February 2014 FBA Labor and Employment Law Third Circuit Update

Posted on Wednesday, March 12th, 2014.

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February 2014 FBA Labor and Employment Law Third Circuit Update

Stephen E. Trimboli, Esq.
Trimboli & Prusinowski, LLC


The U.S. Labor Department’s 2011 regulation governing the calculation of the minimum wage that U.S. employers must offer in order to recruit temporary foreign workers under the H-2B visa program (governing unskilled, non-agricultural foreign laborers) was validly promulgated and is consistent with governing statutes.


In a decision having nationwide implications, and creating a potential split with the Eleventh Circuit, the Third Circuit, in Louisiana Forestry Assoc., Inc., et al. v. Secretary, United States Department of Labor, et al., decided February 5, 2014, www2.ca3.uscourts.gov/opinarch/124030p-4.pdf, affirmed a District Court decision granting summary judgment to the U.S. Departments of Labor and Homeland Security, their respective Secretaries, and the Assistant Secretary of the Labor Department’s Labor Employment and Training Administration on a challenge to the Labor Department’s 2011 Wage Rule. That rule governs the calculation of the minimum wage that U.S. employers must offer in order to recruit temporary foreign workers under the H-2B visa program, governing unskilled, non-agricultural foreign laborers. The plaintiffs in the case were various employer associations whose members recruit H-2B workers and allegedly stood to face higher labor costs as a result of the Rule. Also participating in the case was a group of individuals and organizations representing foreign and U.S. workers impacted by the H-2B program that had been successful in challenging the Labor Department’s earlier 2008 Wage Rule. That earlier case, like Louisiana Forestry Assoc., was tried in the Eastern District of Pennsylvania.


The Louisiana Forestry Assoc. action had been commenced in the Western District of Louisiana. Venue was transferred to the Eastern District of Pennsylvania after the intervenors were granted leave to intervene on the ground of comity.


Under the Immigration and Naturalization Act (INA), authority to administer the H-2B program is vested in the Department of Homeland Security (DHS). The INA directs the DHS, upon the petition of an “importing employer,” determine the “question of any alien as a non-immigrant” worker under the H-2B program “after consultation with appropriate agencies of the Government.” 8 U.S.C. Sec. 1184(c)(1). The DHS, in turn, by regulation, designated the Department of Labor (DOL) as the agency from which it seeks “advice” in determining whether to grant H-2B visa petitions. 8 C.F.R. Sec. 214.2(h)(6)(iii). Under this regulation, the petitioning employer must apply to the DOL for a “temporary labor certification” before filing a visa petition with the DHS. The “temporary labor certification” constitutes “advice” to the DHS on two of the statutory requirements for granting an H-2B visa: whether U.S. workers capable of performing temporary services or labor are available, and whether the alien’s employment will adversely affect the wages and working conditions of similarly-employed U.S. workers. 8 C.F.R. Sec. 214.2(h)(6)(iii)(A).


To obtain a “temporary labor certification,” an employer must apply to the DOL for a “prevailing wage determination” for the area of intended employment, submit a “work order” with the state workforce agency serving the geographic area of intended employment, and advertise the position in question at a wage equal to or higher than the prevailing wage determined by the DOL. The DOL will issue the “temporary labor certification” once these conditions are satisfied. 20 C.F.R. Sec. 655.10, Sec. 655.50(b). Only at this point may the employer submit an H-2B visa application to the DHS. 8 C.F.R. Sec. 214.2(h)(6)(iii)(C), (E).


A regulation promulgated by the DHS under the INA purports to endow the DOL with the authority to create procedures necessary for the issuance of “temporary labor certifications.” 8 C.F.R. Sec. 214.2(h)(6)(iii)(D). This authority purports to include the power to adopt regulations for determining “the prevailing wage applicable to an application for temporary labor certification.” Id.


It was pursuant to this DHS regulation that the DOL adopted the 2008 Wage Rule that the intervenors had successfully challenged, and the 2011 Wage Rule that the Louisiana Forestry Assoc. plaintiffs were now challenging. The 2011 Wage Rule adopted a wage calculation regime that tended to raise the level of “prevailing wages,” and abandoned the four-tier structure contained in the 2008 Wage Rule that stratified wages based on the skill level required for the occupation. The 2011 Wage Rule also severely curtailed the use of employer surveys as a substitute for DOL prevailing wage determination procedures. The DOL estimated that the changes in the method for determining prevailing wages would result in a $4.83 increase in the weighed hourly wage for H-2B and similarly-employed U.S. workers, and a total annual cost increase to H-2B employers of $847.4 million.


The Louisiana Forestry Assoc. plaintiffs challenged the 2011 Wage Rule on several grounds: (1) that the DHS had unlawfully sub-delegated its authority over the H-2B program to the DOL; (2) that the DOL improperly exercised its rulemaking authority when its adopted the 2011 Wage Rule; and (3) that the DOL violated the INA by not including the four-tier structure from the 2008 Wage Rule in the 2011 Wage Rule.


On the sub-delegation issue, the Louisiana Forestry Assoc. Court applied the Chevron standard of deference, Chevron, USA, Inc. v. Natural Resources Defense Council, 467 U.S. 837 (1984), and found the DHS’s granting of rule-making power to the DOL to be lawful. An agency sub-delegates its authority when it shifts to another party almost the entire determination whether a specific statutory authority has been satisfied, or abdicates its final reviewing authority. An agency’s sub-delegation of its authority to an outside party is improper absent an affirmative showing of congressional authorization. But the Louisiana Forestry Assoc. Court contrasted such a sub-delegation with an agency merely receiving “legitimate outside party input,” noting that Courts of Appeals had recognized three forms of such permissible outside input: establishing a reasonable condition for granting federal approval, fact gathering, and advice giving. The Louisiana Forestry Assoc. Court found that the limited rule-making power over prevailing wages granted to the DOL by the DHS fell into the first category of a reasonable condition for granting approval. Because there was a “reasonable connection” between the DHS’s disposing of H-2B petitions and the DOL’s decisions on “temporary labor certifications,” and because it was “likewise reasonable” for the DHS to grant DOL limited rule-making power to govern the certification process, the granting of prevailing wage rule-making authority to the DOL by the DHS was lawful. The Court expressly declined to consider whether the DOL had express or implied authority under the INA or other legislation to promulgate rules concerning the H-2B program.


In a footnote, the Louisiana Forestry Assoc. Court noted a potential conflict between its determination on the sub-delegation issue and the Eleventh Circuit’s decision in Bayou Lawn & Landscape Services v. Secretary of Labor, 713 F.3d 1080 (11th Cir. 2013), which rejected the DOL’s argument that it had been granted lawful rule-making power by the DHS. However, because Bayou Lawn had involved an appeal from a preliminary injunction, it was not a final decision on the merits of the issue. The Louisiana Forestry Assoc. Court also deemed itself “bound to defer to the DHS’s interpretation of the statutes under which Congress has authorized it to administer the H-2B program.”


As to the argument that the DOL had improperly exercised its rule-making authority by adopting the 2011 Wage Rule, the Court found that the DOL had complied with the rule-making notice requirements prescribed in Section 553 of the Administrative Procedure Act, 5 U.S.C. Sec. 553(b)(2) and (3); that the DOL adequately responded to significant and relevant public comments on the proposed Wage Rule and adequately explained its conclusions; that the DOL had not improperly established prevailing wage rates in order to “attract” U.S. workers to jobs that they presumably would not otherwise have taken; and, that in responding to public comments and in the discussion portion of the notice accompanying the final rule, the DOL adequately examined the relevant data and articulated a satisfactory explanation for its action, including a rational connection between the facts it found and the rule-making choices it made.


Finally, the Louisiana Forestry Assoc. Court found that the DOL was not required by statute to use the four-tier methodology that had been contained in the overturned 2008 Wage Rule. The INA provision cited by plaintiffs applied only to the skilled non-agricultural employee H-1B visa program, and was not applicable to the H-2B visa program for unskilled non-agricultural workers.

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