September 29, 2011

Greenberg Traurig Obtains a TRO in Lawsuit Challenging Unfair H-2B Wage Rules Set to Become Effective on September 30, 2011  - DOL Responds with a 60 Day Suspension of the Implementation

On January 19, 2011, the Secretary of Labor issued a Final Rule ("Rule") changing the way in which employers calculate wages for seasonal workers in the U.S. on H-2B visas.  Although, the Rule was originally scheduled to take effect on January 1, 2012, on August 1, 2011, the Secretary announced that the new wage Rule would become effective on September 30, 2011.  Economists, including those in the federal government {i.e., the Small Business Administration’s Office of Advocacy ("SBA")}, have determined that the wage Rule would dramatically increase hourly wage rates.  Specifically, they project that increases could be as much as fifty percent (50%) for many seasonal workers across a variety of industries including: seafood processing, horse training, hospitality, landscaping and agriculture.  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  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) set forth by the Department of Labor ("DOL").  Even this three-month  phase-in period would have 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 customers were originally negotiated.  As a result, the Rule has generated strong bipartisan opposition as well as criticism from the SBA with respect to both its substance and the process by which it was enacted.

On behalf of the litigants, who include representatives from the landscape, seafood, and horse racing industries, Greenberg Traurig challenged the Rule in the U.S. District Court for the Northern District of Florida  and have obtained a temporary restraining order ("TRO") 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 and retention of new jobs.  The SBA believes that the Rule, if it were to go into effect, would eliminate thousands of H-2B and U.S. jobs.

In response to the TRO, the DOL has issued a Federal Register Notice delaying the implementation of the rule for 60 days.  DOL says that this action was taken specifically because the Court issued a TRO in the Florida litigation.   http://www.foreignlaborcert.doleta.gov/