September 22, 2011

Greenberg Traurig Files Lawsuit Challenging Unfair H -2B Wage Rules Set to Become Effective on September 30, 2011

On January 19, 2011, the Secretary of Labor issued a final rule changing the way in which employers must calculate wages for seasonal workers on H-2B visas.  On August 1, 2011, the Secretary made that wage rule effective September 30, 2011, rather than January 1, 2012, as originally envisioned.  Economists, including those in the federal government (i.e., Small Business Administration’s Office of Advocacy), have determined that the wage rule would dramatically increase hourly wage rates by as much as fifty percent (50%) for many seasonal workers in seafood processing, horse training, hospitality, landscaping, agriculture and other occupations.  This would have a snow-ball effect forcing employers, many of whom are small businesses operating at the margins, to dramatically raise wages for all their employees.  Many of these employers believe that if the new regime were to go into effect, they would be driven out of business.  The rule would have particularly devastating effects in Virginia, Florida, Maryland, Louisiana, Alabama, and Oklahoma. 

The new rule at issue is not required by statute and was issued with only a thirty-eight-day comment period at the insistence of certain labor unions.  These unions sued to force the regulation to take effect three months before the initial effective date (January 1, 2012) proposed by the Department of Labor.  Even this three-month  phase-in period would have  had significant adverse consequences for the  affected sectors, many of which are already in mid-season and unable to accommodate high wage increases that were unanticipated when their current contracts with their customers were originally negotiated.  The rule has generated strong bipartisan opposition.  The SBA has criticized both the substance and process of the rule.

The litigants have challenged the rule in the U.S. District Court for the Northern District of Florida seeking a temporary restraining order to block implementation while the court considers the merits of the plaintiffs' case.  Plaintiffs believe that the underlying wage rule is inconsistent with and not authorized by the enabling legislation (the Immigration and Nationality Act), violates the Administrative Procedure Act, 5 U.S.C. § 706, and violates the Small Business Regulatory Flexibility Act, 5 U.S.C. § 601 et seq.  Plaintiffs have also challenged the Department of Labor’s authority to issue any rules under the organic legislation.  The regulatory change is particularly onerous and imperils jobs at a time when federal and state governments are supposed to be doing everything possible to promote the creation of new jobs and their retention.  The SBA believes that the rule, if it were to go into effect, would eliminate thousands of H-2B and U.S. jobs.