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Court decision prohibits midseason H-2B wage increases

Industry News, Legislation, Association News

BALCA ruling in Island Holding case establishes that DOL cannot raise H-2B rates mid-season.

ANLA News | December 11, 2013

From ANLA Knowledge Center:

On Dec. 2, the Department of Labor’s Board of Alien Labor Certification Appeals (“BALCA”) ruled that DOL’s H-2B prevailing wage regulation does not allow DOL to raise prevailing wage rates mid-season. The long-awaited ruling came in Island Holdings, No. 2013-PWD-00002.

Island Holdings brings a little regulatory certainty to the H-2B Program. It establishes that DOL may not, under the current H-2B regulations, raise prevailing wage rates mid-season. Employers may now plan their labor costs without worrying that DOL will change the required wage without warning. The case also shows that a coordinated litigation effort can succeed in challenging DOL’s unlawful actions.

Background
An employer that wants to participate in the H-2B Program must agree to pay its H-2B workers at least the “prevailing wage.” DOL determines the prevailing wage using a formula set by regulation. In 2008, DOL adopted a new formula for setting the prevailing wage. Worker advocacy groups challenged this formula and a federal court ruled the formula was illegal. However, the court allowed DOL to continue using the formula until DOL could adopt a new one.

Earlier this year, DOL issued an Interim Final Rule (“IFR”) with a new formula. DOL also tried to apply the new formula to prevailing wage determinations that it had already issued. For large numbers of H-2B employers, this meant a large, unplanned for increase in their wage obligations. Island Holdings appealed the retroactive increase and it is estimated that another 1400 post-certification wage determinations were appealed. Island Holdings was represented by CJ Lake, LLC, which also serves as ANLA and AmericanHort’s employment and immigration law consultant.

What the Island Holdings Decision Means For Employers
Island Holdings is a very significant decision. Although precise estimates are difficult to come by, it is certain that BALCA’s decision saves employers millions of dollars in unforeseeable and unplanned for expenses. Many employers simply could not pay the new rates and would have had to curtail operations or close their doors.

DOL is currently considering how it will implement the Island Holdings decision. But based on the ruling itself, we expect that following will happen for three main groups of employers:

  • Employers who appealed. These employers are likely to receive a notice vacating/cancelling the supplemental prevailing wage determination that they received in spring. They have no obligation to pay the higher wage.
  • Employers who did not appeal, but escrowed funds instead. DOL will contend that these employers are required to pay the higher wage because they did not appeal. Future litigation will determine whether this argument succeeds
  • Employers who did not appeal, but paid the higher wages. Because these employers did not appeal, it will be very difficult to recover the funds.

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