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Appeals Court Upholds DOL Rule Raising Wages for H-2B Workers

By Patricia Haim  3/6/2014
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The 3rd U.S. Circuit Court of Appeals upheld the Department of Labor’s (DOL) rule that effectively increased the wage that U.S. employers must pay when they hire temporary foreign guest workers under the H-2B visa program. Consequently, U.S. companies that employ H-2B temporary foreign workers to do nonagricultural jobs will have to pay significantly higher wages under the new method for calculating the “prevailing wage” than under the former method.

The H-2B visa category, established in its current form as part of the Immigration Reform and Control Act of 1986, allows U.S. employers to bring in up to 66,000 temporary foreign workers per year to fill low-skilled nonagricultural jobs for which they cannot find sufficient American workers. H-2B visas are available to citizens of 63 countries, including Mexico, Haiti, and numerous nations in Central and South America, the Pacific Rim, Europe, Asia and parts of Africa. H-2B visa holders can work in the U.S. for up to a year at a time, but they cannot stay longer than a total of three years. A U.S. business can bring in H-2B workers for jobs that are a temporary, one-time occurrence, or seasonal, or for which the employer needs to supplement its usual workforce to meet intermittent or peak-load needs.

Before a U.S. employer can bring a foreign national to the U.S. as an H-2B guest worker, it must obtain a temporary labor certification from the DOL and file a petition with U.S. Citizenship and Immigration Services (USCIS). The DOL’s regulations require an employer to advertise the position at the “prevailing wage” through the state workforce agency in the area where the temporary H-2B employees will work, to demonstrate that U.S. workers (that is, both citizens and permanent residents) are not available to perform the job and that the employment of foreign guest workers will not adversely affect American workers’ wages and working conditions.

The case challenged the DOL’s right to change its method for determining the prevailing wage for this program. The new rule, published in 2011, redefined the prevailing wage as the highest of 1) the wage scale in an applicable collective bargaining agreement, if any; 2) the wage scale established under the Davis Bacon Act or Service Contract Act for public contracts, if any; or 3) the average (arithmetic mean) wage established by the DOL’s Occupational Employment Statistics (OES) program for that occupation in that area.

The first two options remained the same; only the third changed. Where formerly, the prevailing wage for the H-2B program had divided the OES wage statistics into four levels, ranging from entry level to highly experienced, the new rule eliminated the four-tier system in favor of a single arithmetic average. The result was to raise the prevailing wage significantly (an average of $4.83 per hour, by the DOL’s calculations), resulting in estimated increased labor costs to H-2B employers of $847.4 million per year.

After reviewing the complex procedural and regulatory history underlying the case, the 3rd Circuit held that the way the DOL adopted its single-level methodology was procedurally valid. Substantively, the court rejected the employers’ argument that the agency failed to consider the effect that the new single-tier prevailing-wage rates would have on employers of H-2B workers, who would have to shoulder higher than anticipated labor costs. The court also rejected their contention that the DOL improperly established higher prevailing-wage rates for H-2B temporary workers “in order to attract U.S. workers.”

Louisiana Forestry Association Inc. v. U. S. Department of Labor, 3rd Cir., Case No. 12-4030 (Feb. 5, 2014). 

Professional Pointer: Although labor costs for H-2B temporary workers are definitely higher under the one-level prevailing-wage methodology than under the former four-level system, the change does not seem to have slowed employers’ use of H-2B visas significantly.

Patricia Haim is a shareholder in the office of Ogletree Deakins in Portland, Ore., where she represents employers in a wide variety of employment, labor and business immigration matters.

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