Department of Labor moves up Effective Date of H-2B Wage Rule
On August 1, the Department of Labor (DOL) issued a final rule moving the effective date of the new prevailing wage final rule for the H-2B program to September 30, 2011. Originally the new rule was to go into effect on January 1, 2012.
The wage rule, in most instances, will increase the hourly wage that must be paid to all currently employed H-2B workers and American workers recruited in connection with an H-2B job application as well as future workers. Additionally, if a broader proposed change to the H-2B program is adopted by the DOL in December the new hourly wage rate requirements will also apply to all similarly employed American workers an H-2B employer has as well.
The H-2B program is used by members of the horse industry, principally horse trainers and owners who cannot find American workers to fill semi-skilled jobs at racetracks, horse shows, fairs and in similar non-agricultural activities.
The final wage rule was published on January 19, 2011 and was to go into effect in 2012. However, the U.S. District Court for Eastern Pennsylvania has ordered the DOL to move up the effective date of the wage rule.
The wage rule itself was in response to the August 30, 2010 ruling by the same U.S. District Court in CATA v. Solis that the current regulations governing the H-2B prevailing wage rate violate the Administrative Procedure Act.
In Addition, the DOL is in the middle of a much broader rulemaking process that would change many aspects of the H-2B program. The AHC submitted comments on that proposed rule. The DOL is expected to release the final rule some time in December.
The AHC is opposed to the proposed H-2B rule as well as the wage rule.
The wage rule changes the way wage rates are calculated for H-2B workers. Currently, employers are required to pay H-2B and American workers recruited in connection with an H-2B job application either the prevailing wage, the federal minimum wage, the state minimum wage or the local minimum wage whichever is highest. The rule makes changes to how the prevailing wage is determined.
The wage rule would base the prevailing wage on the highest of the following:
- Wages established under an agreed-upon collective bargaining agreement.
- A wage rate established under the Davis-Bacon Act or the Service Contract Act for that occupation in the area of intended employment.
- The arithmetic mean wage rate established by the Occupational Employment Statistics (OES) wage survey for that occupation in the area of intended employment.
The rule removes use of a four-tier wage structure tied to skill levels that is currently an option for calculating the prevailing wage. It is important to note that these changes to the way the prevailing wage is calculated are expected to make the hourly rate H-2B employers are required to pay H-2B workers significantly higher.
The new wage rule will apply to all current and future H-2B workers, all American workers recruited in connection with an H-2B job application, and if the broader proposed rule is adopted to all similarly employed American workers as well. This means that between now and September 30th the DOL will be sending new prevailing wage determinations (PWD) to all employers who currently use the H-2B program and they will have to begin paying the new wage on September 30th.
Although the DOL has only just begun to send out new PWDs, the AHC has received reports of increases in the wage that must be paid by employers who use H-2B workers of between 10% and 30%.
The AHC is working with a broad collation of H-2B users to prevent any rule changes that would make the H-2B program unusable from going into effect.