The Department of Labor’s Employment and Training Administration has issued a final rule delaying the effective date of a new H-2B wage calculation regulation.
Throughout 2011, the DOL and the Small Business Association (among other interested groups) have been at odds over the proposed change to the way prevailing wages are calculated for H-2B workers.
Rather than use the traditional wage calculation (from a market survey), the proposal calls for employers to pay H-2B (and U.S. workers recruited in connection with a temporary labor certification application) a “wage that meets or exceeds the highest of the following: the prevailing (market) wage, the federal minimum wage, the state minimum wage or the local minimum wage.”
Thus, as successfully argued by challengers of the proposed rule, DOL would be artificially inflating the prevailing wage assessments by relying upon the federal minimum wage (which is usually higher) for most temporary jobs. The determinations being made by DOL at the end of this year have been onerously high—such that the H-2B program was no longer economically viable.
Most employers would prefer to rely upon the market wage rather than the wage rate established under the Davis-Bacon Act or the Service Contract Act for the occupation in the area of intended employment,
Mounting political pressure from the agricultural, hospitality, travel, and landscape-maintenance industries, among others, has prompted President Barack Obama to include a prohibition to the Government’s provision of funding to the DOL to administer the proposed rule in the continuing appropriation resolution.
Bottom line: it appears that the business community was able to sway the White House to help prevent the DOL from effectively shutting down the H-2B program. At the DOL’s artificially inflated wage rates, an employer would be hard pressed to find a way to make the program work. When competitors are able to pay the lower market wage for employees, it makes no sense for an employer to apply for an H-2B certification, at a much higher wage.
For now, the H-2B guestworker program is still viable for employers looking to fill peakload or seasonal positions with foreign workers. But it’s only a matter of time before DOL takes another crack at shutting-down the H-2B process.