A lawsuit challenging across-the-board increases to foreign guest worker wage rates in 2019 is currently being reviewed in U.S. District Court, and the nationwide implications of the ruling could be enormous.
The National Council of Agricultural Employers (NCAE) has sued the U.S. Department of Labor to stop minimum wage increases for farm laborers under the federal H-2A visa program, arguing that the rate increases currently in place are unsustainable.
The pay rate, known as the Adverse Effect Wage Rate (ARWR), increased this year in every state, creating a situation where agricultural industry employers simply can’t afford to pay their field workers.
Washington’s H-2A wage rate increased from $14.12 to $15.03 per hour this year.
“It’s already affecting us because we now have less money available to pay for other things on the farm,” said Rob Valicoff, co-owner of Valicoff Farms in Wapato. “As a grower, I’m concerned that if we keep raising the wage a dollar per year, we’re going to have to start charging so much for our products that people won’t buy them. We have to be profitable, and labor is the biggest issue we have right now.”
Washington and Oregon sit at the top of the ARWR table, established last year by the Department of Labor. The lowest hourly rate of $11.13 per hour is in Alabama, Georgia and South Carolina.
Valicoff says he is perplexed as to why the H-2A wage rates are so much higher than the states’ minimum wages.
“We’re already paying for everything — paperwork, visas, transportation to get here, room and board, utilities — and all the workers have to pay for is their food,” Valicoff said. “They don’t have any living expenses, so they should be able to manage with the state minimum wage.”
Washington’s minimum wage of $12 per hour is the highest in the nation, and will be going up again to $13.50 next year.
Agricultural industry employers around the country are keeping a close eye on the NCAE’s case against the DOL, currently being reviewed by a federal court in the District of Columbia. An announcement is expected at any time, although no resolution had been announced as of Feb. 25.
Steve Scaroni, owner of the Scaroni Family of Companies in Southern California, agrees that the current H-2A wage system is simply unsustainable.
“We filed the lawsuit to get injunctive relief so we can keep wages at 2018 levels,” Scaroni said. “We fear the Department of Labor may be applying the wage increases illegally. The way we see it, the wages we are being forced to pay, and how those rates are calculated, is dysfunctional.”
Last November, Western Growers sent a letter to the Department of Labor and U.S. Department of Agriculture seeking administrative relief from the proposed wage increases. The letter also requested an interagency study of the underlying issues, such as whether the H-2A wages may have an adverse effect on domestic workers.
The lawsuit was filed after the agencies failed to respond to the industry’s concerns. Early last month, the U.S. District Court for the District of Columbia allowed the case to proceed.
“We don’t have a problem with the wage itself,” Scaroni said. “We have a problem with how it’s calculated. We believe the rates are artificially high, so we need to figure out how to reform the system. Our goal is to freeze the wages at 2018 levels and then get everyone to the table so we can negotiate a better way forward.”
Scaroni’s company, based in Heber, Calif., began participating in the H-2A program in 2006. He started out with 100 guest workers that year and is now using more than 5,000 at his facilities in three states.
The company has two satellite branches in California, one in Arizona and one in Colorado, and is looking to expand its services to Washington and Oregon as soon as this year. That has given Scaroni added incentive to fight the ARWR increases.
“Washington and Oregon have been really impacted by this increase, so we need to figure out a system that is more cost-sustainable,” he said.
Scaroni believes the problem runs much deeper than the wage issue. After being involved in the H-2A program for 13 years, he recognizes that serious reforms are needed.
“There hasn’t been any meaningful immigration legislation to bring new workers into agriculture since 1986, so we’ve had nothing to replenish an aging workforce since then,” he said. “That’s the underlying theme of this whole thing. Ag work has to be supplemented with migrants because it’s been shown that domestic workers won’t do it.”
He explained that the industry has changed so much over the past 33 years that the current system is outdated. But instead of trying to influence changes with national immigration policy, Scaroni is now focusing on how to reform the H-2A system overall.
“My primary focus the past few years has been to push as hard as we can for H-2A reform,” he said. “Broad reform may not be in the cards politically, but we can push to make the program more palatable for employers.”
Scaroni would also like the application process to be more streamlined, saying many of the current issues could be handled at the administrative and regulatory levels.
“It wouldn’t require a change in the law,” he said. “The fact is, we need to figure out a way to make H-2A work. There is no other legal option than to bring in replenishment farm workers. It’s just a reality of how business is done in this industry.”
Valicoff, of Valicoff Fruit Co., wonders what might have happened if certain safeguards were put in place when the H-2A law was established during the Reagan administration.
He doubts the industry would be in such a dire situation today if the government had required employers to verify Social Security Numbers from the very beginning.
“That’s what started this whole thing, if you ask me,” Valicoff said. “All these years, we have been building our infrastructure using a fraudulent workforce and that has put us in a bad position.
“Now, we don’t have the workers we need to deliver our products to market because the system is broken. If we keep going down this road, being a fruit grower/producer won’t be economically feasible anymore.”