DOL H-2A Wage Rule Struck Down: Arbitrary, Capricious

• A federal judge largely invalidated the Trump administration's revised H-2A farmworker wage regulations, deeming them arbitrary and capricious.
• U.S. District Judge Kirk Sherriff found the Department of Labor improperly bypassed public comment for most changes and failed to justify key components.
• The ruling restores the previous Adverse Effect Wage Rate calculation method, which set wages at the average for all farmworkers in a region.
• Challenged provisions included a two-tier wage system setting the lower tier at the 17th percentile, a housing deduction, and a flawed job classification rule.
• The United Farm Workers lawsuit victory means employers must revert to pre-October 2020 wage practices to avoid potential liabilities.

The Adverse Effect Wage Rate invalidation means that employers of temporary foreign farmworkers must revert to the wage calculation methods that were in place prior to the October 2020 emergency rule.

A federal district court has largely struck down a set of regulations from the Trump administration that significantly altered how wages are calculated for temporary foreign farmworkers under the H-2A visa program. U.S. District Judge Kirk Sherriff, an appointee of President Joe Biden, determined that the Department of Labor's (DOL) revised wage formula was arbitrary and capricious. The ruling, which came in response to a challenge brought by the United Farm Workers and several individual farmworkers, found that the agency failed to adequately justify its changes and improperly bypassed the required public notice-and-comment process for most of the new provisions. The court concluded that the Interim Final Rule (IFR) did not reasonably consider its ability to fulfill the DOL's statutory obligation to protect domestic farmworker wages.

The lawsuit contended that the new formula was designed to depress wages rather than accurately reflect market rates for agricultural labor. Judge Sherriff's decision invalidates three of the four components of the rule that were specifically challenged, marking a significant victory for farmworker advocates. This Judge Kirk Sherriff H-2A ruling effectively rolls back changes that would have led to lower minimum wages for the majority of temporary foreign farmworkers.

For decades, the Department of Labor established the minimum required wage for H-2A workers, known as the Adverse Effect Wage Rate (AEWR), by calculating the average wage for all farmworkers within a given region. This long-standing methodology aimed to prevent the influx of temporary foreign labor from negatively impacting the wages of U.S. farmworkers, a duty mandated by federal law. However, in October 2020, the DOL issued an emergency rule, citing the discontinuation of the federal survey it had historically relied upon for wage data. This rule dramatically overhauled the AEWR calculation without undergoing the standard public-comment period.

The emergency rule introduced several controversial changes. It created a two-skill tier system for farmworkers, setting the lower tier's wage floor at the 17th percentile of all wages, a stark departure from the previous average wage standard. The DOL's own projections indicated that this lower tier would encompass approximately 92% of all H-2A workers. Additionally, the rule included a new housing adjustment that effectively reduced workers' take-home pay by deducting the value of employer-provided housing from the AEWR, despite federal regulations requiring growers to provide this housing free of charge. A third problematic provision mandated that an entire job be classified under the duty consuming more than half of a worker's time, potentially leading to higher-paying tasks being compensated at a lower rate if performed for less than 50% of the work period.

Judge Sherriff meticulously dissected the DOL's justifications for these changes. While acknowledging the agency's need to switch data sources due to the discontinuation of the old survey and an impending year-end deadline for new wage rates, he found that the rest of the rule extended far beyond what was necessary to address this specific issue. The court criticized the DOL for adopting the 17th-percentile figure from the H-1B visa program's four-tier system, where only about 60% of workers fall into the bottom two tiers combined, without providing a coherent explanation for its applicability to an H-2A system where the bottom tier would cover almost all workers. The judge explicitly stated that the DOL could not simply transplant a percentile from one visa program to another without proper rationale.

Furthermore, the court expressed skepticism regarding the housing deduction, noting that it assumed a 40-hour workweek. Given that DOL's own data indicated H-2A workers frequently log more hours, this deduction could result in workers effectively paying more for housing than its actual value. The job classification rule also failed to withstand scrutiny, with Judge Sherriff pointing out that the department never considered a simpler, more equitable alternative: paying workers different rates for distinct types of work performed. This Trump farmworker wage rule challenge ultimately highlighted the DOL's failure to adequately consider the impact of its changes on the very workers it is statutorily obligated to protect.

The Adverse Effect Wage Rate invalidation means that employers of temporary foreign farmworkers must revert to the wage calculation methods that were in place prior to the October 2020 emergency rule. This United Farm Workers lawsuit victory underscores the importance of adhering to established legal processes, including public notice and comment, when implementing significant regulatory changes. The Department of Labor H-2A visa wages will now be determined by the pre-existing methodology, at least until the agency issues new, compliant guidance.

Compliance officers and agricultural employers utilizing the H-2A program should immediately review their current wage practices to ensure they align with the pre-October 2020 methodology. Failure to do so could expose them to potential liabilities, as the court's ruling clearly establishes the unlawfulness of the challenged provisions. This decision reinforces the federal mandate that the H-2A program should not undermine the wages of domestic farmworkers, ensuring that temporary foreign labor does not create an adverse effect on the U.S. agricultural labor market.

This ruling invalidates key parts of the Trump administration's H-2A wage formula, meaning employers of temporary foreign farmworkers must revert to previous wage calculation methods or await new, compliant guidance from the DOL. Compliance officers should immediately review their H-2A wage practices to ensure adherence to the pre-October 2020 methodology to avoid potential liabilities.

Source: Original reporting via Associated Press and Courthouse News Service.