly that employers hide job openings from them, reserving them for visa holders and PERM applicants. Even when those jobs are advertised, as is required by the PERM labor certification process, they are often placed in obscure locations. Workers call such job advertisements “fake job postings.” A recent ProPublica investigation has referred to the practice as “The Tech Recruitment Ruse.”47

The agency already collects the data and publishes it regularly on the OFLC disclosure data. But even a one-quarter year lag time renders it useless for job seekers. Publishing it in real-time would unlock enormous value for workers at little or no cost to the government or employers.

12. DOL had the requisite legal authority to update the H-1B prevailing wage levels

As discussed in detail in our 2020 report, DOL has the requisite legal authority to change the H-1B prevailing wage levels to an appropriate rate that protects wage standards and prevents adverse effects on U.S. workers in H-1B occupations. No analyst or commentator has credibly argued otherwise. For far too long, the H-1B wage levels have been set at an artificially low level that undercuts U.S. wage standards, therefore, it is reasonable for DOL to increase the minimum wage levels so that Level I is no lower than the local median wage.

13. DOL should expand the LCA process to include a front-end screening process that reviews the labor and employment law records of employers; those that have violated certain laws in the previous five years should be prohibited from hiring through the H-1B program

In a previous comment to the Department of Homeland Security (DHS), regarding the 2023 H-1B “modernization” rule,48 we recommended that DHS should expand the H-1B Registration System to include a front-end screening process that reviews the labor and employment law records of employers. If employers have violated certain laws, they should be prohibited from hiring through the H-1B program. We further recommended that DHS should consult with DOL to develop a list of key applicable laws and operate the system jointly with DOL, and ideally, also operate the updated registration process jointly, with DOL screening employer records through the LCA process. We reiterate that recommendation here and urge DOL to take steps to exclude lawbreaking employers that violate labor, employment, and immigration laws. While we realize our comment will only be read by DOL, we nevertheless include our discussion about DHS’s role in this process because we believe DOL and DHS should work in tandem to reduce labor and employment violations in the H-1B program.

In the 2023 proposed rule, Modernizing H-2 Program Requirements, Oversight, and Worker Protections,49 DHS proposed to create or expand several additional bars to approval of new petitions filed by H-2 petitioners who have previously committed legal violations related to the H-2 programs. EPI submitted comments generally supporting the proposed changes, which were adopted as a final rule.50 Although they fail to go far enough on their own, if adequately implemented the provisions will help curb abusive employers’ exploitation of the H-2 programs and will level the playing field for employers that obey the law. EPI additionally commented that employers that commit serious violations repeatedly should be permanently banned from the H-2 programs, as they have demonstrated their inability or unwillingness to comply with the programs’ requirements.

In those comments EPI further recommended that the DHS strengthen section 214.2(h)(10)(iii)(3), which addresses violations of “any applicable employment-related laws and regulations” by expanding it to include a number of other violations and making denial of petitions mandatory—rather than discretionary—if employers have violated any of those laws in the preceding five years.51 

We believe DHS should consider similar provisions for employers seeking to hire through the H-1B program because there have been numerous credible accusations of lawbreaking against H-1B employers, as well as investigations and litigation, finding that H-1B employers and recruiters that have been guilty of wage theft, financial bondage, and even human trafficking. The reality is that DOL has limited resources and has interpreted its authority to investigate H-1B employers as constrained, and it is difficult in practice for H-1B workers to come forward and complain themselves about employer lawbreaking—because they could face retaliation and lose their status, and possibly the opportunity to become lawful permanent residents—which means DOL likely receives fewer complaints than they otherwise would. And even when DOL does receive complaints, as numerous reports have shown, DOL often lacks the resources to investigate and take action against lawbreaking employers.52

Thus, at a minimum, to keep lawbreaking employers out of the H-1B program, DHS should have its own list of legal violations and deny any petition for an employer that has violated any of the laws on the list in the preceding five years. That would act as a backstop to prevent lawbreaking employers from hiring through the H-1B program. At present, as DHS rightly points out in the November 2023 Modernizing H-2 Program NPRM, even some of the worst violators of the law are allowed to recruit and hire H-2 workers. We know that this is also the case in the H-1B program. In fact, in the H-1B program, some of the biggest users of the program are also the most egregious violators, receiving thousands of H-1B petition approvals per year. And then after they violate the law, H-1B employees are afraid to complain to authorities because their immigration status is tied to their employer, and even if they are brave enough to lodge a complaint, as noted above, DOL may lack the resources to investigate violations and hold the employer accountable.

As EPI also recommended in the H-2 NPRM, DHS should go further to implement this by also cooperating with DOL to develop a front-end screening process that takes place at the labor condition application (LCA) stage, to vet the labor and employment law records of employers before they can be allowed to hire through the H-1B program. In multiple EPI reports and in comments in response to NPRMs, EPI has made a similar proposal—namely, that a front-end screening process should be created to prohibit employers with track records of wage and hour, labor, immigration, and other legal violations from hiring through the H visa programs.

To make a front-end screening process a reality, ideally, DOL should require employers to register for eligibility to use the H-1B program at the LCA stage, so employer records on compliance with labor and employment laws can be screened up front, before getting to the registration or petition stage. DOL could set up a registration process in which employers list basic information about their business and the purported need for H-1B workers (as is already done via the DOL temporary labor certification forms). As part of that new process, employers could be required to attest, under penalty of perjury and of being banned from hiring through the H-1B and other visa programs, that they have not been found to have violated any of the listed labor, employment, wage and hour, immigration, civil rights, disability, anti-trafficking, or anti-discrimination laws during the past five years. DOL could then attempt to verify by cross-referencing enforcement data and other relevant records—and could cooperate with other worker protection agencies like the NLRB and EEOC—and ultimately certify employers that have not violated the applicable laws.

To break established patterns of abuse, employers that have violated any labor, employment, wage and hour, immigration, civil rights, disability, anti-trafficking or anti-discrimination laws should be prohibited from submitting an LCA (or having their LCA approved) and ultimately not be allowed to hire H-1B workers. Employers that have clean records and an LCA approved by DOL could then continue on with the petition process at USCIS.

Given the present and likely future reality that WHD and other worker protection agencies will continue to be vastly underfunded and understaffed,53 such a screening process on the front end of the H-1B application process could act as a useful and efficient tool to prevent legal violations without WHD having to go through lengthy and costly investigations on the back end, after workers have arrived in the United States and been robbed or otherwise exploited.

At the petition level, if a new screening process at DOL is not created that takes place before or as part of the LCA process, DHS should, at a minimum and as noted above, build on proposed section 8 C.F.R. 214.2(h)(10)(iii)(B) for H-2 petitions by creating a list of key labor, employment, wage and hour, immigration, civil rights, disability, anti-trafficking, and anti-discrimination laws, the violation of which would establish strong evidence that an employer does not treat their employees well and is unlikely to follow employment and immigration laws with respect to their H-1B employees. Although this would work best in tandem with a front-end screening process at the LCA stage, DHS could make significant progress in keeping lawbreaking employers out of the H-1B programs by mandating that any employer that has violated any of the listed laws will be prohibited from having a petition approved for hiring H-1B workers.

Another option would be for DHS to modify the existing H-1B Registration System so that it also screens the records of employers. That way DHS could use it to both manage the annual cap and to assess and certify whether employers are eligible to hire through H-1B based on their past legal violations. Employers could be required to attest, under penalty of perjury and of being banned from hiring through the H-1B and other visa programs, that they have not been found to have violated any of the listed labor, employment, wage and hour, immigration, civil rights, disability, anti-trafficking, or anti-discrimination laws during the past five years. USCIS could work to verify the employer attestation, although ideally DOL should partner with to do this, by cross-referencing DOL enforcement data and other relevant records—preferably also in partnership with other worker protection agencies like the NLRB and EEOC—and would then ultimately certify employers that have not violated the applicable laws, allowing them to continue with the registration process.

Conclusion

The H-1B visa program is the largest temporary work visa program in the United States and an important pathway into the U.S. labor market for skilled migrants from around the world—but a pathway that has serious deficiencies when it comes to the workplace rights of migrant workers and for preserving U.S. labor standards. While less is known about the other LCA programs, H-1B1 and E-3, they have even fewer applicable rules in place to protect workers, which likely means they are having similar impacts on worker rights and labor standards. By issuing this NPRM, DOL has taken an important first step towards reversing decades of artificially depressed wage rates for H-1B workers, and for making the prevailing wage methodology rules consistent across the other LCA programs and for EB-2 and EB-3 green cards. This will benefit other similarly situated workers and simplify and streamline the prevailing wage determination process. Nevertheless, as our comment recommends, more must be done—in this rulemaking and other executive actions—to improve the effectiveness of the updated prevailing wage rates and on enforcement in the LCA and PERM programs, in order to safeguard U.S. wages and labor standards.

Daniel Costa
Director of Immigration Law and Policy Research
Economic Policy Institute
Washington, DC

Ron Hira, Ph.D., P.E.
Associate Professor
Department of Political Science
Howard University

Endnotes

1. See for example, Daniel Costa and Ron Hira, H-1B visas and prevailing wage levels: A majority of H-1B employers—including major U.S. tech firms—use the program to pay migrant workers well below market wages, Economic Policy Institute, May 4, 2020; Ron Hira and Daniel Costa, New evidence of widespread wage theft in the H-1B visa program: Corporate document reveals how tech firms ignore the law and systematically rob migrant workers, Economic Policy Institute, December 9, 2021.

2. Employment and Training Administration, Adverse Effect Wage Rate Methodology for the Temporary Employment of H-2A Nonimmigrants in Non-Range Occupations in the United States, Interim Final Rule, request for comments, U.S. Department of Labor, 20 CFR Part 655, DOL Docket No. ETA-2025-0008, RIN 1205-AC24 (October 2, 2025).

3. Daniel Costa and Ben Zipperer, “Trump’s new H-2A wage rule will radically cut the wages of all farmworkers: New estimates show farmworkers stand to lose $4.4 to $5.4 billion annually under DOL’s updated Adverse Effect Wage Rate,” Working Economics blog (Economic Policy Institute) November 26, 2025; for additional discussion and background, see Daniel Costa, “EPI comment on DOL’s 2025 Interim Final Rule modifying the AEWR methodology for H-2A farmworkers,” Public Comments, Economic Policy Institute, December 1, 2025.

4. PERM stands for Program Electronic Management Review, and is the first step for employers who wish to sponsor an employee for permanent residence in the United States through the EB-2 and EB-3 categories.

5. See for example, Daniel Costa and Ron Hira, H-1B visas and prevailing wage levels: A majority of H-1B employers—including major U.S. tech firms—use the program to pay migrant workers well below market wages, Economic Policy Institute, May 4, 2020.

6. George Borjas, The H-1B Wage Gap, Visa Fees, and Employer Demand, NBER working paper 34793, March 2026. See pages 3-4.

7. USCIS, X.com post, May 21, 2026 at 1:37 PM, https://x.com/USCIS/status/2057561453373399339

8. https://www.newyorkfed.org/research/college-labor-market#–:explore:outcomes-by-major

9. Here are just a sample of some of the recent news accounts in major media outlets: Katherine Bindley, “The ‘Great Hesitation’ That’s Making It Harder to Get a Tech Job,” Wall Street Journal, May 18, 2025; Christopher Rugaber, “Unemployment among young college graduates outpaces overall US joblessness rate,” Associated Press, June 26, 2025; Sydney Ember, “Young Graduates Face the Grimmest Job Market in Years,” NY Times, March 24, 2026.

10. Daniel Costa and Ron Hira, H-1B visas and prevailing wage levels: A majority of H-1B employers—including major U.S. tech firms—use the program to pay migrant workers well below market wages, Economic Policy Institute, May 4, 2020.

11. See for example, Connor O’Brien, Jeremy Neufeld, and Amy Nice, A Prescription for Fixing the Prevailing Wage System: Replacing Blind Benchmarking with Experience Benchmarking, Institute for Progress, March 27, 2026.

12. See Overview section in Wage and Hour Division, “H-1B Program,” web page on the U.S. Department of Labor website.

13. U.S. Department of Homeland Security, U.S. Citizenship and Immigration Services, Modification of Registration Requirement for Petitioners Seeking To File Cap-Subject H-1B Petitions, 86 Fed. Reg. 1676, at 1720, Table 7, June 8, 2021.

14. See Table 12 in Department of Homeland Security, Weighted Selection Process for Registrants and Petitioners Seeking To File Cap-Subject H–1B Petitions, Notice of proposed rulemaking, CIS Docket No. 2820-25, DHS Docket No. USCIS-2025-0040, RIN: 1615-AD01 (September 24, 2026).

15. See for example, Daniel Costa and Ron Hira, H-1B Visas and Prevailing Wage Levels: A Majority of H-1B Employers—Including Major U.S. Tech Firms—Use the Program to Pay Migrant Workers Well Below Market Wages, Economic Policy Institute, May 4, 2020.

16. NPRM at 15490.

17. Norman Matloff, “H-1B Visas Are Transforming America,” Compact, October 8, 2025; Norman Matloff, Are foreign students the ‘best and brightest’? Data and implications for immigration policy, Economic Policy Institute, Briefing Paper #356, February 28, 2013.

18. NPRM at 15490.

19. Office of Foreign Labor Certification, OFLC Wage Search, last visited on May 23, 2026.

20. United States Citizenship and Immigration Services, Characteristics of H-1B Specialty Occupation Workers, Fiscal Year 2024 Annual Report to Congress, October 1, 2023 – September 30, 2024, U.S. Department of Homeland Security, April 29, 2025.

21. U.S. Bureau of Labor Statistics, Table 5.3 Educational attainment for workers 25 years and older by detailed occupation, 2022–23 (Percent), Employment Projections, U.S. Department of Labor, retrieved May 23, 2026; U.S. Bureau of Labor Statistics, Table 11b. Employed people by detailed occupation and age, Labor Force Statistics from the Current Population Survey, U.S. Department of Labor, retrieved May 23, 2026.

22. U.S. Bureau of Labor Statistics, Table 11b. Employed people by detailed occupation and age, Labor Force Statistics from the Current Population Survey, U.S. Department of Labor, retrieved May 23, 2026.

23. Connor O’Brien, Jeremy Neufeld, and Amy Nice, A Prescription for Fixing the Prevailing Wage System: Replacing Blind Benchmarking with Experience Benchmarking, Institute for Progress, March 27, 2026. PDF available here: https://ifp.org/wp-content/uploads/IFP_Prevailing_Wage_Experience_Benchmarking_.pdf

24. NPRM at 15490.

25. NPRM at 15474.

26. For the Davis-Bacon Act, see 40 USC §3141(2); and the Service Contract Act at 41 USC §351(a)(2).

27. Bureau of Labor Statistics, U.S. Department of Labor, Occupational Employment Wage Statistics, Frequently Asked Questions, at Section C, Number 8.

28. Bureau of Labor Statistics, U.S. Department of Labor, Employer Costs for Employee Compensation – December 2025, March 20, 2026.

29. Bureau of Labor Statistics, U.S. Department of Labor, Employer Costs for Employee Compensation – December 2025, March 20, 2026.

30. See tables, Bureau of Labor Statistics, U.S. Department of Labor, Employer Costs for Employee Compensation – December 2025, March 20, 2026.

31. Wage and Hour Division, “Fact Sheet #62L: What benefits must be offered to H-1B workers,” U.S. Department of Labor, Revised July 2008.

32. Daniel Costa and Ron Hira, H-1B visas and prevailing wage levels: A majority of H-1B employers—including major U.S. tech firms—use the program to pay migrant workers well below market wages, Economic Policy Institute, May 4, 2020.

33. NPRM at 15479.

34. See discussion of the 2013 Interim Final Rule setting the H-2B prevailing wage methodology in Daniel Costa, The H-2B temporary foreign worker program: For labor shortages or cheap, temporary labor? Economic Policy Institute, January 19, 2016.

35. Daniel Costa, “H-2B crabpickers are so important to the Maryland seafood industry that they get paid $3 less per hour than the state or local average wage,” Working Economics (Economic Policy Institute blog), May 26, 2017.

36. 8 U.S.C. 1182 (n)(1)(A)(i)(II).

37. Employment and Training Administration, Prevailing Wage Determination Policy Guidance, Nonagricultural Immigration Programs, U.S. Department of Labor, Revised November 2009.

38. Ethan Baron, “H-1B: Uber snatches up more foreign-worker visas as it lays off hundreds of employees,” Mercury News, October 17, 2019.

39. Ron Hira and Daniel Costa, New evidence of widespread wage theft in the H-1B visa program: Corporate document reveals how tech firms ignore the law and systematically rob migrant workers, Economic Policy Institute, December 9, 2021. See also, news coverage of our report, for example, Lauren Kaori Gurley, “Analysis Claims Migrant Tech Workers Have Been Underpaid by Tens of Millions,” Vice News, December 9, 2021.

40. See for example, Senator Richard Durbin, “How American Jobs are Outsourced,” YouTube.com video, April 16, 2016.

41. See for example, Stef Kight, “U.S. companies are forcing workers to train their own foreign replacements,” Axios, December 29, 2019; Julia Preston, “Pink Slips at Disney. But First, Training Foreign Replacements,” New York Times, June 3, 2015; Julia Preston, “Toys ‘R’ Us Brings Temporary Foreign Workers to U.S. to Move Jobs Overseas,” New York Times, September 29, 2015; Michael Hiltzik, “How the University of California Exploited a Visa Loophole to Move Tech Jobs to India,” Los Angeles Times, January 6, 2017; Patrick Thibodeau, “Southern California Edison IT Workers ‘Beyond Furious’ over H-1B Replacements,” Computerworld, February 5, 2015.

42. Eric Fan, Zachary Mider, Denise Lu, and Marie Patino, “How thousands of middlemen are gaming the H-1B program,” Bloomberg, July 31, 2024; Julia Preston, “Large Companies Game H-1B Visa Program, Costing the U.S. Jobs,” New York Times, November 10, 2015.

43. David Weil, The Fissured Workplace: How Work Became So Bad for So Many and What Can Be Done to Improve It, Harvard, 2014.

44. A number of studies show a wage penalty for subcontracted/outsourced workers. For example, see Arindrajit Dube and Ethan Kaplan, “Does Outsourcing Reduce Wages in the Low-Wage Service Occupations? Evidence from Janitors and Guards,” Cornell University ILR Review. January 1, 2010); Deborah Goldschmidt and Johannes Schmieder, “The Rise of Domestic Outsourcing and the Evolution of the German Wage Structure,” The Quarterly Journal of Economics, Oxford University Press, vol. 132(3), 2017, pages 1165-1217; Andres Drenik, Simon Jäger, Pascuel Plotkin, and Benjamin Schoefer “Paying Outsourced Labor: Direct Evidence from Linked Temp Agency-Worker-Client Data,” Econometrics Laboratory, University of California, Berkeley, September 2020.

45. Employment and Training Administration, U.S. Department of Labor, “U.S. Department of Labor revises interpretation, issues new guidance clarifying filing, compliance requirements in H-1B visa program,” Press Release Number 21-97-NAT, January 15, 2021.

46. Julia Preston, “Pink Slips at Disney. But First, Training Foreign Replacements,” New York Times, June 3, 2015.

47. Alec MacGillis, “The Tech Recruitment Ruse That Has Avoided Trump’s Crackdown on Immigration,” ProPublica, June 3, 2025.

48. Daniel Costa and Ron Hira, “EPI comments on DHS’s “Modernizing H-1B” proposed rule,” Public Comments, Economic Policy Institute, December 22, 2023; commenting on U.S. Department of Homeland Security, Modernizing H-1B Requirements, Providing Flexibility in the F-1 Program, and Program Improvements Affecting Other Nonimmigrant Workers, Notice of proposed rulemaking, CIS No. 2745-23, DHS Docket No. USCIS-2023-0005, RIN: 1615-AC70, 88 Fed. Reg. 72870 (October 23, 2023).

49. U.S. Department of Homeland Security, Modernizing H-2 Program Requirements, Oversight, and Worker Protections, Notice of Proposed Rulemaking, CIS No. 2740-23 and DHS Docket No. USCIS-2023-0012, RIN: 1615-AC76, 88 Fed. Reg. 65040 (September 20, 2023).

50. U.S. Department of Homeland Security, Modernizing H-2 Program Requirements, Oversight, and Worker Protections, Final Rule, CIS No. 2740-23; DHS Docket No. USCIS-2023-0012, RIN 1615-AC76, 89 Fed Reg. 103202 (December 18, 2024).

51. See EPI comment on the H-2 programs in the comment submitted to DHS in November 2023; Daniel Costa, EPI comments on DHS’s proposed rule on “Modernizing H-2 Program Requirements, Oversight, and Worker Protections,” Economic Policy Institute, November 20, 2023.

52. See for example, Rebecca Rainey, “Inadequate Labor Department Resources Stymie Enforcement Efforts,” Bloomberg Law, November 7, 2023.

53. See for example, AFL-CIO, Workers’ Rights Ice’d Out, February 25, 2026; Rebecca Rainey, “Trump’s Federal Workforce Cuts Hit Labor Department Enforcement,” Bloomberg Law, Feb. 24, 2025; Daniel Costa, Josh Bivens, Ben Zipperer, and Monique Morrissey, The U.S. benefits from immigration but policy reforms needed to maximize gains: Recommendations and a review of key issues to ensure fair wages and labor standards for all workers, October 4, 2024 (see Figure J); Daniel Costa and Philip Martin, Record-low number of federal wage and hour investigations of farms in 2022: Congress must increase funding for labor standards enforcement to protect farmworkers, Economic Policy Institute, August 22, 2023; Ihna Mangundayao, Celine McNicholas, and Margaret Poydock, “Worker protection agencies need more funding to enforce labor laws and protect workers,” Working Economics blog (Economic Policy Institute), July 29, 2021.

Daniel Navarrete, Director
Division of Regulations, Legislation, and Interpretation
Wage and Hour Division
U.S. Department of Labor, Room S-3502
200 Constitution Avenue NW
Washington, D.C. 20210

Comments on RIN 1235-AA46: Employee or Independent Contractor Status under the Fair Labor Standards Act, Family and Medical Leave Act, and Migrant and Seasonal Agricultural Worker Protection Act

Dear Director Navarrete:

We submit these comments from the Economic Policy Institute (EPI) on the Department of Labor’s (“Department” or “DOL”) Notice of Proposed Rulemaking (“NPRM”) regarding the standard for determining who is an employee and who is an independent contractor under the Fair Labor Standards Act (“FLSA”), the Family and Medical Leave Act (“FMLA”) and the Migrant and Seasonal Agricultural Worker Protection Act (“MSPA”).

The Economic Policy Institute (EPI) is a nonprofit, nonpartisan think tank created in 1986 to include the needs of low- and middle-income workers in economic policy discussions. EPI conducts research and analysis on the economic status of working America, proposes public policies that protect and improve the economic conditions of low- and middle-income workers, and assesses policies with respect to how well they further those goals.

We strongly oppose the Department’s rule as proposed. We urge the Department to withdraw this rule and instead allow the long-standing test for determining employee status under the FLSA to stand.

EPI has conducted extensive research and analysis over the years on the harms of worker misclassification. As we have outlined, workers classified as independent contractors have no right to earn the federal minimum wage, or to earn overtime pay. They lose eligibility for unemployment insurance if they lose their work, and to workers’ compensation if they are injured on the job. They are less likely to receive employer-provided job benefits, such as health insurance and retirement benefits. They lose the right to paid sick or family leave in states and localities that extend those rights, and they would lose the right to even unpaid, but job-protected, family and medical leave under FMLA. Workers classified as independent contractors also must assume the full financial cost of Social Security and Medicare contributions, rather than split it evenly with their employer.

We attach here an April 2026 EPI report1 estimating the concrete economic costs of misclassification for 11 commonly misclassified types of jobs, among those most likely to be negatively affected by this rule. These include lower-wage, labor intensive jobs such as call center workers, landscaping workers, janitors and cleaners, home health aides, truck drivers, delivery workers, manicurists, housekeeping cleaners, retail sales workers, security guards, and construction workers. Workers in these and other occupations stand to lose wages, benefits, and the basic labor protections they should be owed under the FLSA.

The FLSA has a plain-language definition of “employ,” which “includes to suffer or permit to work.” This is a deliberately broad definition that was intended to provide the FLSA’s protections to most workers. The NPRM also seeks to once again upend the clear, long-standing “economic reality” test, which examines multiple factors to get to the central issue of worker classification: is the worker truly in business for themselves, or do they depend economically on finding work in the business of others, under the control and terms of the employer?

Instead of examining all of the relevant factors in a worker’s situation, the NPRM proposes elevating the factors of the level of control the employer exerts, and the worker’s opportunity for profit or loss, above all others in making a determination about whether someone is truly in business for themselves.

This would fail to account for the economic realities of many working relationships: for instance, would the primary work of the employer be able to get done without the worker? How permanent or exclusive is the work being performed—is there a fixed ending date? Does the worker invest in their own tools and equipment, marketing, or business plan, or is it the employer making those investments? Does the worker rely on the employer for training on how to get the job done? All of these questions fall under the factors that the NPRM would deprioritize—even though they provide important information about whether or not someone is truly in business for themselves, and thus that the employer doesn’t have an obligation to them under the FLSA.

This would narrow the definition of who is a covered employee under these three statutes. DOL’s NPRM will encourage misclassification schemes and a race to the bottom, where employers will be able to reclassify their employees as independent contractors and evade their obligations under these laws. Further, because of occupational segregation and other labor market disparities, people of color, women, and immigrants—and people at the intersections of these categories—are more likely to be in occupations where misclassification is common.

An analysis of the proposed rule’s potential costs to workers

In the proposed rule, the Department egregiously fails to estimate the transfers between employers, workers, and the social insurance system that would occur if this proposal were finalized. The requirements that agencies must follow as a part of the rulemaking process are very clear, and among them is the requirement that agencies must assess all quantifiable costs and benefits “to the fullest extent that these can be usefully estimated.”2 There is no question that DOL could have produced estimates; in what follows, we show that it is straightforward to produce estimates using data researchers routinely use and taking a methodological approach that is in the spirit of estimates the Department of Labor undertakes on a regular basis. One plausible explanation for why DOL left out the required estimate is that any good-faith estimate would have shown this rule will result in a substantial transfer from workers and the social insurance system to employers.

The Department only briefly touches on potential benefits to workers from their proposal. DOL estimates a 1-3% increase in the total number of independent contractors as a result of their proposed rule.3 However, DOL appears to assume that this increase will come entirely from people who were otherwise not engaging in paid work entering the workforce anew as independent contractors. This means the Department also assumes that there will not be significant reclassification of workers who are currently employees to independent contractor status. Given what we know about the scale of misclassification already occurring under current law, this seems to be, at best, a woefully naive understanding of what employers might do when faced with a weaker standard sanctioned by DOL. Further, our analysis of commonly-misclassified occupations shows that the independent contractor version of paid work actually has less value for the worker than the employee-status version that the same worker could find – in other words, the worker still bears costs because the independent contractor version of the work likely offers lower pay, fewer benefits, and fewer protections.

In this comment we will estimate these transfers from workers and the social insurance system to employers. The basic structure of this analysis is to take (1) the estimated change in the value of a job to a worker if they are classified as an independent contractor instead of an employee, and (2) the estimated change in payments to social insurance funds if a worker is classified as an independent contractor instead of an employee, and then multiply these figures by the estimated number of workers who will shift to independent contractor status if this rule is finalized. This approach will yield the aggregate impact of the rule on workers and on social insurance system coffers.

In a recent publication, EPI estimated (1) and (2) above for workers in lower-wage, labor intensive occupations most likely affected by the rule, such as call center workers, landscaping workers, janitors and cleaners, home health aides, truck drivers, delivery workers, manicurists, housekeeping cleaners, retail sales workers, security guards, and construction workers.4

The cost to workers in these occupations of being classified as an independent contractor instead of a payroll employee ranges from $6,294 annually for retail sales workers (under extremely conservative assumptions), to $23,266 annually for truck drivers (under less conservative assumptions). Similarly, the annual cost to social insurance funds if a worker is classified as an independent contractor instead of an employee ranges from $600 for manicurists (again under extremely conservative assumptions), to $3,046 for construction workers (again under less conservative assumptions).

Given that we do not have a way to determine where the average impact for those affected by the proposed rule falls in those broad ranges, we simply take the lower bound in both cases, to be extremely conservative. Thus, we assume that the cost to workers is $6,294 annually, and the cost to social insurance programs is $600 per reclassified worker annually.

It should be noted that these lower-bound estimates assume that workers classified as independent contractors are paid not just the full regular pay of a W-2 employee, but also are fully compensated for the value of health insurance and retirement benefits. This is, however, highly unlikely in these occupations. The theory that businesses will not be able to pay less in total compensation to workers if their status shifts from employee to independent contractor—that their base pay will rise to make up for a reduction in benefits—is based on the assumption of perfectly competitive labor markets. There is broad and growing evidence that perfect competition is rare, and that most labor markets do not function competitively—particularly low-wage labor markets like those under consideration here, where workers are more likely to lack the power to bargain for higher wages to compensate for their loss of benefits and increase in taxes when they become independent contractors.5 Further, very low-wage employees whose wage is elevated by the minimum wage could easily see their wage drop when, as independent contractors, they no longer legally must be paid the minimum wage.

How will the share of the workforce who are payroll employees and the share of the workforce that are independent contractors change as a result of this rule?

To begin to answer that question, we need to know how many independent contractors there currently are. There is a great deal of uncertainty around this number (the Department notes that “there are a variety of estimates of the number of independent contractors, and these span a wide range based on methodologies and how the population is defined”).6 The July 2023 Contingent Worker Supplement finds that there were 11.9 million workers who are independent contractors in their main job. This number, however, drastically underestimates the total number of independent contractors by not including workers who do independent contracting on the side, in addition to a payroll job. The Department makes a correction for this issue and estimates that there are 24.8 million individuals working as contractors at a given time. For the sake of the calculations in this comment, we will limit the analysis to the 11.9 million workers the CWS finds are independent contractors in their main job, since workers who do independent contracting as a side job likely work fewer hours and therefore may lose less than the $6,294 we are conservatively assuming workers whose status changes as a result of this rule lose annually. It should be noted that this means we are leaving out many millions of independent contractors and our estimates will, as a result, be extremely conservative for this reason as well. 

How much will independent contracting increase as a result of this rule?

The Department’s proposal would potentially allow companies to legally argue that workers who are now misclassified as independent contractors, or who are working “off the books,” would be legitimately classified as independent contractors under the narrow terms of the proposal. As such, one approach would be to use the percentage of workers misclassified or working off the books under current law to estimate the number of workers who could be reclassified as independent contractors under the proposed rule. However, due to severe data constraints, estimates of the share of workers who are misclassified as independent contractors or working off the books are limited. A 2020 paper estimates that between 12.4% and 20.5% of workers in the construction industry are either misclassified as independent contractors or working off the books.7 Conservatively assuming that the bottom of this range applies more broadly to the lowest-paid quartile of the U.S. labor market, that is 5.1 million low wage workers who may be affected by this rule.8 Of course, these are workers who are already not getting the benefit of being a payroll employee, so the economic impacts described above would not apply. However, this exercise does provide a broad sense of the potential scope of workers affected. Further, even these workers lose something of value under this rule given the current enforcement regime, namely the legal right to the wages and benefits they would receive if they were properly classified. We do not attempt to quantify this effect.

To be exceedingly conservative, we will simply assume that there will be an increase as a result of this rule of 5% in the number of workers who are independent contractors in their main job.9 This translates into an increase of just 595,000 workers who are independent contractors at their main job, given the conservative CWS estimate of 11.9 million workers who are independent contractors in their main job. Multiplying that by our conservative estimate that these workers would lose $6,294 per year yields an aggregate loss to workers of over $3.7 billion annually. Further, social insurance funds would lose at least $357 million annually (595,000 times $600) in the form of reduced employer contributions, meaning this rule also results in a transfer of at least $357 million annually from social insurance funds to employers.10

The NPRM would also have ripple effects in lost benefits and protections that employees are entitled to under other statues. The proposed rule would also extend the weakened definition of employee status to the Family and Medical Leave Act (FMLA) and the Migrant and Seasonal Worker Protection Act (MSPA). Farm workers are already among the most vulnerable, low-paid workers in the U.S., and often face challenges at worksites including poor workplace safety conditions. If farm employers and farm labor contractors have the ability to offload more of their basic responsibilities under MSPA, more farm workers will be at risk of classification as independent contractors and lose even their basic rights under MSPA11, such as to be paid on time or have their working conditions disclosed. More workers would also be at risk of losing access to the right to take job-protected, unpaid family and medical leave under FMLA, which also references the definition of “employee” under the FLSA to determine eligibility for FMLA coverage. The National Partnership for Women and Families has estimated that 15 million workers took advantage of FMLA leave in 2025 alone.12 Protections for break time for nursing mothers—recently expanded under the PUMP Act—are also tied to FLSA employee status. Losing the right to take job-protected time off for illness or the birth of a child, the right to take a break to pump milk, the right to know when you will be paid and to be paid on time—these all specifically conflict with DOL’s stated interest in improving flexibility and satisfaction for workers. This is false flexibility.

The reality of flexible work

The Department focuses on “flexibility and satisfaction” as important non-pecuniary attributes that workers may trade income to receive. However, it is difficult to imagine that there are a meaningful number of workers who would get more satisfaction from doing the same job for substantially less compensation as an independent contractor than for substantially more compensation as a payroll employee. Many workers indeed may value flexibility, but notably, employers are able to provide a huge amount of flexibility to payroll employees if they choose to; the “inherent” tradeoff between flexibility and payroll employment is greatly exaggerated. Workers also highly value other factors, like income stability, which are much less prevalent among independent contractors and are not taken into account here.

In 2024, EPI published a report reviewing the available research and survey data on worker preferences regarding flexibility, stability, and predictability.13 While workers do often prefer flexibility and control over their own schedules, they also want stable, full-time work with predictable pay and benefits.

Employers often incorrectly claim that the FLSA prevents flexible scheduling, but employers control scheduling decisions and can organize work schedules to meet FLSA’s requirements. Employers have long been able to provide flexible schedules and comply with wage and hour laws, and flexible schedules have been negotiated by employers and unions in compliance with the law. Scheduling decisions are the employer’s prerogative (in negotiation with their workers’ union, if there is one), and they can and do set and change schedules in accordance with production demands. Independent contractor status is hardly needed for employers to provide their workers with flexibility.

In conclusion, we urge DOL to withdraw this rule as proposed. The Department should not be in the business of weakening labor protections standards, and should instead seek to vigorously enforce laws against misclassification.

Sincerely,

Samantha Sanders
Director of Government Affairs & Advocacy
Economic Policy Institute

Heidi Shierholz, Ph.D.
President
Economic Policy Institute

Valerie Wilson, Ph.D.
Director, Program on Race, Ethnicity, and the Economy
Economic Policy Institute

Endnotes

1. Ismael Cid-Martinez et al., Misclassifying workers as independent contractors is costly for workers and social insurance systems, Economic Policy Institute, April 2026.

2. Maeve P. Carey, Cost-Benefit and Other Analysis Requirements in the Rulemaking Process, Congressional Research Service, December 9, 2014.

3. 91 Fed. Reg. 9967.

4. Ismael Cid-Martinez et al., Misclassifying workers as independent contractors is costly for workers and social insurance systems, Economic Policy Institute, April 2026.

5. Alan Manning Monopsony in Motion: Imperfect Competition in Labor Markets (Princeton, NJ: Princeton University Press, 2003); Anna Sokolova and Todd Sorensen, Monopsony in Labor Markets: A Meta-Analysis, Washington Center for Equitable Growth, February 2020; Arindrajit Dube, Jeff Jacobs, Suresh Naidu, and Siddharth Suri, “Monopsony in Online Labor Markets,” American Economic Review: Insights 2, no. 1 (March 2020): 33-46, https://www.aeaweb.org/articles?id=10.1257/aeri.20180150.

6. 91 Fed. Reg. 9962. 

7. Russell Ormiston, Dale Belman, and Mark Erlich, An Empirical Methodology to Estimate the Incidence and Costs of Payroll Fraud in the Construction Industry, Institute for Construction Economics Research, January 2020. 

8. Data from the Current Population Survey from the Bureau of Labor Statistics find that there were 163.0 million workers in the U.S. in the first quarter of 2026; 5.1 million = 163.0 million * .25 * .124. 

9. A 5% increase is a conservative assumption, given that the Department is proposing to amend the five-part economic realities test—which has always been interpreted by the Supreme Court in its totality, not weighing any one factor more than another—in a way that will place undue weight on two factors and then narrows those two factors further, making it more likely that workers will be classified as independent contractors and as a result likely leading to a substantial increase in the number of independent contractors. 

10. Some might argue that social insurance funds wouldn’t be hurt by not having employers pay into unemployment insurance and workers’ compensation because independent contractors aren’t eligible for those benefits. However, low-paid independent contractors who lose their contracts and are without work, or get hurt on the job, will be likely to need to depend on safety net programs to survive, so the social insurance system as a whole would still be depleted. 

11. Wage & Hour Division, U.S. Department of Labor, “Fact Sheet #35: Joint Employment and Independent Contractors Under the Migrant and Seasonal Agricultural Worker Protection Act,” revised January 2020. 

12. National Partnership for Women & Families. 2026. Key Facts: The Family and Medical Leave Act (fact sheet), January 2026.

13. Margaret Poydock, Lynn Rhinehart, and Celine McNicholas, Flexible Work: What Workers, Especially Low-Wage Workers, Really Want And How Best To Provide It, Economic Policy Institute, July 2024.

Division of Humanitarian Affairs
Office of Policy and Strategy
U.S. Citizenship and Immigration Services
Department of Homeland Security
5900 Capital Gateway Drive
Camp Springs, MD 20746

Re: DHS Docket No. USCIS-2025-0370, Employment Authorization Reform for Asylum Applicants, Notice of Proposed Rulemaking (Feb. 23, 2026) ¹

To whom it may concern:

The Economic Policy Institute (EPI) submits this comment strongly opposing the Department of Homeland Security’s (DHS) Notice of Proposed Rulemaking (NPRM) titled Employment Authorization Reform for Asylum Applicants, published February 23, 2026. and assigned DHS Docket No. USCIS-2025-0370 (i.e. the proposed rule).

About EPI and organizational interest

The Economic Policy Institute (EPI) is a nonprofit, nonpartisan think tank established in 1986 to include the needs of low- and middle-income workers in economic policy discussions. EPI conducts research and analysis on the economic status of working America, proposes policies that protect and improve economic conditions and raise labor standards for low- and middle-income workers—regardless of immigration status—and assesses policies with respect to how well they further those goals.

EPI has researched, written, and commented extensively on the U.S. system for labor migration, including on temporary immigration protections and Employment Authorization Documents (EADs), and on labor standards enforcement for both the low-wage and professional workforce. EPI has also provided expert testimony about the U.S. immigration system to both the U.S. Senate and House of Representatives, as well as state legislatures.

Summary of the comment

The proposed rule is designed to force asylum applicants seeking haven in the United States to live in the country without being able to work or support themselves and their families. Among other changes, the proposed rule introduces extreme and potentially indefinite delays to obtain a work permit, as it proposes to extend the waiting period to apply for work authorization from 150 days to 365 days, increase the mandatory processing timelines once an initial work permit application is received from 30 days to 180 days, and pause initial work permit processing completely when average affirmative asylum processing times exceed an average 180 days.1 The proposed rule also imposes many new eligibility barriers for both initial and renewal work permits, and would make approval of both applications completely discretionary, meaning asylum-seekers may be denied employment authorization for no reason at all.2

This proposed rule would be acutely harmful to asylum-seekers, but also to employers, coworkers, and spouses and children who rely on asylum-seekers’ employment and income. From the perspective of worker rights, labor standards, and growth in the overall economy, this NPRM raises at least four significant concerns that should be avoided by withdrawing the proposed rule in full.

First, DHS ignores the true value and impact of work authorization on the workforce, and fails to estimate the negative economic impacts that will result from the NPRM. In addition, the proposed rule would impact many workers already participating in the U.S. workforce, including individuals the NPRM classifies as “initial” asylum applicants who previously held lawful employment authorization through programs such as Temporary Protected Status (TPS), humanitarian parole, or deferred action. By focusing on deterrence of future migration while overlooking these workforce impacts, the NPRM substantially understates both the disruption the rule would cause and the reliance interests at stake.

Second, the NPRM rests on the flawed assumption that employers can easily replace asylum-seeking workers who lose employment authorization, and that such replacement can happen quickly and without disruption to the economy. In reality, sudden workforce losses that result from the NPRM terminating or putting in jeopardy the work authorization of roughly 2 million current workers would disrupt operations across multiple industries, forcing employers to increase mandatory overtime, heightening workplace safety risks, and creating significant operational instability that would impact not only asylum-seekers but also their coworkers. Employers would also lose the experience and job-specific skills that many asylum applicants already possess.

Third, by making it far more difficult for asylum-seekers to obtain or renew work authorization, the proposed rule would eviscerate the workplace rights of millions of current and future workers, pushing many into the informal economy, increasing the risk of wage theft, retaliation, and other forms of worker exploitation. This shift would also undermine labor and employment law enforcement by making workers less likely to report violations or cooperate with investigators, weakening workplace protections and lowering labor standards for all workers. The NPRM fails to acknowledge the scope of these enforcement and labor-standards consequences for U.S.-born citizens and foreign-born workers, half of whom are U.S. citizens.

Fourth, the NPRM fails to consider the substantial reliance interests that workers have developed around a predictable system of asylum-based employment authorization, which the NPRM would upend.

Far from streamlining the regulation of asylum-related employment authorization, the proposed rule would harm workers across the board. For these reasons, DHS should withdraw the proposed rule.

The worker rights of millions are protected by EADs

The role that Employment Authorization Documents (EADs) play when it comes to protecting worker rights and uplifting workplace standards should not be ignored and cannot be overstated. For workers who lack a permanent or more durable immigration status, obtaining a temporary EAD can mean having enforceable workplace rights that an individual would otherwise not have. While all workers have some labor and workplace rights under U.S. law—regardless of immigration status—enforcing them in practice becomes virtually impossible because of the threat of deportation, which prevents workers who lack an immigration status or an EAD from calling out lawbreaking employers and demanding that they comply with the law, or from reporting workplace violations to labor enforcement agencies. But having an asylum-based EAD, or protection from deportation through temporary administrative immigration protections like parole, Temporary Protected Status, deferred action—accompanied by an EAD—means that, in practice, workers can report workplace violations to government officials without fear of retaliation that can lead to deportation. It also means that a worker with an EAD can be employed by just about any U.S. employer and change jobs or employers, unlike, for example, migrant workers employed with temporary visas who can only be employed by the sponsor of their visa.

Altogether, nearly 5.6 million people in the U.S. held a temporary but precarious immigration status in 2024, including over 2 million people who are asylum-seekers. (see Table 1 below).

Table 1

While these statuses and protections are only a band-aid for a flawed immigration system that is deeply in need of reform,3 they have been shown to protect millions of workers from some of the worst forms of employer lawbreaking. Employers also greatly benefit from workers having a protective status and a work permit because it allows them to lawfully employ millions of people who would otherwise not be eligible to work, leading to billions in economic contributions to the U.S. economy and generating demand that stimulates growth.

DHS ignores the positive value and impact of work authorization on the workforce and economy, and the negative impacts of terminating and delaying work authorization

In the NPRM, DHS does not estimate and consider the true value and impact that EADs have on the workforce and economy, not even specifically for asylum-seekers. There are examples of existing research showing the important economic contributions that workers with temporary immigration protections and EADs are able to make thanks to being work-authorized. These estimates are relevant because parole, TPS, and DACA recipients are likely to see similar wage gains associated with having an EAD, due to gaining the ability to work lawfully, which brings with it the practical ability to enforce workplace rights and standards. In addition, may persons with protections like TPS and DACA may also be asylum applicants.

One estimate from the American Immigration Council estimated that when the TPS population was approximately 354,000 in 2021, “TPS holders contributed more than $2.2 billion in taxes, including almost $1 billion to state and local governments,” as well as “held $8 billion in spending power.”4 Another estimate by Moriarty found that TPS-eligible individuals “annually contribute some $31 billion in wages to the national GDP.”5

Research has also quantified some of the contributions made by persons who have an EAD because they qualified for Deferred Action for Childhood Arrivals (DACA). DACA was created by DHS in 2012, and recipients are eligible for protections from deportation and EADs that are valid for two years and renewable. More than 835,000 persons have benefitted from DACA, and more than 500,000 were enrolled as of 2024.6 Svajlenka and Truong found that DACA recipient households “pay $6.2 billion in federal taxes and $3.3 billion in state and local taxes each year,” and “after taxes, these households hold $25.3 billion in spending power,” and that DACA recipient families “own 68,000 homes, making $760 million in mortgage payments and $2.5 billion in rental payments annually.”7

When it comes to measuring the workplace impact and economic benefits of workers being issued an EAD, there are a few examples that are worth citing here. One is an annual survey of DACA recipients that was conducted in 2024 for the ninth time. The most recent survey, conducted by Wong et al. and published by the Center for American Progress, showed that DACA has been an essential tool to improve the economic and educational outcomes of recipients.8 In terms of the impact that deferred action and an EAD have had on the employment of DACA recipients: 59.1% of respondents moved to a job with better pay; 47.3% moved to a job with better working conditions; 47.5% moved to a job that “better fits [their] education and training”; 49.6% moved to a job that “better fits [their] long-term career goals”; 57.3% moved to a job with health insurance or other benefits; and 19.6% of respondents obtained professional licenses.

Wong et al. also measured the impact of EADs on DACA recipients’ wages, finding that “[d]ata from the past nine years show that DACA has had a significant and positive effect on wages: Recipients’ average hourly wage more than doubled from $11.92 to $31.52 per hour—an increase of 164.4 percent—after receiving DACA.” These significant wage increases are no doubt a result of the labor and workplace rights and stability that DACA recipients gain from having an EAD.

Orrenius and Zavodny examined the wage and employment impact of TPS9—which allows those who are eligible to also be granted an EAD. They looked specifically at migrants from El Salvador, finding that having TPS increased employment rates, and that less-educated Salvadoran men who were employed earned 13% more if they had TPS. They note that “As a whole, the results suggest that less-educated Salvadoran men who receive TPS are able to move into better jobs and become more selective about the jobs they hold, increasing their earnings but also their job search and unemployment incidence.”

One other analysis comes from Kallick,10 looking specifically at asylum-seekers in New York and nationwide, assesses the wage impact of being issued an EAD. Relying on previous methodologies for measuring the impact of a lawful immigration status being granted to unauthorized immigrants, Kallick estimates that asylum-seekers who are granted EADs increase their wages by 10%.

While the relative benefits of precarious and temporary immigration protections and EADs to migrant workers and the broader economy are clear, it is important to note here that because of the NPRM’s new provisions and pauses in processing, a significant share of the 2 million EADs held by asylum-seekers are unlikely to be renewed, or at a minimum, will be substantially delayed—and initial applications will not be granted—despite meeting the statutory requirements for issuance. This violates the statute and will leave hundreds of thousands of workers at least, and possibly millions, unemployed and without the ability to feed and house themselves, causing them to rely on homeless shelters and food banks, which are already overstretched given the current state of the economy and the affordability crisis. Thus, DHS through this NPRM will intentionally hurt the economy and eliminate the economic benefits for workers and employers that EADs held by asylum-seekers create—and exacerbate a crisis among social safety net providers—a fact that the NPRM does not grapple with or address.

In the meantime, EADs obtained through the asylum process, like those obtained through TPS, parole, and DACA, can mean the difference between having rights on the job or being extraordinarily vulnerable to the worst abuses by employers. While the current administration has claimed they want to help U.S. workers, actions like the mass detention and deportation of millions of workers and canceling EADs reveal they are willing to degrade conditions and standards for all workers, as well as kill jobs and shrink the economy, in order to carry out their extreme immigration enforcement agenda.11

If the NPRM is not withdrawn, millions of workers will be more easily exploited by their bosses and driven into the informal economy. That, in turn, will reduce their tax contributions that support the social safety net and lower their wages significantly12—ultimately hurting U.S workers in low-wage industries and the U.S. economy writ large by driving down demand for goods and services. It will also leave employers without millions of reliable employees in industries like construction, hospitality, childcare, agriculture, food processing and production, and more.

The NPRM underestimates the economic harm to initial asylum applicants who are already employed in the U.S. workforce

The NPRM rests heavily on the premise that restricting access to asylum-based work authorization will deter future asylum applicants by reducing the perceived “pull factor” of employment opportunities in the United States given the lengthy asylum backlog.13 While briefly referenced above, it is worth highlighting that this premise overlooks that many “initial” asylum employment authorization applicants are workers who are already here, including many who are gainfully employed.

Since January 2025, the federal government has terminated or moved to dismantle legal immigration programs that provided work authorization to hundreds of thousands of individuals, including several countries’ TPS designations, the CBP One parole program, the parole program for Cubans, Haitians, Nicaraguans, and Venezuelans (CHNV), multiple family reunification parole programs, and DACA.14 Many workers whose work permits have been terminated or threatened by these changes—and who are also eligible for asylum—are filing asylum applications and seeking initial employment authorization based on their pending applications.

The NPRM acknowledges this trend in passing,15 but largely sidesteps its implications—namely, that the NPRM’s sweeping restrictions on employment authorization for “initial asylum applicants” will largely fall on individuals who are already integrated into the lawful workforce. These workers are not hypothetical future entrants; they are experienced employees currently working in hospitals, manufacturing facilities, construction sites, hotels, schools, and public services. The NPRM therefore risks removing from the workforce hundreds of thousands of workers who have already been performing essential roles in the U.S. economy.

By focusing on speculative deterrence effects for future migrants while overlooking the proposed rule’s immediate impact on workers already embedded in the U.S. economy, the NPRM fails to accurately assess the scope of the disruption the proposed rule would cause. This flawed premise permeates the NPRM’s analysis and projected impacts and, on its own, warrants withdrawal of the proposed rule.

The NPRM incorrectly assumes that asylum-seekers who lose employment authorization can easily be replaced and ignores the resulting disruption to the economy

The NPRM suggests that asylum-seeking workers who lose employment authorization may be replaced and that the resulting shifts may lead to increased hours or compensation for currently employed workers.16 Although the NPRM acknowledges that restrictions on asylum-based employment authorization may lead employers to rely more heavily on currently employed workers through increased hours or overtime, it largely treats these effects as a potential transfer of compensation rather than as a source of workforce disruption.17 These assumptions simply do not reflect the realities in which many asylum applicants work.

A) The NPRM would shrink the legal workforce, exacerbating staffing issues in key industries

Asylum applicants are employed in a number of key industries, such as construction, transportation, manufacturing, food preparation and service, and building and grounds maintenance.18 Employers in sectors such as health care, long-term care, hospitality, education, and logistics frequently report difficulty recruiting and retaining sufficient numbers of workers.19 In these and other industries, the loss of experienced workers cannot easily be offset by replacement hiring. This is the case, in part, because of the Trump administration’s immigration enforcement policies, which are resulting in stagnant population and workforce growth, leaving fewer available workers to fill positions previously held by asylum-seekers.20

The NPRM as a result will exacerbate staffing issues in key industries, by pausing, terminating, or simply not adjudicating EAD applications. Further, the NPRM provides no empirical analysis demonstrating that employers will be able to replace workers who lose asylum-based employment authorization. Instead, the proposed rule rests on speculative assumptions that are inconsistent with the experience of the industries most affected.

B) The NPRM would increase mandatory overtime and workload pressures on remaining workers

Across unionized industries, abrupt workforce losses rarely produce the seamless labor substitution envisioned in the NPRM. Instead, employers often struggle to recruit qualified replacements, leaving operations understaffed for extended periods. In some cases, employers may scale back operations or lay off additional workers when they can no longer meet production or service demands due to the loss of experienced personnel.21 These dynamics are particularly severe in rural areas and specialized industries where the available labor pool is already limited and recruiting new workers can take months or even years.

When employers cannot quickly replace lost staff, the burden falls on the remaining workforce. Workers may be required to work extended shifts, mandatory overtime, or intensified production schedules to maintain operations. These conditions increase worker fatigue and place significant strain on the remaining workforce.22

C) The NPRM would increase workplace safety risks by disrupting experienced workforces

Staffing shortages and excessive overtime can also create significant safety risks. In many safety-sensitive workplaces, such as construction sites, manufacturing facilities, warehouses, and healthcare settings, the sudden loss of experienced workers can create immediate hazards for the remaining workforce. Short-staffing often forces employees to perform additional tasks or work at faster production speeds, increasing the likelihood of fatigue-related injuries and other workplace incidents. Efforts to rapidly replace experienced workers with new or inexperienced hires can further heighten safety risks for the entire workforce. Unionized workplaces have reported increased injury rates, higher stress levels, and exacerbated turnover and burnout following sudden staffing reductions tied to immigration policy changes.23

D) The NPRM would weaken bargaining power in unions and organizing capacity

Many asylum-seekers and other immigrant workers are union members, and their ability to work lawfully is critical to the stability of union bargaining units. By severely restricting asylum-seekers’ access to employment authorization, the NPRM would harm not only individual workers but also the unions that represent them by disrupting membership, weakening collective representation, and undermining unions’ capacity to maintain stable bargaining relationships with employers.

Labor history and modern labor-market research confirm the central role immigrant workers play in sectors where unions organize and represent workers.24 Immigrant workers are disproportionately employed in high-turnover, demanding industries where unions depend on workforce stability to sustain membership and bargaining strength.25 As immigrant employment has grown, so too has immigrants’ share of union membership, making them an increasingly important source of union participation and organizing.

By sharply curtailing asylum-seekers’ access to employment authorization, the NPRM would destabilize the workforce in industries where unions are building and maintaining collective representation. Denying or delaying work authorization would force many workers out of lawful employment or prevent workers from entering lawful employment relationships and joining unions, weakening existing bargaining units and reducing unions’ membership base. It would also disrupt organizing efforts by removing workers from the workforce before they can participate in union campaigns or collective bargaining.

The NPRM’s restrictions on asylum-seekers’ work authorization would significantly impair unions’ ability to represent and grow their membership.

The NPRM would push workers into the underground economy, increase labor and employment violations, weaken labor standards enforcement, and lower wages in numerous industries

The proposed rule would significantly restrict asylum-seekers’ ability to work legally while their asylum claims—often pending for years—are adjudicated, effectively forcing many asylum-seekers to support themselves and their families for extended periods of time without lawful employment.

The NPRM does not meaningfully analyze how individuals in this situation are expected to sustain themselves during those years, nor how effectively eliminating asylum-seekers’ access to employment authorization will impact the enforcement of labor standards, including wage and hour laws, labor laws, and workplace safety laws. In practice, without work authorization, many people will turn to informal or off-the-books employment arrangements in order to support themselves and their families. And we know from existing research that employees who lack work authorization are more than twice as likely to be victims of wage theft for minimum wage violations than U.S.-born citizens.26 Workers in these circumstances are significantly more vulnerable to exploitation. Employers may take advantage of workers’ immigration status to suppress wages, deny overtime pay, ignore workplace safety standards, or retaliate against workers who attempt to assert their rights.

When workers are pushed into informal employment, the resulting labor violations extend beyond those workers themselves—to all workers—regardless of immigration status or the country where they were born. Employers who exploit vulnerable workers not only depress wages and benefits for authorized workers in the same workplace, but they also gain a competitive advantage over law-abiding employers that comply with labor laws and collective bargaining agreements.27 In this way, the NPRM’s restriction of lawful employment authorization would distort workplace competition by rewarding employers that exploit vulnerable workers while disadvantaging those that comply with labor laws and collective bargaining agreements, thus lowering wages for all workers in the many industries where asylum-seekers are employed.

These consequences would reverberate across workplaces and industries. When employment moves into the informal economy, labor violations become harder to detect and enforce, enabling exploitative employers to undercut law-abiding competitors and driving down wages and working conditions for other workers. The NPRM does not meaningfully analyze these foreseeable effects. By failing to account for the predictable expansion of informal employment created by the proposed rule, the NPRM substantially understates its impact on labor standards and the broader labor market.

The NPRM disregards the significant reliance interests created by the existing system of asylum-based employment authorization

Under the Administrative Procedure Act (APA), agencies must consider the reliance interests that regulated parties have developed under existing policies before adopting regulatory changes that would disrupt those settled expectations.28 The NPRM fails to meaningfully account for the reliance interests that workers and unions have developed around the current system of asylum-based employment authorization.

For years, asylum-seekers and labor organizations have relied on a predictable regulatory framework under which individuals who meet the criteria for employment authorization can obtain a work permit within a defined timeframe. Workers make critical life decisions—including housing, transportation, and family support—based on the expectation that, if they satisfy the applicable requirements, they will be able to work lawfully while their asylum claims are pending. By introducing sweeping delays, additional eligibility barriers, and broad discretionary authority to deny applications, the proposed rule would upend these settled expectations and inject profound uncertainty into a system on which workers have long depended.

These reliance interests are particularly significant because many individuals the NPRM characterizes as “initial” asylum employment authorization applicants are not new entrants to the labor market. As described above, many have already been participating in the lawful workforce through programs such as TPS, humanitarian parole, deferred action, or other programs that allow for employment authorization. When those programs are terminated or curtailed, many workers eligible for asylum turn to the asylum system in order to maintain lawful employment authorization—relying on claims for asylum that are almost certainly valid given the circumstances that allowed them to qualify for temporary protections like TPS and parole—but which they did not assert sooner because of their eligibility for other programs which could be approved more quickly. Closing off this pathway for these current lawful employees in the U.S. labor market who also have valid asylum claims will eliminate the only remaining pathway for them to continue working lawfully in jobs they already hold. Their coworkers, employers, and entire workplaces depend on their continued participation in the labor force.

By imposing new eligibility barriers and expanding the circumstances under which renewal applications may be denied, along with creating unjustified lengthy bureaucratic pauses in adjudication, the proposed rule would significantly slow the renewal process and increase the likelihood that workers will lose lawful employment authorization while their applications remain pending. Given the scale of the existing asylum backlog, these changes threaten to create widespread gaps in work authorization for workers who have already been lawfully employed for years.

The NPRM would bring the asylum-based employment authorization system to a functional standstill. Workers who have relied on timely adjudication of work authorization applications would face prolonged periods without lawful employment authorization, while co-workers who depend on those workers would face sudden and unpredictable staffing disruptions. The NPRM does not meaningfully engage with these reliance interests or the systemic consequences of destabilizing an employment authorization framework on which hundreds of thousands of workers and employers have come to depend.

Because the proposed rule disregards these substantial reliance interests and fails to evaluate the disruptive consequences of overturning longstanding expectations about the availability and timing of employment authorization, the NPRM fails to consider an important aspect of the problem before the agency.

Conclusion and recommended action

The NPRM rests on a chain of flawed assumptions that do not reflect the realities of the modern U.S. labor market. It ignores the positive economic benefits and value of Employment Authorization Documents for asylum-seekers, and fails to estimate the many negative impacts that will result, harming not only asylum-seekers, but also U.S. employers and U.S.-born citizen workers. It mischaracterizes who will be impacted by the proposed rule, failing to recognize that many “initial” asylum applicants who would face the harshest aspects of the proposed rule are already embedded in the workforce. It disregards the substantial reliance interests that workers and employers have developed around a predictable system of asylum-based employment authorization. It ignores the predictable expansion of informal employment that will result from leaving asylum-seekers without lawful means of supporting themselves for years. And it assumes—without evidence—that employers will be able to easily replace workers who lose employment authorization.

In practice, the proposed rule would not streamline the administration of asylum-based employment authorization. Instead, it would destabilize workplaces, disrupt established workforces, weaken labor standards enforcement—leading to lower wages for workers in many industries—and impose significant costs on workers, employers, and the broader labor market.

For these reasons, the Economic Policy Institute urges DHS to withdraw the proposed rule.

Comment submitted by:

Daniel Costa
Director of Immigration Law and Policy Research
Economic Policy Institute

Endnotes

1. See Employment Authorization Reform for Asylum Applicants, 91 Fed. Reg. 8616, 8618–20 (Feb. 23, 2026).

2. See id. at 8618–19.

3. Daniel Costa, Josh Bivens, Ben Zipperer, and Monique Morrissey, The U.S. benefits from immigration but policy reforms needed to maximize gains: Recommendations and a review of key issues to ensure fair wages and labor standards for all workers, Economic Policy Institute, October 4, 2024.

4. American Immigration Council, The Contributions of Temporary Protected Status Holders to the U.S. Economy (fact sheet), September 19, 2023.

5. Andrew Moriarty, “Temporary Protected Status (TPS): 5 Things to Know,” Policy Brief, FWD.US, February 29, 2024.

6. President’s Alliance on Higher Education and Immigration (President’s Alliance), Breakdown of Dreamer Populations—Both with and Without DACA, Updated May 23, 2024.

7. , Nicole Svajlenka and Trinh Q. Truong, “The Demographic and Economic Impacts of DACA Recipients: Fall 2021 Edition,” Center for American Progress, November 24, 2021.

8. Tom Wong, Ignacia Rodriguez Kmec, Diana Pliego, Karen Fierro Ruiz, Silva Mathema, Trinh Q. Truong, and Rosa Barrientos-Ferrer, 2023 Survey of DACA Recipients Highlights Economic Advancement, Continued Uncertainty amid Legal Limbo, Center for American Progress, March 25, 2024.

9. Pia Orrenius and Madeline Zavodny, “The Impact of Temporary Protected Status on Immigrants’ Labor Market Outcomes,” Federal Reserve Bank of Dallas Working Paper no. 1415, December 2014.

10. David Dyssegaard Kallick, “’Let Us Work’: The Wage Gain When Asylum Seekers Gain Work Authorization,” Immigration Research Initiative, September 7, 2023.

11. See for example, Ben Zipperer, Trump’s deportation agenda will destroy millions of jobs: Both immigrants and U.S.-born workers would suffer job losses, particularly in construction and child care, Economic Policy Institute, July 10, 2025.

12. See for example, Carl Davis, Marco Guzman, and Emma Sifre. 2024. Tax Payments by Undocumented Immigrants, Institute on Taxation and Economic Policy, July 30, 2024.

13. This rationale—the validity of which is beyond the scope of this comment—is repeated throughout the NPRM. See, e.g., Employment Authorization Reform for Asylum Applicants, Notice of Proposed Rulemaking, 91 Fed. Reg. 8616, 8620 (Feb. 23, 2026) (“[T]he affirmative asylum application backlog serves as a magnet pulling aliens into the U.S. illegally.”); id. at 8664 (same); id. at 8629 (“filing fraudulent, frivolous, or otherwise meritless asylum cases primarily to access employment authorization” is a “pull factor for illegal immigration,” such that the NPRM “should decrease the number of illegal border crossers”); id. at 8659 (proposing new eligibility bar on asylum-based work permits to “curb the pull-factor of employment authorization for those who have been present in the United States for more than 1 year”); id. at 8660 (“This rule will prioritize the safety and security of the American people by disincentivizing illegal migration and criminal conduct for [sic] aliens who would like to obtain employment authorization.”); id. at 8669 (“tethering (c)(8) EAD application acceptance to asylum processing times . . . will permanently eliminate the possibility that asylum backlogs may serve as a magnet attracting illegal immigration”).

14. See Temporary Protected Status (TPS): Fact Sheet, Forum (Feb. 4, 2026), https://forumtogether.org/article/temporary-protected-status-fact-sheet/ (listing recent TPS termination announcements, including TPS protections for Venezuela, Haiti, Nepal, Honduras, Nicaragua, Syria, Afghanistan, Cameroon, South Sudan, Burma, Ethiopia, Somalia, and Yemen); Dep’t of Homeland Sec., DHS Issues Notices of Termination for the CHNV Parole Program, Encourages Parolees to Self-Deport Immediately (June 12, 2025), https://www.dhs.gov/news/2025/06/12/dhs-issues-notices-termination-chnv-parole-program-encourages-parolees-self-deport; U.S. Citizenship & Immigr. Servs., Termination of Family Reunification Parole Processes for Colombians, Cubans, Ecuadorians, Guatemalans, Haitians, Hondurans, and Salvadorans, 90 Fed. Reg. 58032 (Dec. 15, 2025); Gregory Royal Pratt & Laura Rodríguez Presa, DACA delays lead to lost jobs, less stability and anxiety over potential deportation under Donald Trump, Chicago Tribune (Mar. 15, 2026), https://www.chicagotribune.com/2026/03/15/daca-delays-trump-immigration/.

15. See 91 Fed. Reg. at 8652-53, 8658 (acknowledging former TPS, parole, and DACA holders often apply for asylum).

16. 91 Fed. Reg. at 8620–21, 8664-65.

17. See id. (noting that lost compensation may be transferred to currently employed workers through additional hours or overtime).

18. See, e.g., fwd.us, People seeking asylum are contributing to the workforce (Jan. 31, 2026), https://www.fwd.us/news/people-seeking-asylum-are-contributing-to-the-workforce/.

19. See, e.g., Brief of Amici Curiae AFL-CIO and Ten Affiliated Labor Unions, Lesly Miot v. Trump, No. 26-5050 (D.C. Cir. Feb. 17, 2026) (“AFL-CIO and Affiliated Labor Unions Haiti TPS Brief”), at 16–17.

20. See, e.g., Julia Gelatt, “Trump Restrictions on Legal Immigration Could Sharply Reduce U.S. Population Growth,” Migration Policy Institute (April 2026), https://www.migrationpolicy.org/news/trump-legal-immigration-cuts-us-population-growth; and Chair Jerome Powell, “Transcript of Chair Powell’s Press Conference, March 18, 2026,” Federal Reserve, https://www.federalreserve.gov/mediacenter/files/FOMCpresconf20260318.pdf (March 18, 2026).

21. See, e.g., Brief of Amici Curiae AFL-CIO and Affiliated Labor Unions, Svitlana Doe et al. v. Noem et al., No. 25-1384 (1st Cir. July 7, 2025) (“AFL-CIO and Affiliated Labor Unions Parole Brief”), at 13.

22. See, e.g., id. at 8–17 (discussing the chaos and harmful fallout that union members and employers experienced when DHS abruptly ended work authorization through the CHNV parole program); Andrea Hsu, Factories from GE to Kraft Heinz lose immigrant workers, stressing those who remain, NPR (Aug. 11, 2025), https://www.npr.org/2025/08/11/nx-s1-5496335/trump-immigration-workers-parole-tps.

23. See, e.g., AFL-CIO and Affiliated Labor Unions Haiti TPS Brief at 36 (noting that “[a]s a direct result of DHS’s actions [in terminating TPS for Haiti], nurses and other healthcare workers will feel pressure to work longer hours to attend to more patients, exacerbating the turnover and burnout that is endemic to the industry”).

24. See, e.g., Mae M. Ngai, Impossible Subjects: Illegal Aliens and the Making of Modern America (2004) (discussing historical links between immigrant labor and industrial unionization); Joint Econ. Comm. of the U.S. Cong., Unions Protect Employment and Raise Earnings, Including for Workers Who Are Immigrants (June 14, 2023) (finding unionization increases wages, benefits access, and workplace protections for immigrant workers); Andrea Hsu, Factories from GE to Kraft Heinz lose immigrant workers, stressing those who remain, NPR (Aug. 11, 2025), https://www.npr.org/2025/08/11/nx-s1-5496335/trump-immigration-workers-parole-tps.

25. See, e.g., Kevin Appleby, The Importance of Immigrant Labor to the US Economy, Center for Migration Studies (Sept. 2, 2024), https://cmsny.org/importance-of-immigrant-labor-to-us-economy/ (noting foreign-born workers were mainly employed in service occupations, construction, transportation, and material moving occupations); Dorothy Neufeld, Ranked: Union Membership by Industry in America, Visual Capitalist (Nov. 7, 2024), https://www.visualcapitalist.com/union-membership-by-industry-in-america/ (listing top industries with union membership based on Department of Labor statistics, including construction and transportation); Migration Policy Institute, Immigrants and Union Membership in the United States (2004) (demonstrating rising absolute numbers of immigrant workers in unions despite lower overall union density among foreign-born workers).

26. Annette Bernhardt et al., Broken Laws, Unprotected Workers: Violations of Employment and Labor Laws in America’s Cities, Center for Urban Economic Development, National Employment Law Project, and UCLA Institute for Research on Labor and Employment, 2009.

27. See, e.g., AFL-CIO and Affiliated Labor Unions Parole Brief at 15–16 (when the hotel industry is faced with labor shortages, employers often use temporary labor agencies to supply workers, which not only “undermin[e] the wages and working conditions” for U.S. citizen workers employed by the hotel “by paying substandard wages and benefits,” but also “often violate immigration law by hiring undocumented workers”).

28. See FCC v. Fox Television Studios, Inc., 556 U.S. 502, 515–16 (2009) (noting that an agency must sufficiently explain its decision when it departs from a previous position, which requires a “reasoned explanation” as to why it is “disregarding” any “factual findings . . . which underlay its prior policy” and “contradict” the factual findings underlying its new policy).

1. The proposed rule includes multiple reference numbers, which are listed here out of an abundance of caution: No. 2799-25; DHS Docket No. USCIS-2025-0370; DHS Docket No. 2025-0370; and RIN 1615-AC97.

February 26, 2026

Good afternoon, Chair Ricks, Vice Chair Camacho, and members of the committee,

My name is Nina Mast, and I’m a policy and economic analyst at the Economic Policy Institute (EPI). EPI is a nonprofit, nonpartisan think tank founded in 1986 to research the economic status of working America and propose public policies that protect and improve conditions for low- and middle-wage workers.

I’m here today to testify in support of HB 1054, a bill to strengthen Colorado workers’ right to a safe workplace. HB 1054 represents an opportunity for Colorado to continue showing leadership in efforts to protect all workers—both adults and minors—from preventable workplace injuries or fatalities.

As a national expert on state labor standards—including state standards to prevent young workers from exposure to hazardous occupations—I have had the opportunity to work on many state-level efforts to improve state workplace laws—including in Colorado. I regularly encourage policymakers to look to Colorado as a leader in making crucial and innovative updates to its standards both through legislation and administrative rulemaking. HB 1054 is an important next step for Colorado to take in this direction at a time when long-standing federal workplace health and safety standards are at risk.

Since the 1970 passage of the federal Occupational Safety and Health Act first established basic nationwide workplace health and safety standards, OSHA has saved tens of thousands of lives and prevented millions of injuries. Unfortunately, federal OSHA today faces numerous threats including diminished enforcement capacity, efforts to block important and long-overdue new worker protection standards, and—notably—efforts to weaken the statute’s general duty clause, which ensures foundational safety protections to all workers, regardless of the occupation or industry they work in. The Trump administration has proposed carving entire industries out of coverage under the “general duty” clause. This disastrous proposal could leave many workers without any federally guaranteed right to protection from known and preventable workplace hazards.

Given the inadequacies of current federal OSHA enforcement and the risk that existing minimum federal standards could soon be eroded further, it’s crucial for states to step in to protect their workers.

HB 1054 not only enshrines the long-standing intention of the general duty clause into state law, but it also goes further to ensure stronger protections from workplace illnesses and injuries for Colorado workers today. Specifically, the bill creates a general duty of employers to provide “reasonable and adequate” protections for all workers and comply with all standards adopted through administrative rulemaking. The bill also empowers the state attorney general and the Colorado Department of Labor and Employment (CDLE) to refer cases for investigation and recover penalties to be used for enforcement. And—importantly—it provides labor organizations and individuals harmed on the job with the option to file civil actions and pursue statutory damages in cases in which employers violate legal obligations to provide a safe workplace. These provisions will strengthen enforcement of the law, encourage reporting of unsafe working conditions by workers who report abuse at great personal risk, and more meaningfully deter violations.

As a national organization that convenes a network of state research and policy organizations, we have been closely tracking the implications of federal actions for workers at the state level. In the past year, OSHA has faced unprecedented threats to its enforcement capabilities, and aggressive immigration enforcement will make workers even less likely to feel safe reporting unsafe conditions at work. Because of these threats, state lawmakers have an opportunity and responsibility to resist the erosion of hard-won worker protections and take up the mantle of advancing workers’ right to a safe workplace. The sponsors of this bill have shown that they take this commitment seriously, and we urge all members of this committee and the Colorado General Assembly to do the same by supporting the passage of HB 1054.

Thank you.

Department of Consumer and Worker Protection
42 Broadway
New York, New York 10004

Dear members of the New York City Department of Consumer and Worker Protection:

The Economic Policy Institute (EPI) submits this comment in support of the New York City Department of Consumer and Worker Protection (DCWP) proposal to amend rules relating to contracted delivery workers, including to implement Local Law 124 of 2025, which establishes minimum pay protections for grocery delivery workers.

EPI is a nonprofit, nonpartisan think tank working for nearly 40 years to counter rising inequality, low wages and weak benefits for working people, slower economic growth, unacceptable employment conditions, and a widening racial wage gap. We intentionally center low- and middle-income working families in economic policy discussions at the federal, state, and local levels as we fight for a world where every worker has access to a good job with fair pay, affordable health care, retirement security, and a union. EPI has supported past development and implementation of New York City’s existing wage standard for app-based workers in close coordination with affiliates of our Economic Analysis and Research Network (EARN), including the NYC-based Immigration Research Initiative.

New York City has long been a national leader in setting wage and workplace protection standards for frontline service-sector workers who are critical to the city’s economy but often experience low pay, long hours, and unsafe working conditions while producing large profits for corporations or shareholders. This includes workplace protections for app-based ride-hail drivers in place since 2018, and for food delivery workers in place since 2021, when the Council acted on findings from DCWP and established wage standards for app-based delivery workers who are typically treated as “independent contractors” by platform companies and, thereby, denied coverage under most state or federal labor and employment laws. Such municipal policies have become critical to maintaining a consistent wage floor for essential workers in the expanding “gig economy,” since classifying app-based workers as “independent contractors” or applying other non-employee designations remains a key prong of platform companies’ agenda to exempt themselves from coverage under other existing state and federal labor standards.

The 2021 minimum pay standard represented huge progress for app-based delivery workers, the majority of whom are immigrants and people of color. A 2024 report by DCWP revealed a 64% increase in driver earnings alongside an 8% increase in deliveries and a 10% increase in consumer spending when compared with the same fiscal quarter a year prior, before DCWP’s enforcement of the new wage standard. In the first quarter of 2025, consumer spending on app-based delivery grew to an all-time high of $120.2 million, and workers’ total earnings per delivery increased by 21%. In direct contrast to industry claims, these basic workplace protections have benefitted both app-based workers and the platform companies that rely on them.

New York City laws have, however, so far excluded app-based grocery delivery workers, even though these workers face the same struggles that other app-based workers face. Now is the time to take the next step to ensure that all app-based workers are covered by minimum pay and other workplace protections, regardless of their employer.

App-based workers deserve the same protections and benefits as workers in any other industry, including minimum wage rights, unemployment insurance, workers’ compensation, health and safety protections, paid leave, nondiscrimination protections, safeguards against misclassification as independent contractors, and the right to unionize and collectively bargain. DCWP’s proposed rule takes an important step toward realizing that goal by limiting the scope of app-based workers who are excluded from existing minimum wage standards. Raising the minimum wage for app-based grocery delivery workers will have spillover effects that benefit workers in other low-wage jobs, and higher minimum wages benefit us all and make our economy healthier.

Sincerely,

Nina Mast

Policy and Economic Analyst

Economic Policy Institute

December 1, 2025

Paul Buono
Chief, Business and Foreign Workers Division
Office of Policy and Strategy
U.S. Citizenship and Immigration Services
Department of Homeland Security
5900 Capital Gateway Drive
Camp Springs, MD 20746

Re: Removal of the Automatic Extension of Employment Authorization Documents, CIS No. 2826-25; DHS Docket No. USCIS-2025-0271, RIN 1615-AD05 (October 30, 2025)

Chief Buono:

The Economic Policy Institute (EPI) submits this comment strongly opposing the October 30, 2025 Interim Final Rule (IFR) eliminating automatic extensions of Employment Authorization Documents (EADs). The 2025 IFR unlawfully reverses DHS’s nearly decade-long policy choice of providing automatic EAD extensions; ignores ongoing adjudication delays and economic evidence; disregards reliance interests that DHS itself recognized less than a year ago; rejects feasible alternatives; and relies solely on an unsupported security rationale all while unlawfully bypassing notice-and-comment procedures as required by the Administrative Procedure Act (APA). The result is a rule that will strip employees of their workplace rights, destabilize the workforce, disrupt employer operations by creating gaps in employment authorization with unknown durations, and inflict severe harm on workers and their ability to provide for their families solely due to the government’s bureaucratic processing delays. We urge DHS to withdraw the IFR in full.

EPI fully supports and endorses the written comments and recommendations submitted by the Asylum Seeker Advocacy Project (ASAP), which includes a number of examples of the IFR’s impact on ASAP members.

About EPI and organizational interest

The Economic Policy Institute (EPI) is a nonprofit, nonpartisan think tank established in 1986 to include the needs of low- and middle-income workers in economic policy discussions. EPI conducts research and analysis on the economic status of working America, proposes policies that protect and improve economic conditions and raise labor standards for low- and middle-income workers—regardless of immigration status—and assesses policies with respect to how well they further those goals.

EPI has researched, written, and commented extensively on the U.S. system for labor migration, including on temporary immigration protections and EADs, and on labor standards enforcement for both the low-wage and professional workforce. EPI has also provided expert testimony about the U.S. immigration system to both the U.S. Senate and House of Representatives, as well as state legislatures.

The worker rights of millions are protected by EADs

For workers who lack a permanent or more durable immigration status, obtaining a temporary EAD can mean having enforceable workplace rights that an individual would otherwise not have. While all workers have some labor and workplace rights under U.S. law—regardless of immigration status—enforcing them in practice becomes virtually impossible because of the threat of deportation, which prevents workers who lack an immigration status or an EAD from calling out lawbreaking employers and demanding that they comply with the law, or from reporting workplace violations to labor enforcement agencies. But having protection from deportation through temporary administrative immigration protections like parole, Temporary Protected Status, deferred action—accompanied by an EAD—means that, in practice, workers can report workplace violations to government officials without fear of retaliation that can lead to deportation. It also means that a worker with an EAD can be employed by just about any employer and change jobs or employers, unlike migrant workers employed with temporary visas who can only be employed by the sponsor of their visa.

Altogether, nearly 5.6 million people in the U.S. held a temporary but precarious immigration status in 2024, including over 2 million people who are asylum-seekers. (see Table 1 below).

Table 1

While these statuses and protections are only a band-aid for a flawed immigration system that is deeply in need of reform,1 they have been shown to protect millions of workers from some of the worst forms of employer lawbreaking. Employers also greatly benefit from workers having a protective status and a work permit because it allows them to lawfully employ millions of people who would otherwise not be eligible to work, leading to billions in economic contributions to the U.S. economy and generating demand that stimulates growth.

While comprehensive data are limited, we know, for example, that in 2017 the top five industries for TPS beneficiaries from El Salvador, Honduras, and Haiti were construction, restaurants and food services, landscaping, child day care services, and grocery stores.2 Employers in these industries and many others are in danger of losing their current workforce and will be prohibited from legally recruiting millions of other workers. Just one example is the GE Appliance Park in Louisville, Kentucky, a unionized plant where nearly 200 employees received a letter from the administration terminating their status and work authorization.3 Overnight, GE lost 200 employees.

DHS ignores the value and impact of work authorization on the workforce

In the IFR, DHS does not estimate and consider the value and impact that EADs have on the workforce and economy. There are examples of existing research showing the important economic contributions that hundreds of thousands of migrants with temporary protections and EADs are able to make thanks to being work-authorized. For example, when the TPS population was approximately 354,000 in 2021, the American Immigration Council estimated that “TPS holders contributed more than $2.2 billion in taxes, including almost $1 billion to state and local governments,” as well as “held $8 billion in spending power.”4 Another estimate by Moriarty found that TPS-eligible individuals “annually contribute some $31 billion in wages to the national GDP.”5

Research has also quantified some of the contributions made by persons who have qualified for Deferred Action for Childhood Arrivals (DACA). DACA was created by DHS in 2012, and recipients are eligible for protections from deportation and EADs that are valid for two years and renewable. More than 835,000 persons have benefitted from DACA, and more than 500,000 were enrolled as of 2024.6 Svajlenka and Truong found that DACA recipient households “pay $6.2 billion in federal taxes and $3.3 billion in state and local taxes each year,” and “after taxes, these households hold $25.3 billion in spending power,” and that DACA recipient families “own 68,000 homes, making $760 million in mortgage payments and $2.5 billion in rental payments annually.”7

When it comes to measuring the workplace impact and economic benefits of being issued an EAD for the workers themselves, there are limited examples, but three are worth citing here. One is an annual survey of DACA recipients that was conducted in 2024 for the ninth time. The most recent survey, conducted by Wong et al. and published by the Center for American Progress, showed that DACA has been an essential tool to improve the economic and educational outcomes of recipients.8 In terms of the impact that deferred action and an EAD have had on the employment of DACA recipients: 59.1% of respondents moved to a job with better pay; 47.3% moved to a job with better working conditions; 47.5% moved to a job that “better fits [their] education and training”; 49.6% moved to a job that “better fits [their] long-term career goals”; 57.3% moved to a job with health insurance or other benefits; and 19.6% of respondents obtained professional licenses.

Wong et al. also measured the impact of DACA and EADs on wages, finding that “[d]ata from the past nine years show that DACA has had a significant and positive effect on wages: Recipients’ average hourly wage more than doubled from $11.92 to $31.52 per hour—an increase of 164.4 percent—after receiving DACA.” These significant wage increases are no doubt a result of the labor and workplace rights and stability that DACA recipients gain from having an EAD.

Orrenius and Zavodny examined the wage and employment impact of TPS9—which allows those who are eligible to also be granted an EAD. They looked specifically at migrants from El Salvador, finding that having TPS increased employment rates, and that less-educated Salvadoran men who were employed earned 13% more if they had TPS. They note that “As a whole, the results suggest that less-educated Salvadoran men who receive TPS are able to move into better jobs and become more selective about the jobs they hold, increasing their earnings but also their job search and unemployment incidence.”

One other analysis that assesses the wage impact of being issued an EAD comes from Kallick, which looks specifically at asylum seekers in New York and nationwide.10 Relying on previous methodologies for measuring the impact of a lawful immigration status being granted to unauthorized immigrants, Kallick estimates that asylum seekers who are granted EADs increase their wages by 10%.

While the relative benefits of precarious and temporary immigration protections and EADs to migrant workers and the broader economy are clear, it is important to note here that the protections and EADs are only temporary and will end if renewals are not approved, or if renewals are delayed. Thus, DHS through this IFR will intentionally hurt the economy and eliminate the economic benefits for workers and employers that EADs create, a fact that the IFR does not grapple with or address.

An alternative to the path that DHS has chosen of terminating temporary statuses and EADs would be if Congress provided these workers with a permanent immigration status like a green card—and the rights that accompany it—allowing them to have full, equal, and permanent workplace rights and to exercise them in practice. That, in turn, would lead to even higher wages and improved labor standards for all workers,11 not just those who newly obtain green cards. However, the current administration so far has shown no appetite for supporting Congress in the creation of even one new green card.

But in the meantime, EADs through tools like TPS, parole, and DACA can mean the difference between having rights on the job or being extraordinarily vulnerable to the worst abuses by employers. While the current administration has claimed they want to help U.S. workers, actions like the mass detention and deportation of millions of workers and canceling protections like TPS and parole, reveal they are willing to degrade conditions and standards for all workers, as well as kill jobs and shrink the economy, in order to carry out their extreme immigration enforcement agenda.12

If the IFR is not withdrawn, millions of workers will be more easily exploited by their bosses and driven into the informal economy. That, in turn, will reduce their tax contributions that support the social safety net and lower their wages significantly13—ultimately hurting U.S workers in low-wage industries and the U.S. economy writ large by driving down demand for goods and services. It will also leave employers without millions of reliable employees in industries like construction, hospitality, childcare, agriculture, food processing and production, and more.

DHS ignores significant reliance interests

The 2025 IFR also disregards the significant reliance interests that DHS itself reaffirmed less than a year ago when it issued a permanent 540-day automatic extension, and which have existed since the agency’s issuance of the 2016 Final Rule. For nearly a decade, USCIS has automatically provided an extension of some length to some groups of workers with expiring EADs.14 In the 2024 Final Rule, DHS invited stakeholders to rely on a permanent 540-day extension and explicitly sought comment on making the extension permanent to provide regulatory certainty and workforce stability.15 Employers and workers reasonably structured hiring, staffing, payroll planning, and employee retention around that assurance.

Additionally, the only reliance interests DHS barely acknowledges—but does not meaningfully consider—are those of migrants and their employers. Yet, DHS entirely failed to consider the reliance interests of other stakeholders who rely on regulatory stability preventing immigrant communities from suffering government-caused lapses in employment authorization. These other stakeholders include state, city, and local governments; entire regional economies; educational institutions; healthcare providers; legal and social service providers; and the broader public, among others.

DHS cannot now abruptly withdraw the permanent 540-day automatic extension without addressing these significant reliance interests. Doing so violates core administrative law principles.16 In short, DHS invited workers, employers, families, schools, service providers, and communities to rely on regulatory stability, then pulled the rug out from under them without explanation. DHS failed to properly consider these significant reliance interests when issuing the 2025 IFR.

DHS fails to consider feasible alternatives as required by the APA

DHS fails to meaningfully consider feasible, less disruptive alternatives, in violation of the APA. 

Consecutive EADs. For instance, DHS claims that “proper planning” by renewal applicants could ensure no lapses in work authorization, yet this fails to recognize that DHS does not issue consecutive EADs. When individuals file well in advance of expiration, USCIS routinely issues overlapping validity periods rather than tacking the new approval onto the end of the existing authorization. As a result, early filers lose usable work-authorization time, forcing them into an ever-accelerating renewal cycle where they must apply earlier and earlier at significant personal and financial cost merely to maintain continuous work authorization. Filing fees, legal fees, time off work to prepare filings, and the emotional and economic strain of constant renewal planning make this approach untenable. If DHS truly believed early filing was the solution, it was required to consider—and explain why it rejected—the obvious alternative of issuing consecutive EAD validity periods so that applicants could file early without losing work authorization time and money. This straightforward fix would allow individuals to apply far in advance, provide USCIS a longer adjudication window, and preserve the full period of authorized employment. DHS’s failure even to address this option underscores the inadequacy of its “proper planning” rationale and confirms that the agency did not meaningfully consider reasonable, less disruptive alternatives.

Concurrent vetting. Nor does DHS explain why it cannot simply continue to conduct vetting during the renewal process and deny renewal of employment authorization if “potential hits of derogatory information” arise—a process it already uses.17 With or without the automatic extension, the individual remains in the United States; the only question is whether they are forced out of lawful employment while being vetted. In other words, DHS already has a system that protects security while letting people keep working, and it has not explained why it cannot keep using it.

Secure paper. DHS’s concern that its own receipt notices are printed on “non-secure” or “plain” paper ignores an obvious solution: printing the extension notices on secure paper.18 Rejecting straightforward, commonsense solutions in favor of a rule that causes sweeping economic harm and predictable worker displacement is the definition of arbitrary and capricious decision-making.

DHS’s use of an Interim Final Rule violates APA requirements

DHS made the 2025 IFR effective immediately, without providing the notice or opportunity to comment required by the APA. Thus the agency’s use of an interim final rule was unlawful.

First, DHS has not satisfied the “meticulous and demanding” standard for invoking the APA’s “good cause” exception.19 That narrow exception allows an agency to bypass notice and comment only where it “for good cause finds . . . that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest.”20 While DHS claims that notice and comment would be impracticable and contrary to the public interest, it relies almost entirely on the unsupported security rationale discussed above, along with stating it is “self-evident” that more workers would “rush” to apply for EAD renewals before the rule took effect.21 Again, DHS has not provided evidence of any security risks caused by automatic extensions.22 DHS therefore cannot satisfy the good cause exception to avoid notice-and-comment rulemaking.

Second, the 2025 IFR improperly relies on the exception for normal rulemaking involving the “foreign affairs function of the United States.”23 This exception, too, comes with a “high bar.”24 In particular, courts have warned against “[t]he dangers of an expansive reading of the foreign affairs exception” in the immigration context, where inevitable “incidental foreign affairs effects” would “eliminate[] public participation in this entire area of administrative law.”25 DHS cannot meet that high bar here, as the potential effects on international relations that it puts forward are all speculative, tenuous, or otherwise reliant on unsupported claims of security risks.26

Conclusion and recommended action

For all of these reasons, DHS should withdraw the 2025 IFR in its entirety and reinstate the permanent 540-day automatic extension. The IFR contradicts DHS’s statutory mandate, its own 2016 and 2024 Final Rules, and the factual and economic record. It rests on speculation, ignores constitutional concerns, and will cause predictable, major harm to worker rights and workers themselves, as well as families, employers, and the broader economy—all due to bureaucratic processing delays caused by the government alone.

Comment submitted by:

Daniel Costa|
Director of Immigration Law and Policy Research
Economic Policy Institute

Endnotes

1. Daniel Costa, Josh Bivens, Ben Zipperer, and Monique Morrissey, The U.S. benefits from immigration but policy reforms needed to maximize gains: Recommendations and a review of key issues to ensure fair wages and labor standards for all workers, Economic Policy Institute, October 4, 2024.

2. Robert Warren and Donald Kerwin, A Statistical and Demographic Profile of the US Temporary Protected Status Populations from El Salvador, Honduras, and Haiti, Center for Migration Studies, 2017

3. Keely Doll, “Letters warn nearly 200 GE Appliances workers to leave U.S. as immigration program ends,” Louisville Courier Journal, April 4, 2025.

4. American Immigration Council, The Contributions of Temporary Protected Status Holders to the U.S. Economy (fact sheet), September 19, 2023.

5. Andrew Moriarty, “Temporary Protected Status (TPS): 5 Things to Know,” Policy Brief, FWD.US, February 29, 2024.

6. President’s Alliance on Higher Education and Immigration (President’s Alliance), Breakdown of Dreamer Populations—Both with and Without DACA, Updated May 23, 2024.

7. , Nicole Svajlenka and Trinh Q. Truong, “The Demographic and Economic Impacts of DACA Recipients: Fall 2021 Edition,” Center for American Progress, November 24, 2021.

8. Tom Wong, Ignacia Rodriguez Kmec, Diana Pliego, Karen Fierro Ruiz, Silva Mathema, Trinh Q. Truong, and Rosa Barrientos-Ferrer, 2023 Survey of DACA Recipients Highlights Economic Advancement, Continued Uncertainty amid Legal Limbo, Center for American Progress, March 25, 2024.

9. Pia Orrenius and Madeline Zavodny, “The Impact of Temporary Protected Status on Immigrants’ Labor Market Outcomes,” Federal Reserve Bank of Dallas Working Paper no. 1415, December 2014.

10. David Dyssegaard Kallick, “’Let Us Work’: The Wage Gain When Asylum Seekers Gain Work Authorization,” Immigration Research Initiative, September 7, 2023.

11. Daniel Costa, Josh Bivens, Ben Zipperer, and Monique Morrissey, The U.S. benefits from immigration but policy reforms needed to maximize gains: Recommendations and a review of key issues to ensure fair wages and labor standards for all workers, Economic Policy Institute, October 4, 2024.

12. See for example, Ben Zipperer, Trump’s deportation agenda will destroy millions of jobs: Both immigrants and U.S.-born workers would suffer job losses, particularly in construction and child care, Economic Policy Institute, July 10, 2025.

13. See for example, Carl Davis, Marco Guzman, and Emma Sifre. 2024. Tax Payments by Undocumented Immigrants, Institute on Taxation and Economic Policy, July 30, 2024.

14. See 2016 Final Rule, 81 Fed. Reg. at 82,455. 

15. 2024 Final Rule, 89 Fed. Reg. at 101,230. 

16. Dep’t of Homeland Sec. v. Regents of the Univ. of Cal., 591 U.S. 1, 30 (2020) (agency must meaningfully consider reliance interests when abandoning prior policy).

17. 2025 IFR, 90 Fed. Reg. at 48,804 (“If the application is denied, the automatically extended employment authorization and/or EAD generally is terminated on the day of the denial.”); id. at 48,806, 48,808–10 (citing concerns about “potential hits of derogatory information”).

18. See 2025 IFR, 90 Fed. Reg. at 48,809–10, 48,817 (concerns about automatic extension being memorialized on “non-secure” paper).

19. Sorenson Commc’ns Inc. v. FCC, 755 F.3d 702, 706 (D.C. Cir. 2014) (citation omitted). 

20. 5 U.S.C. § 553(b)(3)(B).

21. 2025 IFR, 90 Fed. Reg. at 48,813.  

22. Cap. Area Immigrants’ Rts. Coal. v. Trump, 471 F. Supp. 3d 25, 46 (D.D.C. 2020) (good cause exception not satisfied where agencies only provided a single example of potential adverse consequences and “offer[ed] no other data or information that persuasively supports their prediction of a surge” in border crossings before rule took effect). 

23. 5 U.S.C. § 553(a)(1). 

24. Cap. Area Immigrants’ Rts. Coal. v. Trump, 471 F. Supp. 3d 25, 55 (D.D.C. 2020). 

25. City of New York v. Permanent Mission of India to United Nations, 618 F.3d 172, 202 (2d Cir. 2010). 

26. 2025 IFR, 90 Fed. Reg. at 48,814.