H-2B Wage Rule
On January 19, 2011, the Department of Labor (DOL) issued a new wage rule for the H-2B program that was originally set to go into effect on January 1, 2012. However, Congress has blocked the rule from being implemented until at least March 31, 2013. The new wage rule is opposed by the American Horse Council (AHC) and other H-2B users.
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 the new hourly wage rate requirements will also apply to all similarly employed American workers an H-2B employer has as well.
The wage rule was in response to the August 30, 2010 ruling by the U.S. District Court for Eastern Pennsylvaniain CATA v. Solis that the current regulations governing the H-2B prevailing wage rate violate the Administrative Procedure Act.
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%.
On December 23, 2011, Congress passed the FY 2012 Omnibus Appropriations bill (H.R.2055). This bill prohibited DOL from implementing the new wage rule for 2012 fiscal year (October 1, 2011 to September 30, 2012.
On September 22, 2012, Congress passed a six month Continuing Resolution (CR) to fund the government through March 31, 2013. This CR prohibits the DOL from implementing a new wage rule for the H-2B program until March 31, 2013.
The AHC supported Congressional action to block the H-2B wage rule.