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[Federal Register: October 5, 2010 (Volume 75, Number 192)]
[Proposed Rules]               
[Page 61577-61588]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr05oc10-24]                         

[[Page 61577]]

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Part II

Department of Labor

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Employment and Training Administration

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20 CFR Part 655

Wage Methodology for the Temporary Non[dash]Agricultural Employment H-
2B Program; Proposed Rule

[[Page 61578]]

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DEPARTMENT OF LABOR

Employment and Training Administration

20 CFR Part 655

RIN 1205-AB61

 
Wage Methodology for the Temporary Non-Agricultural Employment H-
2B Program

AGENCY: Employment and Training Administration, Labor.

ACTION: Proposed rule; request for comments.

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SUMMARY: The Department of Labor (the Department or DOL) proposes to 
amend its regulations governing the certification of the employment of 
nonimmigrant workers in temporary or seasonal non-agricultural 
employment and the enforcement of the obligations applicable to 
employers of such nonimmigrant workers. This Notice of Proposed 
Rulemaking (NPRM or proposed rule) proposes to revise and solicits 
comments on the methodology by which the Department calculates the 
prevailing wages to be paid to H-2B workers and U.S. workers recruited 
in connection with a temporary labor certification for use in 
petitioning the Department of Homeland Security (DHS) to employ a 
nonimmigrant worker in H-2B status.

DATES: Interested persons are invited to submit written comments on the 
proposed rule on or before November 4, 2010.

ADDRESSES: You may submit comments, identified by Regulatory 
Information Number (RIN) 1205-AB61, by any one of the following 
methods:
     Federal e-Rulemaking Portal www.regulations.gov. Follow 
the Web site instructions for submitting comments.
     Mail or Hand Delivery/Courier: Please submit all written 
comments (including disk and CD-ROM submissions) to Thomas Dowd, 
Administrator, Office of Policy Development and Research, Employment 
and Training Administration, U.S. Department of Labor, 200 Constitution 
Avenue, NW., Room N-5641, Washington, DC 20210.
    Please submit your comments by only one method. Comments received 
by means other than those listed above or that are received after the 
comment period has closed will not be reviewed. The Department will 
post all comments received on http://www.regulations.gov without making 
any change to the comments, including any personal information 
provided. The http://www.regulations.gov Web site is the Federal e-
rulemaking portal and all comments posted there are available and 
accessible to the public. The Department cautions commenters not to 
include their personal information such as Social Security Numbers, 
personal addresses, telephone numbers, and e-mail addresses in their 
comments as such submitted information will become viewable by the 
public on the http://www.regulations.gov Web site. It is the 
commenter's responsibility to safeguard his or her information. 
Comments submitted through http://www.regulations.gov will not include 
the commenter's e-mail address unless the commenter chooses to include 
that information as part of his or her comment.
    Postal delivery in Washington, DC, may be delayed due to security 
concerns. Therefore, the Department encourages the public to submit 
comments through the http://www.regulations.gov Web site.
    Docket: For access to the docket to read background documents or 
comments received, go the Federal eRulemaking portal at http://www.regulations.gov. The Department will also make all the comments it 
receives available for public inspection during normal business hours 
at the Employment and Training Administration (ETA) Office of Policy 
Development and Research at the above address. If you need assistance 
to review the comments, the Department will provide you with 
appropriate aids such as readers or print magnifiers. The Department 
will make copies of the rule available, upon request, in large print 
and as an electronic file on computer disk. The Department will 
consider providing the proposed rule in other formats upon request. To 
schedule an appointment to review the comments and/or obtain the rule 
in an alternate format, contact the Office of Policy Development and 
Research at (202) 693-3700 (VOICE) (this is not a toll-free number) or 
1-877-889-5627 (TTY/TDD).

FOR FURTHER INFORMATION CONTACT: William L. Carlson, PhD, 
Administrator, Office of Foreign Labor Certification, ETA, U.S. 
Department of Labor, 200 Constitution Avenue, NW., Room C-4312, 
Washington, DC 20210; Telephone (202) 693-3010 (this is not a toll-free 
number). Individuals with hearing or speech impairments may access the 
telephone number above via TTY by calling the toll-free Federal 
Information Relay Service at 1-800-877-8339.

SUPPLEMENTARY INFORMATION: 

I. Revisions to 20 CFR 655.10

A. Statutory Standard With Respect to Prevailing Wages and Current 
Department of Labor Regulations

    As provided by section 101(a)(15)(H)(ii)(b) of the Immigration and 
Nationality Act (INA or Act) (8 U.S.C. 1101(a)(15)(H)(ii)(b)), the H-2B 
visa classification for non-agricultural temporary workers is available 
to a foreign worker ``having a residence in a foreign country which he 
has no intention of abandoning who is coming temporarily to the United 
States to perform other [than agricultural] temporary service or labor 
if unemployed persons capable of performing such service or labor 
cannot be found in this country.'' There is an annual cap of 66,000 H-
2B nonimmigrant visa approvals per fiscal year, divided into two 
biannual allocations of 33,000 each.
    Section 214(c)(1) of the INA requires DHS to consult with 
appropriate agencies before approving an H-2B visa petition. 8 U.S.C. 
1184(c)(1). The regulations for U.S. Citizenship and Immigration 
Services (USCIS), the agency within DHS which adjudicates requests for 
H-2B status, require that an intending employer first apply for a 
temporary labor certification from the Secretary of Labor (the 
Secretary). 8 CFR 214.2(h)(6). That certification informs USCIS that 
U.S. workers capable of performing the services or labor are not 
available, and that the employment of the foreign worker(s) will not 
adversely affect the wages and working conditions of similarly employed 
U.S. workers. A certification from the Secretary is currently not 
required for H-2B employment on Guam, for which certification from the 
Governor of Guam is required. 8 CFR 214.2(h)(6)(iii).
    The Department's regulations at 20 CFR part 655, Subpart A, ``Labor 
Certification Process for Temporary Employment in Occupations other 
than Agriculture or Registered Nursing in the United States (H-2B 
Workers),'' govern the H-2B labor certification process, as well as the 
enforcement process to ensure U.S and H-2B workers are employed in 
compliance with H-2B labor certification requirements. Applications for 
labor certification are processed by the Office of Foreign Labor 
Certification (OFLC) in ETA, the agency to which the Secretary has 
delegated her responsibilities described in the USCIS H-2B regulations. 
Enforcement of the attestations made by employers in H-2B applications 
for labor certification is conducted by the Wage and Hour

[[Page 61579]]

Division (WHD) within DOL, to which DHS on January 16, 2009 delegated 
enforcement authority granted to it by the INA. 8 U.S.C. 
1184(c)(14)(B).
    As a part of the process of applying to employ H-2B workers, an 
employer must ensure that it will pay the workers hired in connection 
with that application a wage that will not adversely affect the wages 
of U.S. workers similarly employed. To ensure that this requirement is 
met, the Department has established a process for providing to an 
employer a prevailing wage for the job opportunity, below which an 
employer may not pay its H-2B workers. Until 2005, the process of 
determining prevailing wages was governed by General Administration 
Letter (GAL) No. 2-98 (1998). The process required by the 1998 GAL made 
use of wage rates determined under the Davis-Bacon Act (DBA), 40 U.S.C. 
276a et seq., 29 CFR part 1, or the McNamara-O'Hara Service Contract 
Act (SCA), 41 U.S.C. 351 et seq., wage rates mandatory for H-2B 
occupations for which such wage determinations existed. In the absence 
of DBA or SCA wage rates, prevailing wage determinations were based on 
the Occupational Employment Statistics wage survey (OES), compiled by 
the Bureau of Labor Statistics (BLS). In May 2005, as a result of 
legislation enacting section 212(p)(4) of the INA, 8 U.S.C. 1182(p)(4), 
relating to the H-1B visa program, the Department issued guidance on 
prevailing wage determinations. The Department applied that guidance to 
H-2B labor certification applications as well as the H-1B temporary 
specialty worker and permanent labor certification programs. Under that 
guidance, prevailing wage determinations in these three visa programs 
were set based on four tiers tied to skill levels using the OES wage 
survey, while the use of DBA or SCA wage rates was at the option of the 
employer seeking the determination. The Department did not use notice 
and comment rulemaking when issuing that guidance. See ETA Prevailing 
Wage Determination Policy Guidance, Non-agricultural Immigration 
Programs (the Prevailing Wage Guidance), http://www.foreignlaborcert.doleta.gov/pdf/NPWHC_Guidance_Revised_11_2009.pdf.
    In 2008, the Department proposed and finalized regulations that 
currently govern the H-2B temporary worker program. 73 FR 29942, May 
22, 2008; 73 FR 78020, Dec. 19, 2008 (the 2008 Final Rule). The 2008 
Final Rule essentially codified various aspects of the 2005 prevailing 
wage guidance, including that the prevailing wage for labor 
certification purposes shall be the arithmetic mean of the wages of 
workers similarly employed at the skill level in the area of 
employment. 20 CFR 655.10(b)(2). Additionally, the 2008 Final Rule, in 
accordance with the 2005 prevailing wage guidance, continued to require 
the use of the OES Survey in setting the prevailing wage, in the 
absence of a collective bargaining agreement, an employer-provided 
survey acceptable under 20 CFR 655.10(f), or a request from the 
employer to use the DBA or SCA wage determinations. The 2008 Final Rule 
also transferred the process of determining prevailing wages from the 
State Workforce Agencies (SWAs) to OFLC but did not change the method 
for calculating the wages for H-2B workers and U.S. workers. The 
activity of calculating and issuing prevailing wage determinations 
(PWDs) based upon requests from employers seeking to use them in 
connection with a foreign labor certification program is now conducted 
by OFLC's National Prevailing Wage Center (NPWC), previously named the 
National Prevailing Wage and Helpdesk Center, in Washington, DC; it is 
designated in the regulation by the generic National Processing Center, 
or NPC.

B. The Need for New Rulemaking

    Because the 2008 Final Rule did not make any changes in the method 
by which wages for H-2B workers and U.S. workers are calculated and 
continued the four-tiered skill system, the Department did not seek 
comment in the rulemaking process on the sources of data used to set 
wage rates. Since the 2008 Final Rule took effect, however, the 
Department has grown increasingly concerned that the current 
calculation method does not adequately reflect the appropriate wage 
necessary to ensure U.S. workers are not adversely affected by the 
employment of H-2B workers. Additionally, the prevailing wage 
calculation methodology became the subject of litigation. On August 30, 
2010, the U.S. District Court in the Eastern District of Pennsylvania 
in Comit[eacute] de Apoyo a los Trabajadores Agricolas (CATA) v. Solis, 
Civil No. 2:09-cv-240-LP, 2010 WL 3431761 (E.D. Pa. Aug. 30, 2010), 
ordered the Department to ``promulgate new rules concerning the 
calculation of the prevailing wage rate in the H-2B program that are in 
compliance with the Administrative Procedure Act no later than 120 days 
from the date of this order.'' The plaintiffs in CATA had challenged 
the Department's use of skill levels in establishing prevailing wages 
and the Department's reliance upon OES data in lieu of DBA and SCA 
rates. The court ruled that the Department had violated the 
Administrative Procedure Act when it did not adequately explain its 
reasoning for using skill levels as part of the H-2B prevailing wage 
determinations, and that it failed to consider comments relating to the 
choice of appropriate data sets in deciding to rely on OES data rather 
than DBA and SCA in setting the prevailing wage rates.
    Accordingly, in order to comply with the Court's order and to 
appropriately establish a wage methodology that adequately protects 
U.S. and H-2B workers, the Department is engaging in this new 
rulemaking to provide the public with notice and opportunity to comment 
on a new proposed methodology to determine prevailing wages under the 
H-2B program. The Department anticipates further rulemaking that will 
address other aspects of the H-2B temporary worker program.

C. Sec.  655.10 Prevailing Wage

    The proposed rule would establish that the prevailing wage will be 
the highest of the following: Wages established under an agreed-upon 
collective bargaining agreement (CBA); a wage rate established under 
the DBA or SCA for that occupation in the area of intended employment; 
and the arithmetic mean wage rate established by the OES for that 
occupation in the area of intended employment. The employer would be 
required to pay the workers at least the highest of the prevailing wage 
as determined by the NPC, the Federal minimum wage, the State minimum 
wage and the local minimum wage.
    The NPRM proposes to include consideration of the use of DBA wages 
and SCA wages for those occupations for which wages have been 
determined under either of the two Acts for the area of intended 
employment. The WHD's DBA survey program has undergone a significant 
re-engineering effort in the last 7 years, resulting in a greatly 
improved and timely prevailing wage rate determination process. The 
wage determinations are maintained by type of public construction 
project (e.g., residential, building, highway, and heavy), and they are 
issued on a county-by-county basis. In addition, they include more 
detail for crafts (e.g., they distinguish between rates paid to a 
pipefitter who performs HVAC work and one who does not). Presently, SCA 
wage determinations are based upon BLS' National Compensation Survey 
and OES survey data, and in some cases Federal employee data is also 
used. SCA

[[Page 61580]]

wage determinations now are reviewed yearly. Therefore, the Department 
has revisited the issue of whether to require the consideration of 
these alternative prevailing wage rate sources and has concluded that 
process improvements have made these wage surveys appropriate for use 
in this program. During its long practice of making wage determinations 
under these statutes, the Department has invested significant time and 
resources in developing appropriate calculation methodologies and 
making decisions about appropriate sources of wage data which it must 
consider in order to preserve wage integrity for U.S. workers.
    The Department has concluded that the mandatory consideration of 
the DBA and/or SCA wages for purposes of PWDs will address several 
important policy objectives, including protecting U.S. worker wages. 
First, it will ensure that each PWD reflects the highest wage from the 
most accurate and diverse pool of government wage data available with 
respect to a job classification and area of intended employment. 
Second, it will ensure compliance with mandatory wage standards for 
certain occupations. In addition, many of the H-2B job classifications 
already have DBA or SCA wages associated with the occupations; 
therefore, reinstating the explicit use of these wages can prevent the 
undercutting of wages in the local market when they more accurately 
reflect local market wages.
    Furthermore, the proposed rule would eliminate the use of the four-
tiered wage structure. The Department currently implements this four-
tiered system in accordance with the 2005 Prevailing Wage Guidance. 
This guidance differentiates the wage tiers by the level of experience, 
education, and supervision required to perform the job duties, as 
required for H-1B wages by section 212(p)(4) of the INA, from which the 
four-tiered wage system is derived. For the reasons stated below, the 
Department proposes to amend the current four-tier practice for the H-
2B program and proposes instead a single OES wage level for H-2B job 
opportunities based on the arithmetic mean of the OES wage data for the 
job opportunities in the area of intended employment.
    The Department has re-examined section 212(p)(4) of the INA and has 
concluded that the use of the skill levels mandated in that provision 
is not legally required in the H-2B program. Section 212(p)(4) of the 
INA was enacted in the context of H-1B reform in the Consolidated 
Appropriations Act of 2005, and while it is the only paragraph in 
section 212(p) that does not reference any specific immigration 
programs to which it applies, it is embedded in the provisions dealing 
with prevailing wages for positions in the H-1B and permanent foreign 
labor categories. There is no legislative history indicating that it 
was or was not meant to apply only to the H-1B program. However, the 
other provisions of section 212(p), which were all added to the INA by 
Congress at the same time, all are specific in their application to H-
1B, to the permanent program, or to both. None applies to the H-2B 
program.\1\ Thus, the Department no longer believes that it is bound by 
section 212(p)(4) to offer four-tiered wage levels in the H-2B program. 
The Department has already eliminated the four-tiered wage levels in 
the H-2A program in its Final Rule on that program. 75 FR 6884 (Feb. 
12, 2010).
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    \1\ Additionally, the decision issued by the court in 
Comit[eacute] de Apoyo a los Trabajadores Agricolas (CATA) v. Solis, 
2010 WL 3431761, at *19 n.22, which invalidated the application of 
the four-tier wage skill levels to the H-2B program, found that 
section 212(p)(4) of the INA is limited to the H-1B context (if the 
Department argued that it was ``using skill levels because of the 
statute, that explanation would be irrational'').
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    The wage-setting procedures no longer require a single wage 
determining methodology as a matter of administrative efficiency, which 
was a concern at the time of issuance of the 2005 Prevailing Wage 
Guidance. The Department, which had used a two-tiered wage system in 
its foreign labor certification programs before the enactment of 
section 212(p), implemented the four tiers in H-2B for administrative 
efficiency when it implemented them in the H-1B and permanent labor 
certification programs. At that time, the SWAs were responsible for 
providing all wage determinations. Training diverse State workforce 
staff around the country on multiple wage methodologies for different 
wage determination processes in foreign labor certification programs 
would have been difficult and would have inevitably resulted in 
inconsistent application and confusion, which is counterproductive to 
the Department's mandate to ensure that H-2B employers do not offer 
wages that will adversely impact the wages of U.S. workers. However, 
the Department completed consolidation of its wage determination 
activities for its foreign labor programs in the NPWC in January 2010. 
The use of a single Center to issue wage determinations ensures that 
wage calculations are applied consistently throughout a single program, 
thereby eliminating the need to use a single method of calculation for 
all programs for administrative efficiency. Indeed, as noted above, the 
Department already has stopped using the four-tiered system in the H-2A 
program as of the effective date of the H-2A Final Rule. 75 FR 6884 
(Feb. 12, 2010).
    The types of jobs found in the H-2B program involve few if any 
skill differentials necessitating tiered wage levels. The Department 
has an obligation to require H-2B employers to offer wages that do not 
adversely affect the wages of their U.S. workforce. By their very 
existence, however, multiple wage rates, particularly in a program in 
which most job opportunities have few or no skill requirements, 
stratify wages and inappropriately allow employers to force much of the 
wage-earning workforce into a lower wage. H-2B workers, most of whom 
fill jobs with low skill levels, are more likely to be classified at 
the low end of the wage tiers, ultimately adversely affecting the wages 
of U.S. workers in those same jobs. In addition, even if skill-based 
wage tiers were desirable as a theoretical matter, neither the OES nor 
any other comprehensive data series that we are aware of attempts to 
capture such variations. While the Department has, since 1998, created 
tiered wages by mathematically manipulating OES data in accordance with 
the statute, the actual OES survey instrument does not solicit data 
concerning the skill level of the workers whose wages are being 
reported. While the assumption that lower wages reflect lower skills 
(the basis for the current methodology) may have some validity in 
higher skilled occupations, there is no support for that assumption in 
the case of the lower-skilled occupations that predominate in the H-2B 
program.
    H-2B disclosure data from the last 10 years demonstrates that many 
jobs for which employers seek H-2B workers--housekeepers, landscape 
workers, etc.--clearly require minimal skill to perform, have few 
special skill or experience requirements, and do not generally have 
career ladders. These jobs have typically resulted in a Level 1 (the 
lowest wage level) determination for the H-2B employer, because the 
jobs themselves do not require the employer to seek workers with higher 
skill levels. The result is a wage determination that is in fact lower 
than the average wage paid for many jobs that are of the same 
classification as those jobs filled under the H-2B program.\2\ By 
allowing jobs to be filled by H-2B workers at these lower wages, a 
tiered wage system can have a

[[Page 61581]]

depressive effect on wages of similar domestic workers, ultimately 
adversely affecting the wages of U.S. workers in those same jobs.\3\ 
The Department cannot continue to allow such wage depression where its 
mandate is to ensure that the wages of U.S. workers suffer no adverse 
impact.
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    \2\ DOL analysis shows that, in about 96 percent of the cases, 
the H-2B wage is lower than the mean of the OES wage rates for the 
same occupation. See footnote 6.
    \3\ Absent an increase in the number of workers under the H-2B 
program to fill the temporary labor shortage, wages for these 
temporary jobs would rise in order to dispel the shortage, until 
sufficient additional domestic labor is attracted into the market. 
These wage increases are avoided, however, under the prevailing wage 
requirements of the H-2B program as currently configured. Moreover, 
when H-2B wages are set lower than wages paid to U.S. workers in 
similar jobs, as they generally are under the tiered wage system, 
the H-2B wages may not actually reflect the economic value of the 
work, impeding any upward pressure on wages that would otherwise 
result from the labor shortage.
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    The Department, accordingly, proposes to require that the 
arithmetic mean of the OES wage rates be the basis for determining the 
OES component of the prevailing wage rate in the H-2B program as it is 
the most effective available method for preventing adverse effect on 
wages. The Department welcomes comment on specific alternatives for 
wage calculations to meet its mandate for avoiding adverse effect on 
wages while ensuring that wages reflect economic realities in the 
marketplace for such jobs.
    Finally, the H-2B regulations currently allow the use of an 
employer-provided survey to determine the prevailing wage when that 
survey meets certain methodological requirements, even if the survey 
produces a lower wage than the OES wage. The NPRM proposes to eliminate 
the use of private wage surveys in the H-2B program. After more than 10 
years of successful experience with the OES, the Department has 
concluded that the review of such surveys is an inefficient and 
unnecessary expenditure of government resources. While private surveys 
can provide useful information, the cost of reviewing the surveys 
outweighs their utility.
    By eliminating the use of such employer-provided surveys, the 
proposed rule also eliminates the need for the 2008 Final Rule 
provision allowing employers to file supplemental information regarding 
the use of a survey, rendering current section 655.10(g) at least 
partially moot. The section also references the submission of 
supplemental information when there is a disagreement with a wage 
level, which has also been rendered moot. As any other issue (such as 
the application of a DBA or SCA wage) can be appealed through the 
review of a PWD by the Certifying Officer or by BALCA through the 
procedures of section 655.11, the Department is removing paragraphs 
655.10(f) and (g) of the current rule.

II. Administrative Information

A. Executive Order 12866

    Under Executive Order (E.O.) 12866, the Department must determine 
whether a regulatory action is economically significant and therefore 
subject to the requirements of the E.O. and to review by the Office of 
Management and Budget (OMB). Section 3(f) of the E.O. defines an 
economically significant regulatory action as an action that is likely 
to result in a rule that: (1) Has an annual effect on the economy of 
$100 million or more, or adversely and materially affects a sector of 
the economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local or tribal governments or communities 
(also referred to as economically significant); (2) creates serious 
inconsistency or otherwise interferes with an action taken or planned 
by another agency; (3) materially alters the budgetary impacts of 
entitlement grants, user fees, or loan programs, or the rights and 
obligations of recipients thereof; or (4) raises novel legal or policy 
issues arising out of legal mandates, the President's priorities, or 
the principles set forth in the E.O.
    The Office of Management and Budget (OMB) has determined that this 
NPRM is an economically significant regulatory action under sec. 
3(f)(1) of E.O. 12866. This regulation would likely result in transfers 
in excess of $100 million annually and consequently is economically 
significant. Accordingly, OMB has reviewed this NPRM.
1. Need for Regulation
    The Department has determined for a variety of reasons that a new 
rulemaking effort is necessary for the H-2B program with respect to the 
wages paid to these workers. Chief among these reasons is the United 
States District Court for the Eastern District of Pennsylvania's order 
and accompanying opinion in Comit[eacute] de Apoyo a los Trabajadores 
Agricolas (CATA) v. Solis, Civil No. 2:09-cv-240-LP, 2010 WL 3431761 
(E.D. Pa. Aug. 30, 2010), which invalidated the application of the 
four-tier wage skill levels to the H-2B program and required the 
Department to ``promulgate new rules concerning the calculation of the 
prevailing wage rate in the H-2B program that are in compliance with 
the Administrative Procedure Act no later than 120 days from the date 
of this order.'' The Department is concerned that the methodology for 
calculating prevailing wages at issue in the Court's order does not 
adequately reflect the appropriate wage necessary to ensure U.S. 
workers are not adversely affected by the employment of H-2B workers.
    For these reasons, discussed in more detail above, the Department 
is proposing the changes contained in the NPRM.
 2. Alternatives
    Given the fact that the court's order and accompanying opinion in 
Comit[eacute] de Apoyo a los Trabajadores Agricolas (CATA) v. Solis, 
Civil No. 2:09-cv-240-LP, requires the Department to promulgate this 
NPRM, the Department has limited its consideration of alternatives of 
wage calculations to the following: (1) To continue the current 
calculation methodology but provide a more complete justification for 
doing so, and (2) to eliminate the four tiers and use the arithmetic 
mean. For use of alternative government sources, the Department 
considered continuing (1) the optional use of DBA and SCA and (2) 
making the use of such surveys mandatory. For alternative wage sources, 
the Department considered, in addition to the continued use of CBAs, 
(1) continuing the use of private employer surveys and (2) elimination 
of private surveys.
    The Department considered alternate data sources but given the time 
constraints imposed by the court's order, we were unable to fully 
analyze these alternatives. We welcome comments from the public on 
alternatives for wage sources that provide adequate protections to U.S. 
and H-2B workers.
    The alternatives proposed in this NPRM are those that will best 
achieve the Department's policy objectives of ensuring that wages of 
U.S. workers are more adequately protected and, thus, that employers 
are only permitted to bring H-2B workers into the country where the 
wages and working conditions of U.S. workers will not be adversely 
affected. We request comments from the public on alternatives for 
calculating a prevailing wage that provides adequate protections to 
U.S. and H-2B workers.
3. Economic Analysis
    The Department's analysis below considers the expected impacts of 
the proposed NPRM provisions against the baseline (i.e., the 2008 Final 
Rule). The method of determining prevailing wages represents additional 
compensation for both H-2B and U.S. workers hired in response to the 
required recruitment.

[[Page 61582]]

The relevant benefits, costs, and transfers that may apply are 
discussed.\4\
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    \4\ For the purpose of this analysis, H-2B workers are 
considered temporary residents of the U.S.
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    The NPRM proposes to require employers to offer H-2B workers and 
U.S. workers hired in response to the recruitment required as part of 
the application a wage that is at least equal to the highest of the 
prevailing wage, or the Federal, State or local minimum wage. The 
prevailing wage is the highest of the following: (1) The wage rate set 
forth in the CBA, if the job opportunity is covered by a CBA that was 
negotiated at arms' length between the union and the employer; (2) the 
wage rate established under the Davis-Bacon Act or the McNamara-O'Hara 
Service Contract Act for the occupation in the area of intended 
employment, if the job opportunity is in an occupation for which such a 
wage rate has been determined; and (3) the arithmetic mean of the OES-
reported wage.
    To estimate the proposed hourly change in wages, the Department 
collected H-2B program participation data for fiscal year (FY) 2009. We 
then matched the OES wage rates to the H-2B data for the same period by 
standard occupational code (SOC). Using all certified or partially 
certified applications in the H-2B program data, we calculated the 
increase in wages by subtracting the average H-2B hourly wage certified 
from the average OES average hourly wage, and we weighted this 
differential by the number of certified workers on each certified or 
partially certified application.\5\ We then summed those products and 
divided the sum by the total number of certified workers of all 
certified or partially certified applications.\6\ Based on this 
calculation, the proposed change in the method of determining wages 
will result in a $4.38 increase in the weighted average hourly wage for 
H-2B workers and similarly employed U.S. workers hired in response to 
the recruitment required as part of the application.\7\
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    \5\ A total of 30 applications were set aside due to invalid 
data.
    \6\ To perform this calculation, we assume that the weighted 
average wage of H-2B workers has the same distribution as the 
weighted average wage of the domestic workers. This may or may not 
be the case. While there is some uncertainty regarding this 
approach, it is the best methodology that can be applied given the 
available data. In about 4.1 percent of cases, the H-2B hourly wage 
was higher than the OES wage; it is likely that, instead of 
declining, those wages would not change as a result of the rule, so 
in such cases, the wage differential was assumed to be zero.
    \7\ The Department does not believe the imposition of these 
wages will cause increases in the wage beyond that represented by 
the OES arithmetic mean. A CBA wage may in fact be the highest of 
the applicable wages; even under the 2008 Final Rule, if the job 
opportunity were covered by a CBA, the wage rate set forth in the 
CBA would be the required wage. Accordingly, including the wage rate 
set forth in the CBA among the definition of prevailing wage will 
not result in an increased cost to the employer. As for the 
application of SCA and DBA to the PWD, in most cases, the SCA wage 
should not result in an increased cost to employers because in most 
cases, the SCA wage is based upon the OES mean. The application of 
DBA wages, and their potential impact on the relative wage increase, 
cannot be determined at this time, because the situations in which 
DBA would be higher than the location-specific OES arithmetic mean 
cannot be determined with sufficient accuracy to permit calculation. 
As a result, this analysis assumes that the OES wage will represent 
the highest of the three alternatives.
---------------------------------------------------------------------------

    The Department provides an assessment of transfer payments 
associated with increases in wages resulting from the change in the 
wage determination method. Transfer payments, as defined by OMB 
Circular A-4, are payments from one group to another that do not affect 
total resources available to society. Transfer payments are associated 
with a distributional effect, but do not result in additional benefits 
or costs to society. The primary recipients of transfer payments 
reflected in this analysis are H-2B workers and any U.S. workers hired 
in response to the required recruitment under the H-2B program. The 
primary payors of transfer payments reflected in this analysis will be 
H-2B employers, and under the proposed higher wages in the NPRM, those 
employers who choose to continue to participate are likely to be those 
that have the greatest need to access the H-2B program. When 
summarizing the benefits or costs of specific provisions of this 
proposed rule, we present the 10-year averages to reflect the typical 
annual effect.
    Employment in the H-2B program represents a very small fraction of 
the total employment in the U.S. economy, both overall and in the 
industries represented in the program. The H-2B program is capped at 
66,000 visas issued per year (33,000 of which are made available 
biannually), which represents approximately 0.05 percent of total 
nonfarm employment in the U.S. economy (130.9 million).\8\ According to 
H-2B program data for FY 2007-2009, the average annual numbers of H-2B 
workers certified in the top five industries were as follows: 
Construction--30,242; Amusement, Gambling, and Recreation--14,041; 
Landscaping Services--78,027; Janitorial Services--30,902; and Food 
Services and Drinking Places--22,948. These employment numbers 
represent the following percentages of the total employment in each of 
these industries: Construction--0.4 percent (30,242/7,265,648); 
Amusement, Gambling, and Recreation--0.9 percent (14,041/1,506,120); 
Landscaping Services--13.2 percent (78,027/589,698); Janitorial 
Services--3.3 percent (30,902/933,245); and Food Services and Drinking 
Places--0.2 percent (22,948/9,617,597).\9\ These percentages decrease 
further when scaled to the actual number of entries permitted each 
year: Construction--0.2 percent (14,756/7,265,648); Amusement, 
Gambling, and Recreation--0.5 percent (6,851/1,506,120); Landscaping 
Services--6.5 percent (38,073/589,698); Janitorial Services--1.6 
percent (15,079/933,245); and Food Services and Drinking Places--0.1 
percent (11,197/9,617,597).\10\ As these data illustrate, the H-2B 
program represents a small fraction of the total employment even in 
each of the top five industries in which H-2B workers are found--less 
than 1 percent in most of the categories.
---------------------------------------------------------------------------

    \8\ Source for total employment: ftp://ftp.bls.gov/pub/suppl/empsit.ceseeb1.txt.
    \9\ Source for total employment by industry: 2007 Economic 
Census.
    \10\ The number of visas available under the H-2B program is 
66,000, assuming no statutory increases in the number of visas 
available for entry in a given year. We also assume that half of all 
such workers (33,000) in any year stay at least one additional year, 
and half of those workers (16,500) will stay a third year, for a 
total of 115,500 H-2B workers in a given year. The scale factor was 
derived by dividing 115,500 by the total number of workers certified 
per year on average during FY2007-2009 (236,706).
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i. Costs
    In standard economic models of labor supply and demand, an increase 
in the wage rate represents an increased production cost to employers 
leading to a reduction in the demand for labor. Because production 
costs increase with an increase in the wage rate, a resulting decrease 
in profits is possible for H-2B employers that are unable to increase 
prices to cover the cost increase. Some H-2B employers, however, can be 
expected to offset the cost increase by increasing the price of their 
products or services. In addition, workers who would have been hired at 
a lower wage rate are not hired at the higher wage rate, resulting in 
forgone earnings for workers. In this theoretical sense, to the extent 
that the higher wages imposed by the rule result in lower employment 
and lower output by firms employing those workers, the lost profits on 
the foregone output and the lost net wages to the foregone workers 
represent a deadweight loss because these gains from trade are not 
attained. This effect will be magnified during years in which the cap 
is not reached.\11\
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    \11\ The output reduction impact of reducing labor demand may be 
partially offset by capital substitution and organizational 
substitution productivity effects. When substitution occurs, the 
deadweight loss will be reduced. Substitution may also involve 
outsourcing of production elements, which may entail a net welfare 
loss to the U.S. if outsourcing to a supplier overseas, but only a 
transfer if outsourcing to a supplier in the U.S.

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[[Page 61583]]

    In a practical sense, because the total employment under the H-2B 
program is capped at 66,000 visas, the macroeconomic effect of 
reductions in H-2B employment and therefore reductions in output is 
expected to be minimal. There has generally been excess demand for H-2B 
workers well beyond the 66,000 limit, and DOL believes that the 
increased wages resulting from the proposed rule will not result in 
fewer than 66,000 visas for H-2B workers because, even if some 
employers decide not to participate in the H-2B program, other 
employers who previously had unfilled positions will participate.
    For example, for the years FY2007 through 2009, employers applied 
for an average of 236,706 certified H-2B positions per year. This 
number reflects the number of positions certified, rather than the 
number of actual workers who entered to take up those positions, which 
is capped at 66,000 per year. Using this number of certified workers to 
represent the quantity of labor demanded, and assuming an elasticity of 
labor demand of -0.3,\12\ a $4.38 (51 percent) increase in wages would 
result in a 15 percent decline in the number of H-2B workers requested 
by employers, for a remaining total of 201,200 H-2B certified positions 
requested by employers, which still far exceeds the 66,000 maximum 
visas allowed under the H-2B program. Therefore, any loss of production 
resulting from some employers dropping out of the program will be 
offset by production by other employers that would then be able to 
employ H-2B workers. Thus, DOL believes that for years in which the 
number of applications exceeds the number available under the cap, 
there will be no deadweight loss in the market for H-2B workers even if 
some employers do not participate in the program as a result of the 
higher H-2B wages.\13\ Indeed, the higher wages expected to result from 
the proposed rule could in turn result in a more efficient distribution 
of H-2B visas to employers who can less easily employ U.S. workers. DOL 
believes that those employers who can more easily attract U.S. workers 
will be dissuaded from attempting to participate in the H-2B program 
after the proposed rule changes, so that those employers participating 
in the H-2B program after the proposed rule will have a greater need 
for the program, on average, than those employers participating in the 
H-2B program before the proposed changes.
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    \12\ See, e.g., Hamermesh, Daniel S., Labor Demand, Princeton 
and Chichester, U.K.: Princeton University Press, 1993.
    \13\ DOL believes that any decline in employment among employers 
participating in the H-2B program will be offset by increased 
employment among new employers who previously were unable to hire 
workers under the H-2B program. Therefore, there would be no 
appreciable decline in employment under the program.
---------------------------------------------------------------------------

    In years in which the number of certified H-2B positions is less 
than the 66,000 visa cap, the higher proposed wages resulting from this 
NPRM could be expected to result in a reduction in employment of H-2B 
workers and therefore a reduction in output by employers participating 
in the H-2B program. This employment reduction would be expected to be 
partially offset by increased employment of U.S. workers to the extent 
that employers could attract U.S. workers (by offering higher wages, 
for example) or could make other adjustments, such as substituting 
capital for labor, but, in a theoretical sense, the reduction in 
employment and output would not be completely offset, potentially 
resulting in some deadweight loss in production among H-2B employers. 
However, the history of the H-2B program suggests that this situation 
is rare. In recent history, the number of H-2B visas has reached the 
66,000 cap every year except 2009.
ii. Transfers
    The proposed change in the method of determining wages results in 
transfers from H-2B workers to U.S. workers and from U.S. employers to 
both U.S. workers and H-2B workers.
    A transfer from H-2B workers to U.S. workers arises because, as 
recruitment wages for U.S. workers increase, a larger number of U.S. 
workers may be attracted to work in jobs that would otherwise be 
occupied by H-2B workers. Additionally, faced with higher H-2B wages, 
some employers may find domestic workers relatively less expensive and 
may choose not to participate in the H-2B program and instead employ 
U.S. workers. While some of these U.S. workers may be drawn from other 
employment, some of them would otherwise remain unemployed or out of 
the labor force entirely, earning no salary.
    The Department, however, is not able to quantify these transfer 
payments with precision. Difficulty in calculating these transfer 
payments arises primarily from uncertainty about the number of U.S. 
workers currently collecting unemployment insurance benefits who will 
become employed as a result of this rule.
    To estimate the total transfer to H-2B workers via the increased 
wages resulting from the new wage determination method, the Department 
multiplied the total number of H-2B workers (115,500, which includes 
both new entrants and an assumed portion of those who entered in each 
of the two previous years),\14\ by the weighted average hourly wage 
increase ($4.38), the number of hours worked per day (7), and the total 
number of days worked (217).\15,16\ We estimate the total annual 
average transfer incurred due to the increase in wages at $769.4 
million. As a result, OMB has determined that the proposed rule is an 
economically significant rule.
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    \14\ See note 11, which explains that the Department assumes 
that 50 percent of workers entering the H-2B program in one year 
will remain in the country the following year and that 50 percent of 
those will remain in the country for a third year. The Department 
data with regard to certified applications cannot be used to 
determine the actual number of H-2B workers in the country. 
Certifications are made without regard to the cap on the number of 
H-2B workers admissible each year and are not intended to indicate 
whether a worker actually entered the country to fill a position. 
Additionally, available DHS data rely on total entries of H-2B 
workers, which may or may not equal the admissions of H-2B workers 
in a given year. See http://www.dhs.gov/xlibrary/assets/statistics/yearbook/2009/table25d.xls. The Department of State keeps records of 
visas issued but does not publicly break down these numbers based on 
subcategories within the H category. http://travel.state.gov/visa/statistics/nivstats/nivstats_4582.html.
    \15\ Our analysis focuses on the costs related to H-2B workers 
because of the lack of data on U.S. workers hired in response to 
recruitment conducted in connection with an H-2B application.
    \16\ For the number of hours worked per day, we use 7 hours as 
typical for an average. For the number of days worked, we assume 
that the employer would retain the H-2B worker for the maximum time 
allowed (10 months, or 304 days [10 months x 30.42 days]) and would 
employ the workers for 5 days per week. Thus, total number of days 
worked equals 217 [10 months x 30.42 days x (\5/7\)].
---------------------------------------------------------------------------

    The increase in the wage rates induces a transfer from 
participating employers not only to H-2B workers, but also to workers 
hired in response to the required recruitment. The higher wages are 
beneficial to U.S. workers because they enhance workers' ability to 
meet the cost of living and to spend money in their local communities, 
which has the secondary impact of increasing economic activity in the 
community. These are important concerns to the current Administration 
and a key aspect of the Department's mandate to ensure that wages of 
similarly employed U.S. workers are not adversely affected.

[[Page 61584]]

B. Initial Regulatory Flexibility Analysis

    The Regulatory Flexibility Act of 1980, as amended (RFA), requires 
agencies to prepare regulatory flexibility analyses and make them 
available for public comment when proposing regulations that will have 
a significant economic impact on a substantial number of small 
entities. See 5 U.S.C. 603. If the rule is not expected to have a 
significant economic impact on a substantial number of small entities, 
the RFA allows an agency to certify such, in lieu of preparing an 
analysis. See 5 U.S.C. 605. For the reasons explained in this section, 
the Department believes this NPRM is not likely to impact a substantial 
number of small entities and, therefore, an initial regulatory 
flexibility analysis is not required by the RFA. However, in the 
interest of transparency and to provide a full opportunity for public 
comment, we have prepared the following Initial Regulatory Flexibility 
Analysis to assess the impact of this regulation on small entities, as 
defined by the applicable Small Business Administration (SBA) size 
standards. We specifically request comments on the following burden 
estimates, including the number of small entities affected by the 
requirements, and on alternatives that could reduce the burden on small 
entities. The Chief Counsel for Advocacy of the Small Business 
Administration was notified of a draft of this proposed rule upon 
submission of the proposed rule to OMB under E.O. 12866, as amended, 
``Regulatory Planning and Review'' 58 FR 51735, Oct. 4, 1993; 67 FR 
9385, Feb. 28, 2002; 72 FR 2763, Jan. 23, 2007.
    Because employers seeking to participate in the H-2B program are 
derived from virtually all segments of the economy and across 
industries, those participating businesses are a small portion of the 
national economy overall. A Guide for Government Agencies: How to 
Comply with the RFA, Small Business Administration, at 20 (``the 
substantiality of the number of businesses affected should be 
determined on an industry-specific basis and/or the number of small 
businesses overall'').
    Employment in the H-2B program represents a very small fraction of 
the total employment in the U.S. economy, both overall and in the 
industries represented in the H-2B program. The H-2B program is capped 
at 66,000 visas issued per year, which represents approximately 0.05 
percent of total nonfarm employment in the U.S. economy (130.9 
million).\17\ According to H-2B program data for FY2007-2009, the 
average annual numbers of H-2B workers certified in the top five 
industries were as follows: Construction--30,242; Amusement, Gambling, 
and Recreation--14,041; Landscaping Services--78,027; Janitorial 
Services--30,902; and Food Services and Drinking Places--22,948. When 
the number of workers certified is scaled to reflect the actual number 
of entries permitted each year, given the H-2B visa cap of 66,000 
workers, the data reflect that H-2B workers represent the following 
percentages of the total employment in each of these industries: 
Construction--0.2 percent (14,756/7,265,648); Amusement, Gambling, and 
Recreation--0.5 percent (6,851/1,506,120); Landscaping Services--6.5 
percent (38,073/589,698); Janitorial Services--1.6 percent (15,079/
933,245); and Food Services and Drinking Places--0.1 percent (11,197/
9,617,597).\18\ As these data illustrate, the H-2B program represents a 
small fraction of the total employment even in each of the top five 
industries in which H-2B workers are found.
---------------------------------------------------------------------------

    \17\ Source: ftp://ftp.bls.gov/pub/suppl/empsit.ceseeb1.txt.
    \18\ Source for total employment by industry: 2007 Economic 
Census. The number of visas available under the H-2B program is 
66,000, assuming no statutory increases in the number of visas 
available for entry in a given year. We also assume that half of all 
such workers (33,000) in any year stay at least one additional year, 
and half of those workers (16,500) will stay a third year, for a 
total of 115,500 H-2B workers in a given year. The scale factor was 
derived by dividing 115,500 by the total number of workers certified 
per year on average during FY2007-2009 (236,706).
---------------------------------------------------------------------------

1. Description of the Reasons That Action by the Agency Is Being 
Considered
    The Department has determined for a variety of reasons that a new 
rulemaking effort is necessary for the H-2B program with respect to the 
wages paid to these workers. Chief among these reasons is the United 
States District Court for the Eastern District of Pennsylvania's order 
and accompanying opinion in Comit[eacute] de Apoyo a los Trabajadores 
Agricolas (CATA) v. Solis, Civil No. 2:09-cv-240-LP, 2010 WL 3431761 
(E.D. Pa. Aug. 30, 2010), which invalidated the application of the 
four-tier wage skill levels to the H-2B program and required the 
Department to ``promulgate new rules concerning the calculation of the 
prevailing wage rate in the H-2B program that are in compliance with 
the Administrative Procedure Act no later than 120 days from the date 
of this order.'' The Department is concerned that the methodology for 
calculating prevailing wages at issue in the Court's order does not 
adequately reflect the appropriate wage necessary to ensure U.S. 
workers are not adversely affected by the employment of H-2B workers.
2. Succinct Statement of the Objectives of, and Legal Basis for, the 
Proposed Rule
    The Department has grown increasingly concerned that the current 
prevailing wage calculation method does not adequately reflect the 
appropriate wage necessary to ensure U.S. workers are not adversely 
affected by the employment of H-2B workers. Accordingly, the Department 
is proposing to establish a new wage methodology that adequately 
protects U.S. and H-2B workers. The legal basis for the proposed rule 
is the Department's authority, as delegated from DHS under its 
regulations at 8 CFR 214.2(h)(6), to grant temporary labor 
certifications under the H-2B program. Additionally, as discussed 
earlier, the Department is subject to an order from the United States 
District Court for the Eastern District of Pennsylvania to ``promulgate 
new rules concerning the calculation of the prevailing wage rate in the 
H-2B program that are in compliance with the Administrative Procedure 
Act no later than 120 days from the date of this order.'' Comit[eacute] 
de Apoyo a los Trabajadores Agricolas (CATA) v. Solis, Civil No. 2:09-
cv-240-LP, 2010 WL 3431761 (E.D. Pa. Aug. 30, 2010).
3. Description of, and Where Feasible, an Estimate of the Number of 
Small Entities to Which the Proposed Rule Will Apply
Definition of a Small Business
    A small entity is one that is independently owned and operated and 
that is not dominant in its field of operation. The definition of small 
business varies from industry to industry to properly reflect industry 
size differences. An agency must either use the SBA definition for a 
small entity or establish an alternative definition for the industry. 
The Department has conducted a small entity impact analysis on small 
businesses in the five industries with the largest number of H-2B 
workers and for which data were available, as mentioned above: 
Landscaping Services; Janitorial Services (includes housekeeping 
services); Food Services and Drinking Places; Amusement, Gambling, and 
Recreation; and Construction. These top five industries accounted for 
almost 75 percent of the total number of H-2B

[[Page 61585]]

workers certified during FY2007-2009.\19\
---------------------------------------------------------------------------

    \19\ According to H-2B program data, the average annual number 
of firms (of all sizes) and H-2B workers certified for these 
industries during FY2007-2009 were as follows: Landscaping Services, 
Firms--2,754, Workers--78,027; Janitorial Services, Firms--788, 
Workers--30,902; Food Services and Drinking Places, Firms--851, 
Workers--22,948; Amusement, Gambling, and Recreation, Firms--227, 
Workers--14,041; and Construction, Firms--860, Workers--30,242.
---------------------------------------------------------------------------

    One industry, Forest Services, made the initial top-five list but 
is not included in this analysis because the only data available for 
forestry also include various agriculture, fishing, and hunting 
activities. Relevant data for Forestry only were not available. The 
Department requests the public to propose possible sources of data or 
information on the revenues and average number of workers of a typical 
small Forestry firm.
    We have adopted the SBA small business size standard for each of 
the five industries, which is a firm with annual revenues equal to or 
less than the following: Landscaping Services, $7 million; Janitorial 
Services, $16.5 million; Food Services and Drinking Places, $7 million; 
Amusement, Gambling, and Recreation, $7 million; and Construction, 
$20.7 million.\20\
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    \20\ The SBA small business size standards for construction 
range from $7 million (land subdivision) to $33.5 million (general 
building and heavy construction). However, because employers 
representing all types of construction businesses may apply for 
certification to employ H-2B workers, the Department used an average 
of $20.7 million as the size standard for construction.
---------------------------------------------------------------------------

    The Department has used representative data because actual data 
regarding entity size is not uniformly collected in the H-2B program. 
The Department added information collection elements surrounding entity 
size, revenue, and number of all employees in early 2009, specifically 
to obtain information regarding the size and status of program 
participants. This would provide the Department with a little over a 
year of program data regarding participants' size and status. However, 
these data elements are not required to be provided in order for an 
employer to submit the Application for Temporary Employment 
Certification, and employers accordingly have the option of not 
providing information about their size, employee complement, and 
revenues without penalty in the application process. As a result, the 
information on the size and status of program participants that has 
been collected since 2009 is therefore not sufficient to provide to the 
Department statistically valid data to use in analyzing the actual 
impact on small businesses.
4. Description of the Projected Reporting, Recordkeeping and Other 
Compliance Requirements of the Proposed Rule
    The proposed rule does not impose any reporting or recordkeeping 
requirements.
    With regard to other compliance requirements, the Department has 
estimated the incremental costs for small businesses from the baseline. 
For this proposed rule, the baseline is the 2008 Final Rule. This 
Initial Regulatory Flexibility Analysis reflects the incremental cost 
of this rule as it adds to the requirements in the 2008 Final Rule. 
Using available data, we have estimated the costs of the increased 
wages and the time required to read and review the Final Rule.
    The Department receives an average of 8,717 applications annually 
(which is not necessarily the same as the number of applicants, because 
one employer may file more than one application) for the H-2B program, 
and the Department estimates that an average of 6,980 of those 
applications result in petitions for H-2B workers that are approved by 
DHS. Even if all 6,980 applications are filed by unique small entities, 
the percentage of small entities authorized to employ temporary non-
agricultural workers will be less than 1 percent of the total number of 
small entities in these industries.\21\ Based on this analysis, the 
Department estimates that the rule will impact less than 1 percent of 
the total number of small businesses. A detailed industry-by-industry 
analysis is provided below.
---------------------------------------------------------------------------

    \21\ The total number of firms classified as small entities in 
these industries is as follows: Landscaping Services, 63,210; 
Janitorial Services, 45,495; Food Services and Drinking Places, 
293,373; Amusement, Gambling, and Recreation, 43,726; and 
Construction, 689,040.
---------------------------------------------------------------------------

    To examine the impact of this proposed rule on small entities, the 
Department evaluates the impact of the incremental costs on a 
hypothetical small entity of average size, in terms of the total number 
of both U.S. and foreign workers, in each industry if it were to fill 
50 percent of its workforce with H-2B workers. There are no available 
data to estimate the breakdown of the workforce into U.S. and foreign 
workers. Based on Economic Census data, the total number of workers 
(including both U.S. and foreign workers) for this hypothetical small 
business is as follows: Landscaping Services, 2.3 workers; Janitorial 
Services, 11.3 workers; Food Services and Drinking Places, 6.3 workers; 
Amusement, Gambling, and Recreation, 5.0 workers; and Construction, 6.3 
workers.\22\
---------------------------------------------------------------------------

    \22\ Source: 2002 County Business Patterns and 2002 Economic 
Census. These data do not distinguish between U.S. workers and 
foreign workers.
---------------------------------------------------------------------------

    Also using Economic Census data, we derived the annual revenues for 
small entities in each of the top five industries by multiplying the 
average number of workers by the average revenue per worker for each of 
the industries. The Department estimates that small businesses in the 
top five industries have the following annual revenues: Landscaping 
Services, $0.181 million; Janitorial Services, $0.336 million; Food 
Services and Drinking Places, $0.223 million; Amusement, Gambling, and 
Recreation, $0.209 million, and Construction, $0.884 million.
a. Change in the Method of Determining Wages for H-2B Workers
    The Department proposes to require employers to offer H-2B workers 
and to any similarly employed U.S. worker hired in response to the 
recruitment required as part of the application a wage that is at least 
equal to the prevailing wage, or the Federal, State or local minimum 
wage, whichever is highest. The prevailing wage is the highest of the 
following: (1) The wage rate set forth in the CBA, if the job 
opportunity is covered by a CBA that was negotiated at arms' length 
between the union and the employer; (2) the wage rate established under 
the Davis-Bacon Act or the McNamara-O'Hara Service Contract Act for the 
occupation in the area of intended employment if the job opportunity is 
in an occupation for which such a wage rate has been determined; and 
(3) the arithmetic mean of the OES-reported wage.\23\
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    \23\ The Department does not believe the imposition of these 
wages will cause increases in the wage beyond that represented by 
the OES arithmetic mean. A CBA wage may in fact be the highest of 
the applicable wages; even under the 2008 Final Rule, if the job 
opportunity were covered by a CBA, the wage rate set forth in the 
CBA would be the required wage. Accordingly, including the wage rate 
set forth in the CBA among the definition of prevailing wage will 
not result in an increased cost to the employer. As for the 
application of SCA and DBA to the PWD, in most cases, the SCA wage 
is equivalent to the arithmetic mean of the OES wage, and will also 
not result in an increased cost to employers beyond that represented 
by the change in the OES from the four tiers to the arithmetic mean. 
The application of DBA wages, and their potential impact on the 
relative wage increase, cannot be determined at this time. As a 
result, this analysis assumes that the OES wage will represent the 
highest of the three alternatives.
---------------------------------------------------------------------------

    To estimate the proposed hourly change in wages, the Department 
collected H-2B program participation data for FY2009. We then matched 
the OES wage rates to the H-2B data for the

[[Page 61586]]

same period by SOC. Using all certified or partially certified 
applications in the H-2B program data, we calculated the increase in 
wages for each industry by subtracting the H-2B hourly wage certified 
from the OES average hourly wage and then estimated the average of 
those differences for each industry.\24\
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    \24\ A total of 30 applications were set aside due to invalid 
data.
---------------------------------------------------------------------------

    These calculations yielded the following hourly wage increases by 
industry associated with this proposed rule: Landscaping services, 
$3.60; Janitorial Services, $3.72; Food Services and Drinking Places, 
$1.29; Amusement, Gambling, and Recreation, $1.37; and Construction, 
$10.61.\25\
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    \25\ These wage increases reflect the differences between the 
OES wages and the H-2B wages for the occupations most closely 
associated with each industry. This estimate may slightly understate 
the wage increase because cases in which the H-2B wages were higher 
than OES wages would bias the estimate downward; however, this 
occurred in only about 4.1 percent of all cases.
---------------------------------------------------------------------------

    To estimate the total cost to the average small entity of increased 
wages for H-2B workers due to the new wage determination method, the 
Department multiplied the average hourly increase in wages for the top 
five industries by the average total number of days worked by H-2B 
workers, the number of hours worked per day, and the average number of 
H-2B workers employed by small entities in each of the top five 
industries.\26\ Our estimates of the total annual average cost incurred 
due to the increase in wages for the average small employer in the top 
five industries are as follows: Landscaping Services, $6,562 ($3.60 x 
217 x 7 x 1.2); Janitorial Services, $32,209 ($3.72 x 217 x 7 x 5.7); 
Food Services and Drinking Places, $6,270 ($1.29 x 217 x 7 x 3.2); 
Amusement, Gambling, and Recreation, $5,203 ($1.37 x 217 x 7 x 2.5); 
and Construction, $51,573 ($10.61 x 217 x 7 x 3.2).
---------------------------------------------------------------------------

    \26\ For the number of hours worked per day, we use 7 hours as 
typical for an average. For the number of days worked, we assume 
that the employer would retain the H-2B worker for the maximum time 
allowed (10 months, or 304 days [10 months x 30.42 days]) and would 
employ the workers for 5 days per week. Thus, total number of days 
worked equals 217 [10 months x 30.42 days x (\5/7\)].
---------------------------------------------------------------------------

b. Reading and Reviewing the New Processes and Requirements
    During the first year that this rule would be in effect, employers 
would need to learn about the new PWD. We estimate this cost for a 
hypothetical small entity which is interested in applying for H-2B 
workers by multiplying the time required to read the new rule and any 
educational and outreach materials that explain the wage calculation 
methodology under the rule by the average compensation of a human 
resources manager.\27\ In the first year of the rule, the Department 
estimates that the average small business participating in the program 
will spend approximately 1 hour of staff time to read and review the 
new regulation, which amounts to approximately $61.42 ($61.42 x 1) in 
labor costs in the first year.\28\
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    \27\ The hourly compensation rate for a human resources manager 
is calculated by multiplying the hourly wage of $42.95 (as published 
by the Department's OES survey, O\*\NET Online) by 1.43 to account 
for private-sector employee benefits (Source: Bureau of Labor 
Statistics). Thus, the loaded hourly compensation rate for a human 
resources manager is $61.42.
    \28\ The number of small businesses that will read and review 
the Final Rule is likely to include some that will not apply for the 
program. There are no available data to quantify this possible 
effect.
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c. Total Cost Burden for Small Entities
    The Department's calculations indicate that for a hypothetical 
small entity in the top five industries that applies for one worker 
(representing the smallest of the small entities that hire H-2B 
workers), the total average annual costs of the NPRM are as follows: 
Landscaping Services, $5,794; Janitorial Services, $5,976; Food 
Services and Drinking Places, $2,281; Amusement, Gambling, and 
Recreation, $2,402, and Construction, $16,455. Similarly, the analogous 
costs for employers in the top five industries that hire the average 
number of H-2B workers for their respective industries are as follows: 
Landscaping Services, $6,638; Janitorial Services, $33,004; Food 
Services and Drinking Places, $6,832; Amusement, Gambling, and 
Recreation, $5,760, and Construction, $51,481.
    The proposed rule is expected to have a significant economic impact 
on a hypothetical small entity that applied for enough workers to fill 
50 percent of its workforce. While applying to hire H-2B workers is 
voluntary, and any employer (small or otherwise) may entirely avoid 
costs associated with the proposed changes by choosing not to apply, an 
employer, whether it continues to participate in the H-2B program or 
fills its workforce with U.S. workers, could face sizeable costs. 
However, increased employment opportunities for U.S. workers and higher 
wages for both H-2B and U.S. workers provide a broad societal benefit 
that in the Department's view outweighs these costs.
    The small entities that have historically applied for H-2B workers, 
however, represent very small proportions of all small businesses. The 
following are the percentages of firms that were certified for H-2B 
workers among all small U.S. businesses in their respective industries: 
Landscaping Services, 2.2 percent [(2,754 x 0.50)/63,210]; Janitorial 
Services, 0.9 percent [(788 x 0.50)/45,595]; Food Services and Drinking 
Places, 0.1 percent [(851 x 0.50)/293,373]; Amusement, Gambling, and 
Recreation, 0.3 percent [(227 x 0.50)/43,726], and Construction, 0.1 
percent [(860 x 0.50)/689,040].\29\ Due to the statutory annual cap on 
available visas, the percentage of small entities receiving H-2B visas, 
to which the full cost burden would apply, would be even lower.
---------------------------------------------------------------------------

    \29\ The source of the numerator (i.e., the number of certified 
H-2B employers) is H-2B program data for FY2007-2009. The source of 
the denominator (i.e., the total number of U.S. businesses meeting 
the SBA small-size criteria) is the 2002 County Business Patterns 
and 2002 Economic Census. http://www.census.gov/econ/susb/data/susb2002.html. We multiply the numerator by 0.50 to reflect our 
assumption that 50 percent of H-2B employers are small businesses.
---------------------------------------------------------------------------

    Therefore, the Department estimates that this proposed rule will 
have a net direct cost impact on a very limited number of small non-
agricultural employers above the baseline of the current costs incurred 
by the program as it is currently implemented under the 2008 Final 
Rule. Accordingly, the proposed rule is not expected to impact a 
substantial number of small entities. The Department specifically 
requests comments on these burden estimates, including the number of 
small entities affected by this proposed change in prevailing wage 
methodology, and on how the final rule can reduce burden on small 
entities while meeting the statutory requirement that the employment of 
H-2B workers not adversely affect the wages and working conditions of 
similarly employed U.S. workers.
 5. Identification of All Relevant Federal Rules That May Duplicate, 
Overlap or Conflict With the Proposed Rule
    The Department is not aware of any relevant Federal rules that 
duplicate, overlap or conflict with the proposed rule.
6. Alternatives Considered as Options for Small Entities Businesses
    While the Department believes this proposed regulation would not 
impact a substantial number of small entities, we recognize the 
potential impact on small businesses and have considered alternatives 
to minimize such impacts. The Department's mandate under the H-2B 
program is to set requirements for employers that wish to hire 
temporary foreign non-agricultural workers. Those requirements are 
designed to ensure that

[[Page 61587]]

foreign workers are used only if qualified domestic workers are not 
available and that the hiring of H-2B workers will not adversely affect 
the wages and working conditions of similarly employed domestic 
workers. These regulations set those minimum standards with regard to 
wages. The required wage rate is a critical aspect of the H-2B program 
that determines whether U.S. workers' wages will be adversely affected 
by the admission of foreign workers. To create different and likely 
lower standards for one class of employers (e.g., small businesses) 
would essentially sanction the very adverse effect that the Department 
is compelled to prevent.
    The Department considered alternate data sources to determine 
prevailing wages, but given the time constraints imposed by the court's 
order and the absence of available data, we were unable to fully 
analyze these alternatives. The only available sources of information 
that we are aware of for setting the prevailing wage are the OES, DBA/
SCA, and surveys created by private entities. The NRPM discusses the 
agency's proposal about how those sources should be used. It would be 
difficult, if not impossible, to cost out any alternative use of these 
sources. For example, to the Department's knowledge there is no 
accessible data base of acceptable private surveys that would allow us 
to determine the cost implications of allowing their continued use. 
While the Department has been unable to fully analyze other viable 
options for the calculation of prevailing wages for small entities, the 
Department invites comments on the availability, usefulness and costs 
of other potential, reliable data sources.
    Ultimately the decision of an employer to apply for H-2B workers is 
a voluntary choice. That is, any individual employer can avoid the 
costs associated with the NPRM by not applying for H-2B workers.

 C. Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 
1531) directs agencies to assess the effects of Federal regulatory 
actions on State, local, and tribal governments, and the private 
sector. The proposed rule has no Federal mandate, which is defined in 2 
U.S.C. 658(6) to include either a ``Federal intergovernmental mandate'' 
or a ``Federal private sector mandate.'' A Federal mandate is any 
provision in a regulation that imposes an enforceable duty upon State, 
local, or tribal governments, or imposes a duty upon the private sector 
which is not voluntary. A decision by a private entity to obtain an H-
2B worker is purely voluntary and is, therefore, excluded from any 
reporting requirement under the Act.

 D. Small Business Regulatory Enforcement Fairness Act of 1996

    The Department has determined that this rulemaking does not impose 
a significant impact on a substantial number of small entities under 
the RFA; therefore, the Department is not required to produce any 
compliance guides for small entities as mandated by the SBREFA. The 
Department has, however, concluded that this proposed rule is a major 
rule requiring review by the Congress under the SBREFA because it will 
likely result in: (1) An annual effect on the economy of $100 million 
or more; (2) a major increase in costs or prices for consumers, 
individual industries, Federal, State or local Government agencies, or 
geographic regions; or (3) significant adverse effects on competition, 
employment, investment, productivity, innovation, or on the ability of 
U.S.-based enterprises to compete with foreign-based enterprises in 
domestic or export markets.

 E. Executive Order 13132--Federalism

    The Department has reviewed this proposed rule in accordance with 
E.O. 13132 regarding federalism and has determined that it does not 
have federalism implications. The proposed rule does not have 
substantial direct effects on States, on the relationship between the 
States, or on the distribution of power and responsibilities among the 
various levels of government as described by E.O. 13132. Therefore, the 
Department has determined that this proposed rule will not have a 
sufficient federalism implication to warrant the preparation of a 
summary impact statement.

 F. Executive Order 13175--Indian Tribal Governments

    This proposed rule was reviewed under the terms of E.O. 13175 and 
determined not to have tribal implications. The proposed rule does not 
have substantial direct effects on one or more Indian tribes, on the 
relationship between the Federal Government and Indian tribes, or on 
the distribution of power and responsibilities between the Federal 
Government and Indian tribes. As a result, no tribal summary impact 
statement has been prepared.

G. Assessment of Federal Regulations and Policies on Families

    Section 654 of the Treasury and General Government Appropriations 
Act, enacted as part of the Omnibus Consolidated and Emergency 
Supplemental Appropriations Act of 1999 (Pub. L. 105-277, 112 Stat. 
2681) requires the Department to assess the impact of this proposed 
rule on family well-being. A rule that is determined to have a negative 
effect on families must be supported with an adequate rationale.
    The Department has assessed this proposed rule and determines that 
it will not have a negative effect on families.

H. Executive Order 12630--Government Actions and Interference With 
Constitutionally Protected Property Rights

    The proposed rule is not subject to E.O. 12630, Governmental 
Actions and Interference with Constitutionally Protected Property 
Rights, because it does not involve implementation of a policy with 
takings implications.

I. Executive Order 12988--Civil Justice

    The proposed rule has been drafted and reviewed in accordance with 
E.O. 12988, Civil Justice Reform, and will not unduly burden the 
Federal court system. The Department has developed the proposed rule to 
minimize litigation and provide a clear legal standard for affected 
conduct, and has reviewed the proposed rule carefully to eliminate 
drafting errors and ambiguities.

 J. Plain Language

    The Department drafted this NPRM in plain language.

K. Paperwork Reduction Act

    As part of its continuing effort to reduce paperwork and respondent 
burden, the Department conducts a preclearance consultation program to 
provide the general public and Federal agencies with an opportunity to 
comment on proposed and continuing collections of information in 
accordance with the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 
3506(c)(2)(A)). This process helps to ensure that the public 
understands the Department's collection instructions; respondents 
provide requested data in the desired format; reporting burden (time 
and financial resources) is minimized; collection instruments are 
clearly understood; and the Department properly assesses the impact of 
collection requirements on respondents.
    The PRA requires all Federal agencies to analyze proposed 
regulations for

[[Page 61588]]

potential time burdens on the regulated community created by provisions 
within the proposed regulations that require the submission of 
information. These information collection (IC) requirements must be 
submitted to the OMB for approval. Persons are not required to respond 
to a collection of information unless it displays a currently valid OMB 
control number as required in 5 CFR 1320.11(l) or it is exempt from the 
PRA.
    The majority of the IC requirements for the current H-2B program 
are approved under OMB control number 1205-0466 (which includes ETA 
Form 9141 and ETA Form 9142). There are no burden adjustments that need 
to be made to the analysis. For an additional explanation of how the 
Department calculated the burden hours and related costs, the PRA 
package for information collection OMB control number 1205-0466 may be 
obtained by contacting the PRA addressee shown below or at http://www.RegInfo.gov.
    PRA Addressee: Sherril Hurd, Office of Policy Development and 
Research, U.S. Department of Labor, Employment & Training 
Administration, 200 Constitution Avenue, NW., Room N-5641, Washington, 
DC 20210. Telephone: 202-693-3700 (this is not a toll-free number).

List of Subjects in 20 CFR Part 655

    Administrative practice and procedure, Employment, Employment and 
training, Enforcement, Foreign workers, Forest and forest products, 
Fraud, Health professions, Immigration, Labor, Longshore and harbor 
work, Migrant workers, Nonimmigrant workers, Passports and visas, 
Penalties, Reporting and recordkeeping requirements, Unemployment, 
Wages, Working conditions.

    Accordingly, ETA proposes to amend 20 CFR part 655 as follows:

Title 20--Employees' Benefits

PART 655--TEMPORARY EMPLOYMENT OF FOREIGN WORKERS IN THE UNITED 
STATES

    1. Revise the authority citation for part 655 to read as follows:

    Authority: Section 655.0 issued under 8 U.S.C. 
1101(a)(15)(E)(iii), 1101(a)(15)(H)(i) and (ii), 1182(m), (n) and 
(t), 1184(c), (g), and (j), 1188, and 1288(c) and (d); sec. 3(c)(1), 
Pub. L. 101-238, 103 Stat. 2099, 2102 (8 U.S.C. 1182 note); sec. 
221(a), Pub. L. 101-649, 104 Stat. 4978, 5027 (8 U.S.C. 1184 note); 
sec. 303(a)(8), Pub. L. 102-232, 105 Stat. 1733, 1748 (8 U.S.C. 1101 
note); sec. 323(c), Pub. L. 103-206, 107 Stat. 2428; sec. 412(e), 
Pub. L. 105-277, 112 Stat. 2681 (8 U.S.C. 1182 note); sec. 2(d), 
Pub. L. 106-95, 113 Stat. 1312, 1316 (8 U.S.C. 1182 note); Pub. L. 
109-423, 120 Stat. 2900; and 8 CFR 214.2(h)(4)(i).
    Section 655.00 issued under 8 U.S.C. 1101(a)(15)(H)(ii), 
1184(c), and 1188; and 8 CFR 214.2(h).
    Subparts A and C issued under 8 CFR 214.2(h).
    Subpart B issued under 8 U.S.C. 1101(a)(15)(H)(ii)(a), 1184(c), 
and 1188; and 8 CFR 214.2(h).
    Subparts D and E authority repealed.
    Subparts F and G issued under 8 U.S.C. 1288(c) and (d); and sec. 
323(c), Pub. L. 103-206, 107 Stat. 2428.
    Subparts H and I issued under 8 U.S.C. 1101(a)(15)(H)(i)(b) and 
(b)(1), 1182(n) and (t), and 1184(g) and (j); sec. 303(a)(8), Pub. 
L. 102-232, 105 Stat. 1733, 1748 (8 U.S.C. 1101 note); sec. 412(e), 
Pub. L. 105-277, 112 Stat. 2681; and 8 CFR 214.2(h).
    Subparts J and K authority repealed.
    Subparts L and M issued under 8 U.S.C. 1101(a)(15)(H)(i)(c) and 
1182(m); sec. 2(d), Pub. L. 106-95, 113 Stat. 1312, 1316 (8 U.S.C. 
1182 note); Pub. L. 109-423, 120 Stat. 2900; and 8 CFR 214.2(h).

    2. Amend Sec.  655.10, by:
    a. Revising paragraphs (b) introductory text, (b)(1), and (b)(2);
    b. Removing paragraphs (b)(4) and (b)(5) and redesignating 
paragraph (b)(3) as (b)(4) and (b)(6) as (b)(5);
    c. Adding a new paragraph (b)(3); and
    d. Removing paragraphs (f) and (g) and redesignating paragraphs (h) 
as (f), and (i) as (g).

Sec.  655.10  Determination of prevailing wage for temporary labor 
certification purposes.

* * * * *
    (b) Basis for prevailing wage determinations. The prevailing wage 
is the highest of the following:
    (1) The wage rate set forth in the collective bargaining agreement 
(CBA), if the job opportunity is covered by a CBA that was negotiated 
at arms' length between the union and the employer;
    (2) The wage rate established under the Davis-Bacon Act or the 
McNamara-O'Hara Service Contract Act for the occupation in the area of 
intended employment if the job opportunity is in an occupation for 
which such a wage rate has been determined; or
    (3) The arithmetic mean of the wages of workers similarly employed 
in the occupation in the area of intended employment as determined by 
the OES. This computation will be based on the arithmetic mean wage of 
all workers in the occupation.
* * * * *

    Signed in Washington this 1st day of October 2010.
Jane Oates,
Assistant Secretary, Employment and Training Administration.
[FR Doc. 2010-25142 Filed 10-4-10; 8:45 am]
BILLING CODE 4510-FP-P
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