Adverse Effect Wage Rate Methodology for the Temporary Employment of H-2A Nonimmigrants in Non-Range Occupations in the United States
| Published date | 05 November 2020 |
| Citation | 85 FR 70445 |
| Record Number | 2020-24544 |
| Section | Rules and Regulations |
| Court | Employment And Training Administration,Labor Department |
Federal Register, Volume 85 Issue 215 (Thursday, November 5, 2020)
[Federal Register Volume 85, Number 215 (Thursday, November 5, 2020)]
[Rules and Regulations]
[Pages 70445-70477]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-24544]
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DEPARTMENT OF LABOR
Employment and Training Administration
20 CFR Part 655
[DOL Docket No. ETA-2019-0007]
RIN 1205-AB89
Adverse Effect Wage Rate Methodology for the Temporary Employment
of H-2A Nonimmigrants in Non-Range Occupations in the United States
AGENCY: Employment and Training Administration, Department of Labor.
ACTION: Final rule.
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SUMMARY: 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.
DATES: This final rule is effective December 21, 2020.
FOR FURTHER INFORMATION CONTACT: 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.
SUPPLEMENTARY INFORMATION:
I. Executive Summary
A. Purpose for the Regulatory Action
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.\1\ The ``Hire American'' directive of the
E.O. articulates that it is a policy of the Executive Branch to
rigorously enforce and administer the laws governing entry of
nonimmigrant workers into the United States in order to create higher
wages and employment rates for U.S. workers and to protect their
economic interests.\2\ It directs Federal agencies, including the
Department, to propose new rules and issue new guidance to prevent
fraud and abuse in nonimmigrant visa programs, thereby protecting U.S.
workers.\3\
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\1\ See E.O. 13788 (Apr. 18, 2017), 82 FR 18837 (Apr. 21, 2017).
\2\ Id. at sec. 2(b); see also DOL, U.S. Secretary of Labor
Protects Americans, Directs Agencies to Aggressively Confront Visa
Program Fraud and Abuse (June 6, 2017), https://www.dol.gov/newsroom/releases/opa/opa20170606.
\3\ E.O. 13788, sec. 5.
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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.
[[Page 70446]]
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,\4\ which were based on the results of the FLS published in
November 2019, as the starting point to establish AEWRs for most H-2A
job opportunities during calendar years 2021 and 2022 and, subject to
annual adjustments, in subsequent years. Accordingly, the Department
will use this FLS data as baseline wage rates for field and livestock
worker occupations and adjust the wages annually beginning in 2023
based on the change in the Employment Cost Index (ECI) for wages and
salaries computed by the BLS. This two-year transition period during
which the current wage rates will remain in effect provides employers
with greater certainty and a reasonable amount of time to plan their
labor needs and agricultural operations under the new wage baseline
before new adjustments to the existing wage rates take effect. For all
other occupations, the Department, as explained in Section II.B.5.b.,
will annually adjust and set the hourly AEWRs based on 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 occupation, the AEWR shall
be the national annual average hourly wage reported by the OES
survey.\5\
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\4\ Notice, Labor Certification Process for the Temporary
Employment of Aliens in Agriculture in the United States: 2020
Adverse Effect Wage Rates for Non-Range Occupations, 84 FR 69774
(Dec. 19, 2019).
\5\ See BLS OES, Frequently Asked Questions (Explaining the OES
may not report a wage for an occupation in a specific area ``for a
number of reasons, including failure to meet BLS quality standards
or the need to protect the confidentiality of our survey
respondents.''), https://www.bls.gov/oes/oes_ques.htm.
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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).\6\ Consequently, NASS may not release its November
2020 report containing the annual gross hourly wage rates for field and
livestock workers (combined) for each state or region based on
quarterly wage data collected from employers during calendar year 2020.
Under the Department's current AEWR methodology, this annual report is
used to establish and publish the hourly AEWRs for the next calendar
year period on or before December 31, 2020. USDA is not legally
required to produce the annual Farm Labor reports. The Department has
previously recognized that ``USDA could terminate the survey at any
time'' \7\ and it has suspended collection on at least two prior
occasions.\8\ USDA's decision to cancel the October data collection and
the release of the report planned for November 2020 cycle is the
subject of ongoing litigation.\9\ That litigation challenges whether
USDA provided adequate reasons for its decision to suspend data
collection and whether it considered important aspects of its decision,
and the district court recently ordered USDA to proceed with the
collection of FLS data for 2020. The litigation does not challenge,
however, USDA's discretion--if adequately explained--to terminate the
FLS at any time. Therefore, regardless of whether USDA ultimately is
successful in the ongoing litigation, it will remain the case that no
statute or regulation requires that USDA perform the FLS. The
Department has determined that this uncertainty regarding the near-term
and long-term future of the FLS also weighs in favor of the Department
establishing now a revised methodology for determining the AEWR, given
its
[[Page 70447]]
importance to the Department's administration of the temporary
agricultural labor certification requirement.
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\6\ Notice of Revision to the Agricultural Labor Survey and Farm
Labor Reports by Suspending Data Collection for October 2020, 85 FR
61719 (Sept. 30, 2020); USDA NASS, Guide to NASS Surveys: Farm Labor
Survey, https://www.nass.usda.gov/Surveys/Guide_to_NASS_Surveys/Farm_Labor/ (last modified Sept. 28, 2020); see also USDA, USDA NASS
to Suspend the October Agricultural Labor Survey (Sept. 30, 2020),
https://www.nass.usda.gov/Newsroom/Notices/2020/09-30-2020.php.
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. See USDA NASS, Farm Production Expenditures Methodology
and Quality Measures (July 31, 2020), available at https://www.nass.usda.gov/Publications/Methodology_and_Data_Quality/Farm_Production_Expenditures/07_2020/fpxq0720.pdf. Similarly, the
COA, which is conducted once every five years, also provides
information on farm income and expenditures only broadly and does
not include the detailed occupation-specific wage data necessary to
develop AEWRs that protect against adverse effect on wages of
workers in the United States similarly employed. USDA, Census of
Agriculture, https://www.nass.usda.gov/AgCensus/ (last modified May
19, 2020). Relatedly, and as explained in the Department's 2010 H-2A
Final Rule, ACS data would entail an unacceptable time lag of over a
year for each published AEWR and the data does not readily allow for
calculation of hourly earnings. Final Rule, Temporary Agricultural
Employment of H-2A Aliens in the United States, 75 FR 6883, 6899
(Feb. 12, 2010) (2010 Final Rule). The QCEW is limited to
approximately 52 percent of the workers in agricultural industries
and does not publish data for specific occupations;\6\ and, while
the NEA provides an estimate of total wages and salaries in an area,
those estimates are generally derived from the QCEW and,
accordingly, suffer from the same limitations as the QCEW data
itself. U.S. Dept. of Commerce, Bureau of Economic Analysis, Local
Area Personal Income Methods at II-1 (Nov. 2019), available at
https://www.bea.gov/system/files/methodologies/LAPI2018.pdf; see
also BLS, QCEW Handbook of Methods at 29 (May 7, 2020), available at
https://www.bls.gov/opub/hom/cew/pdf/cew.pdf. These limitations make
these two data sources less useful than the FLS data in establishing
AEWRs--even with the admitted limitations to the FLS data, which
this Rule aims to address. Lastly, the Department notes that the
NAWS is an inappropriate data source because it is neither conducted
on a regular schedule, nor at the state level, and also surveys
small numbers of workers. DOL Employment and Training Administration
(ETA), National Agricultural Workers Survey, https://www.dol.gov/agencies/eta/national-agricultural-workers-survey (last visited Oct.
3, 2020). In contrast to the OES survey, the Department also cannot
rely on these data sources to establish valid statewide average
hourly rates of pay for the specific occupations outside of the
field and livestock worker category, as is necessary to prevent
adverse effect. Accordingly, the Department has determined that FLS
data is the appropriate starting point for establishing the AEWRs
for most occupations using the H-2A program.
\7\ 73 FR 77110, 77173 (Dec. 18, 2008).
\8\ 76 FR 28730 (May 18, 2011); 72 FR 5675 (Feb. 7, 2007).
\9\ See United Farm Workers v. Perdue, No. 1:20-cv-01432-DAD-JLT
(E.D. Cal. filed Oct. 13, 2020).
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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.\10\ The Department has focused in 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, so as to ensure AEWRs for each
state are published this calendar year as required by 20 CFR 655.120.
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\10\ 84 FR 36168.
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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.
B. Legal Authority
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); see also 8 U.S.C. 1184(c)(1), 1188.\11\ Among
other things, a prospective H-2A employer must first apply to the
Secretary for a certification that:
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\11\ For ease of reference, sections of the INA are referred to
by their corresponding section in the United States Code.
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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).\12\ In addition, the Secretary has delegated to the Wage and
Hour Division (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.\13\
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\12\ See Secretary's Order 06-2010 (Oct. 20, 2010), 75 FR 66268
(Oct. 27, 2019); 20 CFR 655.101.
\13\ See Secretary's Order 01-2014 (Dec. 19, 2014), 79 FR 77527
(Dec. 24, 2014).
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C. Current Regulatory Requirements
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.\14\ The standards and procedures applicable to
the certification and employment of workers under the H-2A program are
found in 20 CFR part 655, subpart B, and 29 CFR part 501.
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\14\ Final Rule, Temporary Agricultural Employment of H-2A
Aliens in the United States, 75 FR 6883 (Feb. 12, 2010) (2010 Final
Rule).
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An employer seeking H-2A workers generally initiates the temporary
labor certification process by filing an H-2A Agricultural Clearance
Order, Form ETA-790/790A (job order), with the State Workforce Agency
(SWA) in the area where it seeks to employ H-2A workers.\15\ In
preparing the job order and to comply with its wage obligations under
20 CFR 655.122(l), the employer is required 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.\16\ Currently, the
AEWR is set by the Department and published annually as a single gross
hourly rate for field and livestock workers (combined) from the FLS
conducted by the USDA's NASS for each state or region and all
occupational classifications. At the time of submitting the job order,
the employer must agree to pay at least the AEWR, the prevailing hourly
wage rate, the prevailing piece rate, the agreed-upon collective
bargaining rate, or the Federal or state minimum wage rate, in effect
at the time work is performed, whichever is highest and pay that rate
to workers for every hour or portion thereof worked during a pay
period.\17\
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\15\ 20 CFR 655.121.
\16\ 20 CFR 655.120(a).
\17\ 20 CFR 655.122(l).
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D. Background and Public Comments Received on the NPRM
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.\18\ The Department
currently sets the AEWR for all agricultural workers in non-range
occupations at the gross hourly rate for field and livestock workers
(combined) from the FLS for each state or region. As part of this
regulatory action, the Department proposed to establish hourly AEWRs
for non-range occupations \19\ at the annual hourly gross rate for each
agricultural occupation in the State or region, as reported by the FLS
and the OES survey, so that each AEWR would be based on data more
specific to the
[[Page 70448]]
agricultural services or labor being performed under the Standard
Occupational Classification (SOC) system and, as a result, would better
protect against adverse effect on the wages of workers in the United
States similarly employed.\20\
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\18\ 84 FR 36168.
\19\ Range occupations are subject to a monthly AEWR as set
forth in 20 CFR 655.211(c).
\20\ See 84 FR 36168, 36171.
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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.\21\ With respect to the use of the FLS to
set AEWRs, the Department specifically sought comment on circumstances
where the FLS did not produce wages for all occupations or geographic
areas, including, but not limited to (1) whether the Department should
use the separate field worker and livestock worker classifications from
the FLS to set AEWRs for workers in occupations included in those
classifications if a wage based on the SOC from the FLS is not
available; (2) whether the Department should index past wage rates for
a given SOC using the Consumer Price Index (CPI) or ECI if a wage
cannot be reported for an SOC in a state or region in a given year
based on the FLS but a wage was available in a previous year; (3)
whether the Department should use the FLS national wage rate to set the
AEWR for an SOC if the FLS cannot produce a wage at the state or
regional level; and (4) whether the Department should consider any
other methodology that would promote consistency and reliability in
wage rates from year to year.\22\
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\21\ Id. at 36184.
\22\ Id. at 36182.
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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.\23\ Accordingly, the Department
proposed and sought comment on the use of the OES survey in limited
circumstances where the FLS does not produce data for a specific
occupation or geographic area. Such proposals reflected the
Department's concern that the current AEWR methodology may have an
adverse effect on the wages of workers in higher-paid non-range
agricultural occupations, such as supervisors of farmworkers and
construction laborers on farms, whose wages may be inappropriately
lowered by an AEWR based on the wages of field and livestock workers
(combined).\24\ A 60-day comment period allowed for the public to
review the proposed rule and provide comments through September 24,
2019.
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\23\ Id. at 36183.
\24\ Id. at 36180-36185.
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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.\25\ Thousands of these
comments specifically related to the proposed changes to the
methodology for setting the AEWRs. The commenters represented a wide
range of stakeholders interested in the H-2A program, including
farmworkers, farm owners, agricultural and trade associations, Federal
elected officials, state officials, SWAs, recruiting companies, law
firms, immigration and worker advocacy groups, labor unions, academic
institutions, public policy organizations, and other industry
associations interested in immigration related issues. The Department
received comments both in support of and in opposition to the proposed
amendments to the AEWR methodology, which are discussed in greater
detail below. These comments raised a variety of concerns, some general
and some pertaining to specific provisions identified in the NPRM.
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\25\ In addition, the Department received 128 comments in
response to document WHD_FRDOC_0001-0070 prior to the comment
submission deadline. These comments were incorporated into docket
number ETA-2019-007, and each comment received a note on
regulations.gov indicating that it was timely received.
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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 http://www.regulations.gov, docket number
ETA-2019-007.
E. Implementation of this Final Rule
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 Application for Temporary Employment Certification
to the OFLC National Processing Center (NPC) for emergency situations
under 20 CFR 655.134. In order for employers to understand their wage
obligations upon the effective date of this final rule, the Department
has posted the AEWRs applicable to each occupational classification and
geographic area contemporaneously with the publication of this final
rule on the OFLC website at https://www.dol.gov/agencies/eta/foreign-labor/.
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 Federal Register Notice. See 20 CFR 655.122(l).
II. Summary of Proposed Changes to the AEWR Methodology and the Changes
Adopted in This Final Rule
A. Revisions to 20 CFR 655.103(b), Definition of Adverse Effect Wage
Rate
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 Sec.
655.120(b), and the monthly rate for range occupations, as set forth in
Sec. 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
[[Page 70449]]
revisions to the FLS. While the Department did not specifically propose
to add the term ``gross'' to the definition of AEWR, it proposed to add
the term ``gross'' after the term ``hourly'' in describing the wage
rate from the FLS in 20 CFR 655.120(b), specifically because USDA was
considering making changes to the FLS to report a ``base'' wage that
would exclude certain types of incentive pay. As discussed in the NPRM,
the Department stated that if it elected to use the new base wage as a
source for the AEWR, it would first engage in new notice-and-comment
rulemaking to adopt such a change. However, the USDA has announced it
is canceling the planned October 2020 collection of wage data and will
not publish the annual Farm Labor report in November 2020. Accordingly,
any new data the USDA had planned to collect for that period is not
available and the Department will not rely on this ``base'' wage data
for purposes of the new AEWR methodology. Additionally, both the OES
and the ECI collect and report data using straight-time, gross pay that
include, for example, commission payments, production bonuses, cost-of-
living adjustments, piece rates, and other incentive-based pay.
B. Revisions to 20 CFR 655.120, Hourly AEWR Determinations
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 Federal Register. The Department proposed to make
the updated AEWRs effective through two announcements in the Federal
Register, one for the AEWRs based on the FLS (i.e., effective on or
about January 1), and a second for the AEWRs based on the OES survey
(i.e., effective on or about July 1), due to the different time periods
for release of these two wage surveys.
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.
1. The Need for an AEWR in the H-2A Program
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.'' \26\ The potential for
[[Page 70450]]
the employment of foreign workers to adversely affect the wages of U.S.
workers is heightened in the H-2A program because the H-2A program is
not subject to a statutory cap on the number of foreign workers who may
be admitted to work in agricultural jobs. Consequently, concerns about
wage depression from the importation of foreign workers are
particularly acute because access to an unlimited number of foreign
workers in a particular labor market and crop activity or agricultural
activity could cause the prevailing wage of workers in the United
States similarly employed to stagnate or decrease. The Department
continues to believe that the use of an AEWR is necessary in order to
effectuate its statutory mandate of protecting workers in the United
States similarly employed from the possibility of adverse effects on
their wages and working conditions. The AEWR is the rate that the
Department has determined is necessary to ensure the employment of H-2A
foreign workers will not have an adverse effect on the wages of workers
in the United States similarly employed.
---------------------------------------------------------------------------
\26\ Interim Final Rule, Labor Certification Process for the
Temporary Employment of Aliens in Agriculture and Logging in the
United States, 52 FR 20496, 20505 (June 1, 1987).
---------------------------------------------------------------------------
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.'' \27\ As a
result, ``their ability to negotiate wages and working conditions with
farm operators or agriculture service employers is quite limited.''
\28\ The AEWR provides a floor below which wages of U.S. and foreign
workers cannot be negotiated, thereby strengthening the ability of this
particularly vulnerable labor force to negotiate over wages with
growers, who are in a stronger economic and financial position in
contractual negotiations for employment.'' \29\
---------------------------------------------------------------------------
\27\ Proposed Rule, Temporary Agricultural Employment of H-2A
Aliens in the United States, 74 FR 45905, 45911 (Sept. 4, 2009).
\28\ Id.
\29\ Id.
---------------------------------------------------------------------------
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).'' \30\ The AEWR acts as ``a prevailing wage concept defined
over a broader geographic or occupational field.'' \31\ Because the
AEWR is generally based on data collected in a multi-state agricultural
region and an occupation broader than a particular crop activity or
agricultural activity, while the prevailing wage is commonly determined
based on a particular crop activity or agricultural activity at the
state or sub-state level, the AEWR protects against localized wage
depression that might occur in prevailing wage rates. The AEWR is
complemented by the prevailing wage determination process, which serves
a related, but distinct purpose. The prevailing wage, as determined
under current Departmental guidance, provides an additional safeguard
against wage depression in local areas and agricultural activities.
---------------------------------------------------------------------------
\30\ 75 FR 6883, 6892-6893.
\31\ Id. at 6892.
---------------------------------------------------------------------------
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,'' \32\ and the Department
has discretion to determine the methodological approach that it
believes best allows it to meet its statutory mandate.\33\ The INA
``requires that the Department serve the interests of both farmworkers
and growers--which are often in tension. That is why Congress left it
to DOL's judgment and expertise to strike the balance.'' \34\ There is
no statutory requirement that the Department set the AEWR at the
highest conceivable point, nor at the lowest, so long as it serves its
purpose. The Department may also consider issues of uniformity,
predictability, and other factors relating to the sound administration
of the H-2A program in deciding how to set the AEWR. For the reasons
discussed below, the Department has adopted an approach that it
believes is reasonable and strikes an appropriate balance under the
INA.
---------------------------------------------------------------------------
\32\ AFL-CIO v. Dole, 923 F.2d 182, 184 (DC Cir. 1991).
\33\ United Farm Workers v. Solis, 697 F. Supp. 2d 5, 8-11
(D.D.C. 2010).
\34\ Dole, 923 F.2d at 187.
---------------------------------------------------------------------------
2. Evidence of Current Wage Depression Is Not Needed
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.'' \35\ In addressing
similar comments in prior rulemaking, the Department explained that the
AEWR is not predicated on the existence of wage depression in the
agricultural sector and has noted that it is not statutorily required
to identify existing wage suppression prior to establishing and
requiring employers to pay an AEWR.\36\ In 1989, the Department
retained the AEWR despite finding that evidence regarding generalized
wage depression in agricultural was inconclusive.\37\ In reaffirming
its commitment to the AEWR in the 2010 rule, the Department explained
that ``regardless of any past adverse effect that the use of low-
skilled
[[Page 70451]]
foreign labor may or may not have had on the wages'' of workers in the
United States similarly employed, ``the Department considers the
forward-looking need to protect U.S. workers whose low skills make them
particularly vulnerable to even relatively mild--and thus very
difficult to capture empirically--wage stagnation or deflation.'' \38\
In addition, a lack of empirical evidence concerning adverse effect
would not itself support the conclusion that an AEWR is unnecessary,
but instead ``may be evidence that the imposition of the AEWR
heretofore has been successful in shielding domestic farm workers from
the potentially wage depressing effects of overly large numbers of
temporary foreign workers.'' \39\
---------------------------------------------------------------------------
\35\ 75 FR 6883, 6,895; see also Final Rule, Labor Certification
Process for the Temporary Employment of Aliens in Agriculture in the
United States; Adverse Effect Wage Rate Methodology, 54 FR 28037
(July 5, 1989).
\36\ See 54 FR 28037, 28046-47 (explaining that the INA ``only
requires that the AEWR prevent future adverse effect from the use of
foreign workers, not compensate for past effect''); see also Dole,
923 F.2d at 187 (noting that there is no ``statutory requirement to
adjust for past wage depression'' and that where ``the data [on
adverse effect] is inconclusive,'' the Department need only
``identify the considerations it found persuasive in making its
decision'' to revise the AEWR methodology).
\37\ See 54 FR 28037.
\38\ 75 FR 6883, 6893.
\39\ Id.
---------------------------------------------------------------------------
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.
3. The Department Proposed To Determine the AEWRs Based on Occupation-
Specific Data That Better Reflects the Wage of Workers in the United
States Similarly Employed
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.
4. General Comments Related to the Department's Proposed AEWR
Methodology
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 Federal Register late in the year. Another association
expressed concern that regional AEWRs under the 2010 Final Rule
``fluctuate wildly,'' and stated that ``[t]he total wage expenditure''
for a ``farm in the Cornbelt I region increased 8% from 2016 to 2017
and then decreased by 1% from 2017 to 2018.'' Many of these commenters
also asserted that the current AEWR methodology has resulted in
significant wage inflation and unsustainable annual increases in the
AEWR.
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
[[Page 70452]]
of job opportunities, and payment of inaccurate wages.
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.\40\
---------------------------------------------------------------------------
\40\ Rural Migration News, The H-2A Program and AEWRs: FLS and
OES (Sep. 9, 2019), https://migration.ucdavis.edu/rmn/blog/post/?id=2337.
---------------------------------------------------------------------------
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.''
5. The Department Will Base AEWRs on Data Using 2019 FLS Wages for the
Most Common SOCs and Occupation-Specific OES Wages for All Other SOCs
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
[[Page 70453]]
the Department's judgment, potentially exacerbate the very concerns it
seeks to address about wage predictability and long term business
planning that it seeks to address through the adoption of ECI-based
wage adjustments. Similarly, even if more recent, 2020 FLS wage data
were available, relying on it to set 2021 AEWRS would only serve to
perpetuate the very wage volatility that the Department seeks to
ameliorate through this rule. The 2020 AEWRs therefore provide
appropriate wage rates for the immediate future, and a reasonable
starting point from which future, ECI-based adjustments will be made.
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 (e.g., truck drivers, farm supervisors and managers,
construction workers, and many occupations in contract employment).
Moreover, use of occupation-specific OES wages for job opportunities
not covered by the FLS addresses 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. The wages
for these workers may be inappropriately lowered by an AEWR established
using FLS wage data derived from the wages of field and livestock
workers (combined) because data from this FLS category does not include
wages paid to construction laborers or supervisors of farmworkers,
among other occupations.
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 Sec. 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 Applications for Temporary
Employment Certification under 20 CFR 655.121 and 655.140 using the
AEWR methodology in effect at the time the job order or Application for
Temporary Employment Certification was filed. As a result, employers
who have already received a temporary agricultural labor certification,
or who have submitted a job order or Application for Temporary
Employment Certification before the effective date of this final rule,
will not be subject to wage obligations under the new AEWR methodology
until the OFLC Administrator publishes the next AEWR adjustment
applicable to the employer's job opportunity. In contrast, employers
who submit a job order on or after the effective date of this final
rule are subject to the new AEWR methodology for the job order and the
related Application for Temporary Employment Certification. The
Department has posted the AEWRs applicable to each occupational
classification and geographic area contemporaneously with the
publication of this final rule on the OFLC website at https://www.dol.gov/agencies/eta/foreign-labor/.
As provided in paragraph (b)(2) of Sec. 655.120, the Department
will publish notice of AEWR adjustments in the Federal Register. As the
majority of H-2A applications under the revised methodology will
involve AEWRs subject only to the FLS-based AEWR, commenters' concerns
about the publication schedule for AEWR notices have been resolved as
these job opportunities will be subject only to one annual ECI-based
adjustment and the ECI generally increases at a stable and predictable
rate. The Department will publish the ECI adjustments for field and
livestock worker AEWRs annually with an effective date on or about
January 1, based on the ECI publication cycle. Similarly, occupations
other than those included in the FLS field workers and livestock
workers (combined) category and all occupations in Alaska \41\ will be
subject only to the OES-based AEWR and only that AEWR's adjustment
cycle. The Department will publish OES-based AEWR adjustments annually
with an effective date on or about July 1, based on the OES publication
cycle. As explained below, only in the rare circumstance in which a job
opportunity constitutes a combination of an FLS-based AEWR occupation
and an OES-based AEWR occupation and the employer's certification
period includes an FLS-based AEWR adjustment or an OES-based AEWR
adjustment, and that adjustment changes which of the applicable AEWRs
is higher, would an employer see a change in the AEWR applicable to a
particular certification.
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\41\ There is no 2020 FLS-based AEWR for Alaska because the FLS
does not collect data covering Alaska.
---------------------------------------------------------------------------
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
[[Page 70454]]
Department sees tremendous benefit in moving to a new source of data
that is unlikely to be discontinued and therefore does not suffer from
the attendant uncertainty. The Department also believes that its new
methodology meets the statutory requirement to protect workers in the
United States similarly employed to H-2A workers from adverse wage
effects. After a two-year transition period where the AEWRs are held
constant, the methodology is likely to result in steady, predictable
wage increases for farmworkers. While other methods could result in
higher or lower AEWRs in any given year, the Department believes the
methodology in this final rule will ensure the employment of H-2A
workers does not adversely affect the wages of workers in the United
States similarly employed by providing annual changes in wages
consistent with the changes in wages and salaries in the broader
economy, as explained further below.. This is especially so given that
the Department is using a different methodology to more accurately
calculate than before the wages of certain more highly skilled
farmworkers, for which the Department has reason to believe the AEWRs
have artificially depressed wages.
a. Use of ECI-Adjusted FLS Wage Data for Field and Livestock Workers
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.\42\
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\42\ See Rogers v. Larson, 563 F.2d 617, 626 (3d Cir. 1977); see
also AFL-CIO v. Dole, 923 F.2d 182, 187 (D.C. Cir. 1991); United
Farmworkers of Am. v. Chao, 227 F. Supp. 2d 102, 108 (D.D.C. 2002)
(``In adopting an AEWR policy, DOL must balance the competing goals
of the statute--providing an adequate labor supply to growers and
protecting the jobs of domestic farmworkers.'').
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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.'' \43\ The
current SOC codes and titles associated with these workers, and which
will be subject to this wage setting approach, are: 45-2041--Graders
and Sorters, Agricultural Products; 45-2091--Agricultural Equipment
Operators; 45-2092--Farmworkers and Laborers, Crop, Nursery, and
Greenhouse; 45-2093--Farmworkers, Farm, Ranch, and Aquacultural
Animals; 53-7064--Packers and Packagers, Hand; and 45-
[[Page 70455]]
2099--Agricultural Workers, All Other. Accordingly, through calendar
year 2022, H-2A Applications for Temporary Employment Certification
seeking workers to perform duties encompassed by one or more of these
SOCs will continue to be subject to the 2020 AEWRs, which were based on
the average annual gross hourly wage rate for field and livestock
workers (combined) as reported for the state or region by the USDA FLS
in November 2019, provided that the FLS reported a wage rate for the
geographic area where the work will be performed. In areas where the
November 2019 USDA FLS data did not report a wage rate, the AEWR will
be the statewide annual average hourly gross wage for the occupation,
if one is reported by the OES survey; or, the OES national annual
average hourly gross wage, if the OES survey does not report a
statewide wage.\44\ Beginning calendar year 2023, and annually
thereafter, these FLS-based AEWRs will be adjusted by the percentage
change in the BLS ECI, Wages and Salaries for private sector workers,
for the preceding 12 month period.
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\43\ USDA NASS, Crosswalk from the National Agricultural
Statistics Services (NASS) Farm Labor Survey Occupations to the 2018
Standard Occupational Classification System, available at https://www.nass.usda.gov/Surveys/Guide_to_NASS_Surveys/Farm_Labor/farm-labor-soc-crosswalk.
\44\ For example, there is no 20120 FLS-based AEWR for Alaska
because the FLS does not collect data covering Alaska.
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i. Using the ECI to Annually Adjust the FLS Wage Data for Field and
Livestock Workers, Beginning in 2023 After a Two-Year Transition
Period, is Reasonable and More Appropriate Than Shifting to the OES
Survey for These Particular Occupations
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,'' \45\ that provides an accurate measure of
annual increases in wages across the private sector and ``is
particularly well suited as a vehicle to adjust wage rates to keep pace
with what is paid by other employers.'' \46\ ECI-based adjustments to
the AEWRs for these occupations will ensure field and livestock worker
wages continue to rise apace with wages in the broader U.S. economy in
a consistent and predicable manner.\47\ While the Department also
suggested the CPI as an alternative data source, the Department has
chosen the ECI rather than the CPI to adjust the FLS-based AEWRs
because the Department views the CPI as less relevant to wage
adjustments than the ECI, which measures changes in wages, rather than
consumer prices. The Department believes indexing the AEWRs to the ECI
will produce steadily increasing AEWRs for field and livestock workers
that fulfill the statutory requirement to prevent adverse effect on the
wages of workers in the United States similarly employed, while
providing consistency and predictability to the agricultural economy.
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\45\ See, e.g., John W. Ruser, The Employment Cost Index: What
Is It?, Monthly Labor Review (Sept. 2001), available at https://www.bls.gov/opub/mlr/2001/09/art1full.pdf.
\46\ How to Use the Employment Cost Index for Escalation, BLS,
available at https://www.bls.gov/ect/escalator.htm
\47\ This approach is consistent with the approach used to
establish the AEWR for range occupations. See 20 CFR 655.211(c); 80
FR 62958, 62995 (Oct. 16, 2015) (``In order to prevent wage
stagnation from again occurring, we have determined that the new
base wage rate should be subject to an adjustment methodology. We
agree with those commenters who recommended that we use the ECI for
wages and salaries to address the potential for future wage
stagnation. Our primary concern in setting the adjustment
methodology for these occupations is to confirm that the wages for
these occupations will continue to rise apace with wages across the
U.S. economy. Although the Department has previously used the
Consumer Price Index for All Urban Consumers (CPI-U) in other
circumstances where adjustment for inflation is warranted, we
conclude that it is reasonable to use the ECI for these occupations,
given that housing and food must be provided by the employer under
this Final Rule, making the cost of consumer goods less relevant
than under circumstances in which workers are paying these costs
themselves'').
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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.\48\ In setting the AEWR, the Department
must balance the interests of workers and employers. Setting AEWRs that
are ``too high in any given area . . . will harm U.S. workers
indirectly by providing an incentive for employers to hire undocumented
workers.'' \49\ The Department remains cognizant of the fact that the
``clear congressional intent was to make the H-2A program usable, not
to make U.S. producers non-competitive'' and that ``[u]nreasonably high
AEWRs could endanger the total U.S. domestic agribusiness, because the
international competitive position of U.S. agriculture is quite
fragile.'' \50\
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\48\ See DOL, Historical State AEWRs, Adverse Effect Wage Rates
by State from 2014 to Present, available at https://www.dol.gov/sites/dolgov/files/ETA/oflc/pdfs/2c.%20AEWR%20TRends%20in%20PDF_12.16.19.pdf.
\49\ 73 FR 8538, 8550 (Feb. 13, 2008); See also 73 FR 77110,
77171 (Dec. 18, 2008) (noting that wages above the market rate may
``encourage employers to hire undocumented workers instead'' of U.S.
or H-2A workers because ``many agricultural employers may be priced
out of participating in the H-2A program'' and ``[w]hen employers
cannot find U.S. workers'' and ``cannot afford H-2A workers because
they are required to pay them above-market wage rates, some will
inevitably end up hiring undocumented workers instead.'').
\50\ 54 FR 28037, 28046 (Jul. 5, 1989).
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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.\51\ Based on private
sector ECI data, the average annual adjustment over the last decade
would have been 2.78 percent, in contrast to the much higher annual
AEWR adjustments cited by many association commenters.\52\ Recent AEWR
data shows significant fluctuation in the AEWR in many states, both
upward and downward. Data shows that annual AEWR adjustments of 3
percent, 4 percent, and 5 percent have not been uncommon, nor is it
uncommon to see the AEWR increase one year, decrease the following, and
then increase again in the third year.\53\ For example, in Arizona,
wages
[[Page 70456]]
increased in 2016 by 6.3 percent, decreased in 2017 by 2.2 percent,
decreased again in 2018 by 4.5 percent, and then increased a jarring
14.7 percent in 2019.\54\ Further, the average difference between the
highest and lowest change across all AEWRs in the state and regions was
11 percent from 2014 to 2018. In 2019 and 2020, it was 23.4 percent and
8.5 percent, respectively, further evidence of the year-to-year
unpredictability in wage obligations employers face under current
regulations. \55\
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\51\ Since implementation of the 2015 H-2A Herder Rule, DOL has
adjusted the AEWR applied to H-2A sheep and goat herding jobs using
the ECI for wages and salaries published by the BLS for the
preceding 12-month period (October-to-October).
\52\ See BLS, Employment Cost Index, Historical Listing--Volume
III at 8, National Compensation Survey (July 2020), available at
https://www.bls.gov/web/eci/echistrynaics.pdf.
\53\ See DOL, Historical State AEWRs, Adverse Effect Wage Rates
by State from 2014 to Present, available at https://www.dol.gov/sites/dolgov/files/ETA/oflc/pdfs/2c.%20AEWR%20TRends%20in%20PDF_12.16.19.pdf.
\54\ Id.
\55\ Id.
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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.\56\ The FLS-based,
ECI-adjusted AEWR methodology in this final rule is, in the
Department's judgment, the most effective available methodology that
addresses the oft-cited concern among many commenters that under the
proposed approach, AEWRs would be too unpredictable and based on a
methodology that would be too complex. ECI-based adjustments are
straightforward to calculate and, based on the substantial historical
data available, predictable. Because the AEWR for these core
occupations will be tied to the ECI and adjusted annually, the
Department believes that the new methodology will reduce the
significant fluctuations in AEWRs and address the concerns raised by
commenters about the need for certainty. During the past decade, the
fluctuation in the ECI from one year to the next has not exceeded more
than half of one percent and the total range of increases over that
period was 2.1 to 3.9 percent,\57\ in contrast to AEWRs that have
fluctuated up or down within a much larger and less consistent or
predictable range, as noted above.
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\56\ USDA ERS, Economic Information Bulletin No. 203, America's
Diverse Family Farms at 7-9 (Dec. 2018), available at https://www.ers.usda.gov/webdocs/publications/90985/eib-203.pdf?v=2059.2
(noting agricultural employers commonly use marketing contracts and
their use of production contracts have ``ranged from 31 percent to
41 percent over the past two decades--with no discernible trend--and
averaged 37 percent''); USDA ERS, Agricultural Economic Report No.
837, Contracts, Markets, and Prices: Organizing the Production and
Use of Agricultural Commodities at 5 (Nov. 2004), available at
https://www.ers.usda.gov/webdocs/publications/41702/14700_aer837_1_.pdf?v=41061 (``Many crop-production contracts hold
for a growing season. Livestock contracts can range from one flock
(less than 2 months) to 10 years, and some livestock contracts are
automatically renewed unless cancelled.'').
\57\ See BLS, Employment Cost Index, Historical Listing--Volume
III at 8, National Compensation Survey (July 2020), available at
https://www.bls.gov/web/eci/echistrynaics.pdf.
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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 (i.e., SOCs 45-2092, 45-
2093, and 45-2041). Although AEWRs for field and livestock workers will
not increase or decrease annually under this final rule in the same
manner as they had under AEWRs determined using previously available
FLS data--in fact, the Department projects a slight reduction in wage
growth relative to the previous methodology--the approach in this final
rule will ensure consistent wage increases for field and livestock
workers and ensure these workers' wages keep pace with wage changes
among U.S. workers more broadly. And this approach may result in higher
AEWRs than would be the case using OES data. The Department has
considered that the use of occupation-specific OES AEWRs could
potentially reduce the wages of significant numbers of agricultural
workers in states with high H-2A usage, such as California and
Washington, including single year reductions of 10.3 and 6.4 percent,
respectively, for crop workers, and 12.6 and 15.4 percent,
respectively, for graders and sorters.\58\ In contrast, AEWRs
determined using the FLS wage data as a baseline and adjusted annually
using the BLS ECI compensation data for all private sector workers,
which has increased annually from 2.1 to 3.9 percent over the past 10
years, will serve to protect against the wage depression suggested by
these commenters, thus protecting against the possibility of the
presence of H-2A workers adversely affecting the wages
[[Page 70457]]
and working conditions of workers in the United States similarly
employed.\59\ It also may protect against absolute decreases in AEWRs,
which have been seen in some years in some states under the FLS
methodology, even during a robust economic expansion, in contrast to
the ECI which is a less volatile data source that has registered
increases during economic contractions and expansions.\60\
Additionally, in cases where the prevailing wage is higher than the
AEWR adjusted based on the ECI, the employer will be required to pay
the prevailing wage rate, and the Department proposed a revised
prevailing wage determination methodology in the July 2019 NPRM, which,
if adopted in the subsequent, second final rule, would likely affect
the wages required to be paid to H-2A workers and may provide
additional wage protection.
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\58\ This is based on a comparison of the 2020 AEWRs with the
most recent OES data for SOCs 45-2092 and 45-2041 in these states,
available at https://www.bls.gov/oes/current/oessrcst.htm.
\59\ See BLS, Employment Cost Index, Historical Listing--Volume
III at 8, National Compensation Survey (July 2020), available at
https://www.bls.gov/web/eci/echistrynaics.pdf.
\60\ See DOL, Historical State AEWRs, Adverse Effect Wage Rates
by State from 2014 to Present, available at https://www.dol.gov/sites/dolgov/files/ETA/oflc/pdfs/2c.%20AEWR%20TRends%20in%20PDF_12.16.19.pdf.
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ii. Using 2019 FLS Data Is a Reasonable Choice for Establishing an AEWR
Baseline for the Most Common SOCs in the H-2A Program
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,'' \61\ and ``reflects the view that farm
labor is mobile across relatively wide areas.'' \62\
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\61\ 84 FR 36168, 36182.
\62\ Id.
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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.'' \63\
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\63\ 75 FR 6883, 6899-6900.
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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
[[Page 70458]]
from academia, that use of an FLS-based AEWR as the starting point rate
to adjust annually based on the percentage change in the ECI is a
reasonable approach for AEWR determinations. Using the 2019 data from
the FLS as the starting point and adjusting the wages using the ECI
will provide greater wage continuity and avoid the further volatility
that might occur if future FLS data were relied on to make year-to-year
wage adjustments, which is beneficial for both farmworkers and
employers, making it the preferred approach, even if FLS publication
were resumed.
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.
b. Use of OES Wage Data for All Other Occupations
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 (e.g., construction, equipment
operators supporting farm production), therefore its use will better
protect against adverse effect for those occupations for which the FLS
did not provide valid wage data at a state or regional level. An AEWR
based solely on the field and livestock worker (combined) wage may have
the effect of depressing wages in higher-paid occupations. This aspect
of the methodology under the 2010 Final Rule appears to cause an
adverse effect on the wages of workers in the United States similarly
employed, contrary to
[[Page 70459]]
the Department's statutory mandate.\64\ And, as explained above, the
Department recognizes the continued uncertainty about ongoing
availability of FLS data, including to set the 2021 AEWRs.
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\64\ 84 FR 36168, 36178; see also id. at 36182 (discussing the
need to disaggregate ``wages of agricultural occupations that are
dissimilar and that this may have the effect of inappropriately
raising wages for lower-paid agricultural jobs while depressing
wages in higher-paid occupations'').
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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.\65\ Thus, a
statewide wage is more likely to protect against wage depression from a
large influx of nonimmigrant workers that is most likely to occur at
the local level.\66\ The use of a statewide wage also more closely
aligns with the geographic areas from the FLS. For these reasons, the
Department believes it is important to use the statewide OES wage where
one exists for the particular occupation. In the limited circumstances
in which there is no statewide wage, use of the national annual average
hourly wage reported for the particular SOC will ensure an AEWR
determination can be made each year without the need for any adjustment
method.
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\65\ See, e.g., 75 FR 6883, 6895.
\66\ Id. at 6899 (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.'')
---------------------------------------------------------------------------
c. Job Opportunities Covering Multiple SOCs Will Be Assigned the
Highest AEWR for All Applicable SOCs
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
[[Page 70460]]
Greenhouse; (2) Farm Workers and Laborers, Farm, Ranch and Aquacultural
Animals; (3) Agricultural Equipment Operators; (4) Graders and Sorters;
and (5) Supervisors. Two associations specified the first four of the
above categories and suggested supervisors could be a ``higher tier''
category derived from the others, such as ``packing-supervisor'' or
``livestock-manager.''
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.\67\
---------------------------------------------------------------------------
\67\ The commenter also asserted that the Department has
provided no justification for inclusion of these job opportunities
in the H-2A program when the employer is not a farm operator. That
point is outside the scope of this aspect of the proposed rule being
finalized.
---------------------------------------------------------------------------
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 Application for Temporary Employment
Certification do not fall within a single occupational classification,
the CO will determine the applicable AEWR based on the highest AEWR for
all applicable occupational classifications. In the event an employer's
job opportunity requires the performance of duties encompassed by two
or more distinct occupational classifications (e.g., an SOC occupation
subject to the FLS-based AEWR and an SOC occupation subject to the OES
AEWR, or two SOC occupations subject to different OES AEWRs), the
Department will assign the highest AEWR among all applicable
occupational classifications.
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 Application
for Temporary Employment Certification. This policy is consistent with
the way the Department determines prevailing wage rates for jobs that
cover multiple SOCs in the H-2B program. Under the final rule,
employers who currently file a single Application for Temporary
Employment Certification covering multiple workers and a wide variety
of duties might choose to file separate Applications for Temporary
Employment Certification and limit the duties of the job opportunities
in each Application for Temporary Employment Certification to a single
occupational classification. The employer would then pay a separate
wage rate based on the duties of each job opportunity included in the
separate
[[Page 70461]]
Applications for Temporary Employment Certification.
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 (i.e., more than 50
percent), where multiple SOCs are covered by the job opportunity. Doing
so could encourage employers to intersperse higher-skilled, higher-
paying work among many workers so that the higher-paying work is never
a duty ``primarily'' performed by any one employee. This would permit
the employer to gain the benefit of that work without having to hire a
U.S. worker at a higher wage to provide that work. The Department is
also concerned with how this would work in practice. Such an approach
would undermine the Department's goal of preventing the
misclassification of workers and encourage employers to combine work
from various SOCs. Ultimately, this approach runs an intolerable risk
of adversely affecting the wages of workers in the United States
similarly employed. Further, the Department believes commenters'
concerns are overstated, because each SOC code encompasses a broad
spectrum of job titles and covers a broad range of job duties.
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 Sec. 655.120 in this final rule.
6. Alternative Methodologies Proposed
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
(e.g., Federal or state minimum wage) below which many U.S. farmworkers
would be expected to accept employment, and, in many instances,
possibly disconnected from wages actually paid in the area of
employment. As the Department noted in prior rulemaking, ``a single
national AEWR applicable to all agricultural jobs in all geographic
locations would prove to be below market rates in some areas and above
market rates in other areas, resulting in all of the associated adverse
effects that have been previously discussed.'' \68\
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\68\ Proposed Rule, Temporary Agricultural Employment of H-2A
Aliens in the United States; Modernizing the Labor Certification
Process and Enforcement, 73 FR 8537, 8550 (Feb. 13, 2008) (2008
NPRM).
---------------------------------------------------------------------------
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.
[[Page 70462]]
Wage increases under both the ECI and OES survey are based on data of
actual wages paid or wages projected to be paid to workers and
therefore protect against adverse effect on the wages of workers in the
United States similarly employed by tracking the increase or decrease
in wages. Commenters did not provide a sufficient economic rationale to
impose a cap that is unrelated to employer costs. Such a cap would also
produce wage stagnation, most significantly in years when the wages of
U.S. workers are rising faster due to strong economic and labor market
circumstances.
a. Use Two-Tier System That Permits Paying H-2A Workers Lower Wages
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.
b. Use Four-Tiered, Skill-Based Wage Structure
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,\69\ which
amended section 212(p) of the INA to provide that where the Secretary
of Labor uses, or makes available to employers, a governmental survey
to determine the prevailing wage, such survey shall provide at least 4
levels of wages commensurate with experience, education, and the level
of supervision.\70\ That provision further notes that where an existing
government survey has only 2 levels, 2 intermediate levels may be
created by dividing by 3 the difference between the two levels offered,
adding the quotient thus obtained to the first level, and subtracting
that quotient from the second level.\71\
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\69\ Consolidated Appropriations Act, 2005, Public Law 108-447,
div. J, tit. IV, section 423; 118 Stat. 2809 (Dec. 8, 2004).
\70\ 8 U.S.C. 1182(p)(4).
\71\ 8 U.S.C. 1182(p)(4).
---------------------------------------------------------------------------
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.\72\ In the 2010 H-2A rule, the
Department determined that ``the notion of meaningful skill differences
among agricultural workers is unfounded'' and that the most common H-2A
agricultural 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.'' \73\ The
Department eliminated the tiered wage structure in the H-2B program for
the same reasons and noted that wage differentials among workers in an
occupation can be the result of many factors other than skill
differentials.\74\
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\72\ Final Rule, Wage Methodology for the Temporary Non-
Agricultural Employment H-2B Program, 80 FR 24146 (Apr. 29, 2015).
\73\ 75 FR 6883, 6900.
\74\ 80 FR 24146, 24159 (citing factors including, but not
limited to, ``[s]ize of employer; seniority; rate of worker
turnover; union status; gender, race, ethnicity, or nationality;
work hour schedule; age; availability of benefits in the form of
training opportunity, health insurance, paid time off, and other
benefits; sub-location within the same area of intended employment;
and pay structure (performance-based pay vs. fixed pay per hour)'')
(citation omitted).
---------------------------------------------------------------------------
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.\75\ The
Department's experience using a tiered wage structure in the H-2B
program led to a similar result and the Department ultimately
determined that use of the tiered wage structure produced
``artificially lower [wages] to a point that [they] no longer
represent[ed] a market-based wage.'' \76\ The commenter above provided
no evidence demonstrating the existence of meaningful skill
differentials among workers within any particular H-2A occupation, much
less a nexus between those differentials and wages paid to workers in
the occupation that would necessitate the same four-tiered, skill-based
wage structure in the H-2A program that the Department eliminated in
prior rulemaking. Therefore, the Department declines to implement a
tiered wage structure in this final rule.
---------------------------------------------------------------------------
\75\ See 75 FR 6883, 6898 (noting that ``73 percent of
applicants for H-2A workers specified the lowest available skill
level--corresponding to the wage earned by the lowest paid 16
percent of observations in the OES data'' while ``[o]nly 8 percent
of applicants specified a skill level that translated in a wage
above the OES median'').
\76\ Final Rule, Wage Methodology for the Temporary Non-
agricultural Employment H-2B Program, 76 FR 3452, 3463 (Jan. 19,
2011); see also 80 FR 24146, 24155.
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c. Accounting for Perquisites, Removing Incentive Pay, and Other
Suggestions To Reduce the AEWR
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 (e.g., by
ensuring that employing H-2A workers is not less expensive than
employing U.S. workers), considering the full cost of employing H-2A
workers provides a more accurate picture of the expenses paid for H-2A
workers than wages alone. One commenter objected, in particular, to the
Department comparing H-2A AEWRs to H-2B prevailing wage rates for
agricultural construction occupations, noting that the H-2B rates
anticipate workers providing their own housing and transportation,
while the H-2A program does not.
Some commenters suggested how the Department could account for
these
[[Page 70463]]
additional costs in relation to the AEWR. A trade association
recommended the Department consider a ``wage credit'' to address the
employer's housing costs, such as 10 percent of the worker's weekly
earnings capped at not more than $75.00 per week with an annual
adjustment using the same index as the Department uses to adjust the
subsistence reimbursement minimum. An individual commenter suggested
that housing provided to workers is worth about $2 per hour, without
providing a basis for that figure, while an employer calculated its
additional costs to employ H-2A workers at $5.61 per hour. An agent
asked the Department to consider allowing the ``fair-market value of
rent'' to count towards the required minimum wage in the H-2A program.
An agent suggested the Department should allow a wage credit for the
provision of food. An employer stated that the H-2A program needs an
update because the wage rate they are assigned is 25 percent above the
state minimum, and their expenses also include housing and
transportation.
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.\77\ This suggestion by commenters fails to
account for the fact that H-2A workers, and those U.S. workers who live
outside of the normal commuting distance, do not permanently live in
the area and presumably also have housing costs in their home
community. Additionally, the presence of significant differences in the
price/cost of housing, meals, transportation, and other benefits across
the country would make establishing any ``wage credit'' impracticable.
Finally, reducing the guaranteed hourly AEWR for all workers to account
for the costs of housing and other benefits would unfairly penalize the
wages of similarly employed workers in the United States who do not
receive housing benefits.
---------------------------------------------------------------------------
\77\ See, e.g., 8 U.S.C. 1188(c)(4) (requiring H-2A employers to
``furnish housing in accordance with regulations'').
---------------------------------------------------------------------------
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.\78\
---------------------------------------------------------------------------
\78\ See BLS, Handbook of Methods: National Compensation
Measures (Dec. 15, 2017), available at https://www.bls.gov/opub/hom/ncs/pdf/ncs.pdf; BLS, Occupational Employment Statistics Frequently
Asked Questions, https://www.bls.gov/oes/oes_ques.htm (last modified
Apr. 15, 2020).
---------------------------------------------------------------------------
d. Application of Collective Bargaining Agreement Wages
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.'' \79\ While collective bargaining may
improve these workers' positions, it may not do so enough to prevent
downward pressure on workers in the United States similarly employed.
The Department continues to share the concern of worker advocacy
organization commenters recognizing the limited bargaining power of
agricultural workers even when unionized. The AEWR provides a floor
below which wages cannot be negotiated, providing necessary protections
for this particularly vulnerable labor force.\80\
---------------------------------------------------------------------------
\79\ 75 FR 6883, 6894.
\80\ 74 FR 45906, 45911.
---------------------------------------------------------------------------
e. Use Median, Not Mean
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.\81\ The Department has a long-standing practice of using
the average or mean wage, within the FLS and OES wage distributions, to
determine the AEWR in the H-2A program and prevailing wages for other
employment-based visa programs.
---------------------------------------------------------------------------
\81\ See 80 FR 24146, 24159-24160; see also Interim Final Rule,
Wage Methodology for the Temporary Non-Agricultural Employment H-2B
Program, Part 2, 78 FR 24047, 24058 (Apr. 24, 2013).
---------------------------------------------------------------------------
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
[[Page 70464]]
unskilled workers to perform jobs in the occupation. Setting the AEWR
below the mean in the relatively low-skill agricultural occupations
that predominate in the H-2A program would have a depressive effect on
wages of workers in the United States similarly employed.
f. Establish the AEWRs Using Highest Among All Available Wage Sources
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 (e.g., SWA prevailing wage survey data; state,
regional, and national FLS data; and local, state, and national OES
data). The commenter noted that the local wage is what U.S. workers
expect to earn in a ``healthy market'' and asserted that sole reliance
on state or regional FLS data would not take into consideration local
wage differences that result from ``market or crop specialty factors.''
The commenter asserted that use of a lower wage rate based on broader
surveys when a higher local OES rate is available would permit H-2A
employers to undercut wages and would force other employers to lower
wages to compete. The commenter suggested the Department revise Sec.
655.120(b) to require the AEWR to be set at the annual average hourly
gross wage for the occupational classification in the state or region
as reported by the USDA's FLS, ``unless the statewide annual average
hourly wage, or applicable regional annual mean hourly wage for the
[SOC] reported in the OES survey is a higher average hourly rate, in
which case the OES State or OES Metropolitan and Nonmetropolitan Area
data rate, whichever is higher, will be the AEWR.''
This commenter also suggested the Department ensure that AEWRs will
not be reduced in the future based on the proposed methodology and
recommended revising Sec. 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.'' \82\
---------------------------------------------------------------------------
\82\ 54 FR 28037, 28044 (citations omitted).
---------------------------------------------------------------------------
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.'' \83\ As explained above and in prior rulemaking, use of a
broader geographic scope to determine the AEWR is consistent with the
statute and addresses the unique nature of the agricultural labor force
and the migratory pattern of employment and AEWRs. Data from a broader
geographic span ``may serve to mobilize domestic farm labor in
neighboring counties and States to enter the subject labor market over
the longer term and obviate the need to rely on importation of foreign
labor on an ongoing basis.'' \84\
---------------------------------------------------------------------------
\83\ See 75 FR 6883, 6899.
\84\ Id.
---------------------------------------------------------------------------
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.
[[Page 70465]]
7. Comments Beyond the Scope of This Rulemaking
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 agricultural labor or services at 20 CFR 655.103(c), and the
Department's proposal to incorporate reforestation and pinestraw
activities into the H-2A program, is not included in this final rule.
Some commenters expressed concerns about housing obligations. Several
comments related to AEWRs for job opportunities in the herding and
production of livestock and suggested the Department revisit the wage
rate methodology at 20 CFR 655.211(c). For example, one commenter
suggested that the monthly AEWR should account for commodity pricing.
Another commenter objected to the Department's annual adjustment of the
monthly AEWR for range occupations governed by the procedures in
Sec. Sec. 655.200 through 655.235 using the ECI, noting that employers
of such workers are required to provide all food, housing, tools and
equipment without cost to the worker. The commenter requested the
Department permit a ``wage credit'' for the provision of food both to
mitigate the combined impact of the ECI and the ``consumer price
index'' on such employers' costs and for consistency with the
requirements placed on H-2A employers outside of range herding
occupations. However, these comments are outside the scope of this
rulemaking.
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.\85\
---------------------------------------------------------------------------
\85\ See 84 FR 36168, 36179, n.30 (Jul. 26, 2019).
---------------------------------------------------------------------------
III. Administrative Information
A. Executive Order 12866: Regulatory Planning and Review; Executive
Order 13563 and Improving Regulation and Regulatory Review; Executive
Order 13771; and the Congressional Review Act
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.\86\ Section 3(f) of E.O.
12866 defines a ``significant regulatory action'' as an action that is
likely to result in a rule that (1) has an annual effect on the economy
of $100 million or more, or adversely affects in a material way a
sector of the economy, productivity, competition, jobs, the
environment, public health or safety, or state, local, or tribal
governments or communities (also referred to as economically
significant); (2) creates serious inconsistency or otherwise interferes
with an action taken or planned by another agency; (3) materially
alters the budgetary impacts of entitlement grants, user fees, or loan
programs, or the rights and obligations of recipients thereof; or (4)
raises novel legal or policy issues arising out of legal mandates, the
President's priorities, or the principles set forth in the E.O.\87\
This final rule is an economically significant regulatory action under
this section and was reviewed by OIRA. 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.
---------------------------------------------------------------------------
\86\ E.O. 12866 of Sept. 30, 1993), 58 FR 51735 (Oct. 4, 1993).
\87\ Id. at 51738.
---------------------------------------------------------------------------
Pursuant to the Congressional Review Act (5 U.S.C. 801, et seq.),
OIRA has designated this rule as a ``major rule,'' as defined by 5
U.S.C. 804(2). Under the Congressional Review Act (CRA), a major rule
ordinarily takes effect 60 days after the date it is published.\88\ An
exception to the delay in a rule's effective date exists, however, in
cases where ``an agency for good cause finds . . . that notice and
public procedure thereon are impracticable, unnecessary, or contrary to
the public interest.'' \89\ Because the full 60-day waiting period from
the date this rule is published to the date it becomes effective is
unnecessary and would result in the very kind of disruption to the
conduct of regulated entities that the rule is meant, in some degree,
to ameliorate, the Department has determined that there exists good
cause under the CRA to have this rule take effect less than 60 days
from the date of publication. In the Department's judgment 45 days is
sufficient time, given the nature of this rule, to allow Congress and
the regulated community an opportunity to review and assess the rule
before it becomes operative, and is the appropriate delayed effective
period in light of the significant potential for confusion and
disruption among affected parties if the rule were to have a later
effective date.
---------------------------------------------------------------------------
\88\ 5 U.S.C. 801(a)(3).
\89\ 5 U.S.C. 808.
---------------------------------------------------------------------------
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 Federal Register.'' 20 CFR 655.120.
The Department has not yet published notice of new AEWRs for calendar
year 2021, and therefore must do so before January 1st to avoid
violating its own regulations. If this rule were not in effect in time
to allow the Department to publish AEWRs calculated under the new
methodology, the Department would have to publish AEWRs determined
according to the methodology in the 2010 Final Rule.
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
[[Page 70466]]
for the H-2A program. These kinds of disruptive and nearly
contemporaneous changes in the obligations the Department imposes on
regulated entities engenders the precise kind of instability and
unpredictability in the wages employers must pay to workers that the
Department seeks to reduce through this rulemaking. Avoiding such
disruption is sufficient grounds for shortening the delay between
publication and when the rule becomes effective.\90\
---------------------------------------------------------------------------
\90\ See Buckeye Cablevision, Inc. v. F.C.C., 387 F.2d 220, 228
n.34 (D.C. Cir. 1967).
---------------------------------------------------------------------------
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.'' \91\ Relatedly, the CRA ``provides for a 60-day waiting
period before the agency may enforce the major rule so that Congress
has the opportunity to review the regulation.'' \92\ By delaying the
effective date for a specified period after the contents of the rule
have been made public, the CRA gives both Congress and the public an
opportunity to assess and understand the rule before its operation
requires changes in the behavior of regulated entities.
---------------------------------------------------------------------------
\91\ Omnipoint Corp. v. F.C.C., 78 F.3d 620, 630 (D.C. Cir.
1996); See also Riverbend Farms, Inc. v. Madigan, 958 F.2d 1479,
1485 (9th Cir. 1992) (``Unlike the notice and comment requirements,
which are designed to ensure public participation in rulemaking, the
30-day waiting period is intended to give affected parties time to
adjust their behavior before the final rule takes effect.'').
\92\ Liesegang v. Sec'y of Veterans Affairs, 312 F.3d 1368, 1375
(Fed. Cir. 2002); See also Office of Mgmt. & Budget, Exec. Office of
the President, Guidance on Compliance with the Congressional Review
Act 2 (2019).
---------------------------------------------------------------------------
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.\93\ That means that, even if the effective date of
this rule were delayed by the full 60 days, wage rates calculated under
the prior methodology likely would not alter the wages to which U.S.
and foreign workers are entitled before the new methodology would
become effective early next year, at which point the Department could
adjust the wage rates accordingly. There would be no practical effect
on the wages paid, even while, as noted above, the issuance of two
separate sets of AEWRs, published only weeks apart, would sow the type
of confusion and uncertainty that this rule is meant to prevent.
---------------------------------------------------------------------------
\93\ See, e.g., Labor Certification Process for the Temporary
Employment of Aliens in Agriculture in the United States: 2020
Adverse Effect Wage Rates for Non-Range Occupations, 84 FR 69774
(Dec. 19, 2019).
---------------------------------------------------------------------------
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.\94\ Because the rule gives parties
time to assess and understand the rule even after it takes effect,
shortening the period between the rule's publication and its effective
date is consistent with the delayed effectiveness required by the
CRA.\95\
---------------------------------------------------------------------------
\94\ See Nat. Res. Def. Council v. Abraham, 355 F.3d 179, 202
(2d Cir. 2004).
\95\ Cf. Black v. Pritzker, 121 F. Supp. 3d 63, 81 (D.D.C.
2015).
---------------------------------------------------------------------------
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.\96\ E.O. 13563 recognizes that
some benefits are difficult to quantify and provides that, where
appropriate and permitted by law, agencies may consider and discuss
qualitatively values that are difficult or impossible to quantify,
including equity, human dignity, fairness, and distributive
impacts.\97\
---------------------------------------------------------------------------
\96\ E.O. 13563 (Jan. 18, 2011), 76 FR 3821 (Jan. 21, 2011).
\97\ Id.
---------------------------------------------------------------------------
Outline of the Analysis
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.
Summary of the Analysis
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.\98\
The final rule is estimated to result in annual transfer payments from
H-2A employees to H-2A employers of $170.68 million and total 10-year
transfer payments of $1.68 billion at a discount rate of 7 percent.\99\
---------------------------------------------------------------------------
\98\ The final rule will have an annualized cost of $0.05
million and a total 10-year cost of $0.46 million at a discount rate
of 3 percent in 2020 dollars.
\99\ The final rule will have annualized transfer payments from
H-2A employees to H-2A employers of $169.10 million and a total 10-
year transfer payments of $1.44 billion at a discount rate of 3
percent in 2020 dollars.
[[Page 70467]]
Exhibit 1--Estimated Monetized Costs, Cost Savings, Net Costs, and
Transfer Payments of the Final Rule
[2020 $millions]
------------------------------------------------------------------------
Transfer
Costs payments
------------------------------------------------------------------------
Undiscounted 10-Year Total.............. $0.46 $1,677.61
10-Year Total with a Discount Rate of 3% 0.46 1,442.50
10-Year Total with a Discount Rate of 7% 0.46 1,198.77
10-Year Average......................... 0.05 167.76
Annualized at a Discount Rate of 3%..... 0.05 169.10
Annualized with at a Discount Rate of 7% 0.07 170.68
------------------------------------------------------------------------
Perpetuated Net Costs * with a Discount Rate of 7% (2016$ Millions)
------------------------------------------------------------------------
* Net Cost Savings = [Total Cost Savings] - [Total Costs].
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).
1. Need for Regulation
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,\100\ which were
based on the results of the FLS published in November 2019, to
establish AEWRs for most H-2A job opportunities during calendar years
2021 and 2022 and, as the starting point, subject to annual
adjustments, to establish most AEWRs in subsequent years. Accordingly,
the Department will freeze wage rates for field and livestock worker
occupations at based on November 2019 FLS data and adjust these wages
annually beginning in 2023 based on the change in the ECI for wages and
salaries computed by the BLS. This two-year transition period provides
employers with a reasonable amount of time to plan their labor needs
and agricultural operations under the new wage requirements. Using the
current, 2020 AEWRs as the starting point also ensures that employers
will not be subject to further volatility in wage adjustments when this
rule takes effect because the Department will be relying on the wage
rates that employers are already paying. For all other occupations, the
Department, as explained in Section II.B.5.b., will annually adjust and
set the hourly AEWRs based on 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 occupation, the AEWR shall be the national annual average
hourly wage reported by the OES survey.
---------------------------------------------------------------------------
\100\ Notice, Labor Certification Process for the Temporary
Employment of Aliens in Agriculture in the United States: 2020
Adverse Effect Wage Rates for Non-Range Occupations, 84 FR 69774
(Dec. 19, 2019).
---------------------------------------------------------------------------
On September 30, 2020, USDA publicly announced its intent to cancel
the October 2020 data collection and resulting publication of the Farm
Labor report.\101\ Consequently, NASS may not release its November 2020
report containing the annual gross hourly rates for field and livestock
workers (combined) for each State or region based on quarterly wage
data collected from employers during calendar year 2020. Under the
Department's current AEWR methodology, this annual report is used to
establish and publish the hourly AEWRs for the next calendar year
period on or before December 31, 2020. NASS is not legally required to
produce the annual Farm Labor reports has suspended collection on at
least two prior occasions.\102\ USDA's decision to suspend data
collection and the release of the report planned for November 2020 has
been challenged in litigation.\103\ That litigation challenges whether
USDA provided adequate reasons for its decision to suspend data
collection and whether it considered important aspects of its decision,
and USDA was recently ordered to proceed with the collection of FLS
data for 2020. The litigation does not challenge, however, USDA's
discretion--if adequately explained--to terminate the FLS at any time.
Therefore, regardless of whether USDA is ultimately successful in the
ongoing litigation, it will remain the case that no statute or
regulation requires that USDA perform the FLS. The Department has
determined that this uncertainty regarding the near- and long-term
future of the FLS also weighs in favor of the Department establishing
now a revised methodology for
[[Page 70468]]
determining the AEWR, given its importance to the Department's
administration of the labor certification requirement. Accordingly, the
Department has determined it is necessary to issue this final rule to
establish the new hourly AEWR methodology, and to do so before the end
of the calendar year in order to ensure there is no disruption in
setting the AEWRs for calendar year 2021.
---------------------------------------------------------------------------
\101\ 85 FR 61719; see also USDA, USDA NASS to Suspend the
October Agricultural Labor Survey (Sept. 30, 2020), https://www.nass.usda.gov/Newsroom/Notices/2020/09-30-2020.php.
\102\ 76 FR 28730 (May 18, 2011); 72 FR 5675 (Feb. 7, 2007).
\103\ See United Farm Workers v. Perdue, No. 1:20-cv-01432-DAD-
JLT (E.D. Cal. filed Oct. 13, 2020).
---------------------------------------------------------------------------
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.
2. Analysis Considerations
The Department estimated the costs and transfer payments of the
final rule relative to what would happen in the absence of the rule
(i.e., the current practices for complying, at a minimum, with the H-2A
program as currently codified at 20 CFR part 655, subpart B).
Ordinarily, there are some uncertainties in predicting the future, but
this is particularly problemmatic because the regulatory provision that
is being replaced required use of the USDA's FLS, which has been
suspended for October 2020. Therefore, what would have happened in the
absense of this rule is speculative. Here, we have assumed that in the
absense of this rule the AEWRs would continue to increase at the same
rate that it would have in previous years. However, other outcomes
could also have occurred. For example, employers might have concluded
that in the absense of an updated FLS they would be subject to the
previously existing AEWRs. This would be quite similar to the policy
adopted for 2021 and 2022 in the final rule and so under this approach
the final rule would be estimated to have substantially smaller
transfers than we have estimated here.
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 (i.e., costs and transfer payments that
accrue to entities affected). The analysis covers 10 years (from 2021
through 2030) to ensure it captures costs and transfer payments that
accrue over time. The Department expresses all quantifiable impacts in
2020 dollars and uses discount rates of 3 and 7 percent, pursuant to
Circular A-4.
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.
Exhibit 2--Number of Affected Entities by Type
[FY 2016-2019 average]
------------------------------------------------------------------------
Entity type Number
------------------------------------------------------------------------
Unique H-2A Applicants................................. 8,050
------------------------------------------------------------------------
Growth Rate
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.
Exhibit 3--Historical H-2A Program Data
------------------------------------------------------------------------
Applications Workers
Fiscal year certified certified
------------------------------------------------------------------------
2012.................................... 5,278 85,248
2013.................................... 5,706 98,814
2014.................................... 6,476 116,689
2015.................................... 7,194 139,725
2016.................................... 8,297 165,741
2017.................................... 9,797 199,924
2018.................................... 11,319 242,853
2019.................................... 12,626 258,446
------------------------------------------------------------------------
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.\104\
Therefore, to estimate realistic growth rates for the analysis, the
Department applied an autoregressive integrated moving average (ARIMA)
model to the FY 2012-2019 H-2A program data to
[[Page 70469]]
forecast workers and applications, and estimate geometric growth rates
based on the forecasted data.
---------------------------------------------------------------------------
\104\ Extrapolating BLS 2029 projections for combined
agricultural workers and comparing with a 17.2 percent growth rate
of H-2A workers, yields estimated H-2A workers that are about 115
percent larger than extrapolated BLS 2029 projections to 2030. The
projection of workers for the agricultural sector was obtained from
BLS's Occupational Projections and Worker Characteristics, which may
be accessed at https://www.bls.gov/emp/tables/occupational-projections-and-characteristics.htm.
---------------------------------------------------------------------------
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.\105\ Multiple models yielded indistinctive measures
of goodness of fit. Therefore, each model was used to project workers
and applications through 2030. Then, a geometric growth rate was
calculated using the forecasted data from each model and an average was
taken across each model. This resulted in an estimated growth rate of
6.2 percent for both H-2A applications and H-2A certified workers. The
estimated growth rates for applications (6.2 percent) and workers (6.2
percent) were applied to the estimated costs and transfer payments of
the final rule to forecast employer participation in the H-2A program.
---------------------------------------------------------------------------
\105\ The Department estimated models with different lags for
autoregressive and moving averages, and orders of integration:
ARIMA(0,2,0); (0,2,1); (0,2,2); (1,2,1); (1,2,2); (2,2,2). For each
model we used the Akaike Information Criteria (AIC) goodness of fit
measure.
---------------------------------------------------------------------------
Estimated Number of Workers and Change in Hours
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).
Compensation Rates
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.\106\ Wage rates are adjusted to
reflect total compensation, which includes nonwage factors such as
overhead and fringe benefits (e.g., health and retirement benefits). We
use an overhead rate of 17 percent \107\ and a fringe benefits rate
based on the ratio of average total compensation to average wages and
salaries in 2019. For the private sector employees, we use a fringe
benefits rate of 43 percent.\108\ We then multiply the loaded wage
factor by the wage rate to calculate an hourly compensation rate. The
Department used the hourly compensation rates presented in Exhibit 4
throughout this analysis to estimate the labor costs for each
provision.
---------------------------------------------------------------------------
\106\ BLS, Occupational Employment and Wages, May 2019: 13-1071
Human Resources Specialist, https://www.bls.gov/oes/current/oes131071.htm (last modified July 6, 2020). Because the OES wage
rate is in 2019 dollars, the Department inflated to 2020 dollars
using the ECI to be consistent with the rest of the analysis which
is in 2020 dollars.
\107\ Cody Rice, U.S. Environmental Protection Agency, Wage
Rates for Economic Analyses of the Toxics Release Inventory Program
(June 10, 2002), available at https://www.regulations.gov/document?D=EPA-HQ-OPPT-2014-0650-0005.
\108\ BLS, Employer Costs for Employee Compensation, https://www.bls.gov/news.release/ecec.toc.htm (last modified Sept. 17, 2020)
(ratio of total compensation to wages and salaries for all private
industry workers).
Exhibit 4--Compensation Rates
[2020 dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Hourly
Position Grade level Base hourly Loaded wage factor Overhead costs compensation
wage rate rate
(a) (b) (c) d = a + b + c
--------------------------------------------------------------------------------------------------------------------------------------------------------
Private Sector Employees
--------------------------------------------------------------------------------------------------------------------------------------------------------
HR Specialist................................ N/A $33.52 $14.35 ($33.52 x 0.43) $5.70 ($33.52 x 0.17) $53.57
--------------------------------------------------------------------------------------------------------------------------------------------------------
3. Subject-by-Subject Analysis
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.
Costs
The following section describes the costs of the final rule.
Quantifiable Costs
a. Rule Familiarization
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).\109\
This number was then multiplied by the hourly compensation rate of
Human Resources Specialists ($53.57 per hour). This calculation results
in a one-time undiscounted cost of $458,099 in the first year after the
final rule takes effect. This one-time cost yields a total average
annual undiscounted cost of $45,810. The annualized cost over the 10-
year period is $53,703 and $65,223 at discount rates of 3 and 7
percent, respectively.
---------------------------------------------------------------------------
\109\ This estimate reflects the nature of the final rule. As a
rulemaking to amend to parts of an existing regulation, rather than
to create a new rule, the one-hour estimate assumes a high number of
readers familiar with the existing regulation.
---------------------------------------------------------------------------
Transfer Payments
The following section describes the transfer payments of the final
rule.
Quantifiable Transfer Payments
This section discusses the quantifiable transfer payments related
to revisions to the wage structure.
a. Revisions to the AEWR Methodology
Section 218(a)(1) of the INA, 8 U.S.C. 1188(a)(1), provides that an
H-2A
[[Page 70470]]
worker is admissible only if the Secretary of Labor 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 20 CFR 655.120(a), the Department meets this statutory requirement
by requiring the 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. As discussed in detail earlier in this
preamble, the Department has carefully considered public comments
related to the proposed changes to the methodology by which it
establishes the AEWRs, and has made substantive revisions in this final
rule.
Public Comment: The Department received one comment on the NPRM
transfer payments from the proposed wage option. One commenter said the
Department had underestimated the transfer of debt burden to workers
because of a discrepancy in the number of certified H-2A workers for
2018 used in the Department's calculations in the NPRM, citing OFLC
data and the Department of State's data on the number of non-immigrant
visas issue in fiscal year (FY) 2018.
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:
45-2041--Graders and Sorters, Agricultural Products
45-2091--Agricultural Equipment Operators
45-2092--Farmworkers and Laborers, Crop, Nursery and
Greenhouse
45-2093--Farmworkers, Farm, Ranch, and Aquacultural Animals
53-7064--Packers and Packagers, Hand
45-2099--Agricultural Workers, All Other
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.\110\ For the most common SOC codes (45-2091, 45-2092, and 45-
2093), the Department calculated the average certification growth rate
from FY2016 to FY2019 by SOC and state, and then determined the average
annual growth rate. In some cases, due to small numbers of
certifications in certain states for a specific SOC in each year, the
growth rates were unreasonably high or low (greater than 80 percent or
less than 80 percent growth). In such cases, the Department applied the
national growth rate for the applicable SOC. Next, the Department
calculated the number of certifications that had work in each quarter
of 2019 by state, and SOC, and applied the applicable growth rate to
quarters three and four to estimate FY2020 quarters three and four
certifications. For all other SOC codes, the Department took the
average of the number of certifications for each SOC and state from
FY2016 to FY2019. The Department also needed to estimate the period of
need, number of workers per certification, and number of hours per
certifications.
---------------------------------------------------------------------------
\110\ FY2020 certification data consists of only two quarters of
data as of the date of analysis for this final rule.
---------------------------------------------------------------------------
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).\111\
[[Page 70471]]
Nominal wages were then converted to real wages by deflating each year
by the same ECI growth rate.\112\
---------------------------------------------------------------------------
\111\ September to September growth rates are used to reflect
the month vintage of ECI data that will be used to update the AEWR.
For the Department to process and release the bi-annual ECI updated
AEWR wages in January, the latest ECI value that will be available
is the released September value. The ECI is available and released
at https://www.bls.gov/news.release/eci.toc.htm.
\112\ Each year's estimated wages were deflated using the
formula: Wage/(1 + 0.289)-(Year-Base year).
---------------------------------------------------------------------------
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.
Exhibit 5--AEWR Wage Under the Final Rule
[Example case]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of Number of
Final rule wage Number of Basic days days Total AEWR Total AEWR
SOC code source certified number of worked in worked in Wage 2016 Wage 2017 wages 2016 wages 2017
workers hours 2016 2017
(a) (b) (c) (d) (e) (f) (a*b*(c/7)*e) (a*b*(d/7)*f)
--------------------------------------------------------------------------------------------------------------------------------------------------------
45-2091...................... FLS AEWR....... 14 35 306 10 $11.74 $12.02 $251,470.80 $8,414.00
53-7062...................... OES............ 10 40 280 50 12.76 13.08 204,160.00 37,371.43
--------------------------------------------------------------------------------------------------------------------------------------------------------
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).
Exhibit 6--AEWR Wage Under the Baseline
[Example case]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of Number of
Baseline wage Number of Basic days days Total AEWR Total AEWR
SOC Code source certified number of worked in worked in Wage 2016 Wage 2017 wages 2016 wages 2017
workers hours 2016 2017
(a) (b) (c) (d) (e) (f) (a*b*(c/7)*e) (a*b*(d/7)*f)
--------------------------------------------------------------------------------------------------------------------------------------------------------
45-2091...................... FLS AEWR....... 14 35 306 10 $11.74 $12.02 $251,470.80 $8,414.00
53-7062...................... FLS AEWR....... 10 40 280 50 11.74 12.02 187,840.00 34,342.86
--------------------------------------------------------------------------------------------------------------------------------------------------------
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 for the 45-2091 SOC code.
---------------------------------------------------------------------------
\113\ The growth rate for each year represents the final rule
AEWR for SOC codes 45-2091, 45-2092, 45-2093, 45-2041, 45-2099, and
53-7064. They have a 0 percent growth rate from the prior year in
years which wages are held constant (e.g., 2021 and 2022). Beginning
in 2023 they are updated annually based on the most recent 12-month
ECI, which for the purposes of this analysis is 2.89 percent.
\114\ 2020 nominal wage is the average of total wages for 45-
2091 from FY2016-FY2020 data.
Exhibit 7--Example Projected Total Wages for 45-2091
----------------------------------------------------------------------------------------------------------------
FLS AEWR growth Total wages Total wages
rate \113\ (nominal dollars) Deflator (ECI) (2020 dollars)
----------------------------------------------------------------------------------------------------------------
2020 \114\............................ N/A $235 1 $235
2021.................................. 0(%) 235 0.972 228
2022.................................. 0 235 0.945 222
2023.................................. 2.89 242 0.918 222
2024.................................. 2.89 249 0.892 222
2025.................................. 2.89 256 0.867 222
2026.................................. 2.89 263 0.843 222
2027.................................. 2.89 271 0.819 222
2028.................................. 2.89 279 0.796 222
2029.................................. 2.89 287 0.774 222
2030.................................. 2.89 295 0.752 222
----------------------------------------------------------------------------------------------------------------
[[Page 70472]]
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.
Exhibit 8--Difference Between Final Rule Wages and Baseline Wages by SOC Code [2020 $millions]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Year 45-2091 45-2092 45-2093 45-2041 45-2099 53-7064 All other Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
2021............................................................ -$7 -$61 -$4 $0 -$1 $0 $18 -$54
2022............................................................ -13 -120 -8 0 -1 0 18 -124
2023............................................................ -13 -120 -8 0 -1 0 18 -124
2024............................................................ -13 -120 -8 0 -1 0 18 -124
2025............................................................ -13 -120 -8 0 -1 0 18 -124
2026............................................................ -13 -120 -8 0 -1 0 18 -124
2027............................................................ -13 -120 -8 0 -1 0 18 -124
2028............................................................ -13 -120 -8 0 -1 0 18 -124
2029............................................................ -13 -120 -8 0 -1 0 18 -124
2030............................................................ -13 -120 -8 0 -1 0 18 -124
--------------------------------------------------------------------------------------------------------------------------------------------------------
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).\115\ The
results are average annual undiscounted transfers of $167.76 million.
The total transfer over the 10-year period is estimated at $1.68
billion undiscounted, or $1.44 billion and $1.20 billion at discount
rates of 3 and 7 percent, respectively. The annualized transfer over
the 10-year period is $169.10 million and $170.68 million at discount
rates of 3 and 7 percent, respectively.
---------------------------------------------------------------------------
\115\ Total transfers in each year are increased with the
following formula to account for an annual increase in the
underlying population of H-2A workers:
Transfer*(1.062[caret](Current year-Base year)).
---------------------------------------------------------------------------
Unquantifiable Transfer Payments
a. Revisions to Wage Structure
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.
4. Summary of the Analysis
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.
Exhibit 9--Estimated Monetized Costs, Cost Savings, Net Costs, and
Transfer Payments of the Final Rule
[2020 $millions]
------------------------------------------------------------------------
Transfer
Year Costs payments
------------------------------------------------------------------------
2021.................................... $0.46 $57.09
2022.................................... 0.00 139.71
2023.................................... 0.00 148.41
2024.................................... 0.00 157.65
2025.................................... 0.00 167.46
2026.................................... 0.00 177.89
2027.................................... 0.00 188.96
2028.................................... 0.00 200.72
2029.................................... 0.00 213.22
2030.................................... 0.00 226.49
Undiscounted 10-Year Total.............. 0.46 1,677.61
10-Year Total with a Discount Rate of 3% 0.46 1,442.50
10-Year Total with a Discount Rate of 7% 0.46 1,198.77
10-Year Average......................... 0.05 167.76
Annualized with a Discount Rate of 3%... 0.05 169.10
[[Page 70473]]
Annualized with a Discount Rate of 7%... 0.07 170.68
------------------------------------------------------------------------
5. Regulatory Alternatives
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; \116\ or (2) workers within the occupations
classifications of field or livestock workers but in a region or state
where USDA cannot produce a wage for that classification, which is
expected to occur only in Alaska. Finally, under this alternative where
both OES state data is not available, and the work performed is not
covered by the field or livestock worker categories of the FLS, the
Department would use the OES national average hourly wage for the SOC.
---------------------------------------------------------------------------
\116\ Among the workers excluded from the field and livestock
worker categories of the FLS are workers in the following SOCs:
Farmers, Ranchers and Other Agricultural Managers (SOC 11-9013) and
First Line Supervisors of Farm Workers (SOC 45-1011), Forest and
Conservation Workers (SOC 45-4011), Logging Workers (SOC 45-4020),
and Construction Laborers (SOC 47-2061).
---------------------------------------------------------------------------
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.
Exhibit 10--Estimated Monetized Wage Structure Transfer Payments and Costs of the Final Rule, Undiscounted
[2020 $millions]
----------------------------------------------------------------------------------------------------------------
Regulatory Regulatory
Final rule alternative 1 alternative 2
----------------------------------------------------------------------------------------------------------------
Total 10-Year Transfer........................................ $1,678 $185 $664
Total with 3% Discount........................................ 1,442 160 575
Total with 7% Discount........................................ 1,199 134 482
Annualized Undiscounted Transfer.............................. 168 18 66
Annualized Transfer with 3% Discount.......................... 169 19 67
Annualized Transfer with 7% Discount.......................... 171 19 69
----------------------------------------------------------------------------------------------------------------
[[Page 70474]]
B. Regulatory Flexibility Analysis and Small Business Regulatory
Enforcement Fairness Act and Executive Order 13272: Proper
Consideration of Small Entities in Agency Rulemaking
The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601 et seq.,
as amended by the Small Business Regulatory Enforcement Fairness Act of
1996, Public Law 104-121, hereafter jointly referred to as the RFA,
requires a final regulatory flexibility analysis (FRFA) when issuing
regulations that will have a significant economic impact on a
substantial number of small entities. The agency is also required to
respond to public comment on the NPRM.\117\ The Chief Counsel for
Advocacy of the Small Business Administration did not submit public
comments on the NPRM.
---------------------------------------------------------------------------
\117\ See 5 U.S.C. 604.
---------------------------------------------------------------------------
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.
1. Objectives of and Legal Basis for the Final 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).
2. The Agency's Response to Public Comments
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.
3. Response to Comments by the Chief Counsel for Advocacy of the Small
Business Administration
The Department did not receive comments from the Chief Counsel for
Advocacy of the Small Business Administration.
4. Description of the Number of Small Entities To Which the Final Rule
Will Apply
a. Definition of Small Entity
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.\118\
SBA establishes separate standards for individual 6-digit NAICS
industry codes, and standard cutoffs are typically based on either the
average number of employees, or the average annual receipts. For
example, small businesses are generally defined as having fewer than
500, 1,000, or 1,250 employees in manufacturing industries and less
than $7.5 million in average annual receipts for nonmanufacturing
industries. However, some exceptions do exist, the most notable being
that depository institutions (including credit unions, commercial
banks, and non-commercial banks) are classified by total assets
(``small'' is defined as less than $550 million in assets). Small
governmental jurisdictions are another noteworthy exception. They are
defined as the governments of cities, counties, towns, townships,
villages, school districts, or special districts with populations of
less than 50,000 people.\119\
---------------------------------------------------------------------------
\118\ Small Business Administration, Table of Small Business
Size Standards Matched to North American Industry Classification
System Codes (Aug. 2019), available at https://www.sba.gov/sites/default/files/2019-08/SBA%20Table%20of%20Size%20Standards_Effective%20Aug%2019%2C%202019_Rev.pdf.
\119\ See http://www.sba.gov/advocacy/regulatoryflexibility-act
for details.
---------------------------------------------------------------------------
b. Number of Small Entities
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 (i.e., the same employer applying for
the same number of workers in the same occupation, in the same state,
during the same work period). Based on employer name, city, and state,
the Department identified 2,627 unique entities with work in a year
between 2016 and 2019, and of those determined that 1,990 (75.8
percent) were small.\120\ These individual small entities had an
average
[[Page 70475]]
of 11 employees and average annual revenue of approximately $3.31
million. Of these entities, 1,946 of them had revenue data available
from Data Axle. The Department's analysis of the impact of this final
rule on small entities is based on the number of small individual
entities (1,946 with revenue data).
---------------------------------------------------------------------------
\120\ Small Business Administration, Table of Small Business
Size Standards Matched to North American Industry Classification
System Codes (Aug. 2019), available at https://www.sba.gov/sites/default/files/2019-08/SBA%20Table%20of%20Size%20Standards_Effective%20Aug%2019%2C%202019_Rev.pdf.
---------------------------------------------------------------------------
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.
Exhibit 11--Number of H-2A Small Entities by NAICS Code
----------------------------------------------------------------------------------------------------------------
Number of
6-Digit NAICS Description employers Percent
----------------------------------------------------------------------------------------------------------------
111998................................... All Other Miscellaneous Crop Farming. 625 31
444220................................... Nursery, Garden Center, and Farm 144 7
Supply Stores.
445230................................... Fruit and Vegetable Markets.......... 124 6
561730................................... Landscaping Services................. 125 6
111339................................... Other Noncitrus Fruit Farming........ 92 5
424480................................... Fresh Fruit and Vegetable Merchant 78 4
Wholesalers.
112990................................... All Other Animal Production.......... 76 4
115210................................... Support Activities for Animal 43 2
Production.
424930................................... Flower, Nursery Stock, and Florists' 37 2
Supplies Merchant Wholesalers.
312130................................... Wineries............................. 35 2
Other NAICS.............................. ..................................... 611 31
----------------------------------------------------------------------------------------------------------------
Number of
4-Digit NAICS Description employers Percent
----------------------------------------------------------------------------------------------------------------
1119..................................... Other Crop Farming................... 632 32
4442..................................... Lawn and Garden Equipment and 147 7
Supplies Stores.
4452..................................... Specialty Food Stores................ 133 7
5617..................................... Services to Buildings and Dwellings.. 125 6
1113..................................... Fruit and Tree Nut Farming........... 109 5
4244..................................... Grocery and Related Product Merchant 97 5
Wholesalers.
1129..................................... Other Animal Production.............. 84 4
4249..................................... Miscellaneous Nondurable Goods 73 4
Merchant Wholesalers.
1151..................................... Support Activities for Crop 49 2
Production.
1152..................................... Support Activities for Animal 43 2
Production.
Other NAICS.............................. ..................................... 498 25
----------------------------------------------------------------------------------------------------------------
c. Projected Impacts to Affected Small Entities
The Department has estimated the incremental costs for small
entities from the baseline (i.e., the 2010 Final Rule: Temporary
Agricultural Employment of H-2A Aliens in the United States; TEGL 17-
06, Change 1; TEGL 33-10, and TEGL 16-06, Change 1) to this final rule.
We estimated the costs of (a) time to read and review the final rule
and (b) wage cost savings (or costs). The estimates included in this
analysis are consistent with those presented in the E.O. 12866 section.
The Department estimates that small entities not classified as H-2A
labor contractors, 1,946 unique small entities,\121\ would incur a one-
time cost of $53.57 to familiarize themselves with the rule.\122\
---------------------------------------------------------------------------
\121\ The 1,946 unique small entities excludes all labor
contractors.
\122\ $53.57 = 1hr x $53.57, where $53.57 = $33.52 + ($33.52 x
43%) + ($33.52 x 17%).
---------------------------------------------------------------------------
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 (e.g.,
both 2016 and 2017) then we took an average of the projected 10-year
wage impacts for each certification to avoid double-counting.
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.\123\ This threshold is also
consistent with that sometimes used by other agencies.\124\ The
Department used a threshold of 15 percent of small entities in the NPRM
and has used 15 percent in prior rulemakings for the definition of
substantial number of small entities.\125\
---------------------------------------------------------------------------
\123\ See, e.g., Final Rule, Establishing a Minimum Wage for
Contractors, 79 FR 60634 (October 7, 2014); Final Rule,
Discrimination on the Basis of Sex, 81 FR 39108 (June 15, 2016).
\124\ See, e.g., Final Rule, Medicare and Medicaid Programs;
Regulatory Provisions to Promote Program Efficiency, Transparency,
and Burden Reduction; Part II, 79 FR 27106 (May 12, 2014)
(Department of Health and Human Services rule stating that under its
agency guidelines for conducting regulatory flexibility analyses,
actions that do not negatively affect costs or revenues by more than
3 percent annually are not economically significant).
\125\ See, e.g., 79 FR 60634.
---------------------------------------------------------------------------
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
[[Page 70476]]
3 percent of their total revenue impacted in the first year. Although a
substantial number of small entities have a significant economic impact
in the 10th year, more than 99 percent of small entities have an
economic impact that is a cost savings due to declines in wages
associated with the annual ECI update for the SOC codes set by FLS
AEWR.
Exhibit 12--Cost Impacts as a Proportion of Total Revenue for Small Entities
----------------------------------------------------------------------------------------------------------------
Proportion of revenue impacted 1st Year 1st Year--% 10th Year 10th Year--%
----------------------------------------------------------------------------------------------------------------
5%............................................. 87 4.5 545 28.0
Total >3%....................................... 160 8.2 824 42.3
----------------------------------------------------------------------------------------------------------------
5. Projected Reporting, Recordkeeping, and Other Compliance
Requirements of the Final Rule
The final rule does not have any reporting, recordkeeping, or other
compliance requirements impacting small entities.
6. Steps the Agency Has Taken To Minimize the Significant Economic
Impact on 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.
C. Paperwork Reduction Act
The Paperwork Reduction Act of 1995 (PRA), 44 U.S.C. 3501 et seq.,
and its attendant regulations, 5 CFR part 1320, require the Department
to consider the agency's need for its information collections and their
practical utility, the impact of paperwork and other information
collection burdens imposed on the public, and how to minimize those
burdens. This final rule does not require a collection of information
subject to approval by OMB under the PRA, or affect any existing
collections of information.
D. Unfunded Mandates Reform Act of 1995
The Unfunded Mandates Reform Act of 1995 (UMRA) (Pub. L. 104-4,
codified at 2 U.S.C. 1501 et seq.) is intended, among other things, to
curb the practice of imposing unfunded Federal mandates on state,
local, and tribal governments. UMRA requires Federal agencies to assess
a regulation's effects on state, local, and tribal governments, as well
as on the private sector, except to the extent the regulation
incorporates requirements specifically set forth in law. Title II of
the UMRA requires each Federal agency to prepare a written statement
assessing the effects of any regulation that includes any Federal
mandate in a proposed or final agency rule that may result in $100
million or more expenditure (adjusted annually for inflation) in any
one year by state, local, and tribal governments, in the aggregate, or
by the private sector. A Federal mandate is any provision in a
regulation that imposes an enforceable duty upon state, local, or
tribal governments, or upon the private sector, except as a condition
of Federal assistance or a duty arising from participation in a
voluntary Federal program.
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.
E. Executive Order 13132, Federalism
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.
F. Executive Order 13175, Consultation and Coordination With Indian
Tribal Governments
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.
List of Subjects in 20 CFR Part 655
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:
Title 20--Employees' Benefits
PART 655--TEMPORARY EMPLOYMENT OF FOREIGN WORKERS IN THE UNITED
STATES
0
1. The authority citation for part 655 continues to read as follows:
Authority: 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).
[[Page 70477]]
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).
0
2. Amend Sec. 655.103(b) by revising the definition of Adverse effect
wage rate to read as follows:
Sec. 655.103 Overview of this subpart and definition of terms.
* * * * *
(b) * * *
Adverse effect wage rate (AEWR). The wage rate published by the
OFLC Administrator in the Federal Register for non-range occupations as
set forth in Sec. 655.120(b) and range occupations as set forth in
Sec. 655.211(c).
* * * * *
0
3. Amend Sec. 655.120 by removing paragraph (c), redesignating
paragraph (b) as paragraph (c), and adding a new paragraph (b) to read
as follows:
Sec. 655.120 Offered wage rate.
* * * * *
(b)(1) Except for occupations governed by the procedures in
Sec. Sec. 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 Sec. 655.121, on or after December 21, 2020, including job
orders filed concurrently with an Application for Temporary Employment
Certification to the NPC for emergency situations under Sec. 655.134.
(2) The OFLC Administrator will publish a notice in the Federal
Register, at least once in each calendar year, on a date to be
determined by the OFLC Administrator, establishing each AEWR.
(3)-(4) [Reserved]
(5) If the job duties on the Application for Temporary Employment
Certification do not fall within a single occupational classification,
the applicable AEWR shall be the highest AEWR for all applicable
occupational classifications.
* * * * *
John Pallasch,
Assistant Secretary for Employment and Training, Labor.
[FR Doc. 2020-24544 Filed 11-3-20; 4:15 pm]
BILLING CODE 4510-FP-P
