Categories: Hospitality

By:  Robert S. Groban, Jr.

U.S. Department of Labor Issues Proposed Rule on H-2B Wage Rates


On October 4, 2010, the Employment and Training Administration, U.S. Department of

Labor (“DOL”), issued a proposed rule that would require employers to pay H-2B and

American workers recruited in connection with an H-2B job application a “wage that meets

or exceeds the highest of: the prevailing wage, the federal minimum wage, the state minimum

wage or the local minimum wage.” The proposed rule was published on October 5, 2010, in

the Federal Register. Interested parties have 30 days to comment.


The H-2B program allows for the admission of 66,000 skilled or unskilled temporary guest

workers annually when qualified American workers are not available and the employment of

foreign workers will not adversely affect the wages and working conditions of similarly

employed Americans. The proposed rule was promulgated in response to the federal district

court decision in Comite de Apoyo a los Trabajadores Agricolas v. Solis, Civil Action No.

09-240 (E.D. Pa. Aug. 31, 2010), which held that the 2008 H-2B wage regulations issued by

the DOL violated the Administrative Procedure Act.


In its preamble to this proposed regulation, the DOL indicated that it has grown increasingly

concerned that the current method for calculating permissible H-2B wages does not

adequately reflect the wages necessary to ensure that American workers are not adversely

affected by the employment of H-2B workers. Under the DOL’s proposed rule, the prevailing

wage for H-2B workers would be based on the highest of three measures:


         1) Wages established under a collective bargaining agreement;

         2) A wage rate established under the Davis-Bacon Act or the Service Contract

Act for the occupation in the area of intended employment; or

         3) The mean wage rate established by the Occupational Employment Statistics

wage survey for that occupation in the area of intended employment.


The DOL added that the inclusion of Davis-Bacon Act or Service Contract Act wages would

protect U.S. worker wages by ensuring the prevailing wage determinations reflect the

“highest wage from the most accurate and diverse pool of government wage data available

with respect to a job classification and the area of intended employment.” Additionally, the

DOL indicated that the proposed rule would eliminate the current four-tier wage structure and

the use of private wage surveys, which the DOL feels often are “not relevant to the unskilled

positions generally involved in the H-2B program.”


Fifth Circuit Rules that Hotel Workers on H-2B Visas Are Not Entitled to

Recoup Visa Expenses Under FLSA


On October 1, 2010, the U.S. Court of Appeals for the Fifth Circuit decided Castellanos-

Contreras v. Decatur Hotels LLC, No. 07-30942 (5th Cir. Oct. 1, 2010)(en banc). In an 8-6

decision, the Fifth Circuit held that foreigners working as temporary guestworkers at New

Orleans hotels under the H-2B program are covered by the Fair Labor Standards Act

(“FLSA”), but that the FLSA does not require these employers to reimburse the workers for

recruitment, visa, and travel expenses in determining whether the employee is receiving the

FLSA-mandated minimum wage.


In reaching this conclusion, the Fifth Circuit declined to enforce retroactively a 2009 DOL

interpretive bulletin that indicated that the FLSA covers visa and travel expenses. The Fifth

Circuit noted that the DOL bulletin was issued in 2009, long after the events in question

occurred in 2005-2006, and found that it had to follow the general rule not to apply changes

in the law retroactively. In the Fifth Circuit’s decision, Judge Catharina Hayes wrote,

“Whatever deference may be due to the [DOL]'s informally promulgated bulletin in the

future, it does not itself in any way purport to apply retroactively. Accordingly, we decline to

apply it to the situation here.”


The Castellanos-Contreras case arose from an FLSA collective action filed by H-2B workers

hired by Decatur Hotels in New Orleans in 2005 after Hurricane Katrina. The H-2B workers'

hourly pay rates exceeded the federal minimum wage. The workers argued, however, that the

money they paid to obtain employment in the United States, including visa, transportation,

and recruitment costs, must be reduced from their pay when calculating whether Decatur was

actually paying them the minimum wage required by the FLSA. If this were not done, the

workers argued, it would have the effect of cutting their wages to less than the FLSAmandated

minimum wage for the relevant pay periods.


The DOL’s proposed rule on calculating wages for the H-2B guest worker program, coupled

with the Fifth Circuit’s decision in Castellanos-Contreras, should serve to remind employers

in industries that use temporary or seasonal H-2B guest workers, such as the recreational,

construction, and hospitality industries, that they must be careful about the wages they pay to

avoid what are clearly renewed efforts by the DOL to regulate wages and working conditions

in this area.

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