American farmers, farm labor contractors and agribusiness associations have a tough row to hoe when it comes to agricultural payroll expenses.
For the past ten years or so, the Adverse Effect Wage Rates (AEWR) that control agricultural wages have varied in terms of geographic scope. They’ve also been subject to change each year. The Department of Labor often would change AEWR wages during the middle of a crop season. And these types of salary variances made it difficult for certain agriculture businesses to forecast payroll expenses.
The DOL issued a Final Rule on Nov. 5, 2020, that froze the AEWR for 2021 and 2022 at the 2020 rates. This way, agriculture businesses would know what AEWR wages would apply for at least two years. Then—for 2023 and beyond—instead of being based on the Farm Labor Survey (which produced variable results), the AEWR would use the 2020 rates as a base and adjust based on the change in the Bureau of Labor Statistics’ Employment Cost Index for wages and salaries. By using this method, the goal was that the AEWR would change at a more predictable rate.
The November Final Rule was set to take effect on Dec. 21, 2020. Because this rule froze the AEWR at the 2020 rates, the DOL had not published or prepared the AEWR for 2021. But on Dec. 23, 2020, a federal district court in California stopped enforcement of the November Final Rule. The court also ordered the DOL to publish AEWRs for 2021 using the former method (based on the Farm Labor Survey) no later than Feb. 25.
For now—in the interim between the Dec. 23 order until the 2021 AEWRs are published on Feb. 25—agribusiness employers must set wages according to the 2020 AEWRs. Please contact Brandon Davis of Phelps’ Immigration team if you have questions about the H-2A agricultural program and wage compliance.