The Department of Labor's proposed rule change to determine the "appropriate wage rates" for H-2A visa workers may have a greater impact on agricultural businesses than the DOL wants you to believe.
The Immigration Guy, Kyle Farmer, explains the ins and outs of this proposed change and the implications for businesses -- spoiler alert, its about to get a lot more expensive. But, Farmer Law PC is developing a plan to fight this wage rate increase.
If you want to learn more about how you can participate in this plan:
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Produced & Edited by Drew Tattam
Welcome back to the Immigration Guy. Happy Wednesday. Over this last weekend, I went to a monster truck show, which is pretty awesome. The only part that wasn't awesome was I took my one-year-old son with me, and he would only let me put the hearing protection on him whenever it was quiet in the room. So, he hasn't figured out that technology yet, but we're still working on that overall. Firetruck rallies? No, not firetruck. Monster. Monster Truck rallies. Firetruck rallies are probably cool too. Monster truck rallies, though. That's one of the most highly recommended events from the immigration. Hey y'all, this is the Immigration Guy with Kyle Farmer.
So today we're gonna talk about, uh, proposed rule change from the Department of Labor. Uh, this proposed rule change. Originally came out at the end of the Trump administration, uh, where there was a whole bunch of other stuff in there. But, uh, part of the rule change was gonna change the wage rate methodology calculation for various occupations within agriculture.
Now, the proposed rule change the way it's written, makes it sound as if only a small fraction of H-2A employers are actually gonna be impacted by this rule change. I suspect that that is not gonna be the case and that the implications are gonna be huge. So just to tell you specifically what they're trying to do, historically, the way that H-2A workers’ wages have been calculated is based off of the aggregation of all of these different agricultural jobs, and they come up to basically a mean wage and which they call the adverse effective wage rate.
It's a statewide survey that they do, and all H-2A workers were always paid the same under the adverse effective wage. Well, the Department of Labor was concerned that the adverse effective wage rate was not, was inadvertently lowering wage rate occupations or for certain occupations. So, for example, agricultural construction workers, uh, truck drivers, those sorts of things.
And so, they proposed a rule change to determine the appropriate wage rate, quote unquote appropriate wage rate for these workers. and what the Department of Labor proposes that they will take the statewide average based off of these different SOC classifications, which are, and they will reference the Department of Labor's OEWS survey and the OEWS survey, they're, they're looking at the statewide average.
So basically, let's say that I have an H-2A truck driving application in Minnesota. They would look at the statewide average or the wage rate of a truck driver in m. And apply that wage rate for these workers? Well, there's a whole bunch of problems with this. One of 'em is that it would significantly increase the wage rate for agricultural producers, uh, in an arbitrary way because they are going to be using a statewide average wage rate.
Let's take a state like Minnesota, for example, so if I'm thinking about concrete workers and Minnesota well, two things to know about Minnesota. The wage rates in urban Minnesota are very, very high. Uh, the wage rates in rural Minnesota where most of this work is performed are not nearly as high. And so, the wage rate in the area where the workers are actually performing the work is significantly less than the wage rate that the Department of Labor would require Employers to pay.
And this is all because there's a lot more jobs in Minneapolis St. Paul than there is in the rest of the state. And so, it unfairly skews the wages higher as if these workers were performing agricultural construction in the, in downtown Minneapolis doesn't make any logical sense. The other thing that is a huge issue here is unlike the H-2B program, there's not a formal.
Process for the Department of Labor to go through or the state workforce agencies to go through to determine which is the appropriate SOC code classification to apply to a particular application under the Department of Labor Regulations for H-2B, for example, you file a prevailing wage determination.
And they will give you the prevailing wage for that occupation in that specific area, not the statewide average. And there's also an opportunity to appeal this, should you not like what they decided. Well, under the Department of Labor's proposed rule change, there is no such process. The state workforce agencies will simply assign a wage rate by looking at the various task being performed, and then they will assign the highest wage rate.
Well, the funny thing is that's not even how they do this for H-2B. But that's how they're proposing. You can do it for H-2A. So, let's say that I spend 1% of my time driving a truck. The way the Department of Labor's looking at that is, okay, you spend 1% of your time driving a truck, 99% of your time working on a farm, driving a tractor, but I gotta assign the truck driver wage rate.
And so, what you're gonna end up seeing is a whole huge increase in wage rates for various occupations for agricultural producers. So let me just give some examples. The state of Iowa, for example, carpenters’ wages would increase by 39% cement mason, and concrete finishers. Wages would increase by 37%. But let's look at the state of Illinois, which we all know that the state of Illinois is just crazy.
Just generally. And I guess you can, we can probably stop the POD podcast right there because everyone knows the state of Illinois's crazy. This is just a specific demonstration of that reinforcing iron and rebar workers. Their wage rates would increase 202%, cement, mason, and concrete finishers, 130%, carpenters 90%.
Let's look at the state of Michigan also, oftentimes can be a bit loony, well reinforcing iron and rebar workers increase 90% cement, mason, and concrete finishers. 49%, carpenters 50%. Look at Minnesota carpenters increase 81% cement, mason, and concrete finishers increase 87%. Minnesota reinforcing iron and rebar workers increase 141%.
And so, what you're gonna, this is what you're gonna end up seeing if this wage rate rule actually goes into effect and hope it doesn't, but let's say that this wage rate goes into effect. What you're gonna end up seeing is employers filing applications, employers putting similar job descriptions to what they've always put.
But let's say that I own a construction company or I own a farm and I'm bringing in H-2A workers to perform some agricultural work. I also have them build a storage, a grain storage building. Well, what's gonna happen is that when the Department of Labor comes in to investigate, they're gonna look at, they're gonna go to your workers.
They're gonna say, hey, what all work did you perform? Your workers are gonna say, well, I mainly drive a tractor. Um, I work in the fields. Pick weed, and then they're gonna say, but we also built that grain storage building right there. And the Department of Labor investigate. Investigator's gonna look at it and they're gonna say, did you pour the concrete?
And your, your worker's gonna say, yeah, they're gonna say, did you tie the rebar together? Your worker's gonna say, yeah, the Department of Labor's gonna come back to you, and they're gonna say, hey, these people should have been assigned the classification of reinforced iron and rebar workers in the state of Minnesota.
So, you egregiously underpaid your workers, and this can end up costing employers millions of dollars. And so, what are your options? Okay. Well, so if I'm an agricultural producer and I am, nor my workers are normally working in the fields, I can file two separate applications where I would've historically only had to file one.
Uh, so I can bifurcate my filings. That's expensive. Um, I can hope I get away with it. That's way more expensive. Don't do that. I can subcontract that workout. Uh, that's about it. But that's not what's gonna happen. What's gonna happen is a lot of employers are gonna advert. not include all of the job duties just because they're not that thorough on their application and it's gonna cause huge wage rate issues in this industry.
Uh, something else that's gonna happen is the Department of Labor's gonna be taken a closer look at applications that have all these different job duties on 'em, and they're gonna be, maybe historically they just assigned a wage rate that's just for farm workers. Farm and agricultural workers, which is one of their protected categories.
But, uh, let's say that they take a closer look, and they see, oh wait, you require a CDL? Okay, well if you require a CDL, now you're a truck driver. So, what do I do? Do I file a separate application just for truck drivers or what? So, you're gonna have a, a big issue here where right now the Department of Labor is advertising, hey, this is only gonna affect five to 10% of employers.
I think it's like 6% is what they put in the actual proposal. Rule change, something like that. Uh, it's not, it's gonna impact a lot more than that. Another thing that's gonna impact is the cost of raising livestock in the United States. A lot of people don't know this, but the way that hogs and chickens are raised, turkeys are in large livestock confinement buildings.
One of the huge costs in constructing a livestock confinement building and what, uh, something that farmers have to take into account to make sure that they're not gonna go broke trying to raise these animals is they're going to have to make sure that the cost of construction of that livestock confinement is worth it. Well, I don't know exactly how they're gonna do that. Whenever the wage rates, which labors a huge part of the cost in constructing a livestock confinement, I don't know how they're gonna possibly build these buildings when wage rates increase anywhere from... You know, if you're in the state of, if you're in the state of Illinois, good freaking luck because it's gonna go up a hundred percent on labor, gonna drive the cost up.
So, what, what are those people gonna do? They're gonna move to Iowa where it's not crazy, or they're gonna move to South Dakota where people aren't crazy, and the wage rates aren't nuts. They're gonna move outta Minnesota, down into Iowa, or over into South Dakota. And so, you're gonna see people moving into these states because the cost of raising livestock in this estate, in the estate is gonna be significantly less.
It's gonna be a lot less to construct these buildings, but even in those states, you're gonna see a huge increase in wage rates. Let's not only ag construction that it's impacting. Let's say that I am a hog producer in Iowa, and I farm a lot. Uh, says I produce a lot of my own grain and I bring over H-2A workers to work in my fields and to haul my grain.
Well, historically you were just paying the adverse effective wage rate for that, but moving forward, you may be stuck paying a truck driver wage rate for that, or you might be filing a certification for its truck drivers and a certification for equipment operators. Just trying to prevent that huge wage rate increase.
And so, if all the issues that these agricultural producers have to face on an annual basis, not. The Department of Labor decided to throw another wrench in their plans by increasing the wage rates significantly in these various occupations. And of course, in some states it's crazier than other states.
Well, there's, there's also some other pretty significant issues. Let's just circle back to Ag Construction for a minute. Let's say I am an ag construction company, and I am contracted to build several buildings. And these buildings are gonna take three years to complete. Well, whenever I go into the contract with my general contractor, with the farmer, I'm assuming some wage rate increase.
But what I'm not anticipating is a 100, 200% increase in the wages. And so then now me as a construction company owner, I have two options. Do I perform that work in accordance with my contract, knowing that I'm going to potentially bankrupt my company in the process? Or do I try to get outta the contract, damaging my reputation and hurting the farmer, and potentially putting a lot of animal lives in jeopardy, assuming that they've already been ordered.
And that they need a place to go. I don't know. And so, it's a, it's a big issue. Um, and it's an issue that we wanna fight. This isn't, uh, you know, we file a lot of H-2A applications. Uh, we're heavily in agriculture. My last name's even Farmer, which is just. That's that, that there's just destiny. I decided I'm gonna name my next kid, John Deere.
That's not true, but it is funny. Uh, anyways, we are, we are heavily in this industry, but we're not, uh, we're, we're not a litigation firm. That's not our, our main focus. Uh, so what we wanna do is we want to get a whole bunch of friends in this industry to come together and to stand up to the Department of Labor and to.
this wage rate, increase it, but it does take cooperation. That's something that the Department of Labor has, is they have unity in the Department of Labor so they can afford to fight these kinds of things. Well, historically, I don't think agricultural producers have done just a bang-up job of rallying together to fight these things as one unit.
But that is what it's gonna take cuz it's gonna be expensive, it's gonna be something that we need to do. Uh, but it is something that we're willing to help coordinate and something that we're help, willing to help contribute towards. Uh, this isn't a call for additional work, uh, because this is not work.
We'll be performing and for any work that we do perform, it's not work that we're gonna bill for. I'm not looking to make money off of this. Uh, in fact, this is gonna cost me money just like it's gonna cost you money. And so, what we're gonna end up doing is we're gonna be sending out some material to people, inviting some people to contribute to this fight, uh, to try to stop the Department of Labor changing the wage rate methodology.
For these workers, cuz it's gonna have huge implications and those implications matter. And it is just it, it still just blows my mind that the Department of Labor doesn't understand that this industry is a globally competitive industry where you can't just keep driving up the cost of production here in the United States because what's gonna happen is that's gonna make the cost of production elsewhere much more.
And whenever that's the case, we're gonna be relying on other countries to feed our people. And when that's the case, it is a serious national security issue. We are a very blessed nation in that we can feed our own citizens. Not everyone's like that. And we are not guaranteed to be like that forever. It is extremely important that we're able to continue that way, and it's a, it's a fight that we are more than happy to, to join into.
And so, we, we just ask people to join in with us so you can contribute to this. Cause uh, we're gonna have a link on our website for people to use. We're setting up a trust to hold the money so that we can pay the law firms that are gonna be helping us with this. I anticipate it's gonna cost around $300,000 to fight this Department of Labor wage rate change.
Um, it's gonna cost us $300,000 now and give us a chance, or it's gonna cost us a lot more in the future. And so, it's a, it's a, it's a fight worth taking on. I think that there are some potential angles of attack on this terrible, terrible rule. Uh, but we do need your support. We need your business support, we need your friend's support.
So please share this with. so that they know it's a, it's a really important. and I think that we do have an opportunity to take it on. I do think it takes team effort. It's gonna take all of us contributing, showing that we actually care about this, we actually care about this industry and it's something worth fighting for.
We care about the H-2A program and it's something worth fighting for. Because it's gonna end up having significant implications on us. So, we do ask for your support. You're gonna be able to find it on our, on our website. You can always, always just email me too just at Kyle Farmer law pc.com. And I am, uh, happy to give any directions.
We're gonna be sending out some email material to, uh, so you can email us. get that information so you to, to get on that list, you can just email us at media farmer law pc.com. In other news there, there are some potentially decent changes to the H-2A program with, with that rule change. Last time there were, there were some other things in there.
Uh, of course some of it was just a pile of garbage has one would expect. But, uh, other than that, there was some good aspects to it, specifically the. Department of Labor. Uh, so historically there was a prohibition against what's called staggered entry. It's a stupid rule. It's a terrible rule because it doesn't actually capture how agri… how agriculture works.
What, what the prohibition was, is you couldn't file an H-2A application, say had April 1st start date, and I need 50 people. You couldn't bring in 25 now and 25 on June 1st because my work picks up through the summer. And that was, there is a rule against that called staggered entry., the Department of Labor is looking at, uh, getting rid of that rule, which is great.
The Department of Labor is also considering getting rid of, i I, I believe part of that rule was they're considering getting rid of the 50% rule and maybe reducing that down to a 30-day rule. And the 50% rule, just people are aware, is uh, there's some continued recruitment obligations and reimbursement obligations for workers through 50% of the work contract.
Uh, and they're cutting that down, which is, which is a good thing. So, there are, there are some things in, in that rule that might be useful. Of course, whenever I look at that rule, I just, it's, it's hard to look past any of the, or see any of the good whenever all you see is the, the ugly. Wage rate change, which is in a separate rule, the wage rate change.
I would expect to go into Forest at the end of this year, and I would imagine if I were the Department of Labor, I'd be wanting to do it in December or January so that people are going into the new calendar year with this is the expectation. So, it's, uh, it's the time to start preparing to fight it. But anyways, thanks for listening, and you'll hear us next week.
We won't see you next week because that's one good thing about podcasts. There's no eye contact. We'll see you next week. Thanks for listening. Thank y'all for listening to The Immigration Guy Podcast. We really appreciate it. You can find us on our website. Go to www.farmerlawpc.com. You can find me on LinkedIn and Twitter.
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