A federal judge in California has blocked the U.S. Department of Labor's revised wage calculation system for foreign agricultural workers, ordering the agency to develop a new approach while keeping the existing pay structure in place. The ruling addresses how employers must compensate workers hired through the H-2A visa program, which permits U.S. farms to bring in foreign labor for up to 10 months annually. According to a report from the Washington Policy Center, the decision could force significant changes to wage rates that affect both agricultural businesses and farmworkers across the country.
The blocked formula would have saved agricultural employers roughly $17.3 billion in wage costs over the next decade, the report states. Under the H-2A program, farms must pay an Adverse Effect Wage Rate (AEWR) to visa holders—a rate historically set $2 to $3 per hour above state minimum wage to discourage overuse of foreign labor. The Labor Department's new approach created two tiers: "Tier I" jobs classified as entry-level positions requiring no special training or experience, and "Tier II" positions demanding specialized skills, long-term experience, or supervisory duties. The formula also deducted housing costs from total compensation for H-2A workers who receive free lodging, while local employees pay their own rent. The Labor Department justified both changes as creating parity between domestic and foreign workers.
The United Farm Workers Foundation sued the Labor Department over the wage revisions, claiming the agency was taking money from agricultural workers and handing it to "big ag" following a year of "record profits," the report notes. The court's decision requires the Labor Department to rework four major elements: the tier system for different job types, the housing cost adjustment, the survey method used to set base wages, and how those rates get applied to workers. One critical question remains unresolved—whether farms will owe backpay covering the gap between the old and new wage structures. The report estimates that potential backpay could reach $2.4 billion if the court orders employers to compensate workers for the difference.
The report explains that U.S. farms have turned increasingly to the H-2A visa program as the domestic agricultural workforce has shrunk, even though the AEWR makes foreign hiring more expensive than employing local workers. The United Farm Workers Foundation's lawsuit overlooked crucial context about farm finances, the report argues—while some operations posted record profits, they simultaneously faced record expenses, drought conditions, electricity problems, water shortages, and widespread meat processing plant closures. The report calls it "an egregious error" for the court to award backpay, arguing that penalizing farms for following current law is unreasonable and threatens many operations with financial collapse.
The report recommends the Labor Department redesign the wage calculation method to satisfy the court while creating a structure that works for both farmworkers and agricultural employers. The goal should be keeping farmworkers employed while allowing farms and ranches to stay in business, rather than imposing retroactive penalties on growers who complied with existing regulations. Until the agency produces a revised formula and the court issues a final ruling, both employers and workers face uncertainty about wage levels and potential back payments.