Employer-provided Wage Surveys Barred in H-2B Prevailing Wage Determinations: Third Circuit | Practical Law

Employer-provided Wage Surveys Barred in H-2B Prevailing Wage Determinations: Third Circuit | Practical Law

In Comite' De Apoyo A Los Trabajadores Agricolas v. Perez, the US Court of Appeals for the Third Circuit dismissed the district court's judgment holding that the case was not ripe for review, and issued a decision vacating the portion of the H-2B wage rule and the DOL's 2009 Wage Guidance permitting the use of employer-provided surveys in prevailing wage determinations as arbitrary and capricious.

Employer-provided Wage Surveys Barred in H-2B Prevailing Wage Determinations: Third Circuit

by Practical Law Labor & Employment
Published on 17 Dec 2014 • USA (National/Federal)
In Comite' De Apoyo A Los Trabajadores Agricolas v. Perez, the US Court of Appeals for the Third Circuit dismissed the district court's judgment holding that the case was not ripe for review, and issued a decision vacating the portion of the H-2B wage rule and the DOL's 2009 Wage Guidance permitting the use of employer-provided surveys in prevailing wage determinations as arbitrary and capricious.
On December 5, 2014, in Comite' De Apoyo A Los Trabajadores Agricolas v. Perez (Comite'), the US Court of Appeals for the Third Circuit dismissed the district court's judgment holding that the case was not ripe for review, and issued a decision vacating the portion of the H-2B wage rule and the 2009 DOL Wage Guidance permitting the use of employer-provided surveys in prevailing wage determinations as arbitrary and capricious (14-3557, (3d Cir. Dec. 5, 2014)).

Background

The H-2B visa program allows employers to bring certain unskilled foreign workers to the US for temporary employment (20 C.F.R. §§ 655.1 to 655.81). To ensure the employment of foreign workers is not suppressing the wages and working conditions of US workers, H-2B employers must offer the job at prevailing wage rates as determined by either a collective bargaining agreement or by the DOL. The DOL methodologies include either a private employer survey or the Bureau of Labor Statistics' Occupational Employment Statistics Survey (OES) (20 C.F.R. § 655.10). The DOL's administration of the H-2B program, including the determination of prevailing wages, has repeatedly been challenged (see Comite', 14-3557, , *1). For more information, see Legal Updates:
In this case, organizations representing H-2B and US workers challenged 20 C.F.R. § 655.10(f) and the 2009 Wage Guidance permitting employer-provided wage surveys, alleging that the rules recognized unreal skill distinctions that allowed employers to hire foreign workers at wages substantially below the average minimum wage for an occupation.
On July 23, 2014, the district court dismissed the suit, stating that a prospective change in the rules in 2014 made the claims unripe for court review. Appellants appealed to the Third Circuit.

Outcome

The Third Circuit reversed the district court's judgment and held that:
  • The case was fit for judicial review because, although the challenged rules were not implemented, the DOL's consistent use of 20 C.F.R. § 655.10(f) and the 2009 Wage Guidance to approve private wage surveys demonstrated that it had taken a "final" position for the purposes of the Third Circuit's ripeness determination.
  • Further delay might cause appellants to suffer unjustifiable hardships because the DOL's evaluation of employer surveys using the skill-level provisions of 20 C.F.R. § 655.10(f) and the 2009 Wage Guidance adversely affected US workers by forcing them to accept lower wages or face being replaced by foreign H-2B workers.
The Third Circuit rejected the DOL's argument that 20 C.F.R. § 655.10(f) and the 2009 Wage Guidance lacked finality because:
  • The DOL was not delaying or conditionally issuing its labor certificates during its internal deliberations.
  • The DOL was using the directives of the rules to issue final labor certificates to employers.
  • The DOL's continued issuance of labor certificates based on 20 C.F.R. § 655.10(f) and the 2009 Wage Guidance adversely affected US workers' wages.
  • Employers were exploiting the loophole in the DOL's administration of the H-2B program.
  • The current state of the H-2B program was causing great disparities between employers that submitted private wage surveys and employers that did not.
Having found the case justiciable, the Third Circuit decided the merits of the case and found that:
  • 20 C.F.R. § 655.10(f) is substantively arbitrary and capricious because the DOL uses private wage surveys in prevailing wage determinations rather than the available OES wage.
  • The DOL violated the Administrative Procedure Act (APA) by repeatedly failing to explain why it allows employers to use private wage surveys in prevailing wage determinations when a valid applicable government wage survey is available.
  • The DOL's 2009 Wage Guidance is arbitrary and capricious, and violates the APA because it is contrary to and violates the DOL's current wage guidance that rejects skill-level considerations.
In holding that the DOL's reliance on 20 C.F.R. § 655.10(f) and use of the 2009 Wage Guidance in prevailing wage determinations is unlawful, the Third Circuit granted the appellants' vacateur request.

Practical Implications

As a result of the Third Circuit's decision in Comite' De Apoyo A Los Trabajadores Agricolas v. Perez, the DOL announced that it no longer relies on employer provided wage surveys in prevailing wage determinations. Therefore, pending prevailing wage determination requests will be based on the OES survey for the occupation. Employers whose prevailing wage determination was based on employer-provided wage surveys, but whose H-2B temporary employment certification applications have not been finally determined will be advised of their new wage obligation.