A federal judge in California has struck down the U.S. Department of Labor's revised wage calculation system for the H-2A agricultural visa program, ordering the agency to develop a new approach while maintaining the existing pay structure. According to a report by the Pacific Research Institute, the ruling targets four central components of the Adverse Effect Wage Rate methodology that determines how much employers must pay temporary foreign farmworkers. The court's decision came after the United Farm Workers Foundation sued, arguing the revised system would deprive agricultural workers of wages.
The blocked methodology would have saved agricultural employers roughly $17.3 billion in wage costs over the coming decade, according to the report. The revised system introduced wage tiers that separated "entry level" positions from jobs requiring specialized training or supervisory duties, with Tier I positions commanding lower hourly pay than Tier II roles. The Department of Labor had also factored in housing costs, subtracting rent expenses from total compensation for H-2A workers who receive free employer-provided housing, while domestic employees pay for their own accommodations off-site. Under the H-2A visa program, agricultural employers can hire foreign workers for up to 10 months annually, and they're required to pay an Adverse Effect Wage Rate that has typically run $2 to $3 per hour above state minimum wage levels.
The court identified shortcomings in four areas: the wage tier structure, the housing cost adjustment, the survey method used to set baseline pay rates, and the rules for how those rates get applied. The report notes the judge has left unresolved the question of retroactive payments, potentially requiring employers to compensate workers for the gap between the previous pay framework and the current one. If ordered, that back pay could total an estimated $2.4 billion in wage differences.
Report author Pam Lewison, a Pacific Research Institute fellow and fourth-generation farmer, argues that ordering back pay "would be an egregious error" and warns that penalizing agricultural employers for complying with the wage rules as written "is an absurd option and puts many farms in jeopardy of collapse." She notes that while the United Farm Workers Foundation claimed farmers enjoyed "record profits," that narrative omits what producers actually faced: record expenses, drought conditions, electricity challenges, restricted water access, and widespread shutdowns of meat processing plants. The Labor Department had justified both the tier system and the housing adjustment as ways to create greater fairness between local workers and H-2A visa holders, according to the report.
The report concludes that rather than imposing retroactive penalties, the court should collaborate with the Department of Labor to craft a wage calculation approach that satisfies legal standards while preserving the economic viability of both farmworkers and the operations that employ them. Lewison emphasizes the preferred path forward: rework the methodology to meet the court's requirements and establish a pay structure that keeps farmworkers employed and agricultural businesses operational. The ruling comes as farms face mounting pressures and U.S. agricultural employers have increasingly turned to the H-2A program as the domestic farm labor pool has shrunk.