The U.S. Department of Labor (DOL) has introduced an interim final rule (IFR) that changes how Adverse Effect Wage Rates (AEWRs) are calculated for H-2A guestworkers. The rule took effect on October 2, following the cancellation of the Farm Labor Survey (FLS) and recent litigation over wage-setting methods.
The IFR replaces the FLS with data from the Bureau of Labor Statistics' Occupational Employment and Wage Statistics (OEWS). Employers will now pay wages based on experience tiers, with adjustments for non-wage costs such as housing. The DOL states this approach will lower employment costs for many H-2A workers, though implementation details remain uncertain.
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The OEWS is a survey of nonfarm establishments based on state unemployment insurance databases. Farm labor contractors are included if they file unemployment insurance, but direct farm employers are not. The DOL has indicated it will work with USDA to expand the dataset, though including family farms poses challenges due to structural differences and exemptions from state programs.
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Under the new rule, combined field and livestock worker wages will be calculated from five SOC codes: Crop, nursery and greenhouse laborers; livestock and aquacultural workers; agricultural equipment operators; hand packers and packagers; and graders and sorters of agricultural products. Skill Level I jobs, which require no prior experience, will be set at the 17th percentile of OEWS wages. Skill Level II jobs, requiring prior experience or technical knowledge, will be set at statewide average hourly wages across the five SOC codes.
The rule also introduces an "adverse compensation adjustment" to account for employer-provided housing that H-2A workers receive but domestic workers do not. This adjustment is based on state-level rental data and is capped at 30% of the AEWR. Adjustments range from US$0.71 per hour in Puerto Rico to US$3.18 in Hawaii. In some states, the adjustment lowers AEWRs below the state minimum wage, which will then apply instead.
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Despite earlier court rulings striking down wage disaggregation, the IFR maintains a primary duties test. Workers who spend over half their time in farm tasks will be paid under combined field and livestock wages. Those with duties outside of these expectations may still fall under nonfarm classifications.
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The DOL estimates the changes could save employers US$2.4 billion annually over the next decade. However, in states where minimum wages exceed the new AEWRs, savings may be limited. All H-2A job orders filed on or after October 2 are subject to the new structure.
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