Employment and Training Administration, Department of Labor.
Final rule.
The Department of Labor (Department or DOL) is amending its regulations governing the certification of agricultural labor or services to be performed by temporary foreign workers in H–2A nonimmigrant status (H–2A workers). Specifically, the Department is amending its regulations to revise the methodology by which it determines the hourly Adverse Effect Wage Rates (AEWRs) for non-range agricultural occupations using wage data reported by the U.S. Department of Agriculture's (USDA) Farm Labor Survey (FLS) and the Department's Bureau of Labor Statistics (BLS) Occupational Employment Statistics (OES) survey. This final rule improves the consistency and accuracy of the AEWRs based on the actual work being performed by H–2A workers, and establishes better stability and predictability for employers to comply with their wage obligations. These regulations are consistent with the Secretary of Labor's (Secretary) statutory responsibility to certify that the employment of H–2A workers will not adversely affect the wages and working conditions of workers in the United States similarly employed. While the Department intends to address all of the remaining proposals from the July 26, 2019 proposed rule in a subsequent, second final rule governing other aspects of the certification of agricultural labor or services to be performed by H–2A workers and enforcement of the contractual obligations applicable to employers of such nonimmigrant workers, the Department focused this final rule on the immediate need for regulatory action to revise the methodology by which it determines the hourly AEWRs for non-range agricultural occupations before the end of the calendar year.
This final rule is effective December 21, 2020.
For further information regarding 20 CFR part 655, contact Brian Pasternak, Administrator, Office of Foreign Labor Certification, Employment and Training Administration, Department of Labor, 200 Constitution Avenue NW, Room N–5311, Washington, DC 20210, telephone: (202) 693–8200 (this is not a toll-free number). Individuals with hearing or speech impairments may access the telephone numbers above via TTY/TDD by calling the toll-free Federal Information Relay Service at 1 (877) 889–5627.
The Department has determined that this rulemaking is necessary to ensure that employers can access legal agricultural labor, without undue cost or administrative burden, while maintaining the program's strong protections for the U.S. workforce. This rulemaking also promotes and advances the goals of Executive Order (E.O.) 13788, Buy American and Hire American.
Consistent with the E.O.'s principles and the goal of modernizing the H–2A program, this final rule amends the methodology by which the Department determines the hourly AEWRs for non-range agricultural occupations using wage data reported by the USDA FLS and the BLS OES survey. It also makes minor revisions related to the regulatory definition of the AEWR to conform to the methodology changes adopted in this final rule and to more clearly distinguish the hourly AEWRs applicable to non-range occupations from the monthly AEWR applicable to range occupations under 20 CFR 655.200 through 655.235.
As discussed in more detail below, the FLS has been the only comprehensive survey of wages paid by farmers and ranchers and has enabled the Department to establish minimum hourly rates of pay for H–2A job opportunities. However, the Department acknowledges the concerns expressed by many commenters about the unpredictability and volatility of the FLS wage data from year-to-year, which the Department believes is a sufficient reason to reconsider its sole reliance on annually produced wage data from the FLS as a means to establish the AEWRs, even were FLS wage data currently available or made available in the future. On the other hand, given the comprehensiveness and relevance of the FLS data, the Department has determined it is appropriate to use the 2020 AEWRs,
In light of USDA's recent announcement regarding the FLS, the continued lack of any statutory or regulatory requirement that USDA conduct the FLS, and ongoing litigation over the announcement, the Department has also determined that the new hourly AEWR methodology is also appropriate in order to promote greater certainty in the setting of AEWRs in future years. On September 30, 2020, USDA publicly announced its intent to cancel the planned October data collection for the Agricultural Labor Survey and resulting Farm Labor reports (better known as the FLS).
In the public announcement suspending data collection and publication of the Farm Labor report in November, NASS noted that the public can access other sources for the data collected in the FLS. Specifically, NASS referred to the Agricultural Resources Management Survey (ARMS), Census of Agriculture (COA), American Community Survey (ACS), Quarterly Census of Employment and Wages (QCEW), National Economic Accounts (NEA), and the National Agricultural Workers Survey (NAWS) as examples of available data sources. While these are valuable resources for certain purposes, the Department did not propose using any of these surveys as a basis to set AEWRs in the NPRM. Similarly, the Department did not receive public comments in response to the NPRM suggesting the Department use these sources to determine the AEWRs. While these data sources may provide useful statistical data concerning the agricultural sector and farm labor, the Department does not consider these sources appropriate for setting the AEWRs. The Department acknowledges that the ARMS provides broad data on farm expenditures, but it does not include the type of specific, detailed occupational and geographical wage data that has been or is supplied under the FLS or OES.
The Department intends to address all of the remaining proposals from the July 26, 2019 proposed rule in a subsequent, second final rule governing other aspects of the certification of agricultural labor or services to be performed by H–2A workers and enforcement of the contractual obligations applicable to employers of such nonimmigrant workers.
This final rule is a deregulatory action under E.O. 13771 because the Department expects the unquantified cost savings of this final rule will outweigh the total annualized costs associated with rule familiarization. The costs of the final rule are attributed to the need for employers to familiarize themselves with the new regulations; consequently, this will impose a one-time cost in the first year. The Department estimates that the final rule will have an annualized cost of $0.07 million and a total 10-year quantifiable cost of $0.46 million at a discount rate of 7 percent. In addition, the final rule is expected to have annualized transfer payments of $170.68 million and total 10-year transfer payments of $1.68 billion at a discount rate of 7 percent. The Department also identified possible unquantifiable transfers associated with the final rule. The Department expects the final rule will provide qualitative benefits including better protection against adverse wage effects on an occupation basis. The Department believes that the final rule will have a significant economic impact on a substantial number of small entities. The Department used a total cost estimate of 3 percent of revenue as the threshold for significant impact to individual firms and a total of 15 percent of small entities incurring a significant impact as the threshold for a substantial impact on small entities. The Department estimates that small entities (not classified as H–2A labor contractors) will incur a one-time cost of $53.57 to familiarize themselves with the rule.
The Immigration and Nationality Act (INA), as amended by the Immigration Reform and Control Act of 1986 (IRCA), establishes an “H–2A” nonimmigrant visa classification for a worker “having a residence in a foreign country which he has no intention of abandoning who is coming temporarily to the United States to perform agricultural labor or services . . . of a temporary or seasonal nature.” 8 U.S.C. 1101(a)(15)(H)(ii)(a);
• There are not sufficient workers who are able, willing, and qualified, and who will be available at the time and place needed to perform the labor or services involved in the petition; and
• the employment of the alien in such labor or services will not adversely affect the wages and working conditions of workers in the United States similarly employed.
8 U.S.C. 1188(a)(1). The INA prohibits the Secretary from issuing this certification—known as a “temporary labor certification”—unless both of the above-referenced conditions are met and none of the conditions in 8 U.S.C. 1188(b) apply concerning strikes or lock-outs, labor certification program debarments, workers' compensation assurances, and positive recruitment.
The Secretary has delegated the authority to issue temporary agricultural labor certifications to the Assistant Secretary, Employment and Training Administration (ETA), who in turn has delegated that authority to ETA's Office of Foreign Labor Certification (OFLC).
Since 1987, the Department has operated the H–2A temporary labor certification program under regulations promulgated pursuant to the INA. The Department's current regulations governing the H–2A program were published in 2010.
An employer seeking H–2A workers generally initiates the temporary labor certification process by filing an
On July 26, 2019, the Department published an NPRM requesting public comments on proposals to modernize and streamline the process by which OFLC reviews employers' job orders and the applications for temporary agricultural labor certifications.
The NPRM invited written comments from the public on all aspects of the proposed amendments to the AEWR methodology regulations, including on the use of the FLS and OES survey to establish the AEWR, and any alternate methods or sources the Department might use to establish the AEWRs in the H–2A program.
The NPRM also explained the Department does not have direct control over the FLS and further recognized that USDA could elect to discontinue the survey at some point, and, in fact, USDA had done so in the past due to budget constraints.
The Department also received requests for an extension of the comment period for the NPRM. While the Department appreciates the issues raised concerning the public's opportunity to review the rule and comment, the Department decided not to extend the comment period because it determined that a 60-day comment period was sufficient to allow the public to review the proposed rule and provide comments. This conclusion is supported by both the volume of comments received, and the wide variety of stakeholders that submitted comments within the 60-day comment period.
The Department received a total of 83,532 public comments in docket number ETA–2019–007 in response to the NPRM.
The Department recognizes and appreciates the value of the comments, ideas, and suggestions from all commenters, and this final rule was developed only after review and careful consideration of all public comments timely received in response to the NPRM. The public may review all comments the Department received in the Federal Docket Management System (FDMS) at
The methodology implemented under this final rule will apply only to the review of job orders filed with the SWA serving the area of intended employment, as set forth in 20 CFR 655.121, on or after the effective date of the regulation, including job orders filed concurrently with an
When the OFLC Administrator publishes updates to the AEWRs in future calendar years, as required by 20 CFR 655.120(b)(2), and the AEWR is adjusted during a work contract period and is higher than the highest of the previous AEWR, the prevailing hourly wage rate, the prevailing piece rate, the agreed-upon collective bargaining wage, the Federal minimum wage rate, or the state minimum wage rate, the employer must pay that adjusted AEWR upon the effective date of the new rate, as provided in the future
The current regulation provides that the hourly AEWR is set at the annual weighted average hourly wage for field and livestock workers (combined) based on the annual USDA's FLS. To be consistent with the Department's decision to adjust the current hourly AEWR methodology discussed in detail below, the Department is making non-substantive conforming changes to the definition of AEWR in 20 CFR 655.103(b). In addition, the Department is making a minor technical revision to the definition of AEWR to clarify that the term AEWR applies to both the hourly rate for non-range occupations, as set forth in § 655.120(b), and the monthly rate for range occupations, as set forth in § 655.211(c).
One commenter opposed “the change in the definition to include the term `gross' after the term hourly,” stating that the change was designed to ensure the Department did not utilize new data being collected by the USDA through
Section 218(a)(1) of the INA, 8 U.S.C. 1188(a)(1), provides that an H–2A worker is admissible only if the Secretary determines that “there are not sufficient workers who are able, willing, and qualified, and who will be available at the time and place needed, to perform the labor or services involved in the petition, and the employment of the alien in such labor or services will not adversely affect the wages and working conditions of workers in the United States similarly employed.” In the 2010 Final Rule, the Department explained that it met this statutory requirement, in part, by requiring an employer to offer, advertise in its recruitment, and pay a wage that is the highest of the AEWR, the prevailing wage, the agreed-upon collective bargaining wage, the Federal minimum wage, or the state minimum wage. In the NPRM, the Department proposed to modify the methodology by which the Department establishes the hourly AEWRs.
Specifically, the Department proposed to establish hourly AEWRs for each agricultural occupation not subject to the monthly AEWR applicable to range occupations set forth pursuant to 20 CFR 655.211(c), as identified by the FLS and the OES survey, so that each AEWR was based on data more specific to the agricultural occupation of workers in the United States similarly employed and, as a result, would better protect against adverse effect on the wages of workers in the United States similarly employed. Accordingly, the Department proposed to revise its methodology so that the AEWR for a particular agricultural occupation would be based on the annual average hourly gross wage for that agricultural occupation in the state or region reported by the FLS when the FLS is able to report such a wage. If the FLS did not report a wage for an agricultural occupation in a state or region, the Department proposed to set the AEWR at the statewide annual average hourly wage for the SOC code from the OES survey conducted by BLS. If both the FLS could not produce an annual average hourly gross wage for that agricultural occupation in the state or region and the OES could not produce a statewide annual average hourly wage for the SOC, then the Department proposed to set the AEWR based on the national wage for the occupational classification from these sources.
As part of its proposal to change to an occupation-specific hourly AEWR, the Department proposed that if the job duties on the H–2A application (including job order) did not fall within a single occupational classification, the Certifying Officer (CO) would determine the applicable AEWR at the highest AEWR for the applicable occupational classifications. The intent of this proposal was to reduce the potential for employers to misclassify workers and impose a lower recordkeeping burden than if the Department permitted employers to pay different AEWRs for job duties falling within different occupational classifications on a single H–2A application. This approach is also consistent with how the Department assigns prevailing wage rates for jobs that cover multiple occupational classifications in the H–2B program.
The Department also proposed to continue to require the OFLC Administrator to publish, at least once in each calendar year, on a date to be determined by the OFLC Administrator, an update to each AEWR as a notice in the
The Department received comments on all aspects of the proposed revisions to the AEWR methodology. After consideration of all comments concerning the proposed revisions to the AEWR methodology, and in light of continuing uncertainty regarding the ongoing immediate availability of FLS data, the Department retains the AEWR concept in this final rule with additional changes to the methodology, as discussed below.
As explained above, and in prior rulemaking, requiring employers to pay the AEWR when it is the highest applicable wage is the primary way the Department meets its statutory obligation under section 218(a)(1) of the INA, 8 U.S.C. 1188(a)(1), to certify no adverse effect on workers in the United States similarly employed.
Many commenters representing employers and trade associations expressed the view that the Department has failed to explain why an AEWR is required to avoid wage depression, and supported removing the concept of the AEWR from the H–2A regulations entirely. For example, four farm bureau organizations asserted that because “American unemployment [is] below 4%, and the agriculture industry [is] continuing to experience extreme labor shortages . . . the concept of an adverse effect wage rate is not applicable to the H–2A program, and other wage setting methods should be implemented.” Another commenter asserted that the “AEWR is an artificial machination of the current H–2A regulations . . . and a mandate without any tether to reality.”
The Department understands the comments but declines to eliminate the AEWR. The Department is required by statute to ensure that the employment of H–2A foreign workers does not adversely affect the wages and working conditions of workers in the United States similarly employed. The AEWR is intended to guard against the potential for the entry of H–2A foreign workers to adversely affect the wages and working conditions of workers in the United States similarly employed. As the Department noted shortly after the creation of the modern H–2A program, a “basic Congressional premise for temporary foreign worker programs . . . is that the unregulated use of [nonimmigrant foreign workers] in agriculture would have an adverse impact on the wages of U.S. workers, absent protection.”
Addressing the potential adverse effect that employment of temporary foreign workers may have on the wages of workers in the United States similarly employed is particularly important because U.S. agricultural workers are, in many cases, especially susceptible to adverse effects caused by the employment of temporary foreign workers. The Department still holds the view that “U.S. agricultural workers need protection from the potential adverse effects of the use of foreign temporary workers, because they generally comprise an especially vulnerable population whose low educational attainment, low skills, low rates of unionization and high rates of unemployment leave them with few alternatives in the non-farm labor market.”
The use of an AEWR, separate from a prevailing wage for a particular crop activity or agricultural activity, “is most relevant in cases in which the local prevailing wage is lower than the wage considered over a larger geographic area (within which the movement of domestic labor is feasible) or over a broader occupation/crop/activity definition (within which reasonably ready transfer of skills is feasible).”
However, Congress did not “define adverse effect and left it in the Department's discretion how to ensure that the importation of farmworkers met the statutory requirements,”
Several comments submitted by employers and associations asserted that the Department should not or is not authorized by statute to require payment of an AEWR if it has not first determined that the employment of H–2A workers has adversely effected the wages of workers in the United States similarly employed in the area of employment. Some commenters believed that the shortage of U.S. workers is adequate evidence that no adverse effect exists. One commenter asserted that “if there is a lack of a sufficient domestic workforce to complete the farm work required, the presence of foreign guest labor cannot, by definition, `adversely affect' the inadequate supply of domestic labor.” Some of these commenters urged the Department to include language in this final rule that would commit the Department to conducting adverse effect determinations annually.
In response to these comments and irrespective of evidence regarding the existence of adverse effect, the Department believes that the statutory responsibility to workers in the United States “will be discharged best by the adoption of an AEWR in order to protect against the possibility that the anticipated expansion of the H–2A program will itself create wage depression or stagnation.”
Moreover, the Department could not commit to annual adverse effect determinations because the Department is not aware of any reliable method available to make such a determination and no commenter suggested a method the Department could use to determine the existence of adverse effect. Such a method would need to demonstrate not only that the employment of foreign workers adversely affected the wages of workers in the United States in each particular locality and each particular occupation or agricultural activity, but also that the employment of H–2A workers was the cause of this adverse effect, as opposed to the employment of unauthorized workers, for example.
The FLS, conducted by USDA's NASS, has aggregated and reported data in the major FLS occupational categories of field workers, livestock workers, field and livestock workers (combined), and all hired workers. The Department currently sets the AEWR at the gross hourly rate for field and livestock workers (combined) from the FLS for each state or region. This has produced a single AEWR for all agricultural workers in a given state or region, such that supervisors, agricultural inspectors, graders and sorters of animal products, agricultural equipment operators, construction laborers, and crop laborers were assigned the same AEWR. In the NPRM, the Department proposed a revised hourly AEWR methodology that would produce more tailored, occupation-based AEWRs designed to better protect against adverse effect on workers in the United States similarly employed. Under the proposed methodology, the AEWR for a particular agricultural occupation would have been based on the annual average hourly gross wage for that agricultural occupation in the state or region reported by the FLS; the statewide annual average hourly wage for the SOC from the OES survey conducted by BLS, if the FLS did not report a statewide or regional average wage for the occupation; or the FLS or OES national annual average wage for the occupation, if both the FLS and OES did not produce an average wage for the occupation in the state or region.
As expressed in the NPRM, the primary impetus for the proposed change was the Department's concern that the current AEWR methodology may have an adverse effect on the wages of workers in higher-paid agricultural occupations, such as construction laborers and supervisors of farmworkers on farms or ranches. Although the FLS collected data on the wages of supervisors, the wages of supervisors have been reported only in the all hired workers category and have not been included in the field and livestock workers (combined) category that the Department currently uses to establish the AEWR. Similarly, wages for “other workers” are reported only in the all hired workers category and are not included in the wages reported in the field and livestock workers (combined) category. Thus, the wages for these workers may be inappropriately lowered by an AEWR established from the wages of field and livestock workers (combined). In short, the Department expressed concern that using FLS wage data for field and livestock workers (combined) to establish the AEWR for all agricultural occupations could produce a wage rate that is not sufficiently tailored to the wage necessary to protect against adverse effect on workers in the United States similarly employed.
The Department invited comments on all aspects of the proposed AEWR methodology. In particular, the Department solicited comments on the use of the FLS and OES survey; the conditions under which each survey should be used to establish the AEWR, including the proposal to calculate the AEWRs without FLS data in circumstances where such data was unavailable; and the proposal to depart from relying on the field and livestock workers (combined) wage from the FLS to instead establish AEWRs based on occupational classifications. The Department also invited comments on any alternative methodologies or wage sources the Department might use to establish the AEWRs in the H–2A program. More specifically, the Department requested comments on whether there are alternate methods or sources that it should use to set the AEWR, such as indexing past wage rates using the CPI or ECI and any other methodology that would promote consistency and reliability in wage rates from year to year.
The Department received many comments from employers, agents, agricultural associations, farm bureaus, worker advocacy organizations, labor unions, individuals, state agencies, state and Federal elected officials, business advocacy organizations, and academic and public policy institutions. Many employers, associations, farm bureaus, and agents opposed the AEWR methodology in the 2010 Final Rule and agreed that a new AEWR methodology is necessary, most often due to concerns that the 2010 Final Rule methodology produced unsustainable wage increases for various reasons discussed below. An association stated that the current methodology makes planning and budgeting difficult because employers do not know what the AEWRs will be until they are published in the
Some commenters, including an association and an SWA, unequivocally supported the Department's proposed AEWR methodology as a way to retain the FLS, while ensuring accurate wages for all occupations through the use of the occupation-specific FLS data and supplementation of the FLS with the OES. Broadly, however, the overwhelming majority of commenters opposed the proposed methodology for a variety of reasons, including that it would be complex and difficult to administer, impose significant employee monitoring and recordkeeping burdens, produce unsustainably high AEWRs for some occupations and reduce AEWRs for others, and result in unpredictable AEWRs that vary from year to year and state to state, increased misclassification
Many employers, associations, and farm bureaus expressed concerns that the proposed AEWR methodology would result in wage increases that would be unsustainable for employers in industries where labor costs constitute the most significant outlay—industries in which one association asserted employers increasingly “revert to hiring undocumented workers” because they are unable to afford H–2A wages under the 2010 Final Rule. Citing an analysis published in the UC Davis Rural Migration Blog, a business advocacy organization expressed concern that the proposed occupation-specific methodology would cause the AEWR to increase by greater than 50 percent in some cases, including an increase of up to 68 percent for Front-Line Supervisors in California, based on a comparison of the 2018 AEWR determined by the FLS field and livestock worker data and the proposed AEWR based on OES data for First-Line Supervisors.
In contrast, most worker advocacy organizations, as well as several labor unions, SWAs, elected officials, and an international recruiting company, expressed concern the proposal would lower wages for many or most workers, while increasing uncertainty regarding farmworker wages. Many commenters, including immigration and worker advocacy organizations, expressed concern that the proposal would “perpetuate a basic problem in the H–2A program where guestworkers, who generally lack bargaining power to negotiate for higher wages due to their temporary status, become concentrated in a sector because the system allows employers to reject as `unavailable' for work those U.S. workers who seek jobs but are unwilling to accept the H–2A wage rate.” The commenters asserted that the Department's proposal would cause wages to stagnate and become depressed in real economic terms.
Some SWAs acknowledged that disaggregation of wages would result in a higher wage for less common occupations like supervisors and agricultural equipment operators, but also expressed concern that disaggregation would reduce the wages of both H–2A workers and workers in the United States similarly employed in lower skilled farm laborer jobs that constitute the majority of H–2A job opportunities. One worker advocacy organization that opposed the Department's proposal generally supported a narrow use of the proposed occupation-specific AEWRs for particular occupations, noting that H–2A employers have increasingly utilized the program for occupations that should be paid a higher wage. This commenter also noted that job orders increasingly include several different types of jobs for which U.S. workers are paid different wage rates and thought that SOC-based AEWRs and use of the highest rate among applicable SOCs were necessary to ensure accurate wages.
Several worker advocacy organizations noted that occupation-specific AEWRs would be lower than the current FLS-based AEWR established using the combined field and livestock worker wage data and many asserted this would be inconsistent with the Department's statutory obligation to ensure employment of H–2A workers will not adversely affect the wages of workers in the United States similarly employed. For example, a worker advocacy organization comment included a chart that indicated the proposed occupation-specific FLS and OES AEWRs would result in wage reductions in many states for workers in SOCs 45–2041 and 45–2092 ranging from $.03 to $2.50 per hour. A forestry worker advocacy organization expressed concern that a “change from using the mean of wages of workers `similarly employed' to hourly wages of SOCs will result in more volatility in wages from year to year as well as reductions in AEWRs” and would result in “downward pressure on wages of U.S. workers and foreign temporary workers in the reforestation and pine straw industries.”
After careful consideration of the comments received, and the Department's own judgment as to what will best contribute to the sound administration of the H–2A program, the Department has decided to revise the hourly AEWR determination methodology in a way that will be more predictable, less volatile, and easier to understand, while also ensuring protection of U.S. workers' wages and accurate AEWRs for job opportunities in higher-skilled occupations. This approach is also appropriate in light of uncertainty about the immediate availability of FLS wage data.
First, the Department will use the 2020 AEWRs, which were based on results from the FLS wage survey conducted by USDA's NASS and published in November 2019, as the baseline AEWR for the overwhelming majority of H–2A job opportunities going forward. As explained further below, adjustments to AEWRs for these workers will be made annually, starting at the beginning of calendar year 2023, based on the BLS ECI, Wages and Salaries—the same index the Department currently uses to adjust the monthly AEWRs for job opportunities in herding or the production of livestock on the range. Second, for all other occupations, the Department will determine the AEWRs as the annual statewide average hourly gross wage for the occupation in the state or region based on the OES survey or, where a statewide average hourly gross wage is not reported, the national average hourly gross wage for the occupation based on the OES survey. As discussed below, use of the OES survey will allow the Department to consistently establish occupation-specific AEWRs for these higher-skilled job opportunities to better protect against adverse effect on workers in the United States similarly employed.
The Department has determined that this revised methodology best addresses commenters' concerns regarding the unpredictability and volatility of the AEWRs in recent years. The AEWRs have increased significantly compared to the rate of inflation or the rate at which compensation has increased for workers more generally in the U.S. economy. Large and unpredictable wage fluctuations can cause financial hardship to more labor-intensive agricultural operations, make it more difficult for them to plan, and ultimately discourage domestic agricultural production, which may result in fewer U.S. farmworker jobs. Furthermore, unlike other employment-based immigration programs, changes to the AEWRs—no matter how large—have a far greater impact on H–2A employers who have a regulatory obligation to pay the updated AEWR, if it remains the highest applicable wage, to all H–2A workers and workers in the United States similarly employed during any current work contract as well as future work contracts.
For related reasons, the Department has decided to begin ECI-based adjustments to the AEWR in 2023. This provides for a period during which employers can rely on the current, 2020 AEWRs as they familiarize themselves with the new wage methodology, understand its likely impact on wages in future years, and plan accordingly. Providing for more immediate adjustments to current wages based on a wholly new methodology would, in
The Department also believes this methodology addresses other commenter concerns about unnecessary complexity and potential for significant wage reductions under the proposed occupation-specific OES-based AEWRs, and strikes a reasonable balance between the statute's competing goals of providing employers with an adequate legal supply of agricultural labor while protecting the wages and working conditions of workers in the United States similarly employed. The Department understands that unpredictable changes in the AEWR can result in harm to U.S. workers by encouraging some employers to reduce employment opportunities and work hours and still others to hire undocumented foreign workers willing to accept employment at much lower wages and without the additional legal protections and benefits, including transportation, meals, and housing, that employers must provided to H–2A workers.
The methodology focuses on determining AEWRs using 2019 FLS data for job opportunities predominantly used by employers in the H–2A program—occupational classifications for field workers and livestock workers—while shifting AEWR determinations to the OES survey for all other occupations for which the FLS did not report wage data at a state or regional level (
The Department recognizes that the revised methodology may result in some AEWR increases in those occupations for which the Department will use the OES survey, depending upon geographic location and agricultural occupation. While wages may change, the Department believes these changes are the result of the Department's use of more accurate occupational data that better reflect the actual wage paid, and thus the wage needed to protect against adverse effect.
In addition, to further address concerns about predictability and clarity, the Department revised paragraph (b)(1) of § 655.120 to add a transition provision. Although the new AEWR methodology in this final rule will be implemented on the effective date of this rule, the SWA and CO will review job orders and
As provided in paragraph (b)(2) of § 655.120, the Department will publish notice of AEWR adjustments in the
The Department acknowledges the concerns of some commenters that fluctuating wages can be harmful to workers, and their concerns that changes to the methodology could result in stagnating or decreasing wages for farmworkers. The Department also recognizes the possibility that the revised methodology in this final rule may result in the AEWRs for field workers and livestock workers being set at slightly lower levels in future years than would be the case under the current methodology. However, as noted, the benefits of relying on the ECI to provide more stable and predictable wage increases are substantial, and, in the Department's judgment, ultimately benefit both employers and workers. Further, by setting the 2020 AEWR as the starting point from which future ECI adjustments will occur, the Department is ensuring that workers' wages will not be lower than their 2020 wages and will then adjust according to the ECI. The Department believes that this approach effectively balances concerns about wage volatility and adverse effects on workers. It also has the related virtue of ease of use.
Further, the data for the current methodology may no longer be available to the Department.. Even if the data were available, or were to become available in subsequent years, the
The most common concern the Department received from employers, agents, associations, and business advocacy organizations was that the proposed methodology would be too complex and that the number of wage sources and potential wage rates would significantly increase wage volatility and uncertainty for employers. For example, one association stated it could not evaluate the potential impact of the proposal because, according to its estimates, the proposed methodology would result in at least 400,000 potential wage rates, based on a combination of 13 occupational categories and five potential wage sources (state/national FLS or OES and the prevailing wage).
Citing the Rural Migration Blog noted earlier, some associations and a business advocacy organization stated that under the proposed rule, wages may fluctuate significantly between years for some states and occupations, such as a 15 percent change in the AEWR for Graders and Sorters in Florida between 2017 and 2018. Similarly, a dairy association expressed concern regarding the year-to-year wage fluctuation for farmworkers tending to animals, asserting that in New York there would have been a 26 percent decrease from the 2016 AEWR based on the OES state data for SOC 45–2093 to the 2017 AEWR based on the regional FLS data. A farm bureau expressed concern that AEWRs would change at different times of the year based on the data source used and asserted this would further increase unpredictability and the potential for wage fluctuations in the same year, considering the employer will remain obligated to pay a higher wage if one is published during the contract period.
A commenter from academia supported the Department's decision to rely primarily on the FLS and further recommended that, instead of using the OES survey when FLS data was unavailable, the Department should use the more general FLS field and livestock worker (combined) data because the FLS-based AEWR would be based on “more accurate data inputs” and would “maintain a consistent data source from year to year, potentially alleviating some of the wage volatility the Department cites as a concern.” The commenter also recommended the Department “use the Employment Cost Index to calculate the appropriate AEWR based on prior years” if the FLS is suspended and FLS data is unavailable, in order to “promote accuracy and consistency between seasons.” Finally, as discussed further in section II.B.6 below, several commenters suggested alternative methods to determine the AEWR, most of which did not involve reliance on OES or FLS data.
Many commenters, including employers, associations, state farm bureaus, and a business advocacy organization, also asserted that the proposed occupational disaggregation would be unworkable because agricultural job opportunities often or by their nature require the performance of a variety of tasks that can fit into a number of occupational classifications. Many of these commenters expressed concern that occupational classifications would be unpredictable due to the number of potential wage sources and this would be unsustainable because employers would be unable to plan for labor input costs, which constitutes the highest expense for many employers. Some commenters asserted that the variety of tasks associated with agricultural jobs, combined with the variety of occupations and wage rates that could be assigned under the proposed rule, would result in unpredictable wage rates from year to year and ensure acceleration of wage rates.
Several commenters asserted the proposal would require employers to “become human resources experts.” Two Federal elected officials, as well as some employers and associations, believed the proposal would impose significant monitoring and recordkeeping burdens on employers, requiring them to monitor and maintain records of all duties performed at all times to ensure compliance with wage obligations. The elected officials asserted the proposal would “make classification of work into a highly contentious issue,” leading to litigation and disputes over occupation and wage assignments, and would require employers to develop familiarity with all potentially applicable occupational classifications.
After consideration of comments, the Department has determined that use of the 2019 FLS wage data for field and livestock workers, adjusted annually by the percent change in the ECI, most reasonably addresses commenters' concerns regarding the complexity in the Department's proposal, as well as the volatility and unpredictability in the AEWRs, both recently and over the past several years, for the majority of H–2A occupations. The methodology is also consistent with the Department's broad statutory mandate to balance the competing goals of the statute to provide an adequate labor supply and to protect the wages and working conditions of workers in the United States similarly employed.
The FLS field workers and livestock workers (combined) category includes workers who “plant, tend, pack, and harvest field crops, fruits, vegetables, nursery and greenhouse crops, or other crops” or “tend livestock, milk cows, or care for poultry,” including those who “operate farm machinery while engaged in these activities.”
In light of the substantial number of commenters concerned about the complexity of the proposed methodology, the unpredictable and often significant annual increases of FLS-based AEWRs, and the need to protect workers against adverse wage effects while also taking into account the need for a stable supply of legal labor, the Department has determined that the most reasonable AEWR determination methodology for field and livestock workers, particularly given uncertainty about the future of the FLS, is to use the recent combined FLS wage data as a starting point and use of the ECI to index for future years. This approach is consistent with an alternative suggested in the NPRM and recommended by a commenter from academia (as well as the current means by which the monthly AEWR is adjusted for range occupations).
The ECI is a “measure of the change in the price of labor, defined as compensation per employee hour worked” based on data collected on “hourly straight-time wage rate[s]” defined as “total earnings before payroll deductions,”
The Department understands the common concern of a large number of employers, associations, and agents that OES-based AEWRs would, in some cases, result in dramatic wage increases, wage variability from year to year, or both, and further acknowledges the concerns of many commenters that the current FLS-based AEWRs have fluctuated widely from year to year and that employers have been subject to annual increases as high as 22 percent in some states.
The methodology in this final rule addresses these concerns by tethering the AEWRs to broad economic data on labor costs using the ECI, which the Department currently uses to make AEWR determinations for H–2A herding and livestock jobs on the range, and adjusting the AEWRs annually beginning in calendar year 2023.
The Department also understands the concerns raised by commenters regarding planning and budgeting difficulties when wage rates fluctuate widely, particularly in the context of the considerations a law firm noted about agricultural sector employers' obligations to fulfill multi-year contractual obligations, as well as a trade association's concerns surrounding longer-term workforce planning.
The Department believes it is reasonable to make annual adjustments based on the ECI to reduce wage volatility from year to year, provide employers with greater stability and certainty regarding their wage obligations to workers, and address the concerns expressed by many commenters about the unpredictable increases in wages reported by the FLS in recent years. As noted above, the Department has determined it is best to utilize the current AEWRs for the next two years and adjust annually thereafter based on changes in the ECI for the most recent preceding 12 months to provide stability and predictability for future wages, and as an acknowledgement that immediate implementation may cause additional disruption of the kind this approach seeks to avoid. The Department believes this approach will serve the AEWR's intended purpose to guard against the potential for the entry of H–2A foreign workers to adversely affect the wages and working conditions of workers in the United States similarly employed while addressing concerns raised by the commenters.
Beginning the ECI adjustments for the FLS-based AEWRs in 2023 addresses commenters' concerns that recent accelerations in the wage rates are, in their view, attributable to flawed survey results and have caused artificially surging wage increases, as well as the need to have time to engage in long range planning. For example, commenters note AEWR increases have averaged as much as 9.5 percent annually in recent years. While the Department disagrees with the commenters' suggestions that the FLS survey results were flawed, this transition period, during which employers may prepare for the new indexed wage rates that will apply to the majority of H–2A job opportunities, adequately balances commenters' concerns related to significant wage fluctuations with the Department's obligation to protect against adverse effects. Giving employers advance notice of the new approach before it begins to result in more predictable wage adjustments ensures that the new rule does not cause, through more immediate implementation of the new adjustment methodology, precisely the kind of unexpected wage changes that commenters expressed concerns about.
This approach also addresses concerns from farmworker advocates about wage cuts, by using the ECI to ensure steady wage growth over time to guard against the potential for the entry of H–2A foreign workers to adversely affect the wages and working conditions of workers in the United States similarly employed. It also guards against the kind of immediate wage cuts that may have occurred in some cases under alternative methodologies by using the current, 2020 AEWR as the starting point from which future adjustments will be made.
In addition, this approach addresses the concerns of many worker advocates, SWAs, and some Federal elected officials that the use of occupation-specific OES data proposed in the NPRM would have immediately, and in some cases significantly, reduced wages for many workers in the most common H–2A occupations (
The Department has chosen to use as a baseline the 2020 AEWRs determined using the combined field and livestock worker FLS wage data after consideration of comments on potential data sources, and for reasons explained below and in prior rulemaking. The Department received many comments on the efficacy of the FLS and OES survey as data sources for AEWR determinations. Some commenters—primarily employers and associations—opposed the use of the FLS to determine the AEWR. Some associations and an agent supported a move away from the FLS because the survey was not limited to U.S. workers and aggregated the wages of workers in many different occupations. Similarly, a business advocacy organization opposed use of the combined FLS wage under the 2010 Final Rule because it averaged the wages of lower-skilled farm workers with higher-skilled workers in, for example, supervisory and heavy machinery operator occupations, which the commenter asserted inflated wages and made it difficult to challenge AEWR determinations. Two associations and an employer opposed use of occupation-specific FLS data due to small sample sizes and opposed use of the FLS generally because it collected data on gross wages.
In contrast, many commenters expressed general or conditional support for the use of the FLS as a primary or sole data source, including many worker advocacy organizations, as well as some associations and academic commenters. Several associations supported use of a modified and expanded FLS, while some employers and associations expressed a preference for retaining the 2010 Final Rule's methodology based on the combined FLS data, but only if the sole alternative was the proposed methodology. One association urged the Department to rely on the FLS as the primary source where a wage is available at any geographic level and to use the OES only in cases where no state or national FLS wage is available. Another commenter believed the Department should rely solely on USDA or states' departments of agriculture to determine the AEWR because these agencies have the best understanding of agricultural employment and the wage setting process for agricultural job opportunities. A Federal elected official urged the Department to rely on the FLS, rather than the OES survey, because the OES survey “reflects earnings from farm labor contractor employees, who are among the nation's lowest paid farmworkers.” Similarly, two Federal elected officials opposed use of the OES system because it “less accurately capture[s] actual wages paid to farm employees, who comprise the bulk of the H–2A guest worker workforce, because the OES data do not actually capture farm employer data and instead only reflect information concerning `establishments that support farm production.' ”
As noted in the NPRM and prior rulemaking, and as discussed below, the Department continues to believe the FLS is a useful source of wage data for establishing the AEWRs for the vast majority of H–2A job opportunities, and that alternative wage sources are, for most occupations, generally not superior to the FLS for the Department's purposes in administering the H–2A program. With the exception of a brief period under the 2008 Final Rule, the Department has established an AEWR using FLS data for each state in the multi-state or single-state crop region to which the State belongs since 1987. One advantage of using a wage derived from the FLS as the baseline for these occupations is that the FLS surveyed farm and ranch employers and collected data on wages paid for field and livestock worker job opportunities common in the H–2A program.
Another advantage of the FLS has been its broad geographic scope, which “provide[s] protection against wage depression that is most likely to occur in particular local areas where there is a significant influx of foreign workers,”
Finally, using the combined FLS data as the baseline to set the AEWR for field and livestock workers is consistent with the Department's conclusion in the 2010 Final Rule that the skills of many farm laborers are “adaptable across a relatively wide range of crop or livestock activities and occupations” because these activities and occupations “involve skills that are readily learned in a very short time on the job, skills peak quickly, rather than increasing with long-term experience, and skills related to one crop or activity are readily transferred to other crops or activities.”
However, as noted above, recent FLS data has introduced a substantial amount of variability in wages in the H–2A program, which has led the Department to consider alternatives that still meet its statutory obligations and the need for sound program administration. The reasons why this variability is problematic are discussed throughout this preamble, and include economic hardship to farmers, which may induce them to reduce production and thus the hiring of U.S. farmworkers—or to resort to using illegal aliens; the difficulties of long-term planning, with attendant costs that may be felt by both employers and farmworker employees; and the current methodology's artificial depression of wages for certain higher-skilled U.S. agricultural workers. The Department is also concerned about using a data source beyond its control and which is subject to an uncertain future, demonstrated by the recent suspension of data collection. The Department thus has decided to use ECI adjustments to these AEWRs moving forward.
This does not mean that the Department has concluded that the wages established by the FLS data, including the 2020 AEWRs, were flawed. Rather, the Department has simply determined that greater certainty going forward is necessary, and the ECI provides a reasonable data source for measuring wage growth consistent with the Department's statutory mandate. Specifically, the Department has concluded, consistent with a commenter
The Department has chosen not to use the OES survey to determine AEWRs for field and livestock worker job opportunities for several reasons. Most importantly, the OES survey does not include farm establishments that are directly engaged in the business of crop production and employ the majority of field and livestock workers. While establishments that support farm production participate in the H–2A program and are included in the OES survey, they constitute a minority of establishments in the country employing workers engaged in agricultural labor or services, and so data reported by these establishments is generally not as useful for purposes of calculating the AEWR for field and livestock workers. In addition, the OES currently cannot produce a statewide or regional wage for both the field worker and livestock worker categories in every year, so a methodology using the OES for these job opportunities would require use of different wage sources from year to year. Thus, use of the OES would be contrary to the Department's goal of establishing greater consistency, reliability, and predictability in wages year to year.
The decision to use the 2019 FLS wage data for field and livestock workers (combined) as the baseline to index future AEWRs for these occupations also addresses commenters' concerns regarding the complexity of the proposals related to disaggregated, occupation-specific AEWRs. It addresses the common concern among employers that the disaggregation of the field and livestock workers classification into various occupations would impose significant recordkeeping burdens and create artificial boundaries for the labor force beyond what is functionally appropriate to support farming operations, especially smaller operations. Use of the combined FLS wage for field and livestock workers will reduce recordkeeping burdens, especially in cases where workers are needed to perform a variety of field and livestock duties, as employers will be required to pay such workers the same wage rate for all of those duties. Similarly, because the overwhelming majority of job opportunities will not be subject to a SOC-based OES AEWR, the new methodology also largely addresses SWA concerns that the Department's proposal would have required SWAs and OFLC to conduct more in-depth review of applications, focusing on the identified occupation and wage assigned, to ensure the employer is using the correct wage. For the same reason, it also serves to alleviate some of the concerns of worker advocates regarding CO and SWA authority to determine appropriate SOCs and issue notices of deficiency to ensure correct classification of job opportunities.
In the NPRM, the Department proposed to use the FLS to set the hourly AEWR except in limited circumstances where the FLS did not report a wage for an occupation or state or region. Under those circumstances, the Department proposed to use the statewide average hourly wage for the occupation using data from the OES survey, and noted that under the proposal, the OES statewide average hourly wage would be used to establish the AEWR if USDA ceased to conduct the FLS for budgetary or other reasons. After careful consideration of all comments received, and for the reasons explained below, the final rule requires that for all occupations other than field and livestock workers (combined), the hourly AEWRs will be annually adjusted and set by the statewide annual average hourly wage for the occupational classification, as reported by the OES survey. If the OES survey does not report a statewide annual average hourly wage for the SOC, the AEWR shall be the national annual average hourly wage reported by the OES survey.
While some commenters supported the use of occupation-specific FLS and OES data to set AEWRs and believed the proposed methodology would produce more accurate wages, many commenters worried that the proposal was too complex and difficult to administer and that the number of wage sources and potential wage rates would result in unpredictable and volatile wages. The Department acknowledges that to the extent the FLS did not consistently report data in each SOC for a state or region, under the proposal, the wage source used to establish the AEWR would have varied from year to year, which could have resulted in a much higher degree of year-to-year variability in the AEWR than exists under the current methodology. As discussed above, the Department does not control the production of new wage data from the FLS in future years, and the Department will now use only one wage source—the OES survey—to determine the AEWRs for occupations other than field and livestock workers (combined) and for geographic areas for which FLS did not report a state or regional wage for field and livestock workers (combined) in its November 2019 report. By using this wage source to set the AEWR for these occupations and geographic areas, employers will have certainty regarding the wage source that will be used to set the AEWRs and the Department will meet its statutory mandate to protect against adverse effect.
Several commenters, including employers, associations, and worker advocacy organizations, were concerned about the Department's proposal to rely on OES data where the FLS did not report a statewide or regional average wage for the occupation. Some commenters expressed concern that the OES surveys nonfarm establishments that support farm production, and urged the Department to rely on the FLS. The Department acknowledges commenters' concerns; however, the Department does not control the production of new wage data from the FLS and recognizes the continued uncertainty about ongoing availability of FLS data. Furthermore, the Department declines to use the FLS as a baseline with annual ECI adjustments to set the AEWR for occupations other than field and livestock workers (combined). While the FLS-based approach is more accurate than the OES for field and livestock workers (combined), as noted above, the OES is more accurate than the FLS for other agricultural occupations, such as supervisors, that the FLS did not adequately survey, and occupations that are more often for contracted-for services than farmer-employed (
Furthermore, the OES is a reliable wage survey that consistently produces annual average wages for nearly all SOCs and is widely used in the Department's other foreign labor certification programs. Additionally, because “each set of OES estimates is calculated from six panels of survey data collected over three years,” the commenters' concerns regarding the volatility of the AEWRs and significant spikes in the FLS wages in recent years, leading the Department to implement annual ECI adjustments for those wages, are also greatly diminished for the SOCs that will shift to the OES-based methodology.
Accordingly, the Department will use the statewide OES average hourly wage for occupations other than field and livestock workers (combined) or, if one is not available, the national OES average hourly wage reported for the SOC. One commenter was concerned that by factoring in wages in both non-metropolitan areas and metropolitan areas (where wages are higher because of a higher cost of living), the use of a statewide OES wage would mean that employers in non-metropolitan areas would be required to pay inflated wages. Another commenter expressed a similar concern with respect to statewide or national AEWRs generally. In the H–2B program, the Department generally establishes prevailing wages based on the OES survey for the SOC in a metropolitan or non-metropolitan area. However, as explained in prior rulemakings, the concern about localized wage depression is more pronounced in the H–2A program than in the H–2B program due to both the economic position of agricultural workers and the fact that the H–2A program is not subject to a statutory cap, which allows an unlimited number of nonimmigrant workers to enter a given local area.
The Department also received many comments that expressed concerns about the proposal to require employers to pay the highest applicable wage if the job opportunity can be classified within more than one occupation. Several farm bureaus, associations, and agents asserted the policy would disproportionately impact small employers that may have no human resources personnel and must employ agricultural workers to perform a variety of similar, but distinct tasks on the farm to remain competitive. One small employer stated that use of separate occupational classifications would require the employer to hire more workers to perform distinct job duties and offer fewer hours to all workers. Another small employer noted that its U.S. workers perform duties ranging from driving tractors and operating forklifts to cleaning bathrooms. Some commenters asserted more generally that agricultural workers cannot be placed in “silos” because they are required to perform job duties outside of their job descriptions on occasion, not on a full-time basis, due to the nature of agricultural work or the need to respond to emergency situations and unforeseen circumstances. Some of these commenters expressed concern that the Department would classify jobs into the highest paid occupation in the particular state, leading to different occupational determinations in different states. An association commented that the states currently provide inconsistent occupation and wage determinations for similar job opportunities and expressed concern that occupation-based AEWRs would lead to inconsistent AEWRs from state-to-state for similar job opportunities.
Two Federal elected officials stated that assignment of the highest wage among multiple applicable occupations would contradict the purpose of the proposal to provide more accurate wages. A worker advocacy organization expressed concern that the proposal to assign the wage of the highest paid occupation would result in employers misclassifying job opportunities into lower-paid occupations to avoid wage obligations. A second worker advocacy organization asserted the proposal would not prevent misclassification of workers because the rule does not require submission of a separate application for work performed in multiple distinct occupations or provide any limitation on the kinds of duties workers may be expected to perform. The commenter suggested the Department should require employers to post at the worksite the AEWR for each occupational classification so that workers will know when they are misclassified. An SWA expressed similar concern that occupation-based AEWRs may encourage employers to misclassify workers into lower-paid job opportunities. Another commenter believed the difficulty of classifying job opportunities into occupational classifications would result in confusion among workers regarding the wage they would be paid at additional worksites.
Several commenters, including employers, associations, SWAs, and a worker advocacy organization, expressed concern or confusion regarding the method the Department would use to classify job opportunities into occupations within the SOC system. Noting that filing multiple applications under the current regulations has been burdensome and costly, three associations asked the Department to clarify whether employers will be required to file multiple applications for different job codes and urged the Department to permit an employer to list several SOC codes in one job order if they are all related to the same job opportunity. Many association commenters also sought clarification of the number of occupational categories the Department would use, including an association that noted the NPRM cited a different number of occupational categories for different states and did not mention some potential occupations, such as Pesticide Handlers and Sprayers (SOC 37–3012). Several commenters urged the Department to reduce the number of occupational categories it would consider, suggesting numbers ranging from four to six. Some associations and a State farm bureau specified five specific occupations: (1) Farmworkers and Laborers, Crop, Nursery, and
Most of these commenters urged the Department to ignore “de minimis” performance of duties or otherwise adopt some form of a primary or majority duties test, with some commenters suggesting the occupational classification should be based on work performed 51 or 75 percent of the time or should apply only if workers perform “substantially the same” duties as in the occupational description. An SWA asked if the proposal would separate workers into distinct agricultural occupations, such as agricultural carpentry as an occupation distinct from the general carpentry occupation and was concerned such a proposal would lower wages and disincentivize U.S. workers from applying for H–2A job opportunities. The SWA also expressed concern that OES wages for specific localities within a state would produce lower wages, disincentivize U.S. job seekers, and disadvantage workers who will have to commute longer distances for higher paid job opportunities in other parts of the state. A second SWA expressed concern that the occupation-specific wage proposal would require more in-depth review of H–2A applications by the SWAs and CO to determine that the appropriate occupation and wage are assigned.
A worker advocacy organization expressed concern that the proposed rule would shift occupational classification responsibilities from the SWAs to the Certifying Officers (COs) and, functionally, primarily to employers themselves, with only minimal review by COs. The commenter believed this would result in manipulation of duties and misclassification by employers and urged the Department to rely on SWAs to determine the proper occupational classification and issue Notices of Deficiency (NODs) for misclassification because SWAs are most knowledgeable about agricultural job opportunities and industries in local areas. The commenter urged the Department to provide SWAs authority to issue NODs for misclassification under 20 CFR 655.120(b)(5) and (d)(1) as proposed. The commenter also suggested revisions to the regulatory language proposed at 20 CFR 655.120(d)(1).
A law firm and a public policy organization objected specifically to application of the construction laborer SOC and corresponding OES wage to H–2A job opportunities because the nature of the work is very different. The law firm acknowledged that agricultural construction workers may perform some of the same tasks as non-agricultural workers, but asserted agricultural construction work generally requires less-skilled workers than non-agricultural construction work and the OES wage would not be representative of wages paid to agricultural construction workers. This commenter also asserted that immediate implementation of the OES wage rate would have “catastrophic consequences” for construction contractors because these employers typically operate under multiple year contracts. In contrast, a worker advocacy organization noted that contractors often employ nonagricultural workers in the H–2A program to construct, for example, livestock buildings for farmers at or near the AEWR. The commenter supported the proposal to provide an occupation-specific wage for agricultural construction job opportunities.
The Department has considered all of these comments and has decided to adopt the language of the NPRM as proposed. Under this final rule, if the job duties on the
For example, a job opportunity involving driving duties may be properly classified under SOC 45–2091 (Agricultural Equipment Operators), SOC 53–3032 (Heavy and Tractor-Trailer Truck Drivers), or a combination of the two, depending on the duties described in the employer's job order. A job opportunity for workers to drive tractors and other mechanized, electrically-powered or motor-driven equipment on farms to plant, cultivate, and harvest a crop (including driving tractors in and out of fields carrying bins and driving forklifts to transfer and stack bins of full product onto trailers), which requires 12 months of experience operating such equipment, would be properly classified under SOC 45–2091 and subject to the FLS-based AEWR. In contrast, a job opportunity for workers to drive semi tractor-trailer trucks to and from specified destinations within area of intended employment (including maneuvering trucks into and out of loading and unloading positions as well as driving in both on-road (paved) and off-road conditions), which requires 12 months of experience operating such equipment and a valid Class A CDL or equivalent, would be properly classified under SOC 53–3032 and subject to the OES-based AEWR. In the event an employer seeks workers to both drive tractors and other mechanized, electrically-powered or motor-driven equipment on farms and semi tractor-trailer units, as described above, the employer's job opportunity constitutes a combination of SOC 45–2091 and SOC 53–3032, subject to either the FLS-based AEWR for SOC 45–2091 or the OES-based AEWR for SOC 53–3032, whichever is a higher rate per hour.
As explained in the NPRM, determining the appropriate occupational classification is an important component of the Department's decision to move to occupation-specific wages. Use of the highest applicable wage in these cases reduces the potential for employers to misclassify workers and imposes a lower recordkeeping burden than if the Department permitted employers to pay different AEWRs for job duties falling within different occupational classifications on a single
Many of the commenters' concerns regarding administrative burdens, impracticality, and complexity of the wage proposal have been addressed as a result of the changes to the proposed AEWR methodology discussed above, including assigning one AEWR for all of the SOC codes covered by the field and livestock workers (combined) category. The overwhelming majority of H–2A job opportunities will fall within the FLS field and livestock workers (combined) category, as reported in the USDA FLS data published in November 2019. Use of the combined FLS with ECI adjustments for field and livestock workers (combined) largely addresses commenters' concerns regarding the number of SOC occupations. However, the Department is not limiting the SOC codes applicable to job opportunities that fall outside of the field and livestock worker (combined) category to those suggested by commenters because the H–2A program is not limited to job opportunities classifiable within those occupations. Based on the statutory and regulatory framework governing the definition of what constitutes agricultural labor or services, the Department's experience is that a wide range of jobs within the U.S. agricultural economy, depending on the nature and location of work performed, could be eligible under the H–2A visa classification. Though the majority of job opportunities will be classifiable within a relatively small number of SOC codes, the Department has issued H–2A certifications to employers covering jobs classified in dozens of SOC codes, including more than three dozen in fiscal year 2019 alone.
The Department declines to permit employers to pay an AEWR based on the SOC in which work is “primarily” performed (
With respect to the worker advocates' concerns about the SWA's role in review of SOC assignment, this final rule does not alter the authority or role of the SWA. SWAs will continue to review job orders—and SOCs therein—in the first instance following the “SWA Review” procedures in 20 CFR 655.121. Those procedures include an SWA-level NOD process, which the SWA may use to address wage offer, occupational classification, and other deficiencies the SWA identifies. The Department has not adopted the commenter's suggested regulatory revision, as the Department is not incorporating the language of proposed paragraph (d) into § 655.120 in this final rule.
The Department received many comments suggesting alternative methods of setting the AEWR that it chose not to adopt for the reasons explained below.
Comments from employers, associations, agents, state farm bureaus, and business advocacy organizations urged the Department to adopt a simplified AEWR methodology, including suggestions to use the state or Federal minimum wage, the minimum wage plus a fixed percentage, an AEWR based on changes in indices like the CPI, or an AEWR calculated based on the price of the agricultural commodity involved. Several commenters urged the Department to eliminate the AEWR and instead require employers to pay the State or Federal minimum wage or some form of enhanced minimum wage, which the commenters believed would provide employers a simpler and more uniform, consistent, and predictable wage determination. Other commenters suggested setting the AEWR at some fixed percentage or dollar amount above the applicable minimum wage, with suggestions ranging from 3 to 15 percent or one to two dollars above the minimum wage. One of those commenters suggested the enhancement should be lower if the applicable rate is the state minimum wage because these wages often exceed the Federal minimum wage. A few commenters suggested using a minimum wage as a baseline and updating the wage annually based on changes in the CPI, which they believed would provide certainty about wages and eliminate administrative costs related to conducting multiple surveys to determine AEWRs. Many of these commenters also suggested a cap on annual wage increases to avoid the annually compounded wage inflation they believed resulted from use of the FLS.
The Department declines to adopt these proposals. The Department establishes wages based on data related to actual wages paid to workers. For purposes of the AEWR, the Federal minimum wage does not sufficiently relate to the actual wages paid to similarly employed workers. The AEWR is meant to approximate the wage paid to workers in the United States similarly employed. Establishing a single national AEWR, either based on Federal minimum wage or applicable state minimum wage, that covers all occupations would not meet that purpose, as further demonstrated by how it would immediately and dramatically reduce the wages of both H–2A and similarly employed workers, particularly those performing work in dozens of states currently being paid a wage above the FY 2020 national AEWR based on the FLS. For similar reasons, the Department will not base the AEWR on a standard (
Further, a primary reason the Department has decided to use occupation-specific wage data for occupations like construction and farm labor supervisor is due to concern that the FLS combined field and livestock worker wage does not accurately reflect wages paid to higher-paid occupations in agriculture. An AEWR methodology based on the Federal or state minimum wage, even one incorporating annual increases based on a broad index, is likely to create or perpetuate the potential wage disparities this final rule aims to avoid when applied to more highly paid occupations.
For similar reasons, the Department declines to impose a cap on wage increases unrelated to actual wage data.
An association suggested the Department should adopt a two-tiered wage system in which the Department would require employers to pay U.S. workers at least the AEWR, but would permit employers to pay H–2A workers a rate 25 percent below the AEWR. Similarly, a public policy organization suggested the Department should allow employers to pay foreign workers less than the currently required AEWR or prevailing wage if the employer agrees to pay U.S. workers 5 percent more than the required rate. The commenter believed that this would benefit U.S. workers because some employers would be willing to pay a higher wage to U.S. workers if the Department permitted them to pay less to H–2A foreign workers. A law firm suggested the Department should permit employers to pay the OES-determined rate to U.S. workers and pay the current FLS-based AEWR to foreign workers and increase penalties for failure to hire U.S. workers to ensure employers are not incentivized to prefer hiring H–2A workers.
The Department declines to adopt a two-tiered system by which U.S. workers must be offered a higher wage rate than that offered to foreign workers. To do so would provide a disincentive to the hiring of U.S. workers by allowing employers to hire foreign workers at lower wages.
The public policy organization cited above also asserted that the statute, at 8 U.S.C. 1182(p)(4), “foresees the possibility” of a four-tiered wage structure and “instructs” the Department to establish wages at four wage levels based on experience, education, and the level of supervision. The commenter believed the Department should adopt this tiered wage structure even if not required by statute because this would more accurately reflect real-world wages, which are strongly correlated with a worker's level of skill.
The commenter refers to the H–1B Visa Reform Act of 2004,
The Department explained its reasons for not extending the tiered wage structure to the H–2A program in the 2010 Final Rule and has provided similar explanations in the H–2B rulemaking, most recently in the 2015 H–2B Wage Final Rule.
Importantly, the Department's practical experience has demonstrated that use of a four-tiered wage structure in the H–2A program leads to the overwhelming majority of H–2A job opportunities being classified at a level I wage, well below the median wage for the occupation.
Many commenters, including trade associations, an employer, a law firm, and agents, recommended that the Department take into account additional costs that employers cover for H–2A workers, such as housing, meals, transportation, and other benefits, when determining the AEWR. Commenters noted that U.S. workers cover these expenses out of their net pay, making the H–2A rate artificially inflated. Several commenters reasoned that if the purpose of the AEWR is to set a wage rate that measures and protects against adverse effect (
Some commenters suggested how the Department could account for these
Some commenters more generally expressed concern that use of data sources that include incentive pay, such as piece rates or bonuses, and overtime in AEWR determinations created unfairly inflated AEWRs. Some of these commenters expressed that including incentive pay and overtime in AEWR determinations resulted in “double counting,” and, because such payments are a reflection of individual worker productivity and performance, inclusion of these forms of compensation results in inaccurate AEWR determinations. A public policy organization urged the Department to require payment of the AEWR to workers in corresponding employment only if the worker was hired after the H–2A worker because payment of the AEWR to existing workers is not necessary to protect those workers' wages.
The Department declines to adopt these suggestions because of its longstanding determination that such approaches would lead to an adverse effect on the wages of workers in the United States similarly employed in violation of the Department's statutory mandate. Requiring employers to guarantee an hourly AEWR based on a wage survey without adjustments for housing and other benefits costs has been the Department's interpretation of H–2A statutory requirements since the 1980s. In addition, the statute contemplates a wage rate that accounts for the lower wages that the introduction of foreign workers causes, as well as no-cost housing and transportation for workers outside the local commuting area, which is intended to make agricultural jobs more attractive to U.S. workers.
The Department also declines to remove piece rates, bonuses, and other incentive-based pay from wage data used to determine the AEWR. As some agricultural jobs guarantee only the state or Federal minimum wage and otherwise pay based on a piece rate, advertising an hourly wage that does not include “incentive pay” is not a reasonable “base rate” for H–2A employers to advertise to U.S. workers. In addition, the approaches suggested would be inconsistent with the wage sources and approach the Department has adopted in the final rule. The OES survey collects wage data for straight-time, gross pay, exclusive of premium pay. Both the OES and the ECI measure of wages and salaries include, for example, commissions, production bonuses, piece rates, and other incentive-based pay.
An association recommended the Department permit employers to use a wage established in a bona fide collective bargaining agreement (CBA), even where the AEWR or prevailing wage rate is higher. The Department declines to permit employers to pay a wage below the AEWR based on a CBA. As explained above, the AEWR is the minimum rate the Department has determined is necessary to ensure the employment of H–2A workers does not adversely affect the wages of agricultural workers in the United States. As the Department noted in the 2010 Final Rule, due to relatively “[l]ow educational attainment, low skills, . . . and high rates of unemployment, agricultural workers have limited ability to negotiate wages and working conditions with farm operators or agricultural services employers.”
A few commenters objected to the Department's use of the mean wage rate to calculate the AEWR. A trade association and an employer suggested that the Department calculate the AEWR using the median wage rate, instead of the mean wage rate, which they explained would prevent “outliers” on both the low and high end from unduly influencing the AEWR, and therefore produce a more representative wage rate. As noted in prior rulemaking, the Department believes use of the OES mean best meets the Department's obligation to protect against adverse effect and is the most appropriate wage to avoid immigration-induced labor market distortions.
The Department declines to use the median because it does not represent the most predominant wage across a distribution, but instead represents only a midpoint. The mean is the best measure of central tendency for a normally distributed sample and provides equal weight to the wage rate received by each worker in the occupation across the wage spectrum. In low-skilled occupations, the mean represents the average wage paid to
One worker advocacy organization urged the Department to require the highest of the FLS, OES, or other “valid source” wage rate for the area of intended employment, asserting that use of the FLS wage where a higher wage from the OES or another valid source is available would be indefensible. Similarly, a second worker advocacy organization suggested the Department require employers to pay the highest wage rate from among all available sources of wage data at all levels of geographic detail (
This commenter also suggested the Department ensure that AEWRs will not be reduced in the future based on the proposed methodology and recommended revising § 655.120(b)(1)(ii) to provide that if an annual average hourly gross wage for the occupational classification in the state or region is not reported by the FLS, the AEWR for the occupational classification and state shall be the statewide annual average hourly wage for the SOC if one is reported by the OES survey with respect to any H–2A applications filed within following the effective date of this regulation, the AEWR shall be no lower than the applicable AEWR established for that region or state in 2019.
The Department declines to implement the commenter's proposal to retain the current AEWR methodology, while simultaneously instituting a new AEWR methodology and requiring employers to pay the highest of all wage sources across the current and proposed methodologies, as this would result in an exceedingly complex and confusing set of minimum wage guarantees. The Department must set the AEWR in a way that reasonably balances the needs and interests of workers in the United States similarly employed and employers and results in a wage that is a reasonable approximation of wages paid to workers in the United States similarly employed. Requiring payment of the highest wage rate among all available sources at all levels of geographic specificity, regardless of the occupation and area of intended employment, would in many cases require an employer to pay an enhanced wage untethered to actual wages paid to similarly employed workers in the area. This would not only unreasonably increase the labor costs of H–2A employers in those cases, but could reduce agricultural job opportunities and place upward pressure on wages in order for employers to attract a sufficient number of available workers. This result would be inconsistent with the twin purposes of the H–2A program to “assure [employers] an adequate labor force on the one hand and to protect the jobs of citizens on the other.”
The Department also declines to require employers to pay the local OES wage rate for the occupation if this rate is higher than rate determined by the applicable source under this final rule. For the reasons stated in the NPRM and above, the FLS should be used as the baseline to set the AEWR for field and livestock worker (combined) job opportunities—such as those requiring crop, nursery, and greenhouse workers (SOC 45–2092) and workers attending to farm or ranch animals (SOC 45–2093)—which constitute the overwhelming majority of employer requests for H–2A workers. The FLS is the preferred wage source for establishing the AEWR in these occupational classifications for the reasons discussed above. All other AEWRs will be established by using the OES survey, including in the unique circumstance that a wage rate for these occupations is not available from the FLS.
Regarding the use of local OES data, the Department is retaining use of geographically broader data sets for reasons explain above. The Department is using a statewide, or in some cases national, OES-based AEWR both to more closely align with the geographic areas from the FLS and to protect against the potential for wage depression from a large influx of nonimmigrant workers that is most likely to occur at the local level. The Department “consistently has set statewide AEWRs rather than substate [ ] AEWRs because of the absence of data from which to measure wage depression at the local level” and use of surveys reporting data at a broader geographic level “immunizes the survey from the effects of any localized wage depression that might exist.”
Further, the use of local OES wages would introduce significant complexities in establishing the offered wage. For example, agricultural associations filing master applications that cover members and worksites across two states or other occupations engaged in itinerant work across multiple states would have to keep pace with literally dozens of different minimum wage rates and the potential adjustments to each of those during the course of a work contract period. The wage payment, recordkeeping, and compliance burden associated with that kind of AEWR methodology would be substantial and unjustifiable. Finally, as noted above, the Department also proposed a revised prevailing wage determination methodology in the NPRM, which, if adopted in a separate final rule, would likely impact the number of prevailing wages that are established for H–2A job opportunities. Employers are currently required to pay the prevailing wage if higher than the AEWR and this wage rate is specifically tailored to crop or agricultural activities and geographic areas, as it may be based on a sub-state area when appropriate.
The Department also received several comments that were beyond the scope of this rulemaking. Some comments were specifically related to reforestation employers, and were not addressed because the definition of
A state agency expressed concern that the use of the AEWR for a particular occupation at an annual average hourly gross wage was not inclusive of service agricultural positions, and suggested that BLS work closely with the sheep-shearing industry before completing the OES, with careful consideration of how an hourly gross wage would negatively impact industries paying workers piece rates. Two commenters recommended the Department expand the wage data used to calculate AEWRs to include H–2A workers' wages in areas where more than 10 percent of the agricultural workforce is composed of H–2A workers and workers in corresponding employment. These commenters stated that H–2A wage requirements, whether due to the AEWR or prevailing wage rate, drive up non-H–2A wages and skew survey results in areas where H–2A workers represent a substantial percentage of the agricultural workforce. Further, these commenters requested the FLS continue to include the wages of U.S. workers in corresponding employment in states that meet the 10 percent threshold they recommended the Department employ for the AEWR.
These comments are beyond the scope of this rulemaking and the Department's authority, as they recommend changes to the methodology of the surveys the Department proposed to use to determine hourly AEWRs. As the Department noted in the NPRM with respect to potential changes to the FLS, the Department would engage in notice-and-comment rulemaking before implementing significant changes to AEWR data collection and reporting methods.
Under E.O. 12866, the Office of Management and Budget's (OMB) Office of Information and Regulatory Affairs (OIRA) determines whether a regulatory action is significant and, therefore, subject to the requirements of the E.O. and review by OMB.
Pursuant to the Congressional Review Act (5 U.S.C. 801,
The Department has determined that a 60-day waiting period between publication and the effective date of this rule would result in serious disruption and uncertainty for regulated parties. The Department's regulations require that it “publish, at least once in each calendar year, on a date to be determined by the OFLC Administrator, the AEWRs for each State as a notice in the
Even assuming data from the FLS were available to calculate AEWRs under the prior methodology, doing so would likely lead to significant confusion for affected parties given that, shortly after this calendar year's notice is published, a new methodology resulting from this rule would be in effect, and the Department would again adjust the AEWRs to ensure they align with what the Department has determined is the appropriate wage rate
Moreover, the purpose of delaying the effective date of a regulation is, generally speaking, “to give affected parties a reasonable time to adjust their behavior before the final rule takes effect.”
Here, the effective date of the rule will not precipitate an immediate impact on the interests or obligations of affected parties. A 60-day delay in the rule's effectiveness is therefore unnecessary. As explained above, for the overwhelming majority of job opportunities covered by the new AEWR methodology, the rule maintains, for the next two years, the existing wage rates currently in effect. This preserves the status quo for an extended period to give regulated entities sufficient opportunity to prepare for the new manner in which wage rates will be adjusted.
Similarly, if new wage rates were calculated and published under the prior methodology before the end of this calendar year, they would not become applicable until after a 14-day delay under the Department's customary practices.
Thus, the rule taking effect does not meaningfully alter, in the short term, the status quo, meaning the full 60-day delay between publication and when the rule becomes operative is not necessary to satisfy the purposes of the CRA.
For these reasons, the Department has determined it has good cause to shorten the lapse under the CRA by 15 days between when the rule is published and when it takes effect. The Department has typically published AEWR notices in mid-to-late December, and, in the Department's experience, there can be as much as a week's delay between when the Department finalizes such notices and when they are actually published. In light of these considerations, and given that the new methodology must be effective this calendar year to avoid the disruption described above, the Department has determined that shortening the CRA waiting period by 15 days is necessary to the effective administration of the H–2A program. Because this rule is being published in early November, a waiting period of 45 days is, in the Department's judgment, appropriate as it leaves adequate time for the Department to establish AEWRs under the new methodology before the end of the calendar year, while not shortening the CRA waiting period beyond what is necessary to avoid the kinds of disruption that the full 60-day waiting period would entail.
E.O. 13563 directs agencies to propose or adopt a regulation only upon a reasoned determination that its benefits justify its costs; the regulation is tailored to impose the least burden on society, consistent with achieving the regulatory objectives; and in choosing among alternative regulatory approaches, the agency has selected those approaches that maximize net benefits.
Section III.A.1 describes the need for the final rule, and section III.A.2 describes the process used to estimate the costs of the rule and the general inputs used, such as wages and number of affected entities. Section III.A.3 explains how the provisions of the final rule will result in quantifiable costs and transfer payments and presents the calculations the Department used to estimate them. In addition, section III.A.3 describes the unquantified transfer payments of the final rule. Section III.A.4 summarizes the estimated first-year and 10-year total and annualized costs and transfer payments of the final rule. Finally, section III.A.5 describes the regulatory alternatives that were considered during the development of the final rule.
The Department estimates that the final rule will result in costs and transfer payments. As shown in Exhibit 1, the final rule is expected to have an annualized cost of $70 thousand and a total 10-year quantifiable cost of $460 thousand at a discount rate of 7 percent.
The total cost of the final rule is associated with rule familiarization. Transfer payments are the results of changes to the methodology for determining the AEWRs. See the costs and transfer payments subsections of section III.A.3 (Subject-by-Subject Analysis) below for a detailed explanation.
The Department was unable to quantify some transfer payments of the final rule. The Department describes them qualitatively in section III.A.3 (Subject-by-Subject Analysis).
The Department has determined that this rulemaking is necessary to ensure that employers can access legal agricultural labor, without undue cost or administrative burden, while maintaining the program's strong protections for the U.S. workforce. Consistent with the goal of modernizing the H–2A program, this final rule amends the methodology by which the Department determines the hourly AEWRs for non-range agricultural occupations using wage data reported by the USDA FLS and the BLS OES survey. It also makes minor revisions related to the regulatory definition of the AEWR to conform to the methodology changes adopted in this final rule and to more clearly distinguish the hourly AEWRs applicable to non-range occupations from the monthly AEWR applicable to range occupations under 20 CFR 655.200 through 655.235.
As discussed above, the FLS has been the only comprehensive survey of wages paid by farmers and ranchers and has enabled the Department to establish minimum hourly rates of pay for H–2A job opportunities. However, the Department acknowledges the concerns expressed by many commenters about the unpredictability and volatility of the wage data from year-to-year, which the Department believes is a sufficient reason to reconsider its sole reliance on annually produced wage data from the FLS as a means to establish the AEWRs, even were FLS data currently available or made available in the future. On the other hand, given the comprehensiveness and relevance of the FLS data, the Department has determined it is appropriate to use the 2020 AEWRs,
On September 30, 2020, USDA publicly announced its intent to cancel the October 2020 data collection and resulting publication of the Farm Labor report.
As discussed in this final rule, the Department believes that the FLS data is the most appropriate wage source for establishing AEWRs for the majority of H–2A job opportunities. For example, the FLS has been the only comprehensive survey of wages paid by farmers and ranchers that has enabled the Department to establish hourly rates of pay for H–2A opportunities. Because doing so will be more predictable, less volatile, and easier to understand, while also ensuring protection of U.S. workers' wages and accurate AEWRs for job opportunities in higher-skilled occupations not adequately represented or reported by USDA in the current FLS data, and given that it may no longer be possible for the Department to rely on new wage data from the FLS, and that, even if such data were available, relying on it to make new adjustments to the AEWRs would likely cause, in some cases, the kinds of volatile and unpredictable wage fluctuations the Department seeks to avoid going forward, the Department has determined it is appropriate to use the 2020 AEWRs, which were based on the results from the FLS published in November 2019, as the foundation to establish AEWR for most H–2A job opportunities. Accordingly, the Department will use this FLS data for the specified SOCs and adjust the wages based on the ECI computed by the BLS.
The Department estimated the costs and transfer payments of the final rule relative to what would happen in the absence of the rule (
In accordance with the regulatory analysis guidance articulated in OMB's Circular A–4 and consistent with the Department's practices in previous rulemakings, this regulatory analysis focuses on the likely consequences of the final rule (
Exhibit 2 presents the number of entities that are expected to be affected by the final rule. The number of affected entities is calculated using OFLC certification data from 2016 through 2019. The Department provides this estimate and uses it to estimate the costs of the final rule.
The Department estimated growth rates for applications processed and certified H–2A workers based on FY 2012–2019 H–2A program data, presented in Exhibit 3.
The geometric growth rate for certified H–2A workers using the program data in Exhibit 3 is calculated as 17.2 percent. This growth rate, applied to the analysis time-frame of 2021 to 2030, would result in more H–2A certified workers than projected Bureau of Labor Statistics (BLS) workers in the relevant H–2A SOC codes.
The Department ran multiple ARIMA models on each set of data and used common goodness-of-fit measures to determine how well each ARIMA model fit the data.
The Department presents the estimated average number of applicants and the change in burden hours required for rule familiarization in section III.A.3 (Subject-by-Subject Analysis).
In section III.A.3 (Subject-by-Subject Analysis), the Department presents the costs, including labor, associated with the implementation of the provisions of the final rule. Exhibit 4 presents the hourly compensation rates for the occupational categories expected to experience a change in the number of hours necessary to comply with the final rule. The Department used the mean hourly wage rate for private sector human resources specialists.
The Department's analysis below covers the estimated costs and transfer payments of the final rule. In accordance with Circular A–4, the Department considers transfer payments as payments from one group to another that do not affect total resources available to society. This final rule maintains the methodologies for estimating the cost of rule familiarization and the transfer payments associated with the AEWR wage structure from the NPRM. However, the AEWR wage structure proposed in the NPRM has been replaced with a wage structure for the final rule that is substantively different and is discussed in more detail in the estimation of transfer payments.
The following section describes the costs of the final rule.
When the final rule takes effect, H–2A employers will need to familiarize themselves with the new regulations. Consequently, this will impose a one-time cost in the first year.
To estimate the first-year cost of rule familiarization, the Department applied the growth rate of H–2A applications (6.2 percent) to the number of unique H–2A applicants (8,050) to determine the number of unique H–2A applicants impacted in the first year. The number of unique H–2A applicants in the first year (8,551) was multiplied by the estimated amount of time required to review the rule (one hour).
The following section describes the transfer payments of the final rule.
This section discusses the quantifiable transfer payments related to revisions to the wage structure.
Section 218(a)(1) of the INA, 8 U.S.C. 1188(a)(1), provides that an H–2A
As explained in the NPRM, the total number of certified workers is based on the average number of H–2A workers in FY 2016 and FY 2017. Based on the Department's NPRM estimate for H–2A workers' certified growth rate of 0.19, the estimated number of certified workers for FY 2018 is 223,411, which is closer to the figure provided by OFLC. Transfer payments computed under this final rule are reflective of the changes adopted to the AEWR methodology and are substantively different from transfer payments presented in the NPRM.
This final rule revises the AEWR methodology so that it is based on data more specific to the agricultural occupation of workers in the United States similarly employed. The Department currently sets the AEWR at the annual average hourly gross wage for field and livestock workers (combined) for the state or region from the FLS conducted by the USDA's NASS, which results in a single AEWR for all agricultural workers in a state or region. As discussed in depth in the preamble, the Department is concerned that this AEWR methodology may have an adverse effect on the wages of workers in higher paid agricultural occupations, such as construction laborers on farms, whose wages may be inappropriately lowered by an AEWR established from the wages of field and livestock workers (combined), an occupational category from the FLS that does not include those supervisory workers.
The Department will set the AEWR under this final rule based on the USDA 2019 FLS for the following SOC codes:
Beginning on the effective date of the final rule through calendar year 2022, the wages for Field Workers and Livestock Workers (combined), as reported for the state or region by the USDA 2019 FLS, shall continue to be the AEWRs where the agricultural services or labor is classified under the above SOC codes. Beginning calendar year 2023 and annually thereafter, the AEWRs based on FLS will be adjusted by the percent change in the BLS ECI for the preceding 12 months.
For all other SOC codes, the Department will annually set the AEWRs based on the statewide annual average gross hourly wage reported by the BLS OES survey. If the OES survey does not report a statewide annual average gross hourly wage for the SOC, the AEWR shall be the national annual average gross hourly wage reported by the OES survey.
To estimate wage impacts, the Department uses FY2016 through FY2020 OFLC labor certification data. To include the most recent H–2A certification data (FY2020) the Department simulated Q3 and Q4 data based on FY2016–FY2019 data, to produce a full year of certification data.
For the three most common SOC codes used in the H–2A program, the Department calculated, by state and SOC code, the number of certifications that had work in one or two calendar years, and the average number of days that occurred in each year. For all other SOC codes, the Department used the national average from FY2016 to FY2019 of the percentage of certifications with work in one or two calendar years, and the number of days in each year. For number of workers per certification and number of hours, the average number of workers for each SOC code and state from FY2016 to FY2019 was applied. Total wages were then calculated using the simulated Q3 and Q4 certifications and these estimated FY2020 Q3 to Q4 wage impacts were summed with the FY2020 Q1 to Q2 wage impacts to create an estimate of total wages for the entirety of FY2020.
The Department calculated the impact on wages that would occur from the implementation of the revised AEWR methodology. For each H–2A certification in FY2016 through FY2020, the Department calculated total wages under the previously existing AEWR baseline methodology and total wages under the revised AEWR methodology. We assume that in the absense of this rule the AEWRs would continue to increase at the same rate that it would have in previous years. Then, the Department averaged total wages by SOC code across FY2016 through FY2020 to produce an annual average wage under the baseline and final rule. Total wages were projected for SOC codes that are updated annually beginning in 2023 with the most recent 12-month ECI by calculating the nominal wage in each year from 2021 through 2030 using an average of annual September to September ECI growth rates since 2016 (2.89 percent).
The Department provides two illustrative examples illustrating the above methodology. Exhibits 5 and 6 illustrate how total wages are calculated for the final rule and baseline. The Department multiplied the number of certified workers by the number of hours worked each week, the number of weeks in a given year that the employees worked, and the annual average hourly gross state AEWR wage for SOC codes set by the AEWR. For SOC codes set by OES the annual average hourly gross wage from the state-level OES by SOC code for the work performed, or national OES if the state-level wage is not available. Exhibit 5 includes an example for each case set by the AEWR and OES.
After the total wages for the final rule was determined, the wage calculation under the baseline AEWR was calculated. The methodology is similar to that used to estimate the projected AEWR under the final rule: The number of workers certified is multiplied by the number of hours worked each week, the number of weeks in a given year that the employees worked, and the AEWR baseline for the year(s) in which the work occurred (Exhibit 6 provides an example of the calculation of the AEWR baseline for the same case as in Exhibit 5).
The total wages for every certification from FY2016 through FY2020 were calculated using the method in Exhibit 5 and Exhibit 6. Wages for each year were converted to 2020 dollars using the ECI, summed by SOC code, then averaged to produce the average annual total wages by SOC code. To simulate the final rule wage methodology of annually updating the AEWR for SOC codes set by FLS, beginning in 2023, the Department provides an illustrative example in Exhibit 7
Once the total wages for the AEWR baseline and final rule were obtained for each SOC code, the Department estimated the wage impact of the revised AEWR by subtracting the baseline AEWR total wages from the final rule total wages in each year from 2021 through 2030 to determine the final rule wage impact. The resulting difference between final rule wages and baseline wages are presented in Exhibit 8.
The changes in wages constitute a transfer payment from H–2A employees to H–2A employers for SOC codes set by the FLS AEWR and annually updated. For all other SOC codes set by OES, and updated annually, the change in wages constitutes a transfer from H–2A employers to H–2A employees. In total, there is a transfer from employees to employers. To account for the growth rate in H–2A workers the total transfers in each year from Exhibit 8 are increased annually by the estimated growth rate of H–2A workers (6.2 percent).
The decrease (or increase) in the wage rates for H–2A workers represents an important transfer from non-H–2A workers in corresponding employment to agricultural employers, not just H–2A workers to agricultural employers. The lower (or higher) wages for H–2A workers associated with the final rule's methodology for determining the monthly AEWR will also result in wage changes to workers in corresponding employment. However, the Department does not have sufficient information about the number of workers in corresponding employment affected and their wage structure to reasonably measure the wage transfer to or from these workers.
The program has experienced a substantial increase in the number of certified H–2A applications and worker positions in the last 10 years that generally reflects the improving economy and lack of a sufficient number of domestic agricultural workers during the period (see Exhibit 3). The new AEWR methodology may further encourage U.S. employers to use more H–2A workers for field and livestock work in the absence of available U.S. workers; however, we cannot measure the potential increase in the number of H–2A workers attributable to the new AEWR methodology due to data limitations.
Exhibit 9 summarizes the estimated total costs and transfer payments of the final rule over the 10-year analysis period.
The Department estimates the annualized costs of the final rule at $0.07 million and the annualized transfer payments (from workers to H–2A employers) at $170.68 million, at a discount rate of 7 percent.
The Department considered two alternatives to the chosen approach of establishing the AEWR at the annual average hourly gross wage for the state or region and SOC from the FLS where USDA reports such a wage. First, the Department considered using the current FLS occupational classifications of field and livestock workers for each state or region to set a separate AEWR for field workers and another AEWR for livestock workers at the annual average hourly gross wage from the FLS for workers covered by those classifications. Under this alternative, the Department would use the OES average hourly wage for the SOC and state if either (1) the occupation covered by the job order is not included in the current FLS occupational classifications of field or livestock workers;
The total impact of the first regulatory alternative was calculated in the same manner as the revised wage using FY2016 to FY2020 certification data. The Department estimated average annual undiscounted transfers of $18.48 million. The total transfer over the 10-year period was estimated at $184.76 million undiscounted, or $159.97 million and $132.37 million at discount rates of 3 and 7 percent, respectively. The annualized transfer over the 10-year period was $18.75 million and $19.12 million at discount rates of 3 and 7 percent, respectively.
Under the second regulatory alternative considered by the Department, the Department would set the AEWR using the OES average hourly wage for the SOC and State. When OES state data is not available, the Department would set the AEWR at the OES national average hourly wage for the SOC under this alternative. The Department again used the same method to calculate the total impact of the regulatory alternative. The Department estimated average annual undiscounted transfers of $66.36 million. The total transfer over the 10-year period was estimated at $663.56 million undiscounted, or $574.51 million and $482.21 million at discount rates of 3 and 7 percent, respectively. The annualized transfer over the 10-year period was $67.35 million and $68.66 million at discount rates of 3 and 7 percent, respectively.
Exhibit 10 summarizes the estimated transfer payments associated with the three considered revised wage structures over the 10-year analysis period. Transfer payments under the final rule are transfers from H–2A employees to H–2A employers and transfers under both alternatives are transfers from H–2A employers to H–2A employees. The Department prefers the current approach because it allows specific OES wages for workers in higher-paid agricultural occupations, such as supervisors of farmworkers and construction laborers on farms, while simplifying the AEWR for SOC codes set by the FLS AEWR and tying it to the ECI index. The Department prefers the chosen approach to the second regulatory alternative: The Department finds benefits to maintaining the FLS AEWR for some SOC codes, which is a superior wage source to the OES for those occupations. The FLS directly surveys farmers and ranchers and the FLS is recognized by the BLS as the authoritative source for data on agricultural wages. The chosen approach maintains the second regulatory alternative advantage of using OES for SOC codes where wages may be underestimated by the FLS AEWR.
The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601
The Department believes that this final rule will have a significant economic impact on a substantial number of small entities and therefore the Department publishes this FRFA. The Department invited interested persons to submit comments on the following estimates, including the number of small entities affected by the proposed rule, the compliance cost estimates, and whether alternatives exist that will reduce the burden on small entities while still remaining consistent with the objectives of the proposed rule.
The Department is amending current regulations related to the H–2A program in a manner that modernizes and eliminates inefficiencies in the process by which employers obtain a temporary agricultural labor certification for use in petitioning DHS to employ a nonimmigrant worker in H–2A status. Sections 101(a)(15)(H)(ii)(a) and 218(a)(1) of the INA, 8 U.S.C. 1101(a)(15)(H)(ii)(a) and 1188(a)(1), establish the H–2A nonimmigrant worker visa program which enables U.S. agricultural employers to employ foreign workers to perform temporary or seasonal agricultural labor or services where the Secretary of DOL certifies (1) there are not sufficient U.S. workers who are able, willing, and qualified, and who will be available at the time and place needed to perform the labor or services involved in the petition; and (2) the employment of the aliens in such labor or services will not adversely affect the wages and working conditions of workers in the United States similarly employed. The standard and procedures for the certification and employment of workers under the H–2A program are found in 20 CFR part 655 and 29 CFR part 501.
The Secretary has delegated the authority to issue temporary agricultural labor certifications to the Assistant Secretary, ETA, who in turn has delegated that authority to ETA's OFLC. Secretary's Order 06–2010 (Oct. 20, 2010). In addition, the Secretary has delegated to WHD the responsibility under section 218(g)(2) of the INA, 8 U.S.C. 1188(g)(2), to assure employer compliance with the terms and conditions of employment under the H–2A program. Secretary's Order 01–2014 (Dec. 19, 2014).
The Department received one comment on the IRFA. One commenter stated that, in their view, the proposed rule would fail to protect farmworkers and would disproportionately favor larger farming operations at the expense of smaller operations.
The Department does not believe that the final rule will have a disproportionally detrimental impact on small farms as the wage impacts on small entities are primarily a cost decrease. In fact, the Department estimates that more than 99 percent of small entities will receive a reduction in wage obligations. Additionally, the Department believes that the proposed changes to the wage rates reasonably implement the statute's requirement that the wages of workers in the United States similarly employed not be adversely affected by the employment of H–2A foreign workers.
The Department did not receive comments from the Chief Counsel for Advocacy of the Small Business Administration.
The RFA defines a “small entity” as a (1) small not-for-profit organization, (2) small governmental jurisdiction, or (3) small business. The Department used the entity size standards defined by SBA, in effect as of August 19, 2019, to classify entities as small.
The Department collected employment and annual revenue data from the business information provider Data Axle and merged those data into the H–2A disclosure data for FYs 2015, 2016, 2017, 2018, and 2019. Disclosure data for 2015 was included for cases that have certified workers in both 2015 and 2016. This process allowed the Department to identify the number and type of small entities in the H–2A disclosure data as well as their annual revenues. The Department identified 23,045 unique cases. Of those 23,045 cases, the Department was able to obtain data matches of revenue and employees for 6,135 H–2A cases with work in any year between 2016 and 2019. Because a single entity can apply for temporary H–2A workers multiple times, unique entities had to be identified. Additionally, duplicate cases that appeared multiple times within the dataset were removed (
To provide clarity on the agricultural industries impacted by this regulation, Exhibit 11 shows the number of individual H–2A small entities employers with certifications in any year between 2016 and 2019 within each NAICS code at the 6-digit and 4-digit level.
The Department has estimated the incremental costs for small entities from the baseline (
The Department estimates that small entities not classified as H–2A labor contractors, 1,946 unique small entities,
In addition to the cost of rule familiarization above, each small entity will have a decrease (or increase) in the wage costs (or cost-savings) due to the revisions to the wage structure. To estimate the wage impact for each small entity we followed the methodology presented in the E.O. 12866 section. For each certification of a small entity, we calculated total wage impacts by projecting total wages for 10 years under the baseline and 10 years under the final rule. If a small entity had a certification in multiple years in the historical data (
The Department determined the proportion of each small entities' total revenue that would be impacted by the cost savings (or costs) of the final rule to determine if the final rule would have a significant and substantial impact on small entities. The cost impacts included estimated first year costs and the wage impact introduced by the final rule. The Department used a total cost estimate of 3 percent of revenue as the threshold for a significant individual impact and set a total of 15 percent of small entities incurring a significant impact as the threshold for a substantial impact on small entities.
A threshold of 3 percent of revenues is consistent with the threshold in the NPRM and has been used in prior rulemakings for the definition of significant economic impact.
Exhibit 12 provides a breakdown of small entities by the proportion of revenue affected by the costs of the final rule. Of the 1,946 unique small entities with work occurring in any year from 2016 to 2019 and revenue data, 8.2 percent of employers had more than 3 percent of their total revenue impacted in the first year. In the 10th year, 42.3 percent are estimated to have more than
The final rule does not have any reporting, recordkeeping, or other compliance requirements impacting small entities.
The final rule will result in net cost savings to most (more than 99 percent of) small entities because the wage cost savings outweigh the trivial rule familiarization cost. Therefore, the Department did not consider alternatives to reduce the burden on small entities because there is no net cost imposed on small entities by this final rule.
The Paperwork Reduction Act of 1995 (PRA), 44 U.S.C. 3501
The Unfunded Mandates Reform Act of 1995 (UMRA) (Pub. L. 104–4, codified at 2 U.S.C. 1501
This final rule does not result in unfunded mandates for the public or private sector because private employers' participation in the program is voluntary, and State governments are reimbursed for performing activities required under the program. The requirements of Title II of the UMRA, therefore, do not apply, and the Department has not prepared a statement under the UMRA.
This final rule would not have substantial direct effects on the states, on the relationship between the National Government and the states, or on the distribution of power and responsibilities among the various levels of government. Therefore, in accordance with section 6 of Executive Order 13132, it is determined that this final rule does not have sufficient federalism implications to warrant the preparation of a federalism summary impact statement.
The Department has reviewed this final rule in accordance with E.O. 13175 and has determined that it does not have tribal implications. This final rule does not have substantial direct effects on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes. Accordingly, E.O. 13175, Consultation and Coordination with Indian Tribal Governments, requires no further agency action or analysis.
Administrative practice and procedure, Employment, Employment and training, Enforcement, Foreign workers, Forest and forest products, Fraud, Health professions, Immigration, Labor, Passports and visas, Penalties, Reporting and recordkeeping requirements, Unemployment, Wages, Working conditions.
For the reasons stated in the preamble, the Department of Labor amends 20 CFR part 655 as follows:
Section 655.0 issued under 8 U.S.C. 1101(a)(15)(E)(iii), 1101(a)(15)(H)(i) and (ii), 8 U.S.C. 1103(a)(6), 1182(m), (n), (p), and (t), 1184(c), (g), and (j), 1188, and 1288(c) and (d); sec. 3(c)(1), Pub. L. 101–238, 103 Stat. 2099, 2102 (8 U.S.C. 1182 note); sec. 221(a), Pub. L. 101–649, 104 Stat. 4978, 5027 (8 U.S.C. 1184 note); sec. 303(a)(8), Pub. L. 102–232, 105 Stat. 1733, 1748 (8 U.S.C. 1101 note); sec. 323(c), Pub. L. 103–206, 107 Stat. 2428; sec. 412(e), Pub. L. 105–277, 112 Stat. 2681 (8 U.S.C. 1182 note); sec. 2(d), Pub. L. 106–95, 113 Stat. 1312, 1316 (8 U.S.C. 1182 note); 29 U.S.C. 49k; Pub. L. 107–296, 116 Stat. 2135, as amended; Pub. L. 109–423, 120 Stat. 2900; 8 CFR 214.2(h)(4)(i); 8 CFR 214.2(h)(6)(iii); and sec. 6, Pub. L. 115–218, 132 Stat. 1547 (48 U.S.C. 1806).
Subpart A issued under 8 CFR 214.2(h).
Subpart B issued under 8 U.S.C. 1101(a)(15)(H)(ii)(a), 1184(c), and 1188; and 8 CFR 214.2(h).
Subpart E issued under 48 U.S.C. 1806.
Subparts F and G issued under 8 U.S.C. 1288(c) and (d); sec. 323(c), Pub. L. 103–206, 107 Stat. 2428; and 28 U.S.C. 2461 note, Pub. L. 114–74 at section 701.
Subparts H and I issued under 8 U.S.C. 1101(a)(15)(H)(i)(b) and (b)(1), 1182(n), (p), and (t), and 1184(g) and (j); sec. 303(a)(8), Pub. L. 102–232, 105 Stat. 1733, 1748 (8 U.S.C. 1101 note); sec. 412(e), Pub. L. 105–277, 112 Stat. 2681; 8 CFR 214.2(h); and 28 U.S.C. 2461 note, Pub. L. 114–74 at section 701.
Subparts L and M issued under 8 U.S.C. 1101(a)(15)(H)(i)(c) and 1182(m); sec. 2(d), Pub. L. 106–95, 113 Stat. 1312, 1316 (8 U.S.C. 1182 note); Pub. L. 109–423, 120 Stat. 2900; and 8 CFR 214.2(h).
(b) * * *
(b)(1) Except for occupations governed by the procedures in §§ 655.200 through 655.235, the OFLC Administrator will determine the AEWRs as follows:
(i) If the occupation and geographic area were included in the Department of Agriculture's (USDA) Farm Labor Survey (FLS) for wages paid to field and livestock workers (combined) as reported for November 2019:
(A) For the period from December 21, 2020 through calendar year 2022, the AEWR shall be the annual average hourly gross wage for field and livestock workers (combined) in effect on January 2, 2020; and
(B) Beginning calendar year 2023, and annually thereafter, the AEWR shall be adjusted based on the Employment Cost Index (ECI) for wages and salaries published by the Bureau of Labor Statistics (BLS) for the most recent preceding 12 months.
(ii) If the occupation or geographic area was not included in the USDA FLS for wages paid to field and livestock workers (combined) as reported for November 2019:
(A) The AEWR shall be the statewide annual average hourly gross wage for the occupation if one is reported by the Occupational Employment Statistics (OES) survey; or
(B) If no statewide wage for the occupation and geographic area is reported by the OES survey, the AEWR shall be the national average hourly gross wage for the occupation reported by the OES survey.
(iii) The AEWR methodologies described in paragraphs (b)(1)(i) and (ii) of this section shall apply to all job orders submitted, as set forth in § 655.121, on or after December 21, 2020, including job orders filed concurrently with an
(2) The OFLC Administrator will publish a notice in the
(3)–(4) [Reserved]
(5) If the job duties on the