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Industries Say New Wage Rates For|Legal Foreign Workers Will Be Crippling

ALEXANDRIA, La. (CN) - Industries dependent on immigrant workers say the U.S. Department of Labor has arbitrarily and unfairly imposed "immediate retroactive, substantive, and burdensome changes" to wage rates that will take effect Sept. 30, more than doubling the wage rates for some workers with H-2B visas.

Lead plaintiff The Louisiana Forestry Association says the new wage rates will stunt industries' progress, to the benefit of foreign competitors, and domestic rivals who use illegal workers.

"The new H-2B prevailing wage rate will cripple Louisiana employers while many of their domestic competitors, who use undocumented, illegal workers, and their foreign competitors (especially China), who do not face such labor costs, are already operating at a significant advantage," according to the federal complaint.

Plaintiffs include the Outdoor Amusement Business Association, the Crawfish Processors Alliance, the American Shrimp Processors Association, the Forest Resources Association, the American Hotel & Lodging Association, and the American Sugar Cane League of the U.S.A.

The H-2B worker program was created in 1987 as amendments to the Immigration and Nationality Act. It provides nonimmigrant alien labor for nonagricultural employers in the United States when U.S. workers are putatively not available.

The plaintiff Forest Resources Association claims that "if implemented September 30, the Wage Rule II will significantly reduce the annual level of U.S. reforestation. It will cause job losses among members' U.S. employees employed in jobs that are not covered within the H-2B certifications and who cannot work and enjoy livelihoods if their employers are not engaged in tree planting. ...

"The H-2B Wage Rule II to go into effect on September 30 raises wages of current H-2B foreign guestworkers and certain affected U.S. workers, similarly employed in reforestation jobs, by as much as 129 percent - for example, in many Louisiana parishes from the 2010-2011 planting season wage rate now in effect of $9.60/hour to $16.31/hour starting September 30. That wage requirement means that tree planters' regular hourly wage rate will suddenly be more than their current overtime wage rate. Moreover, the overtime wage rate will go up from $14.40/hour to $24.47/hour for overtime hours worked. FRA member forestry (reforestation) firms that will be subject to these higher H-2B mandated prevailing wage rates will not be able to pass these reforestation labor costs off on to forest landowners."

The Forest Resources Association claims that "landowners and tree farmers who depend on the reforesting contractors to replant after harvest will face either unrecoverable increases in reforestation costs or they will postpone, reduce, or stop reforestation."


The Crawfish Processors Alliance makes similar claims. Referring to itself as the CPA, the group says it is "one of the Louisiana small business groups that rely heavily on a viable and cost-effective H-2B program to sustain its contribution to the Louisiana economy. CPA has 28 members who provide approximately 80 percent of the production of commercial crawfish. Crawfish picked tailmeat is a staple food source in Louisiana and its members sell to the nation. U.S. crawfish producers and processors compete in a world market, however, and the industry faces severe competition from Chinese exporters. The number of processing plants has decreased dramatically, largely as a result of the competition from the Chinese. Its processors depend on the H-2B workers to support the farmers who raise their crawfish in paddies and fishermen to process this highly variable seafood harvest. The downstream restaurants, grocers, and wholesale seafood purveyors also are dependent on the output from the processing operations. The prevailing wages paid in 2010 were from $7.25-$9.05 per hour in Louisiana. ...

"The new H-2B prevailing wage rate will cripple Louisiana employers while many of their domestic competitors, who use undocumented, illegal workers, and their foreign competitors (especially China), who do not face such labor costs, are already operating at a significant advantage.

"Any increase in wages will allow the Chinese even greater opportunity to capture the domestic U.S. market for crawfish. Once the market is lost, it will be impossible to recapture all of it because commercial buyers will lack confidence that U.S. producers can sustain production at prices that can be competitive. Crawfish processors currently provide many jobs for U.S. employees, and those jobs will be lost to our economy and the U.S. workers in these non-H-2B jobs will be severely affected if these new wage increases for predominantly only H-2B foreign guestworkers are not stopped before September 30."

The American Shrimp Processors Association makes the same argument: "The demand for shrimp in the U.S. alone is so large that the U.S. domestic shrimp industry can only produce and satisfy approximately 10 percent of U.S. demand. Unfortunately, the remainder of the market is served by imported shrimp produced in aquaculture ponds around the world and often sold into the U.S. at unfairly low prices.

"Unfairly low priced imported shrimp steadily drove domestic prices down beginning in 2000 and eventually became so severe that the U.S. domestic industry petitioned the International Trade Commission and U.S. Department of Commerce in 2004 for a trade remedy relief as a result of the unfairly dumped imports. The domestic industry prevailed and imported shrimp from five countries are currently subject to antidumping orders to remedy their unfair trade practices. Before the antidumping orders could take full effect, the Gulf South was struck by a series of devastating hurricanes beginning with Katrina in 2005. After five years of rebuilding the industry after the hurricanes, the domestic shrimp industry was on the verge of a full recovery when the worst environmental disaster in U.S. history occurred. The Deepwater Horizon disaster occurred just off the coast of Louisiana in April 2010, spewing millions of gallons of oil into pristine and productive shrimping grounds, resulting in massive fishing closures and a crisis in consumer confidence. ...

"The changes being implemented are material and will have immediate and severely detrimental effects on ASPA members who depend on a reliable and cost-effective H- 2B program and wage requirements to sustain their operations."

The employers say, "The H-2B program was not designed to replace willing and available U.S. workers with H-2B workers but to balance the needs of employers (and the U.S. economy as a whole) with the interests of U.S. workers similarly employed by making legal temporary foreign workers available when U.S. workers are not willing and available. ...


"Before an employer may hire H-2B workers, DOL [the Department of Labor] must certify that there are insufficient numbers of U.S. workers willing and available. Therefore, employers currently employing H-2B foreign guestworkers have already advertised for and hired any willing and available U.S. workers. Most of the extraordinary wage increases to go into effect under Wage Rule II will therefore necessarily go to foreign guestworkers, not to U.S. workers, because U.S. workers chose not to take these jobs."

The employers say the Department of Labor "claimed in the Wage NPRM [notice of proposed rulemaking] that it had 'grown increasingly concerned that the current [prevailing wage] calculation method does not adequately reflect the appropriate wage necessary to ensure U.S. workers are not adversely affected by the employment of H-2B workers.' 75 Fed. Reg. 61578, 61579 (Oct. 5, 2010). ...

"Rather than follow the Department's longstanding practice of determining the

applicable prevailing wage from the single most appropriate and accurate data source based on the job title and full task and duty description, the Wage NPRM I proposed a new prevailing wage scheme that is not tethered to the most relevant or statistically valid data source for the job title and description, but rather is simply the highest wage the DOL can locate from among any possible data source that mentions any job task and duty associated with the employer's position. The Department then assigns the highest wage to the employer and calls it the 'prevailing wage' that must be paid to all H-2B workers and any U.S. workers recruited in conjunction with the H- 2B job order. The Wage NPRM I proposed that employers pay as the 'prevailing wage' the highest wage found from among four different sources: a collectively-bargained union wage; a wage rate established under the Davis-Bacon Act ('DBA'); a wage rate established under the McNamara-O'Hara Service Contract Act ('SCA'); or a wage determined from the arithmetic mean of OES data, which DOL described as being the wage rate 'that is at the point between the current Level II and III wages' for the relevant occupation."

The plaintiffs say that "although DOL did not address any of the comments it received in response to its request about an extended phase-in period for the Wage Rule I, the department announced on the previously announced effective date of Wage Rule I by making the Rule's requirements, including new methodology and drastically higher wage rates - some are more than 100 percent increases - effective on or about October 1, 2011, rather than January 1, 2012."

The plaintiffs say the Department of Labor "never considered the effect of the new prevailing wage methodology and resulting mandatory wage rate increases on employers who had already been approved to hire, who already employ, and who will employ H-2B workers on and after September 30, 2011 for the remainder of the term of a currently valid labor certification."

The Department of Labor "issued the Wage NPRM II just before the July 4 holiday weekend and unreasonably limited the amount of time the public would be permitted to comment on the proposal to only 10 days - requiring filings by Friday, July 8, despite the wide-ranging substantive changes the proposal would make to H-2B employers' existing legal, economic, and contractual obligations, and despite the ripple effects beyond the economic viability of these employers that affect many other American jobs and businesses, as well as the jobs of non-H-2B regulated employees. ...


"Many employers subject to the regulations would have commented on the effects of the proposed substantive changes in their legal obligations, the effects on their ability to continue operations, the likely resulting layoffs of non-H-2B regulated American employees that will be required, and many other substantial and irreparable harms if the DOL would have provided an adequate comment period," the employers say.

They claim that "some of the wage rates that have been issued as mandatory 'prevailing wage rates' under the methodology of Wage Rule I and Wage Rule II will result in foreign H-2B guestworkers and a small number of covered U.S. workers being paid more than their American supervisors and managers, as well as more than professional engineers and other skilled employees of the affected H-2B employers."

They say the Department of Labor "prejudged the issue, ignored substantive comments that opposed the proposed regulatory change, ignored relevant legal precedent governing the H-2 programs under 8 U.S.C. § 1101()(15)(H)(ii) and 1184(c)(1), failed to adequately deliberate before issuing Wage Rule I and Wage Rule II, and failed to demonstrate a rational connection between the alleged problem cited and its regulatory solution. ...

"DOL has arbitrarily determined that to the extent existing, affected H-2B employers can even pay these wages, the money to pay these new wages will be at the costs of non-H-2B American workers' jobs, deferred or canceled pay raises, promotions and other benefits to American non-H-2B employees, deferred capital improvements, deferred maintenance on equipment, loss of customers' and suppliers' goodwill, and many other adverse effects that were not even considered by DOL. DOL in Wage Rule I and Wage Rule II claims, without any evidence whatsoever, that U.S. workers are currently being adversely affected by the employment of H-2B workers.

"In each of those rulemakings, DOL arbitrarily and capriciously ignores relevant data that casts doubt the validity of its conclusions, including failing to consider that H-2B employment in the U.S. is limited to 66,000 H-2B visas per year and that in 2010, just 47,403 H-2B visas were issued and in 2009, just 44,847 H-2B visas were issued by DOS, while private sector employment in the U.S. is approximately 139 million workers according to DOL's own Bureau of Labor Statistics as of August 2011. DOL notes in Wage NPRM I that employment in the H-2B program is miniscule, yet it nonetheless arbitrarily and unreasonably concludes that this miniscule employment, as compared to the entire U.S. workforce, results in adverse effect on U.S. workers' wages. DOL has failed to consider in these rulemakings that employers that rely on H-2B employees to perform certain jobs or to supplement their U.S. workforce would be unable to operate without these H-2B workers, upon which other Americans' jobs depend, as well as their local economies and the larger U.S. economy. ...

"In reaching its arbitrary conclusion about adverse effect resulting from the employment of workers with H-2B visas, DOL ignores the highly relevant fact that H-2B workers are already paid a wage rate mandated and heavily audited by DOL that DOL itself has determined will not result in an adverse effect on U.S. workers. Thus, DOL is arbitrarily maintaining diametrically opposed positions in this rulemaking. On the one hand, DOL mandates a wage rate employers must pay H-2B workers in order to avoid adverse effects on U.S. workers, and on the other hand, DOL claims (without evidence) as the basis for these rulemakings that wage rates being paid to H-2B workers may be having an adverse effect on U.S. workers.

"In reaching its conclusion about adverse effect resulting from H-2B workers,

DOL fails to consider and indeed completely ignores important aspects of the alleged problem, including other possible, and more likely, explanations for such adverse effect, including the presence of unauthorized workers in the workforce, estimated to be about 10 million, and who are more susceptible to working for substandard wages than legal H-2B workers who must be paid a mandated wage rate and other benefits. The 47,403 H-2B visas that were issued in 2010 amount to just 0.004 percent of the estimated number of illegal workers in the economy. Thus, DOL's failure to consider even the possibility that illegal workers are the most likely explanation for any adverse effect on U.S. wage rates caused by foreign workers is arbitrary, as is DOL's conclusion that substantial increases in wages for H-2B workers will address adverse effect resulting from the employment of unauthorized workers.

"Indeed by enacting the Immigration Reform and Control Act of 1986 and continuing the temporary guestworkers programs at 8 U.S.C. § 1101(a)(15)(H)(ii) and 8 U.S.C. § 1184(c)(1), Congress demonstrated its intent to provide employers with reasonable access to a legal guestworker program and to discourage employment of illegal workers in the United States. DOL's failure to follow applicable substantive law under the INA, including case law governing the H-2B program, is arbitrary and capricious."

The plaintiffs want the Wage Methodology for the Temporary Non-Agricultural Employment H-2B Program, Final Rule, 76 Fed. Reg. 3452 (Jan. 19, 2011), and Wage Methodology for the Temporary Non-Agricultural Employment H-2B Program, Final Rule, 76 Fed. Reg. 45667 (Aug. 1, 2011) declared "not applicable to, nor enforceable against, any employer of an employee with an H-2B visa issued pursuant to an approved Labor Certification issued on or before September 29, 2011, or in the alternative on or before January 1, 2012, and that such employer shall not be required to pay any wage other than that required by the terms of the applicable Labor Certification that was issued on or before September 29, 2011, or in the alternative on or before January 1, 2012."

The trade groups are represented by Edward Harold with Fisher & Phillips of New Orleans.

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