Court finds revised AEWR calculations unlawful, orders new methodology

A federal court has found that the U.S. Department of Labor’s revised method of calculating the H-2A Adverse Effect Wage Rate (AEWR) is unlawful and directed the department to come up with something new.

The Aug. 25 ruling (.pdf) by the U.S. District Court in the Eastern District of California found several changes in a new Interim Final Rule (IRF) issued last August, including the two-tier wage structure and housing adjustment, were inadequately justified.

“The Court finds that the challenged components of the IFR are arbitrary and capricious, and that the IFR failed to establish that there was good cause to bypass the APA’s procedural requirements for most of the challenged components,” the ruling read in part. “The Court therefore finds the IFR unlawful and remands to DOL to promptly generate a new methodology for calculating AEWRs.”

In May, the same court denied a request for a preliminary injunction to halt enforcement of the rule.

The new methodology included an “Entry-Level Skill Level I” and “Experience-Level Skill Level II” wage rate that allowed the AEWR to vary based on skill levels and duties required in the jobs performed by seasonal agricultural workers. 

In its Aug. 25 ruling, the court also determined that DOL improperly bypassed the normal notice-and-comment process for most of the rule changes.

The court did not immediately vacate the rule. The current AEWRs remain in effect, and employers should continue paying the wages required by their approved job orders. The court ordered DOL to “promptly generate a new methodology for calculating AEWRs.”

The National Council of Agricultural Employers (NCAE) said in a statement that the ruling poses an “existential threat” to U.S. growers.

“We are deeply disappointed by the court’s ruling,” NCAE president and CEO John Hollay said. “For years, America’s farmers, ranchers, and growers have been pushed toward a breaking point by artificially inflated wage mandates. The (Labor) Department averted a crisis in rural America by issuing the IFR. The ruling reignites this crisis.”

Employers are also not ordered to pay back wages at this time. However, DOL must notify employers that they may later be required to make wage-adjustment payments if the replacement AEWRs are higher than the current rates.

The Georgia Fruit and Vegetable Association advised members to preserve detailed payroll records and records of duties performed, as well as worker contact information.

Last November, United Farm Workers, the UFW Foundation and 18 farmworkers filed a lawsuit to reverse the interim final rule changing AEWR calculations for the H-2A guest worker program. Other industry groups greeted the changes with applause and optimism, with members of the Ag Wage Reform Coalition pushing to make the changes permanent.

“NCAE remains eager to work alongside the Department to establish a clear, sustainable wage structure moving forward,” Hollay said. The judge’s ruling underscores the need for congressional action in passing the Securing Agriculture’s Workforce Act (SAWA) of 2026. The fate of farming in America should not be determined at the whim of a single judge in California.”