[Federal Register Volume 63, Number 54 (Friday, March 20, 1998)]
[Rules and Regulations]
[Pages 13756-13767]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-7339]



[[Page 13755]]

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Part VI





Department of Labor





_______________________________________________________________________



Employment and Training Administration



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20 CFR Part 656



Labor Certification Process for the Permanent Employment of Aliens; 
Researchers Employed by Colleges and Universities, College and 
University Operated Federally Funded Research and Development Centers, 
and Certain Federal Agencies; Final Rule

  Federal Register / Vol. 63, No. 54 / Friday, March 20 1998 / Rules 
and Regulations  

[[Page 13756]]



DEPARTMENT OF LABOR

Employment and Training Administration

20 CFR Part 656

RIN 1205-AB11


Labor Certification Process for the Permanent Employment of 
Aliens; Researchers Employed by Colleges and Universities, College and 
University Operated Federally Funded Research and Development Centers, 
and Certain Federal Agencies

AGENCY: Employment and Training Administration, Department of Labor.

ACTION: Final rule.

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SUMMARY: The Employment and Training Administration (ETA) of the 
Department of Labor (Department or DOL) is publishing a final rule 
relating to labor certification for permanent employment of immigrant 
aliens in the United States. The amendments change the way prevailing 
wage determinations are made for researchers employed by colleges and 
universities, Federally Funded Research and Development Centers 
(FFRDC's) operated by colleges and universities, and Federal research 
agencies. The final rule also changes the way prevailing wages are 
determined for colleges and universities, FFRDC's operated by colleges 
and universities, and Federal research agencies filing H-1B labor 
condition applications on behalf of researchers, since the regulations 
governing prevailing wage determinations for the permanent program are 
followed by State Employment Security Agencies (SESA's or State 
agencies) in determining prevailing wages for the H-1B program.

EFFECTIVE DATE: May 4, 1998.

FOR FURTHER INFORMATION: Contact Denis M. Gruskin, Senior Specialist, 
Division of Foreign Labor Certifications, Employment and Training 
Administration, Room N-4456, 200 Constitution Avenue NW., Washington, 
DC 20210. Telephone: (202) 219-5263 (this is not a toll-free number).

SUPPLEMENTARY INFORMATION:

I. Introduction

    On April 22, 1996, ETA published in the Federal Register a Notice 
of Proposed Rulemaking (NPRM) proposing to amend ETA's regulations at 
20 CFR part 656 to permit prevailing wage determinations for 
researchers employed by colleges and universities to be based solely on 
the wages paid by such institutions. 61 FR 17610. In addition to 
inviting comments on that proposal, commenters were invited to submit 
comments about extending the proposed rule to researchers in other 
employment, such as Federal nonprofit research agencies and their 
affiliated nonprofit research institutions. Comments were invited from 
interested persons through May 22, 1996. This document adopts final 
regulations based upon the April 22, 1996, NPRM and the comments 
received.

II. Permanent Alien Employment Certification Process

    Before the Department of State (DOS) and the Immigration and 
Naturalization Service (INS) may issue visas and admit certain 
immigrant aliens to work permanently in the United States, the 
Secretary of Labor (Secretary) first must certify to the Secretary of 
State and to the Attorney General that:
    (a) There are not sufficient United States workers who are able, 
willing, qualified, and available at the time of the application for a 
visa and admission into the United States and at the place where the 
alien is to perform the work; and
    (b) The employment of such aliens will not adversely affect the 
wages and working conditions of similarly employed United States 
workers. 8 U.S.C. 1182(a)(5)(A).
    If the Secretary, through ETA, determines that there are no able, 
willing, qualified, and available U.S. workers, and that the employment 
of the alien will not adversely affect the wages and working conditions 
of similarly employed U.S. workers, DOL so certifies to the INS and to 
the DOS by issuing a permanent alien labor certification.
    If DOL cannot make either of the above findings, the application 
for permanent alien employment certification is denied. DOL may be 
unable to make either of the two required findings for one or more 
reasons, including, but not limited to:
    (a) The employer has not adequately recruited U.S. workers for the 
job offered to the alien, or has not followed the proper procedural 
steps prescribed in 20 CFR part 656.
    These recruitment requirements and procedural steps are designed to 
test the labor market for available U.S. workers. They include 
providing notice of the job opportunity to the bargaining 
representative (if any) or posting of the job opportunity on the 
employer's premises, placing an advertisement in an appropriate 
publication, and placing a job order for 30 days with the appropriate 
local public employment service office.
    (b) The employer has not met its burden of proof under section 291 
of the Immigration and Nationality Act (INA) (8 U.S.C. 1361), that is, 
the employer has not submitted sufficient evidence of attempts to 
obtain qualified, willing, able, and available U.S. workers and/or the 
employer has not submitted sufficient evidence that the wages and 
working conditions which the employer is offering will not adversely 
affect the wages and working conditions of similarly employed U.S. 
workers. With respect to the burden of proof, section 291 of the INA 
states, in pertinent part, that:

    Whenever any person makes application for a visa or any other 
document required for entry, or makes application for admission, or 
otherwise attempts to enter the United States, the burden of proof 
shall be upon such person to establish that he is eligible for such 
visa or such document, or is not subject to exclusion under any 
provision of (the INA) * * * .

III. Department of Labor Regulations

    The Department has promulgated regulations, at 20 CFR part 656, 
governing the labor certification process described above for the 
permanent employment of immigrant aliens in the United States. Part 656 
was promulgated pursuant to section 212(a)(14) of the INA (now at 
section 212(a)(5)(A)). 8 U.S.C. 1182(a)(5)(A).
    These regulations set forth the factfinding process designed to 
develop information sufficient to support the granting or denial of a 
permanent labor certification. They describe the potential of the 
nationwide system of public employment service offices to assist 
employers in finding available U.S. workers and how the factfinding 
process is utilized by DOL as the primary basis of developing 
information for the certification determinations. See also 20 CFR parts 
651-658; and the Wagner-Peyser Act (29 U.S.C. Chapter 4B).
    Part 656 sets forth the responsibilities of employers who desire to 
employ immigrant aliens permanently in the United States. Such 
employers are required to demonstrate that they have attempted to 
recruit U.S. workers through advertising, through the Federal-State 
Employment Service System, and by other specified means. The purpose is 
to assure an adequate test of the availability of qualified, willing, 
and able U.S. workers to perform the work, and to ensure that aliens 
are not employed under conditions that would adversely affect the wages 
and working conditions of similarly employed U.S. workers.

IV. Prevailing Wages and Researchers

    Employers seeking a permanent labor certification must recruit for 
U.S. workers at prevailing wages. The

[[Page 13757]]

SESA's survey prevailing wage rates on behalf of DOL. The permanent 
labor certification regulations at Sec. 656.40 specify how State 
agencies are to calculate prevailing wages. The prevailing wage 
methodology set forth is used not only in determining prevailing wages 
for the permanent labor certification program, but is also followed in 
determining prevailing wages for the H-2B temporary nonagricultural 
certification program, the H-1B labor condition application (LCA) 
program, and the (expired) F-1 student off-campus employment program. 
See 20 CFR part 655, subparts A, H, and J, respectively. In each of 
these programs, the applicable legislative and/or regulatory history 
requires that prevailing wages be determined in accordance with the 
requirements of the permanent labor certification regulations at 20 CFR 
656.40.
    Section 656.40 of the permanent labor certification regulations 
requires that in the absence of a wage determination issued under the 
Davis-Bacon Act, the Service Contract Act, or a collective bargaining 
agreement, the prevailing wage shall be the weighted average rate of 
wages paid to workers similarly employed in the area of intended 
employment, i.e., ``the rate of wages [is] to be determined, to the 
extent feasible, by adding the wage paid to workers similarly employed 
in the area of intended employment and dividing the total by the number 
of such workers.'' Section 656.40(b) further provides that ``similarly 
employed'' is defined as having substantially comparable jobs in the 
occupational category in the area of intended employment.
    The INA requires that the wages paid to an H-1B professional worker 
be the higher of the actual wage paid to workers in the occupation by 
the employer or the prevailing wage for the occupational classification 
in the area of employment. The H-1B regulations incorporate the 
language of 20 CFR 656.40 (as suggested by H.R. Conference Report, No. 
101-955, October 26, 1990, page 122) and provide employers filing 
applications the option of obtaining a prevailing wage determination 
from the SESA, using an independent authoritative source or other 
legitimate source, as provided by Sec. 655.731(a)(2)(iii)(B) and (C) of 
the H-1B regulations. Thus, this final rule applies to the H-1B program 
as well.

V. Effects of Hathaway Children's Services on Prevailing Wages

    In accordance with the en banc decision of the Board of Alien Labor 
Certification Appeals (BALCA or Board) in Hathaway Children's Services 
(91-INA-388, February 4, 1994), prevailing wages are calculated by 
using wage data obtained by surveying employers across industries in 
the occupation in the area of intended employment. In Hathaway, the 
BALCA overruled its decision in Tuskegee University (87-INA-561, Feb. 
23, 1988, en banc), which had interpreted Sec. 656.40 to permit an 
examination of the nature of the employer's business in ascertaining 
the appropriate prevailing wage. 87-INA-561 at 4. In Tuskegee, the 
Board had said, in relevant part:

    Thus to be ``similarly employed'' for purposes of a prevailing 
wage determination, it is not enough that the jobs being compared 
are in the same occupational category; they must also be 
``substantially comparable.'' Accordingly, it is wrong to focus only 
on the job title or duties; the totality of the job opportunity must 
be examined * * *.
    It is clear that it is not only the job titles, but the nature 
of the business or institution where the jobs are located--for 
example, public or private, secular or religious, profit or non-
profit (sic), multinational corporation or individual 
proprietorship--which must be evaluated in determining whether the 
jobs are ``substantially comparable.''

    In Hathaway, the Board declined to make an exception for 
maintenance repairers employed by nonprofit institutions, analogous to 
the exception it had made in Tuskegee. The employer in Hathaway, a 
nonprofit United Way affiliate, urged that the Board's decision in 
Tuskegee should be dispositive. The employer argued that the rationale 
in Tuskegee necessarily extends to nonprofit employers, thereby 
differentiating them from for-profit employers.
    The Board stated in Hathaway that its holding in Tuskegee was ill-
advised and explicitly overruled it. The Board went on to say that:

    The underlying purpose of establishing a prevailing wage rate is 
to establish a minimum level of wages for workers employed in jobs 
requiring similar skills and knowledge levels in a particular 
locality. It follows that the term ``similarly employed'' does not 
refer to the nature of the Employer's business as such; on the 
contrary, it must be determined on the basis of similarity of the 
skills and knowledge required for performance of the job offered * * 
*.

    In accordance with the holding in Hathaway, SESA's were instructed 
to survey all employers, without regard to the nature of the employer, 
in the area of intended employment in determining prevailing wages for 
an occupation.
    It was subsequently asserted that implementation of this policy 
resulted in considerably higher prevailing wage determinations for 
research positions in colleges and universities. The higher education 
community maintained that this policy jeopardized its ability to 
recruit foreign researchers with talents and skills not readily 
available in the U.S. Further, following the decision in Hathaway, the 
Department received comments and inquiries from Congress and other 
Federal agencies and organizations, such as the Council of Economic 
Advisors (CEA); National Science Foundation (NSF); Department of 
Defense, Defense Research and Engineering (DRE); Office of Science and 
Technology Policy (OSTP); National Institutes of Health (NIH); National 
Aeronautics and Space Administration (NASA); United States Department 
of Agriculture (USDA); United States Geological Survey (USGS), 
Department of Energy (DOE), and Department of Transportation (DOT), 
expressing concern about the Department's change of policy in 
determining prevailing wages for researchers employed by universities.

VI. Bases for Proposed Rule

    The Department believed there were substantial policy reasons to 
propose an exception to the current rule.
    Among the bases of the proposed rule were:
     The nonproprietary nature of academic research as 
articulated by the American Association of Universities. The Department 
specifically requested comments on whether there are attributes of 
academic research that distinguish it from research conducted by 
private, for-profit employers. This was a factor in determining that 
such workers are not similarly employed.
     Other Federal agencies. Other Federal agencies and 
organizations with an interest in the research talent, knowledge, 
skills and abilities available to the U.S. academic community expressed 
concerns that the Hathaway decision could interfere with the ability of 
institutions of higher education to obtain the services of talented 
foreign scholars and researchers.
     The belief of the academic community and others that 
intangible, non-pecuniary factors that are incentives for working in an 
academic environment should be considered in determining prevailing 
wages for researchers employed by institutions of higher education. The 
Department stated that it was interested in comments specifying the 
nature of these intangible benefits and how they are unique to higher 
education.
    The Department also invited comments with respect to extending the 
concept discussed in the proposed rule to prevailing wages in other 
employment, such as instances in which

[[Page 13758]]

researchers are employed by Federal research agencies and their 
affiliated nonprofit research institutions engaged in research, in 
which postdoctoral fellows and visiting scientists may be employed in a 
manner similar in certain respects to colleges and universities.
    In sum, the proposal reflected a determination that consideration 
of all of the above factors supported a conclusion that researchers 
employed by colleges and universities may not be similarly employed to 
researchers employed by private, for-profit employers.
    One also should note that in the context of college and university 
employment there is precedent, albeit statutory, for treating workers 
attached to the academic process differently than those outside the 
academic community. As stated in section 212(a)(5)(A) of the INA, 
certification of employment of aliens shall be denied on the basis of 
availability of ``qualified'' U.S. workers who are able and willing, 
that is, those who possess the minimum qualifications necessary to 
perform the job, even if they are less qualified than the alien 
beneficiary. By contrast, the statute states in the same subparagraph 
that for job opportunities as college and university teachers, 
certification of employment of aliens generally may be denied on the 
basis of availability of ``equally qualified'' (emphasis added) U.S. 
workers who are able and willing, that is, only those equally or more 
qualified than the alien beneficiary.
    While differentiation of treatment of college and universities in 
this statutory provision certainly is not dispositive of issues 
discussed in this rulemaking, it does supplement the concept that it is 
legitimate to examine the differences between college and university 
employment and the broader employment market.

VII. Comments on Proposed Rule and Analysis of Comments

    Seventy-five comments were received on the April 22, 1996, proposed 
rule. The largest number of comments were received from independent 
research institutes. Thirty-four comments were received from research 
institutes such as the Howard Hughes Medical Institute, the Scripps 
Research Institute, and the National Biomedical Foundation of 
Georgetown University.
    The next largest group of comments was received from colleges and 
universities. Twenty-one comments were received from colleges and 
universities. Colleges and universities represented by these comments 
included such institutions as Princeton, University of Chicago, Yale, 
Harvard, Massachusetts Institute of Technology, Johns Hopkins, and 
Stanford.
    Seven comments were received from Federal agencies. The agencies 
submitting comments were OSTP, NIH, NSF, DRE, the Smithsonian 
Institution, and the USDA which submitted comments from two different 
subcomponents.
    Seven comments were also received from various associations. These 
associations included the Association of American Universities (AAU), 
American Immigration Lawyers Association (AILA), Council of Graduate 
Schools, and NAFSA Association of International Educators.
    Two comments were received from State Employment Security Agencies. 
The SESA's submitting comments were the Arizona Department of Economic 
Security and the Wyoming Department of Employment.
    One comment was received from each of the following: Congressman 
Lamar Smith, Massachusetts General Hospital, one international human 
rights group, and a senior economist employed by an association of 
universities.
    Seventy-two of the comments were in favor of the proposed rule and 
the majority were in favor of extending the rule to include nonprofit 
research institutes. Only three commenters opposed the rule. The 
commenters opposed to the rule were the two SESA's and the senior 
economist employed by Oak Ridge Associated Universities.

A. Comments About the Proposal to Adopt the Rule as Proposed for 
Colleges and Universities

    All of the 21 comments received from colleges and universities 
supported the proposed rule. The NPRM was also supported by the 
Association of American Universities (AAU), Council of Graduate 
Schools, NAFSA Association of International Educators (NAFSA), several 
Federal agencies, AILA, and nonprofit research institutes.
    In addition to supporting DOL's finding that such employees are not 
``similarly employed'' to commercial researchers, the colleges and 
universities and some other commenters advanced public policy arguments 
to the effect that the NPRM would eliminate perceived anomalies and 
economic hardship caused by the post-Hathaway policy of determining 
prevailing wages by surveying across industries. Perceived problems 
caused by the post-Hathaway policy that would be eliminated by the 
proposed rule, noted by one or more of the colleges or universities in 
their comments, included the following:
     Much higher prevailing wage determinations as a result of 
the post-Hathaway policy.
     Higher wages have precluded many universities from using 
the permanent labor certification program and the H-1B labor condition 
application program and have disrupted important university-based 
research programs.
     Need to increase the wage of the H-1B employee or 
terminate employment of the researcher.
     Some granting agencies, such as the National Institutes of 
Health, specify the amount to be paid to each researcher; even without 
such restrictions, it is often not possible to find the additional 
money needed to increase the salary of a researcher needed to meet the 
prevailing wage.
     Alien researchers may be paid more than U.S. citizens for 
performing similar duties and responsibilities.
     Requiring higher salaries to be paid to foreign 
researchers and foreign scholars who are in lower positions than, for 
example, Assistant Professors.
     Permanent labor certification applications and H-1B labor 
condition applications have been withdrawn because of the higher 
prevailing wages required by the post-Hathaway policy.
1. Department's Analysis of Comments
    After consideration of all comments, the Department has concluded 
that the proposed rule should be adopted for colleges and universities 
and expanded as set forth below. The comments and the Department's 
analysis are discussed below in greater depth.
    a. Academic Researchers are not Similarly Employed to Commercial 
Researchers. In the preamble to the NPRM, the Department specifically 
requested comments as to whether there are attributes of academic 
research that distinguish it from research conducted by private, for-
profit employers (see 61 FR at 17613). About half of the comments from 
colleges and universities asserted that there were substantial 
differences between academic researchers and researchers working in a 
for-profit environment. A few commenters attached the AAU position on 
this issue previously submitted to the Department,1 and

[[Page 13759]]

others addressed this issue directly. Having considered these comments, 
the Department has determined that different treatment of researchers 
employed by colleges and universities is justified, in part, by the 
close relationship of research to teaching in the academic environment. 
Research positions at colleges and universities are often related to 
teaching (faculty) positions and often involve teaching duties, albeit 
not in a classroom setting. See footnote 1.
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    \1\ In the preamble to the NPRM, the AAU's comment was quoted, 
in part, as follows:
    Teaching is a primary mission of universities and occurs in all 
university settings. Teaching and research are inextricably 
intermingled in universities, with research extending into 
undergraduate education, and teaching extending into postdoctoral 
education. Academic research scientists are expected to operate as 
teachers as well as researchers. University teaching includes a wide 
range of activities beyond the traditional classroom lecture, such 
as seminars, advising and other forms of mentoring. Some of the most 
effective teaching about research is carried out by doing research, 
and university research personnel often operate as student and 
teacher at the same time in the same setting: a postdoctoral fellow 
is instructed by the faculty researchers with whom he or she is 
working at the same time he or she serves as a teacher for graduate 
and undergraduate students working in the same lab. (Emphasis in 
original.)
    61 FR at 17613.
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    With one exception, all of the comments that addressed this issue 
agreed with the view of the AAU. The one commenter that disagreed with 
this position pointed out that according to the 1993 National Science 
Foundation survey of doctorate recipients, of those postdoctorates 
reporting that their primary work activity was research, only 5.3 
percent indicated that teaching was their secondary activity. The 
commenter went on to state that ``all highly educated workers play a 
teaching role by helping to show new employees the ropes in their work 
environment, but in this regard doctorates in universities who do not 
teach courses are not substantially different from doctorates in 
industry or in government.''
    The preamble to the proposed rule made clear that AAU was not 
speaking with respect to teaching in a classroom setting conducted by 
faculty members. In the Department's view, the relationship described 
by AAU and quoted above, as well as in the NPRM's preamble, goes 
substantially beyond showing new employees the ``ropes in their new 
environment.''
    Based on the comments received, the Department is persuaded that 
teaching, as described by the AAU, is an important function often 
performed by college and university researchers. This is not as true 
for non-academic researchers.
    Other commenters, such as independent nonprofit research institutes 
and Federal agencies, were also in agreement that there were 
significant differences between research conducted by academic 
institutions and research conducted by private, for-profit employers. 
These comments provide further amplification and support for the AAU 
position summarized in the preamble to the NPRM, 61 FR at 17613, that 
research in academic institutions is nonproprietary as opposed to 
research conducted in a private, for-profit research organizations. The 
research product delivered by researchers in private, for-profit 
organizations is proprietary in nature and can be appropriated by the 
employing institution for commercial purposes. 61 FR at 17613. Examples 
of the points made by the colleges and universities include the 
following:
     Academic research is for the public good and advancement 
of knowledge, as opposed to having a profit motive.
     Researchers in academia, unlike researchers in for-profit 
organizations, are expected to publish promptly and widely in peer-
reviewed journals; commercial scientists apply research results to 
product development within the company, often withholding the 
publication of research.
     Academic research is independently initiated and sustained 
with the intention of transmitting bodies of knowledge to succeeding 
generations of researchers, public and private; commercial research 
priorities are set by company goals for developing marketable products.
    Two of the three commenters opposing the rule asserted that the 
same skills are required on the part of researchers who are employed in 
a university setting as are required of those employed in a private, 
for-profit research organization. One of these two commenters 
acknowledged that university research tends to focus on issues of basic 
research while private sector research tends to focus on the applied 
end of the spectrum. However, this commenter indicated that the degree 
to which an academic institution is engaged in applied and basic 
research across a variety of disciplines is a function of the extent to 
which the institution's research is leveraged by private sector or 
Federal agency contracts.
    The third commenter opposing the rule indicated that the dichotomy 
between university and industry research cited by the AAU is 
exaggerated. Industry funding of academic research has been growing 
rapidly, and many universities have been applying for patents of their 
own in promising new fields such as biotechnology, human genome 
research, and exotic materials.
    These comments in opposition to the rule presently are 
unpersuasive, for the following reasons.
(1) Skill Requirements
    Differences in the skills and knowledge required of researchers to 
work in an academic environment compared to the skills and knowledge in 
a private, for-profit organization was not one of the policy reasons 
for issuing the NPRM. The differences articulated in the proposed rule 
discussed such factors as the wide dissemination of research results in 
peer-reviewed scientific journals, the expected application of research 
results to producing marketable products within commercial 
organizations, the expansion of the frontiers of knowledge by academic 
researchers conducting fundamental research programs, and the 
nonproprietary nature of research performed in an academic setting as 
opposed to that performed in a private, for-profit setting. 61 FR at 
17613.
(2) Differences Between Academic and Commercial Researchers
    The Department has carefully considered the issues raised 
concerning the differences between academic and commercial research and 
has found that, at present, sufficient distinctions exist between the 
two to support separate treatment of researchers in the two venues.
    Despite trends regarding sources and uses of research funds in 
colleges and universities, the overwhelming majority of R&D the $21.6 
billion spent for R&D at U.S. academic institutions in 1995 appears to 
be nonproprietary in nature. This conclusion is supported by the 
following:
     Funds from the commercial sector during the past two 
decades grew faster than funds from any other source. Funding from the 
commercial sector, however, constituted a relatively small proportion 
(6.9 percent) of academic R&D funding in 1995. Science & Engineering 
Indicators 1996, National Science Board Subcommittee, National Science 
Foundation, at 5-8 and 5-9.
     Although patents awarded to universities have grown 
rapidly over the past two decades and universities are increasingly 
negotiating royalty and licensing arrangements based on their patents, 
income from these licensing arrangements are modest when compared with 
total R&D expenditures. In 1993, gross revenues received by U.S. 
universities from licensing arrangements amounted to $242 million. 
Ibid. at 5-42 and 5-43.
     The nonproprietary nature of academic research and the 
fact that academic researchers are expected to publish widely in peer-
reviewed journals is also supported by the fact

[[Page 13760]]

that in 1993, as in previous years, the United States contributed the 
largest fraction--34 percent--of 414,000 articles published in refereed 
journals worldwide. About 70 percent of the U.S. articles had academic 
authors. Further, in virtually all nations' journals, U.S. articles are 
cited more heavily than articles appearing in domestic publications. 
Ibid. at 5-4, 5-30, 5-31, and 5-40.
    In view of the trends regarding sources and uses of academic R&D 
funds, the Department plans to monitor such trends in promulgating a 
rule establishing an exception to the results of the Hathaway decision 
that would permit prevailing wage determinations for researchers in 
colleges and universities to be based solely on the wages paid by such 
institutions. If the current trends relative to the performance of 
research by colleges and universities were to continue long enough, one 
or more of the bases for concluding that researchers employed by 
colleges and universities are not similarly employed to nonacademic 
researchers may no longer be valid.
    b. Non-pecuniary Factors. In the preamble to the proposed rule, the 
Department asked for comments that specify the nature of the 
intangible, non-pecuniary incentives to working in an academic 
environment and how they are unique to higher education. Several of the 
colleges and universities addressed this issue. These comments provide 
further amplification of and support for the nature of the intangible, 
non-pecuniary incentives to working in an academic environment advanced 
by the Council of Economic Advisors and cited in the NPRM (see 61 FR 
17614). Other commenters, such as independent nonprofit research 
institutes and Federal agencies, were also in agreement that there were 
significant non-pecuniary incentives to working in an academic 
environment. Examples of these comments included the following:
     Intellectual freedom to determine one's own research 
direction is relatively unhindered by direction from management or by a 
profit motivation.
     The opportunity exists to interact with a large number of 
people with similar goals and interests.
     Academic research, unlike commercial research, is 
characterized by a great diversity of research interests and 
activities.
    One commenter maintained that although ``tenured professors 
appreciate the autonomy they have in research universities and that 
this permits the universities to compete in the labor market without 
paying wages and benefits equal to those in industry,'' it is not clear 
that this applies to non-tenure track, temporary research appointments. 
The commenter observed that employees on temporary research 
appointments do not enjoy the autonomy experienced by tenure and 
tenure-tack faculty who are principal investigators on research 
projects. In particular, postdoctoral appointees and research 
associates do not have faculty status and enjoy few if any of the non-
pecuniary incentives alluded to by the CEA.
    Nonetheless, autonomy in choice of research projects is not the 
only intangible benefit associated with working in an academic 
environment. The Department believes, based on the comments, that 
postdoctorates are also significantly motivated by other non-pecuniary 
factors, such as working with leaders in their chosen field and 
generally working with colleagues and other scholars. The Department 
also believes that working on nonproprietary research issues adds an 
important qualitative dimension to the non-pecuniary incentives that is 
not readily duplicated in other work environments.
2. Additional Issues Raised by Commenters Opposing Rule; DOL Analysis
    Additionally, the three commenters opposing the rule raised issues 
that were not addressed in the preamble to the NPRM. Those comments and 
the Department's analysis of them are provided below.
    a. Wage Differentials. One commenter took issue with the claim that 
there is a great wage differential between researchers in private 
industry and in colleges and universities. According to this commenter, 
the wage differentials cited in the preamble to the proposed rule 
between industry and colleges and universities for researches are 
grossly exaggerated. According to the commenter, a ``true national 
average which included industry wages would almost certainly be less 
than 20 percent higher than a national average which included only 
colleges and universities.'' According to the commenter, such a 
differential was 23 percent in 1989. The commenter also maintained that 
implementation of the rule would reduce costs on research projects by 
an average of much less than 10 percent compared to the prevailing wage 
methodology required by the current regulation.
    Economic hardship to employers due to wage differentials, by 
itself, would not be a basis for promulgating an exception to the 
decision in Hathaway. However, the Department is convinced that the 
wage differentials are significant and, in combination with the other 
factors--differences between academic and commercial research and the 
value of non-pecuniary benefits and incentives--constitute sufficient 
reason to conclude that researchers employed by colleges and 
universities and researchers employed by for-profit commercial 
employers are not ``similarly employed''.
    Most employers would find wage differentials of 23 percent, as 
cited by the commenter, to be significant. Further comments received 
prior to the issuance and subsequent to the issuance of the NPRM 
suggest that the national wage differential could be greater than 23 
percent. On a localized level, some commenters report differentials 
much greater than 23 percent. The Department is convinced that enough 
of a national differential exists, in combination with the other bases 
for the rule, discussed above, to justify the conclusion that DOL's 
regulations should recognize that researchers employed by colleges and 
universities and researchers employed by for-profit commercial 
employers are not similarly employed.
    b. General Labor Market Conditions. Two commenters expressed 
concern about the general labor market impact of the proposed rule. 
These comments, in large measure, misconstrue the nature of the 
rulemaking. The Department's mandate under the permanent labor 
certification program is to prevent the entry of foreign immigrant 
workers from adversely affecting the wages or working conditions of 
similarly employed U.S. workers. The wage protection component of this 
requirement is effectuated by regulations which require that the 
employers seeking labor certification must offer at least the 
prevailing wage paid to similarly employed U.S. workers in the area of 
intended employment. The proposed rule was not intended to alter this 
basic structure and it does not do so. The rule addresses only the 
narrow issue of how the phrase ``similarly employed'' should be 
defined. Whether the use of foreign researchers, in and of itself, has 
some negative impact on the domestic labor market is simply beyond the 
scope of this rulemaking. The determination as to whether academic 
researchers and researchers in the for-profit sector are or are not 
similarly employed is not impacted by considerations of potential 
adverse effect on labor market conditions among researchers. If, as the 
Department has now concluded, academic researchers are not similarly 
employed to their colleagues outside academe, the adverse effect is 
addressed by requiring the payment of the prevailing wage among 
similarly

[[Page 13761]]

employed academic researchers. To the extent there are economic factors 
limiting the employment potential of researchers, they are outside the 
scope of this rulemaking.
    Nevertheless, the Department is concerned about the possible 
adverse effect on U.S. researchers as a result of this rulemaking and 
has considered the comments submitted in this regard. As a result of 
the comments indicating that adverse effect may arise from this rule 
and trends regarding sources and uses of academic R&D funds discussed 
above, the Department plans to study the effects of this rulemaking 
over the next 5 years.
    One SESA's comments were, on balance, against the proposed rule 
because of perceived adverse effects on U.S. researchers. The Arizona 
SESA pointed out that one published survey it used until recently to 
make prevailing wage determinations for researchers showed, based on a 
universe of employers that did not include colleges and universities, a 
wage level that was more than 30 percent higher than the universities' 
salary schedules. According to the SESA, many U.S. workers majoring or 
obtaining degrees in the Sciences, quickly go on to employment 
opportunities in private industry because of the higher wage scale. The 
SESA was of the opinion that many foreign workers are willing to work 
for universities at low wages because the opportunity to stay in the 
United States, either permanently or temporarily, is a big enticement. 
According to the SESA, many foreign workers know that if they can get 
permanent employment with a college or university, the opportunity to 
adjust to permanent residence status increases because of the INA's 
``equally qualified'' provision which provides the basis for the 
special handling procedures for college and university teachers in the 
permanent labor certification regulations. See 8 U.S.C. 
1182(a)(5)(A)(I)(I) and (a)(5)(A)(ii); 20 CFR 656.21a; and 61 FR at 
17612. The SESA, in addition, expressed the view that grant funding 
restrictions and other established practices do not justify basing 
prevailing wage determinations for researchers employed by colleges and 
universities solely on the wages paid by such institutions if it 
discourages U.S. workers from applying for such positions.
    This SESA in its comments indicated, however, that it may be 
appropriate to consider academic researchers as not similarly employed 
to researchers employed in the private sector and to base prevailing 
wage determinations solely on the wages paid by colleges and 
universities. Specifically, the SESA stated in the course of its 
comments that:

    The research positions at the universities and in the private 
sector are not totally comparable, since researchers are not 
``similarly employed'' as the current regulation determines. The 
researcher at the university may also be teaching, writing articles 
for scientific journals, working on basic, fundamental or 
theoretical research. If they are performing other duties then they 
should be given a different job title and code (presumably from 
private sector researchers).

    The Department has concluded that, currently, there are ample bases 
to conclude that researchers employed by colleges and universities and 
researchers employed by for-profit commercial employers are not 
similarly employed. The observations of the Arizona SESA concerning the 
general labor market effects of foreign doctorates in the labor force 
are discussed below along with those of another commenter who submitted 
comments expressing concern about the effect of foreign doctorates on 
the general labor market for doctorate recipients employed as 
researchers.
    The senior economist employed by an association of universities 
offered a number of reasons for not promulgating a final rule that 
would allow prevailing wage determinations for researchers employed by 
colleges and universities to be based solely on the wages paid by such 
institutions. The reasons advanced by this commenter concerned general 
labor market factors affecting the supply and demand for researchers 
and the policy bases articulated for issuing the NPRM.
    The comments concerning general labor market conditions are 
summarized and discussed below.
(1) Unemployment Rate
    A commenter asserted that unemployment and underemployment, as 
measured by the NSF, are higher now for doctorate scientists and 
engineers than they have been in many years. Such concerns, however, 
are not relevant to this rulemaking, which is implementing the 
statutory protection against adverse effect on wages and working 
conditions of similarly employed U.S. workers, due to the importation 
of foreign workers. Further, in the permanent alien labor certification 
program, high levels of unemployment should have a self-correcting 
effect, since more U.S. workers will be available for the jobs for 
which certification is sought. In the H-1B program, to which this rule 
also will be applied, Congress has determined that no labor market test 
is necessary.
    Nevertheless, available information indicates that, generally, job 
prospects for recent Ph.D. recipients remain strong. According to the 
NSF, in April 1993, the overall unemployment rate for recent science 
and engineering (S&E) doctorate recipients stood at 1.7 percent, while 
the NSF states that the unemployment rate for the entire U.S. labor 
force for the comparable period--1993--was 6.8 percent.2 
Ibid. at 3-5.
---------------------------------------------------------------------------

    \2\ The Bureau of Labor Statistics, in its ``Labor Force 
Statistics from the Current Population Survey'' reports that for 
September 1996, the seasonally adjusted civilian unemployment rate 
was 5.2 percent.
---------------------------------------------------------------------------

    According to the NSF, concerns expressed about labor market 
prospects by recent S&E doctorate recipients have less to do with their 
ability to find a job than with their ability to get full-time jobs 
that use their training. In 1993, the ``involuntary out-of-field'' 
(IOF) rate for all recent S&E doctorate recipients was 3.6 percent. 
Individuals were considered involuntarily out of their Ph.D. field if 
they stated in an NSF survey that they were either working part-time 
solely because a full-time job was not available or that one reason 
they were working outside of their Ph.D. field was because a job in 
their field was not available. Unfortunately, it is not possible to 
compare the IOF rate for 1993 with previous years because of the lack 
of comparable data. Ibid. at 3-6. However, another measure reported by 
the NSF indicates that foreign doctorate recipients have not had a 
significant impact on the overall labor market for recent doctorate 
recipients. Self-assessment by recent S&E doctorate recipients as to 
whether their primary jobs in 1993 are closely related to their Ph.D. 
fields shows very similar patterns to the information pertaining to 
then-recent doctorate recipients in 1988. Ibid. at 3-8 and 3-9.
(2) Effect on Recent Doctorate Recipients in Universities
    Two commenters maintained that the wage levels of recent U.S. 
doctorate recipients employed in colleges and universities have been 
held in check by the hiring of foreign researchers. One commenter 
maintained that the rule as proposed, in conjunction with the hiring of 
foreign researchers, increased immigration levels, and the elimination 
of the growth in research and development funding will have unfavorable 
consequences for U.S. researchers.
    It does not appear that the number of foreign doctoral recipients 
who remain in the United States after graduating are numerous enough to 
have any appreciable affect on general wage

[[Page 13762]]

levels. About 30 percent of the 8,000 foreign students earning S&E 
doctoral degrees received firm offers to stay in the United States in 
1993. (This overall percentage has been stable over the past several 
years.) The firm offers were from three primary sources:
     About 400, or 5 percent, received firm offers for academic 
employment.
     Almost 500, or 6 percent, received firm offers for 
commercial employment.
     A larger group, almost 1,500, or 18 percent, obtained a 
postdoctoral research position for 1 year.

Ibid. at 2-28 and 2-29.
    Not all foreign students who receive a firm offer to stay in the 
United States do so. A number of factors influence foreign doctoral 
recipients' decisions to return home. Further, as emerging countries 
expand their capacity to educate at the doctoral level, the NSF expects 
that fewer foreign students will come to the United States to be 
educated. Ibid. at 2-29. The number of foreign students studying S&E 
fields in the United States seems to have peaked in 1992. Ibid. at 2-
33.
    With respect to the comment concerning flattened growth in R&D 
funding, a look at overall R&D spending presents a rather complex 
picture. Overall R&D spending in the 1990's generally has not kept pace 
with inflation. The decline, in real terms (largely related to the 
Defense downsizing), has been modest--2 percent. In nominal terms, R&D 
funding reached an all time high of $171 billion in 1995. It is 
important to note, however, that of the three major R&D performing 
sectors--industry, the Federal Government, and academia--academic is 
the only one to have registered a real increase in R&D performance 
since 1990. Ibid. at 4-2. A more detailed examination of the trends 
reveals that the annual rate of increase in academic R&D performance 
has been falling fairly steadily since the late 1980's. On the other 
hand, the Federal Government, which supplies about three-fifths of all 
funds used to perform R&D on campus, has been increasing its support of 
academic research continuously since 1982. Ibid. at 4-2. This suggests 
that job opportunities involving research in academia have been growing 
rather than declining, albeit at a slow rate over the last several 
years.
    If foreign doctorate recipients have an adverse effect on any part 
of the labor market segment, it is most likely to be on the market for 
postdoctoral appointments. However, the wage data included in the 
comments of the individual opposing the rule do not indicate that 
foreign doctorate recipients have had an adverse effect on the market 
for postdoctoral appointments. This commenter asserted that the wage 
gap between academe and industry for recent doctorate recipients with 
less than 6 years of work experience has been steadily declining. 
According to information furnished by the commenter, the percentage gap 
between non-academic and academic salaries of doctorates with less than 
6 years of experience declined from 32 percent in 1981 to 23 percent, 
as indicated above, in 1989. And this trend, according to the 
commenter, continued through 1993--the year of last available data.
    DOL is not convinced, for the reasons cited above, that the 
admission of foreign academic researchers, at current levels, is at 
such an extent as to diminish or stagnate the wage levels of doctoral 
recipients doing academic research nationwide. While foreign worker 
penetration of the job market for postdoctoral positions is greater, 
DOL has reached the same conclusion for those job opportunities. The 
Department, however, plans to study over the next 5 years whether 
pervasive hiring of foreign workers has taken place and whether adverse 
effect has occurred on a scale broader than individual job 
opportunities or individual localities.
(3) Discourages U.S. Workers From Obtaining Doctorates
    One commenter expressed the belief that declining labor market 
conditions for young researchers will discourage talented young 
Americans from choosing to make investments in S&E graduate education 
in the near future, and that the United States will suffer as a result. 
These concerns appear to be overstated in light of the supply and 
demand projections for S&E personnel discussed in Science & Engineering 
Indicators 1996.
    According to the NSF-reported ``mid-growth scenario'' of the demand 
for S&E workers, overall demand for S&E will slightly exceed supply by 
the year 2005 by a small amount--4 percent. Most of this excess demand 
occurs in the last 3 years of the forecast; until 2002, the S&E labor 
market appears to be in balance. This should not be a problem, since 
the NSF indicates that even if the ``high-growth scenario'' were to 
materialize there would be sufficient time for the labor market to 
respond to the new higher demands. Ibid. at 3-21. In any event, these 
models suggest that concerns that foreign researchers are shutting U.S. 
researchers out of the labor market are not a problem over the long 
term.
    The Department, based on the above, is not convinced at this time 
that foreign recipients of doctoral degrees have had an appreciable 
impact on the general market for recent doctorate recipients or on the 
market for postdoctoral recipients. However, the impact of foreign 
labor on the ability of recent U.S. recipients of doctorates to obtain 
employment generally and to obtain postdoctoral appointments in 
particular has not been definitively determined. Therefore, the 
Department cannot dismiss those related issues raised by the commenters 
in view of its statutory responsibility to protect wages and working 
conditions of similarly employed U.S. workers under section 
212(a)(5)(A) of the INA. The Department, therefore, plans to study the 
impact of the final rule over the next 5 years.
3. Conclusion
    The Department is convinced that a set of unique factors lead to 
the conclusion that, at this time, researchers in academe and 
researchers employed by for-profit commercial employers are not 
similarly employed and that the proposed rule should be adopted for 
colleges and universities. The Department, however, plans to study the 
impact of the final rule over the next 5 years, and determine whether 
the bases for promulgating the rule continue to hold.

B. Other Issues Relating to Colleges and Universities

    Commenters submitting comments on the NPRM also raised other issues 
relating to colleges and universities that are discussed below.
1. Definition of ``College and University''
    Nine commenters, including six universities, two academic 
associations and one Congressman recommended that the term 
``institutions of higher education as defined in section 1201(a) of the 
Higher Education Act of 1965'' be used instead of the term ``colleges 
and universities'' in any final rule promulgated by the Department. The 
Department has reviewed the definition of institutions of higher 
education in section 1201(a) of the Higher Education Act and has 
determined that it is not appropriate for the labor certification 
program. The definition proposed by commenters is not consistent with 
the definition of ``college or university'' that has been used for many 
years in administering the special handling provisions in the 
regulations established for college and university teachers. Unlike the 
definition of ``colleges and

[[Page 13763]]

universities'' used in administering the permanent labor certification 
program, section 1201(a) of the Higher Education Act includes business 
and vocational schools and is limited to public or other nonprofit 
institutions. A directive dated January 13, 1984, from Bryan T. Keilty, 
then ETA's Acting Administrator for Regional Management, to all 
regional administrators, in relevant part, defined ``college or 
university'' as follows:

    ``College or university'' means an educational institution: (A) 
which admits as regular students only individuals having a 
certificate or diploma of graduation from high school, or the 
recognized equivalent of such a certificate or diploma; (B) which is 
legally authorized by the Federal and/or State Government(s) to 
provide a program of education beyond high school; and (C) which 
provides an educational program for which it awards a baccalaureate 
(bachelor's) or higher degree, or provides a program which is 
acceptable for such a degree. This would include those junior or 
community colleges which award associate degrees, but which teach 
courses which can be credited toward a baccalaureate degree at 
another college or university.

    The Department has concluded it cannot change the definition of 
``college or university'' used for the past 14 years in administering 
the permanent labor certification program without complying with the 
notice and comment requirements of the Administrative Procedure Act.
2. Extension of Proposed Amendment to H-1B Labor Condition Application 
(LCA) Program
    Many commenters, including several colleges and universities, 
independent nonprofit research institutes, various associations, the 
American Immigration Lawyers Association, Federal agencies and one 
member of Congress, indicated that the H-1B regulations dealing with 
prevailing wages, at 20 CFR 655.731(a)(2)(iv), should be modified to 
clarify that the proposed changes would also apply to the H-1B program. 
Amendment of the H-1B regulations at 20 CFR 655.731(a)(2)(iv) would 
require the initiation of a separate NPRM to modify that regulation, 
but such a rulemaking is unnecessary for the reasons discussed below.
    There are sufficient bases to apply the methodology required by 
this final rule to the H-1B program. The Department clearly expressed 
in the preamble to the proposed rule that the change proposed for 
Sec. 656.40(b) would be followed in determining prevailing wage for the 
H-1B LCA program, as well as the permanent labor certification program. 
The preamble stated that the ``proposed rule would also change the way 
prevailing wages are determined for colleges and universities filing H-
1B labor condition applications on behalf of researchers, since the 
regulations governing prevailing wage determinations for the permanent 
program are followed by State Employment Security Agencies in 
determining prevailing wages for the H-1B program.'' The preamble also 
noted that the H-1B regulations incorporate the language of 20 CFR 
656.40 (as suggested by H.R. Conf. Rep. No. 101-955 (October 26, 1990), 
page 122). Specifically, the conference report at page 122 stated that 
the prevailing wage to which an H-1B visa petitioner ``must attest is 
expected to be interpreted by the Department of Labor in a like manner 
as regulations currently guiding section 212(a)(14)'' (now section 
212(a)(5)(A) of the Immigration and Nationality Act).
    It should also be noted that the H-1B regulations at 
Sec. 655.731(a)(2)(iv) define ``similarly employed'' as it is defined 
in the current permanent labor certification rule. Section 
655.731(a)(2)(iii)(A) provides, in relevant part, that ``(w)here the 
prevailing wage is not immediately available, the SESA will conduct a 
prevailing wage survey using the methods outlined at 20 CFR 656.40 and 
other administrative guidelines or regulations issued by ETA.'' On May 
18, 1995, ETA issued General Administrative Letter (GAL) No. 4-95 to 
All State Employment Security Agencies, Subject: Interim Prevailing 
Wage Policy for Nonagricultural Immigration Programs. That GAL 
provided, in relevant part, that ``(i)n determining prevailing wages 
for the permanent and temporary labor certification programs, the H-1B 
program, and the F-1 student attestation program, the regulatory scheme 
at 20 CFR 656.40 must be strictly followed.'' 3
---------------------------------------------------------------------------

    \3\ General Administrative Letter 2-98, issued on October 31, 
1997, which superseded GAL 4-95, provides that the regulatory scheme 
at 20 CFR 656.40 must be followed in determining prevailing wages 
for the permanent and temporary H-2B labor certification programs 
and the H-1B program.
---------------------------------------------------------------------------

3. Extension of the Proposed Amendment to Research Institutes 
Affiliated with Colleges and Universities
    Some commenters expressed the view that institutions ``affiliated'' 
with colleges and universities should be included in the exception to 
the Department's general prevailing wage methodology crafted for 
colleges and universities. The Department is not including institutions 
affiliated with colleges and universities because it requires 
additional information as to whether researchers employed by such 
affiliated institutions are sufficiently similar to college and 
university researchers to warrant similar treatment, and if so, how to 
define affiliated research institutes and what institutions should be 
included in wage surveys to determine prevailing wages for such 
institutions.
4. Including an Express Provision to Permit Consideration of Wage 
Differences by Discipline
    The AILA recommended that the rule should explicitly provide for 
consideration of wage differentials among researchers working in 
different disciplines. The Department does not believe such an express 
provision is necessary. According to the Dictionary of Occupational 
Titles (DOT), researchers are classified according to field of 
specialization. Consequently, the Department currently makes prevailing 
wage determinations for researchers by discipline.

C. Extension of Rule to Nonprofit Research Institutes

    As indicated above, commenters also were invited in the preamble to 
the NPRM to submit comments with respect to extending the proposed rule 
change to researchers in other employment. All of the comments 
submitted by apparently nonprofit, independent research institutes were 
in favor of extending the scope of the proposed rule to cover 
independent research institutes. The overwhelming majority of the 
comments received from independent research institutes included the 
reasons discussed below for extending the rule to cover such research 
institutes.
1. Competitive Factors
    The commenters maintained that researchers at independent research 
institutes across the Nation compete for Federal grants and publish 
research results in the same manner as universities. According to the 
commenters, the only difference between institutes and universities is 
that most institutes are not degree-granting institutions.
    The Department did not receive sufficient information to evaluate 
to what extent the independent research institutes compete for Federal 
grants and publish research results in the same manner as universities. 
However, an issue more important to this rulemaking would be the extent 
to which researchers at independent research institutes are or are not 
``similarly employed'' to researchers in private industry. The extent 
to which the

[[Page 13764]]

nonprofit research institutes perform nonproprietary research as 
opposed to proprietary research and development would, for example, be 
an important factor in making this determination. The commenters did 
not submit sufficient information with respect to competitive factors 
and the ``similarly employed'' issue to determine that such concerns 
could be used as a basis for making an exception in the prevailing wage 
methodology for researchers employed by nonprofit research institutes.
2. Prevailing Wage Methodology for Researchers
    The research institutes asserted that prior to Hathaway, 
researchers in independent research institutes were included with 
researchers at colleges and universities in determining prevailing 
wages. The commenters stated that inclusion of independent research 
institutes would not be an extension of the proposed rule--it would be 
a restoration of the pre-Hathaway practice. It was stated in the 
preamble to the NPRM that prior to Hathaway, SESA's, in conducting 
prevailing wage surveys for researchers employed by colleges and 
universities, consistently limited prevailing wage surveys to colleges 
and universities, and DOL was not aware of any other situation in which 
a similar practice was followed in determining prevailing wages for an 
occupation found in a variety of industries.
    Further investigation of sampling practices by SESA's subsequent to 
the receipt of comments on the NPRM, however, indicates that there was 
greater variation in sampling practices for colleges and universities 
than indicated in the NPRM. Not all SESA's limited surveys only to 
researchers employed by colleges and universities. Some surveyed a 
variety of industries in making such determinations. Some SESA's 
included nonprofit research institutes in the sample used in 
determining prevailing wages for colleges and universities. Some 
sampled nonprofit research institutions separately in the course of 
making prevailing wage determinations for researchers employed by such 
institutions. Some SESA's pointed out that they would not have known 
prior to the Hathaway decision whether the employer was profit or 
nonprofit, and included profit and nonprofit institutes in the same 
sample when responding to prevailing wage requests. Because SESA's were 
inconsistent in their sampling practices, their practices in this 
regard cannot be considered as a basis for the NPRM or the final rule.
3. Pending Legislation to Change Prevailing Wage Methodology for 
Researchers
    Many commenters stated that Congress has acknowledged the 
similarities between researchers in academic settings and those at 
nonprofit, independent research institutes by providing legislative 
language in immigration bills that would require prevailing wage 
determinations for employees employed by colleges and universities and 
research institutes to be based solely on the wages paid by such 
institutions. Unenacted legislation is, however, outside the scope of 
this rulemaking and to consider it in the rulemaking would be 
speculative.
4. Additional Reasons Advanced for Extending the Proposed Rule to 
Nonprofit Research Institutes
    One or more commenters offered additional reasons for extending the 
proposed rule to nonprofit, independent research institutes. Their 
comments and the Department's response to them are provided below.
    a. Anomalies of Staff Doing the Same Work Being Paid at Dissimilar 
Rates. Some commenters pointed out that there are many situations where 
staff from the university and nonprofit research institutes work side-
by-side. One commenter expressed the opinion that it would make little 
sense for institute employees on H-1B visas to be subject to a 
different wage structure than everyone else on the university campus.
    Such anomalies are not prohibited under the H-1B program, as a 
result of amendments made to the INA by the Miscellaneous and Technical 
Immigration Amendments of 1991 (MTINA), Pub. L. 102-232, 105 Stat. 1733 
(December 12, 1991). The anomalies are not a function of DOL prevailing 
wage methodologies and policies. The INA, as amended by the Immigration 
Act of 1990 (IMMACT), Pub. L. 101-649, 104 Stat. 4978, provided that 
employers did not have to pay similarly employed U.S. workers the same 
wage as must be paid to H-1B workers. Under IMMACT prior to MTINA, the 
employer was required to pay the higher of the actual or prevailing 
wage for an occupation to both H-1B nonimmigrant and ``to other 
individuals employed in the occupational classification and in the area 
of employment. . . .'' MTINA amended the INA/IMMACT wage requirements, 
in relevant part, so that the obligation that the employer pay the 
prevailing wage applied only to its H-1B nonimmigrant workers and not 
to the ``other individuals employed in the occupational classification. 
. . .'' Thus, subsequent to MTINA, not all workers in the U.S. labor 
market receive prevailing wage protections, even when they have foreign 
co-workers. It is, therefore, not illegal under this program to have 
workers working side-by-side being paid disparate wages. This possible 
disparity in wages between U.S. workers and H-1B nonimmigrant workers 
is not unique to colleges and universities, Federal research agencies, 
nonprofit research institutes, or even for-profit entities.
    In the Department's view, disparities in wages paid to researchers 
with similar duties working side-by-side does not justify establishing 
an exception to the prevailing wage determination methodology currently 
followed in situations involving employers other than colleges and 
universities. More fundamentally, wage disparity among workers is not 
germane to the question of whether the workers are similarly employed.
    b. Source of Funding Should be Considered. One commenter pointed 
out that research projects are funded by many different government 
agencies, and it is a waste of taxpayers' money to require payment of 
artificially high salaries to temporary foreign and immigrant 
employees.
    The Department has consistently taken the view that sources of 
funding are not factors to be taken into consideration in prevailing 
wage determinations. Had source of funding been a determinant, the 
broad protection against adverse effect in the INA would have made an 
exception for government-funded employment--but it does not do so. 
Further, in the Department's view, such a position furthers its 
statutory mission to protect the wages and working conditions of U.S. 
worker, rather than constituting a waste.
    However, the Department recognizes that source of funding may be a 
factor for determining similarity of employment, to the extent it 
supports nonproprietary research, as opposed to proprietary research 
and development. Since nonproprietary research currently dominates 
academic research performance in large measure, it is one determinant 
that distinguishes academic research from commercial research. The 
rulemaking record does not establish to the satisfaction of the 
Department that nonprofit research institutes perform nonproprietary 
research in relative or absolute terms to the same extent as colleges 
and universities.

[[Page 13765]]

    c. Non-pecuniary Motivations. Some commenters asserted that non-
pecuniary motivations of researchers working in nonprofit research 
institutes are similar to those working in academia. This may be true, 
but unlike academe, research in nonprofit institutions does not appear 
to be ``inextricably intermingled'' with teaching in an academic 
setting as it is in colleges and universities. Nor is there any firm 
information as to the relative significance of performing research with 
the attributes that distinguish that research from research in a for-
profit setting, to the total research and development effort. The 
Department believes that the amount of nonproprietary research 
performed by an institution is not only important in terms of the 
attributes that distinguish it from commercial research, but that it 
adds an important dimension to the non-pecuniary incentives to working 
in a research environment.
    d. Worker Displacement. At least one commenter maintained that 
foreign researchers do not displace immigrant or citizen researchers, 
but rather complement their efforts. As previously indicated, available 
information does not indicate that displacement of domestic doctorate 
recipients by foreign labor is significant. In any event, as indicated 
above, this rule addresses only the narrow issue of how the phrase 
``similarly employed'' should be defined.
5. Overly Broad Implementation of Hathaway
    The AILA was strongly in favor of the NPRM, but was of the opinion 
that DOL's implementation of Hathaway was overly broad and incorrect, 
and did not require conducting wage surveys across industries to 
determine prevailing wages for researchers employed by colleges and 
universities. The Department does not believe these comments are 
germane to the rulemaking. Assuming that the recognition of a separate 
wage system for college and university researchers was achievable under 
the existing regulations, a proposition that the Department does not 
accept, that conclusion would not preclude the Department from 
addressing the matter through a regulatory change. Given the interest 
expressed and the need to assure consistent treatment of the issue, the 
Department concluded that rulemaking was the appropriate course. 
Whether the Hathaway precedent is being applied improperly in 
occupations other than academic researchers is both beyond the scope of 
this rulemaking and is a matter that can and should be addressed to the 
BALCA in an appropriate case.

D. Other Requests to Extend the Rule

    In response to the proposed rule, comments also were received from 
Federally Funded Research and Development Centers (FFRDC's) and Federal 
agencies urging that they be included within the scope of the rule. The 
comments received from the FFRDC's and the Federal agencies are 
discussed below.
1. Federal Research Centers
    The Department has concluded that it is appropriate to include 
FFRDC's administered by academic institutions within the scope of the 
final rule. The Department believes that research conducted by FFRDC's 
administered by academic institutions are an extension of the research 
environment existing in the colleges and universities and the research 
performed in such FFRDC's has the same attributes as research performed 
by colleges and universities; i.e., nonproprietary in nature, 
inextricably intermingled with teaching, and offers significant 
intangible, nonpecuniary incentives.
    Comments to support this conclusion were received from the National 
Laboratory Immigration Forum (NLIF) which represents the 10 most well 
known of the FFRDC's often referred to as the national laboratories. 
The comments of the NLIF relevant to the scope of this rule were 
similar to those made by the colleges and universities and the 
independent research institutes. The main points made by the NLIF were:
     National laboratories are involved in far-ranging 
collaborative efforts with the academic community and many researchers 
have joint appointments with both a laboratory and a university, which 
involve teaching as well as research.
     Most funding for the operation of the national laboratory 
complex comes through the Federal Government and is subject to many of 
the same salary limitations that universities are subject to under non-
DOE Federal research grants.
     Research conducted by the national laboratories is largely 
nonproprietary in nature. Research results are expected to be 
disseminated through publication in peer-reviewed scientific journals.
     Non-pecuniary factors are a substantial motivator for 
researchers seeking employment in the national laboratories.
     Some areas of research are well beyond the scope of normal 
domestic research and may call for expertise in disciplines that are 
not readily available in the United States.
    The above comments are consistent with the comments of the colleges 
and universities urging that the national laboratories be included 
within the scope of the proposed rule.
    The Department believes the above factors apply in large measure to 
all of the FFRDC's administered by colleges and universities, and has 
therefore, concluded that FFRDC's administered by academic institutions 
should be included within the final rule. The Department, however, does 
not believe the FFRDC's managed by non-academic institutions should be 
included in the final rule establishing an exception to the way 
prevailing wage determinations are made for researchers employed by 
colleges and universities. The Department is not convinced that the 
attributes of academic research which distinguish it from commercial 
research are as pronounced in those FFRDC's managed by nonacademic 
institutions as they are in the FFRDC's administered by colleges and 
universities. Further, the Department is concerned that researchers 
from other countries coming to work for the FFRDC's managed by 
nonacademic entities may be used to a greater extent to perform 
research of a proprietary nature in those FFRDC's that are not managed 
by academic institutions. Therefore, the Department is extending the 
final rule to include only those FFRDC's managed by colleges and 
universities.
2. Federal Agencies
    All Federal agencies that submitted comments were in favor of the 
thrust of the proposed rule, but generally indicated that it was too 
narrow and should be extended to Federal agencies and laboratories; 
federally-affiliated, nonprofit institutions; and other nonprofit 
institutions affiliated with universities and colleges. Reasons offered 
for supporting the rule were similar to those advanced by many of the 
other commenters. The major points made by one or more of the agencies 
with respect to extending the proposed rule to cover Federal agencies 
were:
     Post-Hathaway policies impact negatively on the ability to 
recruit foreign scientists and result in such anomalies as foreign 
staff being paid more than U.S. workers.
     The proposed rule is too narrow. It should be extended to 
Federal agencies and laboratories, federally-affiliated nonprofit 
institutions, and other nonprofit institutions affiliated with 
universities and colleges.
     Research by Federal agencies is nonproprietary in nature.

[[Page 13766]]

     Non-pecuniary factors similar to those in colleges and 
universities motivate individuals to work for Federal research agencies 
and federally affiliated nonprofit institutions.
     The Federal pay scale should be accepted by DOL as a 
``legitimate source'' of prevailing wage data for federally sponsored 
employment. Alternatively, a rule should be promulgated recognizing 
that postdoctoral fellows, visiting scientists and other scholars 
employed by Federal agencies in H-1B status will necessarily be paid 
according to the pay practices of the research entity, and this fact 
satisfies prevailing wage concerns.
    Although the comments advocating inclusion of the Federal research 
agencies did not provide sufficient information to draft a final rule 
excluding all Federal research agencies as a class from the effects of 
Hathaway Children's Services on the Department's prevailing wage 
methodology, the Department is convinced that some Federal agencies may 
be able to satisfy the necessary criteria in order to be provided such 
an exception. These criteria are: (1) A close relationship between 
research and teaching; (2) a primary engagement in nonproprietary 
research; and (3) significant, intangible nonpecuniary factors that 
motivate researchers to work for the Federal research agency. Federal 
research agencies, by virtue of the fact that they are Government 
institutions, can presumptively satisfy the criterion of being 
primarily performers of nonproprietary research. Therefore, the final 
rule provides that Federal research agencies may petition the Director, 
U.S. Employment Service, to submit evidence that shows they meet the 
other two criteria necessary to obtain an exception to the prevailing 
wage methodology required by the issuance of Hathaway Children's 
Services. The rule also provides that if a petition is denied, a 
request for review of the denial may be made to the Board of Alien 
Labor Certification Appeals.
    The procedures that will have to be followed and the documentation 
that will have to be supplied by the Federal research agencies to 
obtain an exception from the general prevailing wage methodology that 
requires prevailing wages to be determined by surveying employers 
across industries in the occupation in the area of intended employment 
will be developed and issued by ETA within 45 days of publication of 
the final rule. Prevailing wages for the research agencies that are 
granted an exception from the general prevailing wage methodology will 
be determined by considering only the wages paid to researchers by 
Federal research agencies, colleges and universities, and FFRDC's 
administered by colleges and universities.
    ETA believes that to meet the criteria contemplated by this rule 
requires a relatively large organization. The research agency must be 
rather large before it can have researchers significantly and 
substantially involved in teaching as well as research and offer 
significant, intangible nonpecuniary incentives similar to those 
offered by colleges and universities. Therefore, a Federal research 
agency is defined for the purpose of this rule as:

    [A] major organizational component of a Federal cabinet level 
agency or other agency operating with appropriated funds that has as 
its primary purpose the performance of scientific research. Federal 
research agencies are presumed to be doing nonproprietary research. 
To be considered a major organizational component of a cabinet level 
agency or other agency operating with appropriated funds for the 
purpose of this part, the organizational component or other agency 
must be administered by a person who is no lower than Level V (or 
the equivalent) of the Executive Schedule (see 5 U.S.C. 5316).

    ETA is not establishing a similar petitioning process for other 
members of the research community, such as nonprofit research 
institutes. Since such entities are private organizations, it cannot be 
presumed that the research they perform is of a nonproprietary nature. 
Since they are private entities, they can engage in either proprietary 
or nonproprietary research. Although the entity may be accorded a 
nonprofit status under the Internal Revenue Code, they can contract to 
perform research that has a commercial application for private, for-
profit entities. The ETA cannot be expected to sort out in this 
rulemaking process the extent to which non-profit research 
organizations are or are not performing research that has commercial 
applications for a for-profit entity.

Executive Order 12866

    The Department has determined that this proposed rule is not an 
``economically significant regulatory action'' within the meaning of 
Executive Order 12866, in that it will not have an economic effect on 
the economy of $100 million or more or adversely affect in a material 
way the economy, a sector of the economy, productivity, competition, 
jobs, the environment, public health or safety, or State, local, or 
tribal governments or communities.
    While it is not economically significant, the Office of Management 
and Budget reviewed the final rule because of the novel legal and 
policy issues raised by the rulemaking.

Regulatory Flexibility Act

    When the proposed rule was published, the Department of Labor 
notified the Chief Counsel for Advocacy, Small Business Administration, 
and made the certification pursuant to the Regulatory Flexibility Act 
at 5 U.S.C. 605(b), that the rule does not have a significant impact on 
a substantial number of small entities. The Chief Counsel did not 
submit a comment.

Small Business Regulatory Enforcement Fairness Act

    The Department has determined that this final rule is not a ``major 
rule'' pursuant to the Small Business Enforcement Regulatory Fairness 
Act of 1996 (5 U.S.C. 801 et seq.), because it is not likely to result 
in (1) an annual effect on the economy of $100 million or more; (2) a 
major increase in costs or prices for consumers, individual industries, 
Federal, State or local government agencies, or geographic regions; or 
(3) significant adverse effects on competition, employment, investment, 
productivity, innovation, or on the ability of United States-based 
enterprises to compete with foreign-based enterprises in domestic and 
export markets.

Paperwork Reduction Act

    This final rule will create no collection of information 
requirements. The petitioning process for Federal agencies requests 
information from current Federal employees acting in their official 
capacity.

Catalogue of Federal Domestic Assistance Number

    This program is listed in the Catalogue of Federal Domestic 
Assistance at Number 17.203. ``Certification for Immigrant Workers.''

List of Subjects in 20 CFR Part 656

    Administrative practice and procedure, Aliens, Employment, 
Employment and training, Enforcement, Fraud, Guam, Immigration, Labor, 
Longshore work, Unemployment, Wages, and Working conditions.

Final Rule

    Accordingly, part 656 of Chapter V of title 20, Code of Federal 
Regulations, is amended as follows:

PART 656--[AMENDED]

    1. The authority citation for part 656 continues to read as 
follows:


[[Page 13767]]


    Authority: 8 U.S.C. 1182(a)(5)(A); 29 U.S.C. 49 et seq.; section 
122, Pub. L. 101-649, 109 Stat. 4978.

    2. Section 656.3 is amended as follows:
    a. A definition of ``Federal research agency'' is added in 
alphabetical order as follows:


Sec. 656.3  Definitions for the purpose of this part, of terms used in 
this part.

* * * * *
    Federal research agency means a major organizational component of a 
Federal cabinet level agency or other agency operating with 
appropriated funds that has as its primary purpose the performance of 
scientific research. Federal research agencies are presumed to be doing 
nonproprietary research. To be considered a major organizational 
component of a cabinet level agency or other agency operating with 
appropriated funds for the purpose of this part the organizational 
component or other agency must be administered by a person who is no 
lower than Level V (or the equivalent) of the Executive Schedule (see 5 
U.S.C. 5316).
* * * * *
    3. Section 656.40 is amended as follows:
    a. In the introductory language in paragraph (b), the phrase 
``except as provided in paragraph (c) of this section,'' is added 
immediately after the phrase ``For purposes of this section,''.
    b. Paragraph (c) is redesignated as paragraph (d), and a new 
paragraph (c) is added to read as follows:


Sec. 656.40  Determination of prevailing wage for labor certification 
purposes.

* * * * *
    (c) For purposes of this section, similarly employed in the case of 
researchers employed by colleges and universities, Federally Funded 
Research and Development Centers (FFRDC's) administered by colleges and 
universities or Federal research agencies, means researchers employed 
by colleges and universities, FFRDC's administered by colleges and 
universities, and Federal research agencies in the area of intended 
employment.'' If no researchers are employed by colleges and 
universities, FFRDC's administered by colleges and universities, and 
Federal research agencies other than the employer applicant, 
researchers employed by colleges and universities, FFRDC's administered 
by colleges and universities, and Federal research agencies outside the 
area of intended employment shall be considered ``similarly employed.''
* * * * *
    4. Subpart E is added to read as follows:

Subpart E--Petitioning Process for Federal Research Agencies


Sec. 656.50  Petitioning Process.

    (a) Federal research agencies seeking to have prevailing wages 
determined in accordance with Sec. 656.40(c)(2) shall file a petition 
with the Director, U.S. Employment Service.
    (b) The procedures and information to be included in the petition 
shall be in accordance with administrative directives issued by ETA 
that will specify the procedures to be followed and information that 
shall be filed in support of the petition by the requesting agency.
    (c) The Director shall make a determination either to grant or deny 
the petition on the basis of whether the petitioning agency is a 
Federal research agency, whether most researchers at the petitioning 
agency have a close relationship with teaching as well as research, and 
whether the employment environment for researchers at the petitioning 
agency provides significant intangible and nonpecuniary incentives of 
the nature found at colleges and universities.
    (d) Denials of agency petitions may be appealed to the Board of 
Alien Labor Certification Appeals.
    (1) The request for review shall be in writing and shall be mailed 
by certified mail to the Director, U.S. Employment Service, within 35 
calendar days of the date of the determination, that is by the date 
specified in the Director's determination; shall set forth the 
particular grounds for the request; and shall include all the documents 
which accompanied the Director's determination.
    (2) Failure to file a request for review in a timely manner shall 
constitute a failure to exhaust available administrative remedies.
    (e) Upon a request for review, the Director shall immediately 
assemble an indexed Appeal File.
    (1) The Appeal File shall be in chronological order, shall have the 
index on top followed by the most recent document. The Appeal File 
shall contain the request for review, the complete petition file, and 
copies of all the written material upon which the denial was based.
    (2) The Director shall send the Appeal File to the Board of Alien 
Labor Certification Appeals.
    (f) In considering requests for review of denied petitions, the 
Board of Alien Labor Certification Appeals shall be guided by 
Sec. 656.27.

    Signed at Washington, DC, this 17th day of March, 1998.
Alexis M. Herman,
Secretary of Labor.
[FR Doc. 98-7339 Filed 3-19-98; 8:45 am]
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