TOPEKA, KAN. (RFD NEWS) — A recent federal court decision has created uncertainty for agricultural employers who rely on the H-2A program after the court found several parts of the Department of Labor’s wage methodology unlawful.
Roger McEowen with the Washburn School of Law joined Market Day Report to discuss what the ruling means for farmers and ranchers and what employers should be watching as the Department of Labor develops a new methodology.
Court Challenges H-2A Wage Methodology
In his interview with RFD News, McEowen said the case centered on the Department of Labor’s formula for determining the minimum wage farmers must pay H-2A workers.
The court found several important parts of the methodology unlawful under the Administrative Procedure Act.
“It’s a procedural type issue there,” McEowen said. “The court said that DOL had not adequately explained its choices. And in some instances had improperly bypassed the normal notice and comment process, which is required under the Administrative Procedure Act.”
However, the court did not immediately eliminate the existing wage rates. Instead, the court ordered the Department of Labor to develop a new methodology.
Current H-2A Wage Rates Remain in Effect
For farmers and ranchers currently using the H-2A program, McEowen said the wage rates will not change immediately.
“For now I’d say, don’t change what you’re doing based solely on the decision,” he said. “The current annual effective wage rates remain in effect until the Department of Labor puts out the new rates.”
McEowen said employers should recognize that the current rates are temporary and that a new methodology could result in higher wage rates in the future.
“I would continue complying with the current rates, but I’d keep very good records of wages and hours and job duties and housing going forward,” he said.
Department of Labor Must Explain New Methodology
McEowen said the Department of Labor will need to explain its methodology more clearly when developing a new wage formula.
“Well, they’ve got to show their work,” he said, noting that the agency needs to explain why its methodology protects American workers from adverse wage effects and why the data being used is appropriate for agricultural labor.
McEowen said the court was particularly critical of placing about 90% of H-2A jobs into a 17th percentile wage category.
He also said substantive changes to the wage system must go through the normal notice-and-comment process so the public has an opportunity to participate before a rule is finalized.
Potential Back-Pay Exposure
While there is no current back-pay obligation, McEowen said employers should watch for potential future exposure.
The Department of Labor has notified employers that they may have to make back-pay adjustments for H-2A workers, U.S. workers and corresponding employment if the new wage methodology produces higher rates.
“But, and this is the key point to pay attention to, no employer owes back pay today,” McEowen said. “The current annual effective wage rates remain in effect while the Department later develops this new methodology the court is requiring, and the litigation continues.”
He said the Department of Labor has formally notified employers that they may owe adjustments for the period beginning September 2.
“As of today, the current annual effective wage rates still apply,” McEowen said. “There’s no present back-pay obligation. But I would say this: there is potential exposure.”
Broader Questions About Federal Agencies
McEowen said the case also raises broader questions about federal agencies’ authority and the role of the courts.
He said agencies have expertise but are not Congress and cannot simply create a new policy without staying within the authority Congress has given them.
“They have to stay within the authority Congress gave them, and they have to follow the Administrative Procedure Act and explain what they’re doing and why they’re doing it,” McEowen said.
He said courts have an important role in ensuring agencies do not exceed those boundaries, particularly when agency wage decisions can directly affect the cost of producing food in the United States.
McEowen advises agricultural employers to continue following current wage rates while keeping detailed records and closely watching the Department of Labor’s next steps.
“The bottom line, people, if you want to take away something from this, is to comply with the wage rates today,” McEowen said. “Keep your records. Watch very closely what the Department of Labor does next, because the wage rate you pay today may not be the final number.”
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