The Department of Labor (“DOL”) is trying to change the rules surrounding the wage rates of H-2A temporary foreign workers (“H-2A workers”). Specifically, the DOL is changing the way it determines the hourly Adverse Effect Wage Rates (“AEWR”) for agricultural occupations except herding and production of open-range livestock. The proposed rule uses a combination of wage data reported by the U.S. Department of Agriculture’s (“USDA”) Farm Labor Survey (“FLS”) and the Department of Labor’s Bureau of Labor Statistics Occupational Employment and Wage Statistics (“OEWS”) survey. This is the second time the DOL has recently tried to change the AEWR. Its previous attempt, in 2020, faced several legal challenges and did not go into effect.
What are Adverse Effect Wage Rates?
The AEWR are the wage rates that must be paid to H-2A workers. In part these rates ensure that H-2A workers are paid a living wage, and they also ensure that employers do not undercut local workers by paying foreign workers a lower rate. AEWR are published by DOL, and are just one of several minimum wages that an employer must take into consideration when hiring workers.
The Immigration and Nationality Act of 1952 required the Secretary of Labor to create AEWRs. An employer planning to hire workers under the H-2A program must offer and pay the highest of the AEWR, the prevailing wage[1], the negotiated collective bargaining rate, the federal minimum wage, or the state minimum wage. Essentially, the AEWR sets the minimum wage rate that can be paid to H-2A workers.
Calculating the AEWR
Every year, the AEWR for each State or region is published as a single average hourly gross wage. It is set using the field and livestock workers (combined) data from the FLS, which is gathered by the USDA’s National Agricultural Statistics Service (“NASS”). This method of data collection produces one AEWR for all agricultural workers in a State or region, without considering specific jobs.
The annual AEWR is calculated based on the results of the FLS. NASS typically conducts the survey in April and October and releases the results in May and November. The FLS reports contain the average hourly wage rates for different categories of workers for each State or region: (1) field workers, (2) livestock workers, (3) field and livestock workers (combined), and (4) the gross wage rate for all hired workers (which includes supervisors and managers). The DOL uses the FLS data to calculate the AEWR for each State or region using the annual weighted average hourly wage for field and livestock workers. The purpose of the calculation and the AEWR is to put United States farmworkers in the same position they would be if there were no foreign workers who would be willing to perform farm work for a lower wage.
The DOL is concerned that the current way of calculating the AEWR may have a negative effect on the wages of workers in higher-paid agricultural jobs. For example, supervisors of farmworkers or construction laborers on farms might have their wages lowered by an AEWR based solely on the wages of the FLS field and livestock workers (combined) occupational category.
Recent AEWR Rules
2020 AEWR Final Rule
On November 5, 2020, DOL announced a final rule that would have updated the way that the annual AEWR in the H-2A visa program is calculated. According to the 2020 AEWR final rule, the DOL wanted to stop the 2020 AEWRs for two years and, starting in 2023, adjust the AEWRs annually using the more general Employment Cost Index instead of the FLS. According to the DOL, the 2020 AEWR final rule was “…meant to provide greater consistency and predictability in the H-2A nonimmigrant visa program.” However, after the 2020 AEWR final rule was published, farmworker organizations filed lawsuits in federal court challenging the action.
On December 23, 2020, the U.S. District Court for the Eastern District of California issued an order preventing the DOL from implementing the 2020 AEWR final rule and ordering the DOL to continue using the previous method to calculate the AEWR. The court granted the order, finding that the plaintiffs were likely to prevail on their claim that the Rule was unsupported by adequate reasoning.
On January 12, 2021, the District Court issued another order requiring the DOL to publish the 2021 AEWRs in the Federal Register on or before February 25, 2021, which would become effective upon their publication. The court also ordered the DOL to notify all state workforce agencies, employers, and the general public that the AEWRs in effect on December 20, 2020 would remain in effect until the DOL published the 2021 AEWRs in the Federal Register.
In response, the NASS released the Farm Labor Report on February 11, 2021, which included quarterly and annual average farm labor data for 2020. According to the results of the FLS, NASS reported an average increase of $0.63 per hour, or 4.5%, from 2020 to 2021, with slight changes throughout different regions.
2021 AEWR Proposed Rule
On December 1, 2021, the DOL published a proposed rule changing the calculation of hourly wage AEWRs for agricultural occupations except herding and production of open-range livestock. For field and livestock workers, which represent the majority of agricultural jobs, the proposed rule continues to use the average annual hourly wage as reported by the FLS.
For all other agricultural jobs, which are not represented or reported by the current FLS data, the DOL proposes to set the AEWRs using the statewide or national average annual hourly wages for the occupational classifications reported by the BLS-OEWS survey program, which provides a more specific wage average for a wider variety of jobs than USDA’s FLS does.
The new DOL rule would also require employers filling jobs with employees whose duties fall in multiple categories to pay the highest wage that applies within those categories. This addresses situations in which the combination of duties an employer requires of their employee has different AEWRs. Under this proposal, if the job duties on the H-2A application do not fall within the field and livestock worker category, the DOL will set the AEWR based on the highest relevant AEWR it qualifies for.
Essentially, DOL’s proposed rule would modify the way that the AEWR is calculated. Both the FLS and OEWS surveys provide data personalized to United States agricultural workers and the States and regions where these workers are employed. This makes these sources effective in ensuring that the temporary employment of foreign workers in field and livestock job opportunities will not negatively affect the wages of workers in the United States with similar jobs. The change would ensure that rates would be use specific OEWS wages for workers in high-paid agricultural occupations, but still using FLS data for the majority of H-2A workers, those whose proposed duties fall within a single category.
Anyone wanting to submit written comments on the proposed rule must do so before January 31, 2022.
To view the proposed rule, click here.
To view the current AEWR, click here.
To view more Center resources on Labor, click here.
To submit a comment on the proposed rule, click here
[1] The “prevailing wage” under the DOL’s special definition for the H-2A program is based on small-scale wage surveys of employers in very local areas for very specific job tasks. For example, it may look at picking cherries in Western Michigan or pruning apple trees in the Hudson Valley in New York. Further, if that prevailing wage increases during the contract, the employer must increase worker pay to that level.