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Today the latest Adverse Effect Wage Rate (AEWR) is scheduled to be published in the Federal Register. For employers who are wondering about the status of the AEWR, this post will provide some background on the AEWR and briefly explain the recent policy changes (that have since been undone) that caused the delayed release of the 2021 AEWR.
The Adverse Effect Wage Rate
Agricultural employers seeking to hire foreign workers using H-2A visas must offer a federally mandated minimum wage. Employers must advertise in recruitment, offer, and pay their H-2A and U.S. farmworkers, with corresponding employment, a wage that is at least equal to the highest of:
the local prevailing wage for a particular job,
a collective bargaining wage, or
the state or federal minimum wage.
This rule is meant to prevent employers from hiring foreign workers at a wage rate that would adversely affect U.S. farmworkers. The AEWR varies by state and is typically higher than state or federal minimum wages.
The Farm Labor Survey
The annual AEWR is calculated based on the results of the Agricultural Labor Survey, commonly referred to as the Farm Labor Survey (FLS). The National Agricultural Statistics Service (NASS), the U.S. Department of Agriculture’s (USDA) statistical branch, conducts the survey, which is typically carried out in April and October and released in May and November in the Farm Labor Report. The FLS contains gross hourly wage rates for field and livestock workers (combined) for each state or region. The U.S. Department of Labor (DOL) uses the FLS data to calculate the AEWR for each state or region using the annual weighted average hourly wage for field and livestock workers. The purpose of the calculation and the resulting AEWR is to put U.S. farmworkers in the same position they would be, but for the presence of foreign workers, who potentially would be willing to perform farm work for a lower wage.
Suspension of the Farm Labor Survey
On September 30, 2020, USDA publicly announced its intent to cancel the planned FLS data collection for the last two quarters of fiscal year 2020. Consequently, NASS did not issue the Farm Labor Report as scheduled in November. On November 5, 2020, the DOL published a final rule, Adverse Effect Wage Rate Methodology for the Temporary Employment of H-2A Nonimmigrants in Non-Range Occupations in the United States, 85 FR 70445 (2020 AEWR final rule), (effective December 21, 2020). According to the 2020 AEWR final rule, the DOL elected to freeze the 2020 AEWRs for two years (2021 and 2022), and, beginning in 2023 adjust the AEWRs annually using the more general Employment Cost Index, instead of the FLS. According to the DOL, the 2020 AEWR final rule was “…meant to provide greater consistency and predictability in the H-2A nonimmigrant visa program.” Following the publication of the 2020 AEWR final rule, farmworker organizations filed lawsuits in federal court challenging the action.
Injunction of the Suspension of the Farm Labor Survey
On December 23, 2020, the U.S. District Court for the Eastern District of California (United Farm Workers, et al. v. U.S. Dep’t of Labor, et al., No. 20-cv-1690) issued an order enjoining (in other words, preventing) the DOL from implementing the 2020 AEWR final rule and ordering the DOL to operate under the previous methodology to calculate the AEWR. The court granted the injunction based on a finding that the plaintiffs’ claim - that the DOL had violated the Administrative Procedure Act (APA) by canceling the FLS and refusing to publish the annual Farm Labor Report - had a likelihood of success on the merits.
The APA establishes the standards that govern how federal agencies are held accountable to the public and the way in which their actions are subject to review by the courts. The APA also requires federal agencies to engage in sound decision-making and directs that agency actions be set aside if they are arbitrary or capricious.
Upon review, the court found the DOL’s actions appeared to have violated the APA’s public rulemaking procedures that are required before an agency makes substantive changes in federal policy. The court also found the plaintiffs were likely to prevail on their claim that the 2020 AEWR final rule was arbitrary and capricious because it was unsupported by and lacked adequate reasoning. The court noted that although DOL is “required to protect against adverse effects on workers generally,” the proposed methodology in the 2020 final rule “would not track local labor market conditions” and “depart from accurate livestock and fieldworker market wage data and intentionally depress and stagnate the wages of those workers.”
On January 12, 2021, the District Court issued a supplemental order requiring the DOL to publish the AEWRs for 2021 in the Federal Register on or before February 25, 2021 and to make those AEWRs effective upon their publication. The court also ordered the DOL to notify all state workforce agencies (SWAs), employers, and the general public that the AEWRs in effect on December 20, 2020, will remain in effect during the interim period until the Department publishes 2021 AEWRs in the Federal Register.
The Farm Labor Survey and the Publication of the 2021 AEWR
On February 11, 2021, the NASS released the Farm Labor Report originally scheduled for release November 25, 2020, which includes quarterly and annual average farm labor data for the year 2020. According to the results of the FLS, NASS reported an average increase of $0.63 per hour, or 4.5%, from 2020 to 2021, subject to regional differences. The 2021 AEWR for field and livestock workers in Maryland will be $14.05. Since the 2021 AEWR is higher than Maryland’s current state minimum wage ($11.75/hour) and the federal minimum wage ($7.25/hour), the AEWR is most likely the minimum wage employers of H-2A farmworkers will need to provide this year.