If you are an employer which hires foreign workers to fill semi-skilled jobs (such as grooming or mucking) then you need to know that last week, according to the American Horse Council, the Department of Labor (DOL) issued a final rule moving the effective date of the new prevailing wage final rule for the H-2B program to September 30, 2011. Originally the new rule was to go into effect on January 1, 2012.

The wage rule, in most instances, will increase the hourly wage that must be paid to all currently employed H-2B workers and American workers recruited in connection with an H-2B job application as well as future workers. Additionally, if a broader proposed change to the H-2B program is adopted by the DOL in December the new hourly wage rate requirements will also apply to all similarly employed American workers an H-2B employer has as well.

Background
The final wage rule was published on January 19, 2011 and was to go into effect in 2012.  However, the U.S. District Court for Eastern Pennsylvania has ordered the DOL to move up the effective date of the wage rule.

The wage rule itself was in response to the August 30, 2010 ruling by the same U.S. District Court in CATA v. Solis that the current regulations governing the H-2B prevailing wage rate violate the Administrative Procedure Act.

In Addition, the DOL is in the middle of a much broader rulemaking process that would change many aspects of the H-2B program.
The AHC comments on that proposed rule can be found here.  The DOL is expected to release the final rule some time in December.

The AHC is opposed to the proposed H-2B rule as well as the wage rule.

Wage Rule
The wage rule changes the way wage rates are calculated for H-2B workers. Currently, employers are required to pay H-2B and American workers recruited in connection with an H-2B job application either the prevailing wage, the federal minimum wage, the state minimum wage or the local minimum wage whichever is highest. The rule makes changes to how the prevailing wage is determined.

The wage rule would base the prevailing wage on the highest of the following:

  • Wages established under an agreed-upon collective bargaining agreement.
  • A wage rate established under the Davis-Bacon Act or the Service Contract Act for that occupation in the area of intended employment.
  • The arithmetic mean wage rate established by the Occupational Employment Statistics (OES) wage survey for that occupation in the area of intended employment.
The rule removes use of a four-tier wage structure tied to skill levels that is currently an option for calculating the prevailing wage.  It is important to note that these changes to the way the prevailing wage is calculated are expected to make the hourly rate H-2B employers are required to pay H-2B workers significantly higher.

The new wage rule will apply to all current and future H-2B workers, all American workers recruited in connection with an H-2B job application, and if the broader proposed rule is adopted to all similarly employed American workers as well. This means that between now and September 30th the DOL will be sending new prevailing wage determinations (PWD) to all employers who currently use the H-2B program and they will have to begin paying the new wage on September 30th.

Although the DOL has only just begun to send out new PWDs, the AHC has received reports of increases in the wage that must be paid by employers who use H-2B workers of between 10% and 30%.

Mandatory E-verify Legislation
Changes to the H-2B program are especially troubling because of the likely passage of mandatory e-verily legislation in the House.  In June, Congressman Lamar Smith (R-TX), Chairman of the House Judiciary Committee, introduced the Legal Workforce Act (H.R.2164).  This bill would require all employers to use the federal E-verify system to make sure all their workers are authorized to work in the U.S.  The House Judiciary Committee is expected to mark-up and approve this bill sometime in September.

While it is likely the bill will be passed by the House, it is unclear if such legislation would be approved in the Senate.  If Congress were to make mandatory E-verify law it would be vital for the horse industry and other employers to have access to functioning, efficient and cost effective foreign temporary worker programs for when no U.S. workers can be found.

AHC Position
The AHC is working with a broad collation of H-2B users to prevent any rule changes that would make the H-2B program unusable from going into effect.
If you have any questions please contact the AHC at ahc@horsecouncil.org

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