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[Federal Register Volume 76, Number 12 (Wednesday, January 19, 2011)]
[Rules and Regulations]
[Pages 3452-3484]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-1117]

[[Page 3451]]

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Part VI

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-agricultural Employment H-2B 
Program; Final Rule

Federal Register / Vol. 76, No. 12 / Wednesday, January 19, 2011 / 
Rules and Regulations

[[Page 3452]]

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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: Final rule; request for comment on specific issues.

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SUMMARY: The Department of Labor (the Department or DOL) is amending 
its regulations governing the certification for the employment of 
nonimmigrant workers in temporary or seasonal non-agricultural 
employment. This Final Rule revises the methodology by which the 
Department calculates the prevailing wages to be paid to H-2B workers 
and United States (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: This Final Rule is effective January 1, 2012. Comments should be 
submitted by March 21, 2011.

FOR FURTHER INFORMATION CONTACT: William L. Carlson, Ph.D., 
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. The Department's Role in the H-2B Program

    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.'' This visa status is granted by U.S. 
Citizenship and Immigration Services (USCIS), an agency within DHS, 
under its regulations at 8 CFR 214.2(h)(6) et seq. 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). That consultation 
occurs according to a USCIS regulatory requirement that an employer 
first obtain a temporary labor certification from the Secretary of 
Labor (the Secretary) establishing 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. 8 CFR 
214.2(h)(6).
    The Secretary's responsibility for the H-2B program is carried out 
by two agencies within the Department. Applications for labor 
certification are processed by the Office of Foreign Labor 
Certification (OFLC) in the Employment and Training Administration 
(ETA), the agency to which the Secretary has delegated those 
responsibilities described in the USCIS H-2B regulations. Enforcement 
of the attestations and assurances made by employers in H-2B 
applications for labor certification is conducted by the Wage and Hour 
Division (WHD) under enforcement authority delegated to it by DHS. 8 
U.S.C. 1184(c)(14)(B).

B. The Determination of the Prevailing Wage

    To comply with its obligations under the program, an employer must 
pay the H-2B workers hired in connection with the application a wage 
that will not adversely affect the wages of U.S. workers similarly 
employed. The Department's H-2B procedures have always provided that 
adverse effect is prevented by requiring H-2B employers to offer and 
pay at least the prevailing wage to the H-2B workers and those U.S. 
workers recruited in connection with the job opportunity. To facilitate 
compliance with this requirement, the Department has established a 
process for providing to an employer a prevailing wage for the job 
opportunity for which certification is being sought. From the outset of 
the H-2B program, the Department directed that the same prevailing wage 
procedures be used for the permanent, H-1B, and H-2B programs. Although 
the Department did not promulgate a separate prevailing wage 
methodology until 1995, General Administration Letter (GAL) 10-84, 
``Procedures for Temporary Labor Certifications in Non Agricultural 
Occupations'' (April 23, 1984) provided guidance to the States on the 
administration of the H-2 nonagricultural program (a predecessor of the 
H-2B program) requiring the States to determine the prevailing wage in 
accordance with regulations for the permanent program at 20 CFR 656.40. 
In 1995, the Department issued separate prevailing wage guidance 
through GAL 4-95, ``Interim Prevailing Wage Policy for Nonagricultural 
Immigration Programs'' (May 18, 1995), Attachment I,\1\ and again in 
1998, through GAL 2-98 ``Prevailing Wage Policy for Nonagricultural 
Immigration Programs'' (November 30, 1998) that continued to extend the 
provisions of Sec.  656.40 to the H-2B program. Under the two GALs, 
payment of the 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., was mandatory for H-2B 
occupations for which such wage determinations existed. Starting in 
1998, in the absence of SCA or DBA wage rates, prevailing wage 
determinations were based on the Occupational Employment Statistics 
wage survey (OES), compiled by the Bureau of Labor Statistics (BLS). 
The OES wage survey produces employment and wage estimates for about 
800 occupations and is based upon wage data covering full-time and 
part-time workers who are given monetary compensation for their labor 
or services. The OES survey is published annually and features data 
broken out both by geographic area and industry. The wage estimates in 
the survey are made available at the national, State and metropolitan 
and nonmetropolitan area levels. The OES survey directly collects a 
wage rate for all occupations defined by the Office of Management and 
Budget's (OMB's) occupational classification system, the Standard 
Occupational Classification (SOC) system code. Employers, however, have 
been able since at least 1995 to submit private wage surveys that met 
Department standards.
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    \1\ See http://wdr.doleta.gov/directives.
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    Both the 1995 and the 1998 GALs provided that DOL would issue 
prevailing wage determinations at two levels, entry-level and 
experienced. At that time, there were not many H-2B program users, and 
new prevailing wage procedures were designed primarily to address the 
needs of the permanent and H-1B programs which were dominated by job 
opportunities in higher skilled occupations. There was considerable 
desire on the part of H-1B and permanent program users to have the 
Department create a multi-tiered wage

[[Page 3453]]

structure to reflect the largely self-evident proposition that workers 
in occupations that require sophisticated skills and training receive 
higher wages based on those skills. Since the OES survey captures no 
information about actual skills or responsibilities of the workers 
whose wages are being reported, the two-tier wage structure introduced 
in 1998 was based on the assumption that the mean wage of the lowest 
paid one-third of the workers surveyed in each occupation could provide 
a surrogate for the entry-level wage. The Department did not conduct 
any meaningful economic analysis to test its validity and, most 
significantly, it did not consider whether assumptions about wages and 
skill levels for higher skilled occupations might be less valid when 
applied to lower skilled occupations. In December 2004, the Department 
revised its regulation governing the permanent program. 69 FR 77326, 
Dec. 27, 2004. These revisions included changes to 20 CFR 656.40 which 
governed the procedures for determining the prevailing wage. In 
particular, these revisions eliminated the requirement that SCA/DBA 
wage determinations be treated as the prevailing wage where such 
determinations existed. The regulation provided that use of available 
SCA/DBA wage rates would be only at the option of the employer.
    The preamble to the PERM regulation also discussed Congress's 
enactment of the H-1B Visa Reform Act in the Consolidated 
Appropriations Act of 2005, Public Law 108-447, Div. J., Title IV, 
section 423, which amended section 212(p)(4) of the INA, 8 U.S.C. 
1182(p)(4), relating to the H-1B visa program. This legislation 
mandated that the Department issue prevailing wages at four levels when 
the prevailing wages were based upon a government survey. The 
legislation mandated how the four levels were to be calculated by 
mathematically manipulating the existing two level wages. Section 
656.40 of 20 CFR, the regulation implementing the H-1B Visa Reform Act, 
only specifically referenced prevailing wages established for the PERM 
and H-1B programs.
    Soon after the enactment of the new regulations, the Department 
issued comprehensive guidance on prevailing wage determinations. 
Following the practice in place since 1984, this guidance also applied 
to the H-2B program. ETA Prevailing Wage Determination Policy Guidance, 
Non-agricultural Immigration Programs, May 2005, revised November 
2009.\2\ The guidance included the use of the four-tier wage structure 
and the elimination of the mandatory application of the SCA/DBA wage 
determinations.
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    \2\ http://www.foreignlaborcert.doleta.gov/pdf/NPWHC_Guidance_Revised_11_2009.pdf.
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    In 2008, the Department issued the regulations that currently 
govern the H-2B temporary worker program. 73 FR 78020, Dec. 19, 2008 
(the 2008 Final Rule). The 2008 Final Rule addressed some aspects of 
the 2005 prevailing wage guidance. See 20 CFR 655.10(b)(2). However, 
the Department did not propose or seek comments on the methodology for 
determining prevailing wages.
    In early 2009, a lawsuit was filed challenging various aspects of 
the Department's H-2B procedures included in the 2008 Final Rule; among 
the issues raised was the use of the four-tier wage structure in the H-
2B program and the optional use of SCA and DBA wages. Comit[eacute] de 
Apoyo a los Trabajadores Agricolas (CATA) v. Solis, Civil No. 2:09-cv-
240-LP, 2010 WL 3431761 (E.D. Pa.). In its August 30, 2010 decision, 
the court ruled that the Department had violated the Administrative 
Procedure Act (APA) in failing to adequately explain its reasoning for 
using skill levels as part of the H-2B prevailing wage determinations, 
and failing to consider comments relating to the choice of appropriate 
data sets in deciding to rely on OES data rather than SCA and DBA in 
setting the prevailing wage rates. The court 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.''
    This rulemaking represents the Department's efforts to address both 
substantive and procedural concerns about prevailing wages in the H-2B 
program. The Department promulgated and published an NPRM in accordance 
with the court's order, allowing a 30-day comment period. 75 FR 61578, 
Oct. 5, 2010. Several commenters requested that the Department provide 
additional time to comment on the proposed rule; the Department 
requested additional time from the court and was granted until January 
18, 2011, to promulgate a Final Rule. The Department, in turn, provided 
the public an additional 8 days for comment on the NPRM.
    The NPRM proposed to eliminate the use of the four-tier wage 
structure for the H-2B program in favor of the mean OES wage for each 
occupational category. It also provided that available SCA/DBA wage 
determination rates for those occupations for which H-2B certification 
is sought, or collective bargaining agreement (CBA) wages, if such an 
agreement exists, would be used if they reflected higher wages than the 
OES wage. The NPRM also proposed to eliminate the use of employer-
provided surveys in the H-2B program. After a thorough review of the 
comments, the Department has decided to finalize these changes.

C. Overview of Comments Received

    The Department received almost 300 comments in response to the 
proposed rule. We have determined that 251 of these comments were 
completely unique, 8 were duplicates, and 39 were a form letter or 
based on a form letter. Commenters represented a broad range of 
constituencies for the H-2B program, including individual employers, 
worker advocacy groups, labor organizations, small business advocates, 
business associations, law firms, government agencies, including the 
Chief Counsel for the Office of Advocacy of the Small Business 
Association (Chief Counsel for Advocacy, SBA),\3\ Members of Congress 
and Congressional Committees, and various interested members of the 
public. These comments, both supporting and opposing the proposed 
regulation, are discussed in greater detail below.
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    \3\ The comment submitted by the Chief Counsel for Advocacy, SBA 
reflected not only that agency's concerns but also those expressed 
by employers at a roundtable hosted by the SBA on October 20, 2010.
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    Some of the comments received were outside the scope of the 
proposed rule. The NPRM proposed a methodology for determining the 
prevailing wage for use in the H-2B program. Many comments went well 
beyond that issue, addressing matters such as comprehensive immigration 
reform, general immigration-related concerns, unemployment-related 
issues, the incorporation or continuation of special procedures in the 
H-2B program, enforcement, future regulatory actions, and various 
regulatory sections under Subpart A that are not part of this 
rulemaking. Comments submitted before the comment period began or after 
the comment period closed were not considered.
    Among those comments the Department deemed out of scope were 
several comments received about the use of the wage methodology within 
the Territory of Guam. A labor certification from the Secretary is not 
required for H-

[[Page 3454]]

2B employment on Guam.\4\ Instead, an employer seeking a foreign labor 
certification on Guam is required to request and receive a 
certification from the Governor of Guam. 8 CFR 214.2(h)(6)(iii). The 
Department did not propose in the NPRM to revise the certification 
process on Guam; therefore all comments received about Guam have been 
deemed out of scope.
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    \4\ The Secretary of Labor is required, for certain military 
workforce projects, to consult with the Governor of Guam in a 
certification to the Secretary of Defense regarding the adequacy of 
recruitment of U.S. workers. Public Law 111-84, Subtitle C, 123 
Stat. 2672, section 2834 (October 28, 2009). This is a separate 
certification from that required to be given to the employer by the 
Governor of Guam under 8 CFR 214.2(h)(6)(iii).
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    Additionally, several commenters asserted that the Interim 
Regulatory Flexibility Analysis (IRFA) in the NPRM failed to consider 
increased payroll costs associated with the wage increases for other 
workers who would be paid the prevailing wage. This rule is limited to 
the determination of methodology for the payment of a prevailing wage 
to H-2B workers and U.S. workers hired in response to the H-2B required 
recruitment. Any extension of the requirements to pay the prevailing 
wage to others is outside the scope of this rule.

II. Discussion of Comments Received

A. The Significance of Setting the Prevailing Wage at the Appropriate 
Level

    The Department's role in the H-2B temporary nonimmigrant program is 
to certify to DHS that: (1) there are not sufficient U.S. workers 
available who are capable of performing the temporary services or labor 
at the time of filing of the petition for the H-2B classification and 
at the place where the foreign worker is to perform the work; and (2) 
the employment of the foreign worker will not adversely impact the 
wages and working conditions of U.S. workers similarly employed. 20 CFR 
655.1(b), 8 CFR 214.2(h)(6)(iii), and 8 CFR 214.2(h)(6)(iv). These two 
findings address the statutory requirement that H-2B workers be 
admitted only if no unemployed persons capable of performing such 
service or labor in this country are available. 8 U.S.C. 
1101(a)(15)(h)(ii)(b).
    Historically, requiring an H-2B employer to pay the prevailing wage 
for the locality in which the worker will be employed has been the 
cornerstone of the required labor market test. The Department has 
consistently held that payment of the prevailing wage ensures that 
there is no adverse effect on the wages of similarly employed U.S. 
workers and provides meaningful access to these job opportunities.
    The Department proposed a prevailing wage methodology that will 
result in wages that more closely reflect the average of wages paid to 
similarly employed workers in the area of intended employment. In doing 
so, the Department ensures full compliance with the statutory intent of 
the H-2B program and that unemployed U.S. workers capable of performing 
the jobs for which H-2B workers are sought will have meaningful access 
to job opportunities.
    Several commenters claimed that regardless of the changes the 
Department makes to the wage methodology used in the H-2B program, H-2B 
employers will not be able to find interested U.S. workers for these 
job opportunities. The Department's objective in this rulemaking is not 
to guarantee that U.S. workers will apply for these positions, but to 
provide a prevailing wage that does not adversely affect the wages of 
U.S. workers and provides them the opportunity for jobs sought by H-2B 
employers at competitive wages.
    One commenter agreed that setting the appropriate prevailing wage 
for the position is central to testing the labor market. This commenter 
argued that U.S. workers cannot be expected to accept employment under 
conditions below the established minimum levels, citing examples of 
high unemployment rates in industries in which employers tend to hire 
H-2B workers, including the construction industry, as well as high 
unemployment rates among specific groups of vulnerable low-wage 
workers: Youth, Hispanics, and African Americans. The same commenter 
indicated that a prevailing wage rate that ensures no adverse effect on 
wages and working conditions of U.S. workers is needed and that an 
increase in hourly wages for some H-2B guest workers and U.S. workers 
recruited and hired as part of the labor certification process is 
consistent with the INA's statutory intent.
    Another commenter indicated that the primary goal of any change in 
the wage methodology is to ensure that there are no persons in the U.S. 
capable of performing the advertised unskilled labor. This commenter 
observed that if the wages are set high enough, U.S. workers will be 
interested in the work, but if the wages are set too low U.S. labor 
will not be interested. This commenter also noted that where there are 
genuine labor shortages, employers would normally attract workers by 
offering (among other things) higher wages, which would increase wages 
for U.S. workers.
    The Department agrees with the need to ensure there is no adverse 
effect by offering a wage that would be acceptable to U.S. workers. By 
proposing a prevailing wage methodology that will pay wages that more 
closely reflect the average of wages paid in any occupation, the 
Department creates conditions under which unemployed U.S. workers will 
have access to job opportunities that they would in fact seek out, 
rather than those in which the pay is too low. Testifying before the 
House Subcommittee on Immigration, Citizenship, Refugees, Border 
Security, and International Law in April 2008, Ross Eisenbrey, Vice 
President of the Economic Policy Institute, cited CPS data identified 
by Jin Dai and Jared Bernstein that examined labor market indicators 
for seven H-2B occupations that constituted the majority of H-2B 
employment. Annual wage data for these occupations had increased at a 
slower rate than has those in other occupations.\5\ The testimony 
points to the fact that economic theory suggests that employers who 
experience shortages of labor compete for available labor by increasing 
wages; however, under the H-2B program, if positions are not filled by 
U.S. workers at the wage offered by the employer, the employer may 
sidestep this effect by petitioning the Department for permission to 
bring in foreign workers at that lower wage.
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    \5\ H-2B Program: Hearing Before the Subcommittee on 
Immigration, Citizenship, Refugees, Border Security, and 
International Law of the H. Comm. On the Judiciary, 110th Cong. 5 
(2008) (statement of Ross Eisenbrey, Vice President, Economic Policy 
Institute).
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    Some commenters questioned the appropriateness of the Department's 
proposal, asserting that increasing wages of H-2B and U.S. workers 
recruited in the program is not synonymous with protecting the wages of 
U.S. workers from adverse effect. The DHS regulations explicitly 
require that certifications be granted only if they do not result in 
adverse impact on the wages and working conditions of U.S. workers. 
Since the inception of the program, the Department has determined that 
the best way to fulfill its mandate to protect wages is to require 
employers to pay a prevailing wage. In all labor certification 
programs, except for the unique requirements of the H-2A program, the 
Department has used a prevailing wage, however defined or calculated, 
as a means of protecting U.S. workers against adverse effect--as the 
INA requires in most programs in which the Department has

[[Page 3455]]

a role. The Department proposed no change to this longstanding approach 
and this Final Rule does not make any such change.
    Another commenter questioned why the Department, while asserting 
that the current wage methodology currently results in an adverse 
effect on U.S. workers, continues to certify H-2B labor applications as 
not adversely affecting U.S. workers, when the Department clearly 
states its belief that it does. The Department's role in all its 
immigration programs is to ensure that there is no adverse effect on 
the wages (and working conditions) of similarly employed U.S. workers 
by requiring the payment of an appropriate prevailing wage. The 
Department's concern that the current prevailing wage methodology may 
not be adequate to accomplish this task, together with the court's 
decision, was the impetus for the development of the NPRM in which the 
Department provided notice of a proposed change to the methodology, and 
solicited comments in order to fully examine the issue and determine 
the most appropriate course for meeting its obligation. The Department 
must continue to meet its obligations under the existing regulations 
until such time as a new regulation is promulgated in accordance with 
APA requirements. Discontinuing the issuance of prevailing wage 
determinations would abrogate the Department's obligation to administer 
the H-2B labor certification program.

B. Highest of All Applicable Wages

    The Department proposed that the prevailing wage would be the 
highest of three wage rates: The wage established under an applicable 
CBA; the 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. Several commenters approved of this approach, noting that 
this methodology better protects U.S. workers and is far more likely to 
ensure that jobs for which employers petition for H-2B workers go 
unfilled by able U.S. workers because there are no such workers 
available, not because employers are offering wages far below the rates 
normally paid and expected by domestic workers in the area of intended 
employment. Other commenters objected to this approach, asserting that 
the various sources of prevailing wage rates the Department proposed to 
consider are not of equal validity.
    The Department has concluded that the approach in the NPRM is most 
consistent with its responsibility under the applicable DHS regulations 
to grant certifications that avoid adverse effect on wages. The mandate 
to prevent adverse effect has existed for many years in all of the 
immigration programs administered by the Department and, except for the 
unique requirements of the H-2A program, has always been implemented by 
a requirement that employers offer and pay the prevailing wage. In 
situations where there is a SCA or DBA wage determination or 
collectively bargained wage rate in addition to the OES determination, 
it is compatible with our responsibility to avoid adverse effect to 
mandate that the employer pay the higher of these determinations. Such 
determinations are based on real wages being paid to workers in these 
areas for the same kind of work for which H-2B workers are sought--in 
other words, the labor pool of those U.S. workers the would-be H-2B 
employer should be seeking. By requiring the highest wage among these 
available, validated sources, the Department is guaranteeing that the 
jobs are offered to available workers at wages that do not create an 
adverse effect.
1. Collective Bargaining Agreements
    The Department proposed retaining from the 2008 Final Rule the 
inclusion of a collective bargaining wage as the prevailing wage if the 
job opportunity is covered by an agreement that was negotiated at arms' 
length between the collective bargaining unit and the employer. Several 
commenters supported this proposal, but suggested that the Department 
go further and require that whenever a CBA covers workers in a 
particular geographic region and a specific occupational 
classification, the wage rate negotiated in the CBA should apply to all 
employers in the region who wish to hire H-2B workers in the same 
occupation classification, even those that are not signatory to the CBA 
or who have no collective bargaining unit in that occupation.
    A CBA is a contractual agreement negotiated at arms' length between 
more or less equal parties. The provisions of a CBA reflect a 
negotiation process and a series of concessions between the parties to 
the agreement that would not apply to other parties not involved in the 
negotiations. The negotiation of a CBA also involves agreement on a 
range of issues, wages, working conditions, work rules and many others, 
all of which combine to lead to a complete agreement, only one of whose 
elements involves wages. For example, one set of negotiating parties 
may agree to a lower wage in return for a guarantee of job security 
while another set may agree to higher wages at a greater risk of job 
cuts. Thus, the Department is unwilling to use a collectively-bargained 
wage outside the workplace for which it has been negotiated unless that 
wage has been determined to be prevailing through the SCA, DBA, or OES 
wage determination process.
    By contrast, another commenter objected to the use of a wage higher 
than a CBA wage in an employment situation in which a CBA applies, 
noting that where an employer is subject to a CBA, paying a wage other 
than the CBA scale rate may violate the terms of the agreement and have 
ramifications under contract and labor law. However, the Department 
must consistently use the prevailing wage rate under the H-2B program 
in order to ensure that U.S. workers have meaningful access to these 
positions and do not experience wage depression as a result of 
employers hiring foreign workers at less than prevailing wages. A CBA 
rate that had fallen below the minimum wage would not be valid. 
Similarly, a CBA rate below the prevailing wage would not be a valid 
wage for purposes of the H-2B program.
2. Use of SCA and DBA Wages
    The Department also proposed to include consideration of the Davis-
Bacon Act (DBA), 40 U.S.C. 3142 et seq., or the McNamara-O'Hara Service 
Contract Act (SCA), 41 U.S.C. 351 et seq., wage rate for occupations 
for which wage rates have been determined under either of the two Acts 
for the area of intended employment. After considering numerous 
comments, the Department adopts this proposal in the Final Rule.
    An employer association questioned the validity of SCA wage 
determinations, claiming that the data used for SCA wage determinations 
is inconsistent and that the use of Federal employee wage data 
invalidates SCA wage rates. Similarly, two associations representing 
employers expressed concerns about the methodology and accuracy of DBA 
surveys. The commenters cited a 1979 report from the General Accounting 
Office (now the Government Accountability Office, GAO), 1996 
Congressional testimony from the GAO, and a 2004 report from the 
Department's Office of Inspector General (OIG). One commenter suggested 
that DBA surveys take years to be distributed, collected, calculated 
and completed. Two of the commenters noted that survey completion is 
voluntary and the results may therefore be biased. Several commenters 
(an individual, two employer associations, and an employer) expressed 
concern

[[Page 3456]]

that DBA wage rates are based on union wages, and therefore are not 
reflective of the market.
    After consideration, the Department concludes that the commenters' 
concerns with the consistency, timeliness, and validity of SCA and DBA 
wage determinations are unfounded. The highly localized wages in the 
SCA present the best market information with which to ensure that those 
workers similarly employed are not being adversely affected. To help 
ensure reliability, SCA wage determinations are now reviewed on a 
yearly basis. Where a single rate is paid to a majority (50 percent or 
more) of the workers in a class of service employees engaged in similar 
work in a particular locality, that rate is determined to be 
prevailing. Where a single rate does not prevail, statistical measures 
of central tendency reflected in BLS surveys are considered when 
issuing SCA wage determinations. The BLS conducts two surveys that 
produce locality based wage data: The National Compensation Survey 
(NCS), which is the primary data source for SCA wage determinations, 
and the OES survey, which serves as either a supplement to NCS data or 
as the primary data source for areas or classifications not surveyed by 
NCS. See 29 CFR 4.50-51.
    The NCS is conducted by personal visit. Consideration is paid to 
supplemental sources, such as the General Schedule locality pay 
schedules, Non-Appropriated Fund (NAF) surveys, surveys conducted by 
states, and the Federal Wage System Schedules for the comparable 
geographic area, which indicates what Federal employees would be paid 
if they worked in the SCA contract work positions. See 29 CFR 4.50. 
While the Department rarely consults these Federal employee pay systems 
in determining H-2B wage rates, the use of these data, contrary to the 
commenter's claims, would likely not inflate wage rates: March 2009 NCS 
data reported by BLS and used by the Federal Office of Personnel 
Management and the Federal Salary Council showed that Federal employees 
make an average of 22 percent less than their counterparts in the 
private sector.\6\
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    \6\ ``Annual Report of the President's Pay Agent'', December 7, 
2009. http://www.opm.gov/oca/payagent/2009/2009PayAgentReport.pdf.
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    Prevailing wages under the DBA are established for the 
corresponding classes of laborers and mechanics employed on projects of 
a character similar to the contract work in the civil subdivision 
(usually a county) of the State in which the work is to be performed. 
40 U.S.C. 3142(b). Department regulations establish that the prevailing 
wage is the wage paid to the majority (greater than 50 percent) of the 
workers in the classification on similar projects in the area during 
the relevant period. 29 CFR 1.2(a)(1). If the same wage is not paid to 
a majority of workers in the classification, then the prevailing wage 
is the weighted average of the wage rates paid to workers in that 
classification.
    The prevailing wage rates found in the WHD Administrator's 
determinations are based on survey data derived from the information 
that responding contractors and other interested parties provide. 29 
CFR1.1-1.7. The wage surveys collect information from all interested 
parties including unions, contractors, and associations. If 
insufficient wage data is received for a particular county, then the 
calculation will be expanded to a group of surrounding counties.
    The reports relied on by commenters who expressed concern about the 
accuracy of DBA wages are more than 6 years old and not reflective of 
the current status of the wage determinations. The Department has 
successfully implemented significant improvements to the DBA wage 
determination process in the last 7 years. As noted in the preamble to 
the proposed rule, WHD's DBA survey program has undergone a significant 
re-engineering effort, resulting in a greatly improved and timely 
prevailing wage rate determination process. By working with the Census 
Bureau at the U.S. Department of Commerce, the Department has 
successfully expedited the overall survey process. The Census Bureau 
now mails the data collection forms to employers and other interested 
parties and, upon their return, scans the completed form and loads the 
data into the electronic survey database. Additionally, the Department 
has significantly improved its timeframe for reviewing submitted survey 
data. As a result of these and other improvements, the Department 
recently published a statewide survey in less than 18 months. The 
Department anticipates that this will be the norm for future surveys. 
To increase survey participation and improve the accuracy of published 
survey data, the Department has developed newly enhanced post-
collection activity, including more follow-up phone calls and on-site 
clarification and verification reviews.
    The surveys used to determine DBA wage rates are sent to all 
relevant employers within the locality as well as to all other 
interested parties, including labor organizations, contractors, and 
employers associations. No one source of wage data is determinative. 
The Department notes that while the DBA survey, like every other wage 
survey, is voluntary, and there is no statutory requirement that 
employers or labor organizations submit their wage data, the Department 
actively encourages participation; however, there is no statutory 
requirement that employers or labor organizations must submit their 
wage data. In order to mitigate any potential bias, the Department has 
taken and continues to take actions to improve completion rates, get 
the most representative sample possible, and ensure the accuracy of 
this data. First, it has expanded community outreach efforts and held 
additional public conferences. These efforts help responders to better 
understand the survey process and to appreciate the importance of 
survey participation. Additionally, an on-line response tool has been 
introduced, giving recipients the opportunity to submit data 
electronically. The Department has also engaged an outside contractor 
to randomly audit responses to improve accuracy and further mitigate 
any bias. In the rare event of misrepresentation in a survey response, 
fines and imprisonment can be pursued. Finally, the Department 
identifies the most fair and appropriate geographical statistical areas 
by relying on Census jurisdictions and OMB-defined Metropolitan 
Statistical Areas (MSAs). The Department believes these measures ensure 
that the DBA wages are reflective of the labor market.
    In calculating DBA wage rates, WHD follows several important and 
well-established policies. First, in order for a classification and 
rate to prevail, the minimum craft sufficiency standard must be met. 
Long-standing WHD procedures provide that wage data for a particular 
classification generally must be received for at least three workers 
employed by two contractors in order for a wage rate to be published 
for a classification. Second, in compiling data for building and 
residential wage determinations, WHD cannot use data from Federal or 
federally-assisted projects ``unless it is determined that there is 
insufficient wage data to determine the prevailing wages in the absence 
of such data.'' 29 CFR 1.3(d). Third, the county is the appropriate 
geographic unit for data collection, although data may be derived from 
groups of counties in some situations, as described below. 29 CFR 
1.7(a), (b). Finally, data received from metropolitan and rural 
counties cannot be combined. 29 CFR 1.7(b).

[[Page 3457]]

    In accordance with these principles, WHD first attempts to 
calculate a prevailing wage based on private project survey data at the 
county level. See Mistick Construction, ARB No. 04-051, slip op. at 3 
(Mar. 31, 2006). If there is insufficient private survey data for a 
particular county, then WHD considers any available survey data from 
Federal projects. If the combined Federal and non-federal survey data 
received from a particular county is still insufficient to establish a 
prevailing wage rate for a classification, then data from surrounding 
counties may be used, provided that data from metropolitan and rural 
counties are not combined. See 29 CFR 1.7(b); see also Mistick 
Construction, ARB No. 04-051, slip op. at 3 (Mar. 31, 2006).
    In considering survey data from surrounding counties, WHD first 
expands its calculation from the county alone to a group of counties. 
For metropolitan counties, WHD expands the county data to all of the 
other counties located in the same MSA, as determined by OMB. If 
private survey data from the established county group is still 
insufficient, then WHD will include Federal project data from all 
counties in the group. Rural county groups, which are defined by WHD, 
are made up of contiguous non-metropolitan counties with similar wage 
patterns.
    OMB states that the ``general concept of a metropolitan statistical 
area is that of an area containing a large population nucleus and 
adjacent communities that have a high degree of integration with that 
nucleus.'' 2010 Standards for Delineating Metropolitan and Micropolitan 
Statistical Areas, 75 FR 37,246, Jun. 28, 2010. The purpose of 
establishing MSAs is to provide ``a nationally consistent set of 
delineations for collecting, tabulating, and publishing Federal 
statistics for geographic areas.'' Id. OMB publishes and maintains 
official MSA lists, based primarily on decennial Census data.
    WHD strictly relies upon OMB's MSA determinations in deciding which 
surrounding counties constitute a metro county ``group'' for DBA 
purposes, and WHD therefore does not reconfigure MSA groups. By using 
objective and well-established county group designations set by OMB, 
WHD avoids injecting bias and uncertainty into its wage determination 
process.
    If both private and Federal data for an established county group 
are still insufficient to determine a prevailing wage rate, then WHD 
may expand to a ``supergroup'' of counties (either rural or 
metropolitan) or even to the statewide level; the expansion stops when 
sufficiently standard data have been attained for the craft. WHD only 
expands data to these levels, however, for classifications that have 
been designated as ``key'' crafts. A list of ``key'' crafts can be 
found in WHD's Prevailing Wage Resource Book. See U.S. Department of 
Labor, Prevailing Wage Resource Book (July 2009), Davis-Bacon Surveys 
(Tab 12) at 3, available at http://www.dol.gov/whd/recovery/pwrb/toc.htm. For non-key crafts, data are not expanded beyond the county 
group level.
    One employer argued that using DBA wage rates would bypass the 
requirements of the National Labor Relations Act (NLRA). A DBA 
prevailing wage determination represents an accurate prevailing wage 
rate available for similar workers in a particular area of employment. 
Where a collectively-bargained wage rate prevails in a classification 
on similar projects in the area during the relevant period, then and 
only then is the resulting DBA prevailing wage the collectively-
bargained wage rate. This does not, however, subject an employer to the 
collective bargaining agreement upon which the underlying wage rate is 
based. Rather, the rate is interpreted as a reflection of the 
prevailing wage in the area of employment.
    Several commenters suggested that the Department consider SCA and 
DBA rates in its prevailing wage determinations only when the 
applicant's H-2B workers would work on projects subject to the SCA or 
DBA. SCA and DBA wage rates provide a reliable prevailing wage for 
certain occupations within specific localities. The commenters' 
concerns that an SCA or DBA wage is a ``government wage'' are 
unfounded: the resulting wage closely approximates the prevailing wage 
for a particular occupation within a particular locality. Since SCA and 
DBA calculations incorporate workers and projects outside of government 
contracts, these rates are an appropriate source of prevailing wages.
    Some commenters requested that the SCA and DBA wage determinations 
not be consulted as prevailing wage sources for any occupations not 
covered by the SCA and DBA surveys. As indicated above, when 
determining prevailing wages, the Department will not consider either 
source unless it includes data appropriate for the actual tasks, 
duties, and activities the worker will perform in the area of intended 
employment, as described by the employer in the H-2B application.
    Similarly, a number of landscaping employers commented that the 
proposed wage sources (SCA, DBA, and OES) generalize the prevailing 
wage determination process and do not consider particular job 
classifications in areas of intended employment. However, the SCA, DBA, 
and OES wage rates are specific to occupations and areas of intended 
employment. National Prevailing Wage Center (NPWC) staff will match the 
job duties listed on the Application for Prevailing Wage Determination 
with the appropriate occupational definition contained in the O*Net 
Occupational Outlook Handbook, the SCA Dictionary of Occupations, or 
specific Davis-Bacon wage determinations. Only if an appropriate match 
can be made will the source be considered in determining the H-2B 
prevailing wage.
    Several submissions from various commenters noted that two 
different agencies within the Department collect wage data: BLS 
publishes OES, among other wage surveys, while WHD publishes SCA and 
DBA prevailing wage rates. Two of these commenters recommended that the 
Department consolidate wage calculations into fewer surveys, while 
others recommended that the Department give all of the responsibility 
for wage determinations to a single agency. The Department believes 
that OES survey data is distinct enough from SCA wage determinations 
and DBA surveys that all three should be retained, and that all are 
appropriate for use in the H-2B program. OES data encompasses 
occupations outside the scope of the SCA and DBA, while in certain 
instances the nature of government-contracted service work and 
construction projects requires SCA and DBA determinations to take into 
account more detailed information about how the work is performed 
(e.g., DBA wage rates reflect the work performed by various crafts 
determined by area practice).
    Two employer associations and two employers commented that any 
increase in H-2B wage rates would be arbitrary. One commenter 
elaborated, explaining that because the methodologies used to produce 
the SCA, DBA, and OES wage rates and data are different, none can be 
truly accurate. As explained above, the SCA, DBA, and OES methodologies 
use the best information available to establish prevailing wage rates 
for specialized occupations within specific occupational categories. 
OES data has been used historically as the basis for prevailing wage 
determinations in the H-2B and other DOL immigration programs, while 
SCA and DBA rates were used in the H-2B program before 2005. 
Furthermore, the three wage rates are not fundamentally different: all 
are derived from employer survey data.

[[Page 3458]]

    A few commenters believed incorrectly that the Department's use of 
SCA and DBA wage rates would require employers to provide fringe 
benefits or to pay workers the cash equivalent of such benefits. The 
Acts require contractors performing service or construction work, 
respectively, on covered Federal contracts to furnish, in addition to 
the prevailing hourly rate of pay, fringe benefits found prevailing in 
the locality (or the cash equivalent thereof).\7\ SCA and DBA wage 
determinations reflect two figures--wages and benefits. For purposes of 
the H-2B program, however, the SCA or DBA prevailing wage is only the 
wage component of the wage determination. This Final Rule therefore 
does not require the payment of fringe benefits; such benefits would, 
however, otherwise be required if the employer's work involves a 
contract which is covered by one of the Acts.
---------------------------------------------------------------------------

    \7\ Section 2(a)(2) of the McNamara O'Hara Service Contract Act, 
41 U.S.C. 351(a)(2); 40 U.S.C. 3141(2)(B).
---------------------------------------------------------------------------

    Numerous commenters urged the Department to include fringe benefits 
in all H-2B prevailing wage determinations. These commenters assert 
that not including fringe benefits would ``give employers an incentive 
to hire H-2B workers instead of U.S. workers'' in order to avoid 
additional labor costs, and would thus undermine the requirement that 
H-2B visas be issued only if no qualified U.S. workers are available. 
The Department recognizes these commenters' concerns, particularly for 
H-2B positions that have been certified at an SCA or DBA wage rate. 
However, the Department historically has not required the payment of 
fringe benefits to H-2B workers, even before 2005, when SCA and DBA 
wage rates were mandatory for occupations where such wage 
determinations existed. See 75 FR 61578, 61579 (Oct. 5, 2010) (``Wage 
Methodology for the Temporary Non-Agricultural Employment H-2B 
Program'' Proposed Rule). In addition, no data exists to allow adequate 
computation and monetization of fringe benefits over all the 
occupations and locations covered by the H-2B program. Therefore, given 
the Department's historical practice, and given that the Department 
cannot currently fully estimate the economic impact of requiring fringe 
benefits for H-2B positions, the Department will not require fringe 
benefit payments to H-2B workers, regardless of the source of the 
prevailing wage.\8\
---------------------------------------------------------------------------

    \8\ For projects covered by DBA or SCA, employers are 
responsible for paying fringe benefits as required by those laws 
regardless of whether the workers are domestic or H-2B workers.
---------------------------------------------------------------------------

3. The Elimination of the Four-tier Wage Structure
    In the NPRM, the Department proposed to eliminate the use of the 
four-tier wage structure and implement a single prevailing wage rate 
based on the arithmetic mean of the OES wage data for the job 
classification in the area of intended employment. The NPRM cited a 
number of reasons why the four tiers did not establish an adequate 
prevailing wage. After thorough consideration of the public comments, 
the Department has decided that the proposed elimination of the use of 
the four-tier wage structure is appropriate.
    The Department continues to believe that the OES wage data is an 
appropriate wage data available in the absence of a higher CBA, SCA, or 
DBA wage. The OES wage survey is among the largest continuous 
statistical survey programs of the Federal Government. BLS produces the 
survey materials and selects the nonfarm establishments to be surveyed 
using the list of establishments maintained by State Workforce Agencies 
(SWAs) for unemployment insurance purposes. The OES collects data from 
over 1 million establishments. Salary levels based on geographic areas 
are available at the national and State levels and for certain 
territories in which statistical validity can be ascertained, including 
the District of Columbia, Guam, Puerto Rico, and the U.S. Virgin 
Islands. Salary information is also made available at the metropolitan 
and nonmetropolitan area levels within a State. Wages for the OES 
survey are straight-time, gross pay, exclusive of premium pay. Base 
rate, cost-of-living allowances, guaranteed pay, hazardous duty pay, 
incentive pay including commissions and production bonuses, tips, and 
on-call pay are included. The features described above are unique to 
the OES survey, which is a comprehensive, statistically valid, and 
useable wage reference, and it is for these reasons that the survey is 
also used in other foreign labor certification programs administered by 
the Department, including the H-1B and PERM programs. The frequency and 
precision of the data collected, as well as the comprehensive nature of 
the occupations for which such data is collected, make it an 
appropriate data source for determining applicable wages across the 
range of occupations found in the H-2B program.
a. The Four-Tier Wage Structure is Not Suitable for Unskilled Jobs
    The Department received a number of comments in support of its 
proposal to eliminate the four-tier wage structure. Three Congressional 
commenters supported the proposal. One indicated that the four-tier 
wage structure is inappropriate for the H-2B program because the 
program involves relatively low-skilled occupations with few 
differences in skill or experience. Another commenter, a Congressional 
subcommittee, indicated that the structure is contrary to the 
Department's obligation to ensure that H-2B employers offer wages that 
do not adversely affect the wages of the U.S. workforce. The third 
Congressional commenter argued that a tiered wage structure in the H-2B 
program undercuts Congressional intent to protect the wages of both 
U.S. and foreign workers.
    Additional commenters supported the Department's decision to 
eliminate wage tiers, noting that the use of skill level wages in low-
skill H-2B jobs causes an adverse effect because all workers in those 
job categories perform the same job duties and, in the commenters' 
view, compete with one another for job openings, regardless of their 
cumulative experience levels. One commenter noted that even if 
experience in the job normally results in a higher wage level, the 
current methodology permits employers to pay the H-2B workers entry-
level wages, thus placing U.S. workers seeking the same job openings at 
a disadvantage because their experience is not compensated.
    The Department also received a number of comments opposing the 
elimination of the four-tier wage structure; numerous commenters, 
including the Chief Counsel for Advocacy, SBA, offered arguments that 
wage tiers appropriately reflect the level of skill, education, 
experience and other requirements of the job. Several commenters 
opposed the elimination of the four-tier wage structure on the grounds 
that the skill levels allow employers to differentiate between 
employees based on their skills and level of experience. Some of these 
commenters expressed concern that the change to the arithmetic mean for 
all H-2B wages would result in an inappropriate averaging of the wages 
of entry-level and more experienced workers. Other commenters asserted 
that the use of a single wage would inflate the prevailing wages of 
entry-level workers and deflate prevailing wages of highly-experienced 
workers because it would fail to take into

[[Page 3459]]

consideration wage differentiation factors such as supervisory duties, 
responsibilities, and seniority/tenure or experience, particularly for 
skilled positions in certain industries. One commenter indicated that 
the wage determination methodology would average in wages for higher 
skilled workers, and therefore contradicts the intent for establishing 
the H-2B program as one for the recruitment of unskilled workers.
    A few commenters argued against the elimination of skill levels, 
and presented an alternative in which employers could craft job 
descriptions in such a way as to couple the higher arithmetic mean-
based wage with a requirement for more experience.\9\ Several 
commenters expressed concern that the Department's proposal does not 
specify that employers will be able to increase their experience 
requirements as a result of the increased wages and requested that if 
the Department uses the OES arithmetic mean, H-2B employer-applicants 
should be allowed to specify the minimum experience requirements that 
are associated with the new wage.
---------------------------------------------------------------------------

    \9\ The Chief Counsel for Advocacy, SBA's comment reflected the 
suggestion of several businesses on this alternative.
---------------------------------------------------------------------------

    One commenter argued that the skills in the H-2B program may not be 
a matter of educational degrees or detailed training, but rather 
properly and efficiently performing the job. This commenter asserted 
that employers typically reward H-2B workers with higher wages and 
benefits based on job performance, and that raising the wages in the 
program to the mean would eliminate the employer's ability to properly 
manage and reward those employees.
    Other commenters indicated that the elimination of the four-tier 
wage structure will not maintain fair wage calculations to ensure U.S. 
workers are not adversely affected by the employment of H-2B workers 
because the current system ensures unskilled and skilled workers have 
access to H-2B job positions according to their level of experience, 
education, and supervision required to perform the job duties. One of 
these commenters further claimed that because many H-2B workers are in 
low-skilled or unskilled positions, wage rates from a lower tier should 
correlate with lower skills and be close to the appropriate wage such 
that H-2B workers earn wages at similar levels as the wages of domestic 
workers.
    Several commenters representing the ski industry conceded that 
although not all positions in their industry reflect skill levels, 
their industry is unique in that certain positions, particularly those 
for ski and snowboard instructors, require certification and/or 
accreditation which reflects specific levels of skill and experience 
consistent with those established for the industry nationally and 
internationally. These commenters indicated that establishing a 
prevailing wage rate based on a single overall arithmetic mean fails to 
account for skill progressions required of the ski instructor 
positions. In addition, one commenter in the construction industry 
associated the wage tiers with important skills and knowledge 
pertaining to safety requirements and programs, noting that Level II 
and Level III workers are necessary to maintain workers' safety.
    As discussed elsewhere in this Final Rule, the Department's 
obligation to administer the H-2B program requires that the prevailing 
wage which is offered and paid in the program reflect the minimum 
requirements of the position. This requirement reflects the 
Department's obligations to avoid adverse effect on the wages of 
workers and enable meaningful access to job opportunities for U.S. 
workers. Because the Department has determined that the majority of H-
2B jobs reflect no or few skill differentials, the appropriate 
prevailing wage an employer must offer and pay, absent a higher CBA, 
SCA, or DBA wage, is the arithmetic mean of the OES wage data of 
workers who are similarly employed in the area of intended employment. 
Where an employer's job opportunity requires skills beyond those 
minimally required for the position (which may include but are not 
limited to additional certifications based on experience, or safety 
accreditations), the employer is at liberty to offer and pay to its 
workers in excess of the prevailing wage to account for the additional 
skills or experience which the employer requires.
    One commenter noted that the assumption that H-2B workers fill the 
lower skilled and lower paid positions and that the higher skilled and 
higher paid positions are taken by U.S. workers leads to a conclusion 
that no adverse effect exists because the H-2B workforce simply fills a 
predictable labor shortage permitting U.S workers to consistently fill 
higher skilled complementary positions.
    As discussed in the NPRM, the Department has found that almost all 
jobs for which employers seek H-2B workers require little, if any, 
skill--an assertion with which few commenters disagreed. H-2B 
disclosure data from Fiscal Year (FY) 2007 to 2009 demonstrates that 
most of the jobs included in the top five industries for which the 
greatest annual numbers of H-2B workers were certified--construction; 
amusement, gambling and recreation; landscaping services; janitorial 
services; and food services and drinking places--require minimal skill 
to perform, according to every standardized source available to the 
Department, such as the SOC, O*NET and the Occupational Outlook 
Handbook. These jobs include, but are not limited to, landscaper 
laborer, housekeeping cleaner, construction worker, forestry worker, 
and amusement park worker, which make up the majority of occupations 
certified in those years, all of which require less than 2 years of 
experience to perform, if that.\10\ This prevalence of job 
opportunities in low-skilled categories is generally reflected in the 
H-2B employer applications. These jobs have typically resulted in a 
Level I wage determination, which is lower than the average wage paid 
to similarly employed workers in job classifications in non-H-2B jobs.
---------------------------------------------------------------------------

    \10\ The Executive Order (E.O.) 12866 analysis below analyzes FY 
2007 through 2009 disclosure data that reflects the numbers of jobs 
certified in these occupations; the top five industries for which 
the average annual number of H-2B workers were certified are 
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.
---------------------------------------------------------------------------

    Under the Department's 2005 Prevailing Wage Guidance, the 
determination of an appropriate wage level is dependent upon the duties 
and requirements of the job opportunity as described by the employer on 
the ``Application for Prevailing Wage Determination,'' ETA Form 9141. 
The Department applies a standard analysis of the job position (found 
in the 2005 Prevailing Wage Guidance) to determine the appropriate wage 
level. In doing so, the Department compares the employer's job 
requirements with those typical of the job classification. A Level I 
\11\ wage is based on a determination that the job position described 
by the employer does not deviate, or only minimally deviates, from the 
typical

[[Page 3460]]

minimum requirements of the corresponding SOC-based job classification 
contained in O*NET, including the specific Job Zone. A Job Zone 
reference indicates the level of skill, education, experience and/or 
preparation typically required to perform the job, and ranges from one 
(for which little or no preparation is needed) to five (in which 
extensive education, training, and preparation are required to 
adequately perform the job duties at the entry-level). For example, one 
of the most requested H-2B job classifications, landscaping and 
groundskeeping worker, is classified as falling within O*NET Job Zone 
One.\12\ All of the other frequently represented positions in the 
program: janitors and cleaners, housekeepers, construction laborers, 
and amusement and recreation attendants, also are categorized within 
Job Zone One.
---------------------------------------------------------------------------

    \11\ Level I wage rates under the Prevailing Wage Guidance are 
typically assigned to job offers for beginning level employees who 
have a basic understanding of the occupation. These employees 
perform routine tasks that require limited, if any exercise of 
judgment. The tasks provide experience and familiarization with the 
employer's methods, practices, and programs. The employees may 
perform higher level work for training and developmental purposes. 
These employees work under close supervision and receive specific 
instructions on required tasks and results expected. Their work is 
closely monitored and reviewed for accuracy. See http://www.foreignlaborcert.doleta.gov/pdf/NPWHC_Guidance_Revised_11_2009.pdf.
    \12\ For a full description of this job classification, see: 
http://online.onetcenter.org/link/summary/37-3011.00.
---------------------------------------------------------------------------

    The notion that the four wage tiers have a meaningful relationship 
to skill, as expressed by many commenters including the Chief Counsel 
for Advocacy, SBA, represents a misunderstanding of the way in which 
the Department calculates the four tiers. The Department does not 
collect data associated with skill levels, but instead collects data 
across the job spectrum. The Department approximates skill levels from 
that generalized data, not because the data can be disaggregated by 
skill level, but because it is required to assign a value to four skill 
levels, in accordance with the formula set forth at section 212(p)(4) 
of the INA. The formula is artificial, designed to approximate 
arbitrary skill levels and has a skewing effect when applied to the 
wage rates applicable to typical H-2B jobs, in which there are fewer 
skill differentials. The four wage levels currently used by the 
Department are calculated by applying a statutory mathematical formula 
to the wage distribution corresponding to a particular occupational 
classification in the area of intended employment. The Level I wage is 
established by taking the arithmetic mean of the bottom one-third of 
the wage distribution; the Level IV wage rate is determined by 
establishing the arithmetic mean of the top two-thirds of the wage 
distribution; the Level II and Level III wages are derived from a 
formula established by section 212(p)(4) of the INA which provides for 
the reconstitution of two-level Government surveys and creation of two 
intermediate levels by dividing by the number three the difference 
between the initial two levels and adding the quotient to the first 
level to create Level II, and subtracting that quotient from the second 
level to create Level III.
    Thus, there is no correlation in the four-tier wage structure 
between the skill level required to perform a job and the wage attached 
to it. An employer can pay a higher wage for many reasons other than 
skill level. The lack of a meaningful nexus between the skill level and 
the compensation is significant where applied to the wage rates 
assigned to typical H-2B jobs in which there are fewer skill 
differences, because in most cases, a basic skill set is all that is 
required to adequately perform these jobs. The range of wages reported 
in these low-skilled occupations represents the range of pay in the 
occupation, not the range of pay for skills associated with the job 
opportunity.
    These comments did not identify any significant data or analysis 
that undermines the essential component of the analysis contained in 
the NPRM: that there are no significant skill-based wage differences in 
the occupations that predominate in the H-2B program, and to the extent 
such differences might exist, those differences are not captured by the 
existing four-tier wage structure. No commenter directly addressed the 
Department's concerns about these deficiencies in the existing 
methodology. No commenter challenged the fact that the OES survey does 
not collect information about the skills or responsibilities of the 
workers whose wages are included in the survey. No commenter offered 
any analytical or empirical support for the notion that the mean of the 
lowest one-third of the workers in the survey somehow reflects the 
entry-level wage, nor offered an alternative to the OES wage 
methodology that might better reflect the purported differences in 
skills within an occupation. While skill-based wage differences may 
exist in these occupations, there is insufficient evidence to justify 
any judgment about what that wage rate should be within a particular 
occupational code, and it is more appropriate for the employer to 
select a different occupational code that is more suitable for the 
level of skills and responsibilities required for the position. In the 
absence of reliable information that would permit the Department to 
make and quantify such a judgment, our responsibility to avoid adverse 
effect mandates that the average of the OES wage for that occupation be 
considered in determining the prevailing wage for the occupation for 
which workers are sought. Again, as noted above, this does not prevent 
employers from offering higher wages if necessary to attract 
appropriate applicants.
    Even with the elimination of the four-tier wage structure from the 
H-2B program, employers would still be able to obtain wage 
determinations that account for differences in skill. The SOC 
classification system generally groups job classifications into larger 
categories encompassing related positions; for example, it recognizes 
entry-level positions such as the landscaping and groundskeeping 
workers, as well as positions requiring additional skills or experience 
such as first-line supervisors/managers of landscaping, lawn service, 
and groundskeeping workers. The latter are classified as Job Zone Two 
and contain different and/or additional job duties and requirements, 
which, if selected by the employer, yield a prevailing wage that is 
higher than that for the low-skilled worker in the same broader SOC 
category. The variety of SOC job classifications reflecting different 
kinds and levels of skills ensures that the employer has the latitude 
to select a different SOC code for the Department's consideration to 
reflect a position which requires additional skills and experience, and 
which permits the employer to adequately compensate for those 
additional skills and experience.
    Therefore, the Department disagrees with some commenters' 
assertions that raising the OES base wage to the mean necessarily means 
having to increase job requirements or otherwise justify that increase 
with additional skills. The jobs themselves are written to incorporate 
the basic skills at entry. Use of the arithmetic mean in determining 
the prevailing wage simply recognizes that those who are performing the 
tasks of the job at Level I are performing the same tasks at Level III, 
with the distinction between the wages for the two levels not being 
based on a differential in skills.
    If an employer chooses to increase its requirements for the 
position, it should consider classifying the occupation under an SOC 
code that more closely approximates the requirements and duties of the 
job; otherwise, the employer will need to justify the higher 
requirements as a business necessity. Additionally, nothing in this 
rule prevents an employer from paying a wage higher than the prevailing 
wage to a worker who possesses skills, licenses, certifications, etc. 
above those listed in its H-2B application. Employers who cannot use a 
different O*NET/OES category remain free to offer a wage higher than 
the established prevailing wage if they desire to do so. Employers

[[Page 3461]]

are also at liberty to specify experience or other requirements 
consistent with the long-standing program requirement that job 
qualification must be normal to the occupation, or are otherwise 
justified by business necessity. This rule does not prevent monetary 
rewards for those employees who have earned them through experience, 
skill acquisition, or even employer loyalty. Nothing in this Final Rule 
suggests nor should be construed to prevent the employer from paying 
its workers, U.S. and H-2B, more than the required prevailing wage.
    Some commenters indicated that particular industries, such as 
forestry, will fare poorly based on a change to a mean-based OES wage 
rate. These commenters contended that their job classifications contain 
numerous occupations that range from low-skilled to professional-
skilled work. Their concern is that obtaining a mean-based wage in 
these classifications will produce a prevailing wage that exceeds the 
level for a low-skilled job under these classifications.
    The Department believes this concern to be misplaced given the way 
jobs are classified in OES. Each job family in O*NET, and by extension 
in the OES, contains numerous levels of jobs. That comprehensiveness is 
one of the reasons the Department has successfully used the OES for 
over a decade for this purpose. A general forest conservation worker is 
categorized separately from a forest conservation technician, allowing 
for two separate levels of compensation, each appropriate to the work 
being performed. Again, an employer has the opportunity in filing for 
the prevailing wage determination to select the occupational code it 
believes most appropriate. That selection is reviewed against the 
actual job description provided by the employer, and the Department's 
final determination rests on the actual tasks, duties and activities in 
which the employer describes the worker as engaging.
    The purpose of establishing the prevailing wage is to establish the 
minimum wage that avoids adverse effect, considering the actual 
requirements of the position for which H-2B certification is being 
sought. It is not to ensure that H-2B workers or workers whose 
experience or skills exceed those of the position receive premium pay 
for having more in the way of skills, knowledge, or experience than 
what the position actually requires. The Department, by this Final 
Rule, is only setting the floor against which compensation for the 
basic occupation for which an employer seeks H-2B workers is to be 
measured, in accordance with its obligations under the H-2B program.
b. Section 212(p)(4) of the INA Does Not Impose a Four-tier Wage 
Structure on the H-2B Program
    Several commenters opposed the Department's proposal to eliminate 
the four-tier wage structure, indicating that the use of a tiered 
prevailing wage system was supported by the regulatory history of the 
program. Other commenters, however, noted that the use of skill levels 
is illogical given the reasoning behind the implementation of the four-
tier wage structure in the H-1B program.
    The Department disagrees with the comment that suggests that the 
use of the four-tier wage structure is legally mandated. That 
contention was discussed and rejected by the district court in CATA v. 
Solis, 2010 WL 3431761 at *19. fn. 22 (``[A]ny appeal to Sec.  
1182(p)(4) would not constitute a rational explanation for using skill 
levels in determining H-2B prevailing wage rates''). The Department's 
analysis in the NPRM and in this Final Rule reaches the same 
conclusion. While the Department had, for reasons of consistency and 
administrative efficiency, treated the application of skill levels in 
the H-2B, H-1B and PERM programs in the same manner, continuing a 
system that leads to the payment of wages below prevailing is contrary 
to the Department's regulatory mandate to ensure against adverse 
effect. The application of tiers to the H-2B program has no rational 
basis beyond the efficiency served by having one methodology for all 
foreign labor certification programs. The H-2B program is obviously 
distinguishable from the H-1B program that was the focus of the 
Consolidated Appropriations Act of 2005 (Pub. L. 108-447). The H-1B 
program is specifically designed to address the needs of employers of 
high-skilled, temporary workers and requires distinguishing among 
varying levels of skill by the nature of the kinds of jobs that it 
covers. Those jobs require theoretical and practical application of a 
body of highly specialized knowledge and attainment of a bachelor's or 
higher degree in a specific specialty or its equivalent. As a result, 
the H-1B program reflects a wide range of experience, skills, and 
knowledge which appropriately correspond to stratified wage levels. The 
history of the H-2B program, by contrast, indicates that it grew out of 
its agricultural predecessor, the Bracero program, as a companion for 
employers requiring assistance with low-skilled non-agricultural work. 
Although the Department recognizes that not all positions requested 
through the H-2B program are for low-skilled labor, the program is 
still overwhelmingly used for work requiring lesser skilled workers--
those occupations that require at most 2 years, and in most cases much 
less than 2 years, of education, training, or experience to perform the 
job duties, tasks, and activities. As discussed above, there is no 
justification for stratifying wage levels to artificially create wage-
based skill levels when in fact there is no great difference in skill 
levels with which to stratify the job.
c. Elimination of the Four-tier Wage Structure in the H-2A Program
    In proposing the elimination of the four-tier wage structure in 
favor of a single arithmetic mean wage, the Department noted that it 
had previously taken similar action in the H-2A program. One commenter 
disagreed with the Department's reasoning behind the elimination of the 
four-tier wage structure arguing that the H-2A and H-2B programs are 
different and suggested that the Department continue to treat the H-2B 
program as distinct. Another commenter asserted that the Department's 
rationale for the elimination of the four-tier wage structure in the H-
2A program was based on the concern that the OES data is inaccurate and 
not concern over adverse effect.
    The H-2A and H-2B temporary programs are similar in that they both 
involve largely low-skilled occupations where skill-based wage 
differences do not appear to exist to any significant degree and to the 
extent they do exist, the differences are not reflected in the OES 
survey data. The Department especially limited its rationale to 
eliminating OES in the H-2A program to the inappropriateness of the OES 
in light of a more appropriate wage source (e.g., the Farm Labor 
Survey). No similar data source exists for the range of jobs in the H-
2B program. Thus, the Department has adopted the OES as the best data 
source available for the H-2B program, absent an applicable CBA, SCA, 
or DBA wage rate. The lack of skill-based wage differences is a 
sufficient basis to support the determination that the four-tier wage 
structure should no longer be used in either program.
d. Other Issues Related to Four-tier Wage Structure
    A number of commenters, including the Chief Counsel for Advocacy, 
SBA, argued that the ruling in CATA v. Solis did not identify anything 
inherently

[[Page 3462]]

wrong with the four skill levels as used in the current procedure. 
Several commenters asserted that the Department misconstrued the 
court's ruling and went well beyond the focus of the order. At least 
one commenter accused the Department of using the CATA v. Solis 
decision to promote an agenda to raise wages and to prevent employers 
from using the H-2B program.
    These comments misconstrue our references to the CATA v. Solis 
ruling and demonstrate a misunderstanding of the Department's 
obligation to administer the H-2B program. The court's ruling in CATA 
v. Solis affected only the timing of the NPRM, not its content. The 
Department announced in the Fall 2009 Semiannual Regulatory Agenda its 
intention to propose a re-examination of the H-2B program. A review of 
the H-2B wage system was identified as part of that re-examination. The 
court's conclusions about the legal necessity for the four-tier system 
parallel the tentative conclusions that the Department had already 
reached in its review.
    The CATA v. Solis court's reasoning parallels the Department's 
approach in some significant areas. The CATA v. Solis court's principal 
concern about the four-tier wage structure was the fact that the 
Department had never published an explanation as to why the two-tier 
system, and later the four-tier wage structure, that were used in the 
PERM and H-1B programs were also adopted for use in the H-2B program. 
The court's critique was largely correct, and this rulemaking is 
designed to provide the notice and comment process that was previously 
lacking.
    The commenters who observed that the CATA v. Solis court ordered 
the Department to simply ``show its work'' overlook the court's clear 
disapproval of the use of the four-tier wage structure now used in the 
H-2B program. The Department based its methodology for the PERM, H-1B, 
and by extension, the H-2B programs, on the requirements now found in 
the INA at 8 U.S.C. 1184(p)(4). The Court found that any such reliance 
on this statutory provision, developed for the use of the H-1B visa 
program, would be irrational and not an appropriate foundation for the 
use of skill levels in determining H-2B prevailing wage rates. See CATA 
v. Solis, 2010 WL 3431761, at *19 fn. 22. As explained in greater 
detail above, the Department believes that the use of skill levels in 
the H-2B program is inappropriate given the job duties, tasks, and 
experience required to perform them.

C. The Arithmetic Mean Wage Rate Established by the OES Wage Survey Is 
the Most Appropriate Basis for Calculating the OES Component of the 
Prevailing Wage Rate

    The Department proposed 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 the most effective 
available method for determining the prevailing wage. To determine the 
new wage calculation, the Department proposed to use the published 
arithmetic mean established by the BLS when compiling the OES survey. 
This mean is the average of all the survey's wages in the occupation. 
It will produce a wage rate that is at a point between the current 
Level II and III wages.
    Several commenters, including the Chief Counsel for Advocacy, SBA, 
espousing the importance of the H-2B program to U.S. employers engaged 
in seasonal business, as well as its importance to both H-2B and U.S. 
workers, contended that selecting the arithmetic mean as a prevailing 
wage will result in increased H-2B wages, which will have a negative 
effect on employers for several reasons. The commenters first noted 
that some employers will not be able to afford to pay increased H-2B 
wages, which will be particularly problematic for small companies or 
those operating at marginal income levels. Commenters argue that this 
outcome favors larger companies that have greater economic ability to 
absorb an increase in wages, therefore, driving smaller companies out 
of business. Commenters, including the comments presented at the SBA-
sponsored roundtable (reflected in the Chief Counsel for Advocacy, SBA 
comment), also asserted that smaller employers may cease to operate if 
they are unable to pay the increased costs in H-2B wages, especially 
when such companies are faced with an extreme shortfall of available 
U.S. workers. Furthermore, some commenters asserted that the costs to 
employers resulting from the increase in wages will have an 
overreaching effect on their profitability and were concerned that the 
disappearance of small and marginal companies may have a resulting 
negative effect on U.S. workers who may lose their jobs as a result of 
a shut-down of such companies.
    Additionally, several commenters argued the Department did not take 
into account contracts employers have already put in place for the 
coming year; contracts that already established a set pricing for 
services. Employers participating in the H-2B program have always been 
required to meet the conditions of the labor certification, which 
include the payment of a valid prevailing wage. The fact that a new 
wage methodology may result in wages in excess of anticipated labor 
costs does not minimize the Department's obligation. However, even 
though the NPRM provided current and future users of the H-2B program 
with some indication of what the Final Rule would require, we recognize 
that many employers already may have planned for their labor needs and 
operations for this year in reliance on the existing prevailing wage 
methodology. In order to provide employers with sufficient time to plan 
for their labor needs for the next year and to minimize the disruption 
to their operations, the Department is delaying implementation of this 
Final Rule so that the prevailing wage methodology set forth in this 
Rule applies only to wages paid for work performed on or after January 
1, 2012. The Final Rule will be effective in its entirety on January 1, 
2012.
    This is a final rule, without a phase-in period. We, however, 
welcome information from the public on the feasibility, and 
implementation of phasing in the new prevailing wages. The Department 
recognizes that rapid wage increases may create burdens for employers 
that choose to participate in the H-2B program, while also providing 
potentially higher wages for U.S. and H-2B workers hired under the 
program. Comments should address:
    1. Is a phase-in desirable?
    2. What would the impact be of a phase-in of the prevailing wage 
methodology on employers and workers?
    3. Over what period and at what levels should any phase-in be 
implemented that would be consistent with the Department's obligation 
under this program?
    While the Department recognizes the concerns of many commenters, it 
believes its responsibility to set the prevailing wage is most 
effectively fulfilled without regard to the size or economic state of 
the employer. No such qualifier is present in the relevant DHS H-2B 
regulations or statute. That decision cannot ultimately be influenced 
by the impact that requiring payment of the prevailing wage will have 
on any one individual employer. As the Court of Appeals for the First 
Circuit noted in one of the earliest cases examining the Department's 
responsibilities under the predecessor H-2 program, ``[t]o recognize a 
legal right to use alien workers upon a showing of business 
justification would

[[Page 3463]]

be to negate the policy which permeates the immigration statutes, that 
domestic workers rather than aliens be employed wherever possible.'' 
Elton Orchards v. Brennan, 508 F. 2d 493, 500 (1st Cir. 1974). Contrary 
to one commenter's claim, the Department's decision to require that the 
arithmetic mean of the OES wage rate as the basis for determining the 
OES component of the prevailing wage rate is not arbitrary, but a 
deliberate acknowledgment that the levels currently provided to 
employers for use in the program are too low when weighed against the 
data on wages which are currently paid in those occupations for the 
same jobs. Our responsibility to set wage rates that avoid adverse 
effect on wages compels us to look to the OES arithmetic mean as an 
appropriate wage-setting tool, along with the CBA, SCA, and DBA.\13\ As 
discussed earlier, the Department believes the arithmetic mean is far 
closer to the actual wage being paid in these same occupations and more 
closely approximates the prevailing wage which must be paid in order to 
avoid adverse effect.
---------------------------------------------------------------------------

    \13\ The Department's justification for its reliance on the OES 
data has previously been expressed. See 69 FR 77368, Dec. 27, 2004.
---------------------------------------------------------------------------

D. Evidence of Negative Effects on Wages

    The Department received a number of comments providing a variety of 
data and research attempting to refute the concept of wage depression 
resulting from the prevalence of low wages in the H-2B program. 
Additionally, several commenters, including the Chief Counsel for 
Advocacy, SBA, faulted the Department for not providing data and/or 
studies as empirical support for eliminating the four-tier wage 
structure. Still others claimed that H-2B workers are already paid 
wages that are higher than those that predominate in the geographic 
area where the job opportunity is located. To refute the notion of wage 
depression caused by the H-2B program, some of the commenters relied on 
the Department's Initial Regulatory Flexibility Analysis (IRFA) 
indicating that the relatively small effect of the H-2B program on the 
overall economy undermines the wage depression rationale for the 
elimination of the four-tier wage structure.
    Many of these commenters relied on a recent study, included in the 
rulemaking record by one commenter, which contains an economic analysis 
of the H-2B program by an academic economist, Madeline Zavodny.\14\ In 
concluding that the admission of H-2B workers on the national level 
does not have a negative correlation to U.S. workers' employment or 
earnings and has no statistically valid relationship to the wages and 
employment levels of workers on the state level, the study compares 
wage changes ``in sectors that rely heavily on H-2B visa holders with 
wages in other industries that hire few or no temporary workers.''\15\
---------------------------------------------------------------------------

    \14\ See Economic Effect of H-2B Workers, public comment ETA-
2010-0004-0256.1.
    \15\ Id. at 17.
---------------------------------------------------------------------------

    Additionally, the appropriate measure of adverse impact on the 
wages of U.S. workers is not assessed on the national or even the state 
level but rather must be considered in terms of the workers who are 
similarly employed. Under the Department's regulations, being similarly 
employed generally means having substantially comparable jobs in the 
occupational classification in the area of intended employment. 
Therefore, any study purporting to measure a net effect of the 
employment of H-2B workers on the wages, working conditions and access 
to job opportunities for U.S. workers fails to take into account the 
lack of uniformity in distribution of H-2B workers, as well as a 
variety of factors which at any time may also correlate with the 
presence of H-2B workers in any localized labor market.
    The predominance of Level I wages in the program, wages based on 
the mean of the bottom one-third of all reported wages in the systems, 
is itself evidence of the adverse impact of those wages on those U.S. 
workers performing the same tasks and engaged in the same jobs. 
Specifically, a review of the Department's records for the issuance of 
prevailing wages in calendar year 2010 indicates that almost 75 percent 
of jobs are classified at a Level I wage, with the remaining 25 percent 
scattered in Levels II, III and IV. In a broader examination of wages 
offered over the past several years, in about 96 percent of cases, the 
H-2B wage is lower than the mean of the OES wage rates for the same 
occupation. 75 FR 61580, Oct. 5, 2010. In a low-skilled occupation, the 
mean for the occupation represents the wage that the average employer 
is willing to pay for unskilled workers to perform that job. The four-
tier structure artificially lowers that wage to a point that it no 
longer represents a market-based wage for that occupation. The H-2B 
worker, along with the domestic workers recruited against the 
application, who are being paid a significantly lower wage than two-
thirds of those in that area of employment cannot help but have a 
depressive effect on the wages of those around him. An employer paying 
U.S. workers as well as H-2B workers has no incentive to pay the U.S. 
workers any higher compensation. The local competitors, by extension, 
have no incentive to pay a higher compensation. Therefore, it follows 
that if the employer must only offer and pay Level I wages, wages below 
what the average similarly employed worker is paid, those wages will 
make the U.S. workers less likely to accept those job opportunities or 
will require them to accept the job at a wage rate less than the market 
has determined is prevailing for the job. The net result is an adverse 
effect on the worker's income. While an arithmetic mean is not an 
indicator of the single best wage at which U.S. workers are considered 
to be adversely affected, by its placement at the average wage rate it 
establishes a more accurate wage for the average U.S. worker.

E. Alternatives for the Calculation of a Prevailing Wage

1. OES Alternatives
    The Department received several proposals for alternative 
prevailing wage-setting methods, including those mentioned at the SBA 
roundtable later memorialized in the Chief Counsel for Advocacy, SBA 
comment. We considered alternatives such as using the OES median; using 
only the DBA wage for construction and using the SCA (or a regional) 
wage for reforestation; using some set percentile of some of these 
wages; and including fringe benefits. Our reasons for rejecting those 
alternatives are set out in the discussion of the RFA in the 
administrative section of this preamble.
    Other options presented as alternatives were not alternatives for 
the setting a prevailing wage but rather suggestions to change elements 
in the proposed wage-setting methodology and are dealt with elsewhere 
in this discussion.
    Other commenters noted that although the arithmetic mean represents 
an improvement to a stratified wage rate system, it will not do enough 
to protect U.S. workers from adverse effect. At least one such 
commenter suggested the Department set the OES wage at the 90th 
percentile wage instead to account for any fringe benefits without 
which the wages of U.S. workers who are similarly employed would be 
depressed. The Department declines to do so. As discussed above, the 
Department historically has not required the payment of fringe benefits 
to H-2B workers, even when SCA and DBA wage rates were mandatory for 
occupations where such wage determinations existed. No data exists to 
allow the full

[[Page 3464]]

computation and monetization of fringe benefits over all the 
occupations and locations covered by the H-2B program. Nor is there any 
basis concluding that the 90th percentile represents any valid 
surrogate for such data.
    One commenter challenged the Department's assertion that SCA rates 
do not differ substantially from the OES rates used in the H-2B 
program.\16\ To support its claim, this commenter cited a disparity of 
$2.27 in OES and SCA wage rates for landscaping and grounds keeping 
workers in Wichita County, Kansas. The Department was not able to 
replicate this commenter's analysis; however, it appears that much of 
the difference between the two wage rates resulted from the 
inappropriate comparison of the SCA wage rate to the baseline, the 
Foreign Labor Certification Online Wage Library's OES Level I wage. As 
explained above, the Level I wage rates are not representative of the 
prevailing wage paid to workers in the locality. If the Level III 
(mean) wage of $10.26 per hour \17\ is used instead (as it would be 
under the final rule), the $2.27 difference between the OES and SCA 
rates cited by this commenter shrinks to $0.29, with OES rate falling 
just short of the $10.55 per hour SCA wage.\18\ The Department 
acknowledges that for some occupations in some areas of intended 
employment there may appear to be a larger disparity between OES and 
SCA wage rates. However, many differences result from a comparison of 
similar-sounding job titles; under this Final Rule the determination of 
appropriate wage will be based on actual job duties, which the 
Department believes will minimize false equivalencies and thereby 
reduce wage disparities.
---------------------------------------------------------------------------

    \16\ This comment addresses a statement made in footnote 7 of 
the NPRM, in the economic analysis required under Executive Order 
12866. 75 FR 61582, Oct. 5, 2010.
    \17\ 37-3011 for 2000001, at http://www.flcdatacenter.com/OesQuickResults.aspx?area=2000001&code=37-3011.00&year=11&source=1.
    \18\ WD number 2005-2216, revision 13, 11/18/2010.
---------------------------------------------------------------------------

2. Non-OES Alternatives
    One commenter suggested a wage methodology that would have SWAs, 
rather than employers and/or the Department, conduct surveys to 
effectively determine the appropriate wage for any occupation in a 
particular State. Before 1998, when the program was much smaller, SWAs 
did in fact conduct surveys to produce prevailing wages. The financial 
resources available today to be devoted to such an activity, in 
particular given the expansion of the program and the resources 
available elsewhere (specifically, OES, SCA, and DBA) no longer make 
this a viable option. In addition, the inconsistencies that resulted 
from State to State in the treatment of the same job opportunity, 
reflecting not the local conditions but the quality of the surveyors 
and the collection instruments used, created difficulties that the 
benefits of using such surveys do not outweigh.\19\ Reliance on SWA 
surveys in our non-agricultural immigration programs was largely 
abandoned in 1998 because the OES provides a more reliable and cost-
effective means for producing prevailing wage rates on a consistent 
basis across the country. For these reasons, the Department has 
determined that the OES survey with its standardized job descriptions, 
compensation data collection and analysis, and SCA and DBA wage 
determinations provide a much more accurate portrayal of wage 
information than State surveys.
---------------------------------------------------------------------------

    \19\ The Department, in fact, recognized the need for 
consistency in the approach to establishing prevailing wages when it 
federalized the prevailing wage determination system in the 2008 
Final Rule.
---------------------------------------------------------------------------

    Finally, one commenter representing reforestation employers 
suggested that the Department set as the prevailing wage 115 percent of 
the higher of the Federal or State minimum wage.\20\ The Department 
believes such a calculation would result in an arbitrary rate not based 
on labor market conditions. U.S. workers, for instance, may make far 
more than this rate, in which case the resulting prevailing wage would 
suppress U.S. worker earnings. On the other hand, U.S. workers could 
earn less than the 115 percent level, creating a scenario where 
employers are required to pay H-2B workers more than U.S. workers.
---------------------------------------------------------------------------

    \20\ This proposal was also expressed in the comment submitted 
by the Chief Counsel for Advocacy, SBA.
---------------------------------------------------------------------------

    One comment suggested the Department adopt methods of compensating 
reforestation workers that are more flexible and not based on specific 
locations, citing inevitable deviations (due to weather, ground 
conditions, contractor demands) in an itinerant work schedule. An 
alternative method proposed by a commenter was the establishment of a 
prevailing wage for a wider region--similar to the H-2A Adverse Effect 
Wage Rate (AEWR) which typically covers several states with a single 
wage rate--which would allow employers to deviate from identified 
worksites as long as they pay workers at least the established rate. 
The Department recognizes that the uncertainties inherent in 
reforestation can make it difficult to determine if and where employees 
will be working as conditions change during the contract period. That 
is an issue about the amount of work available, not the wages to be 
paid. The Department notes that in situations where projects stretch 
across multiple counties or states with different prevailing wages, the 
employer can avoid this complexity by paying the highest of the 
prevailing wages of those areas, which is similar to paying to a 
regional wage, such as the AEWR. Prevailing wage rates for forestry 
work are generally the same across contiguous counties--and frequently 
noncontiguous counties--in the same State.
    The Department has concluded that it is not feasible or desirable 
to establish regional wage rates for particular industries in the H-2B 
program. The prevailing wage rates are locality-based in order to 
prevent adverse effect on U.S. workers. The Department believes that 
using a regional wage rate could result in an arbitrary rate not based 
on labor market conditions. U.S. workers in some localities might make 
more than this rate, in which case the prevailing wage would suppress 
U.S. worker earnings, while U.S. workers in other localities might earn 
less than the H-2B workers earning the regional rate.
3. Other Alternatives
    One commenter noted that the NPRM indicated that H-2B workers 
comprise a small proportion of the U.S. labor force--less than 1 
percent of most job categories--and that since most of those positions 
are low skilled and low paid, it follows that U.S. workers occupy 99 
percent of highest paying jobs in any given category. Based on this 
conclusion, the commenter proposed that to prevent adverse effect on 
the wages of U.S. workers, the prevailing wage should be based on the 
BLS 10th percentile wage estimate for the occupation in the area of 
employment. The commenter further noted that this would keep the H-2B 
workers in the lowest 10 percent of the wage category and the U.S. 
workers in the highest 90 percent of the wage category, therefore 
avoiding any adverse effect on the wages or working conditions of U.S. 
workers.
    While the Department appreciates the suggestion for avoiding the 
adverse effect on similarly employed U.S. workers, this commenter's 
proposal reflects a misunderstanding of the purpose behind the change 
in prevailing wage methodology. The Department's role in the H-2B 
program is not to determine the wages of H-2B workers, per se, but 
rather to set an appropriate prevailing wage--a floor--for the job 
opportunity that will ensure no adverse

[[Page 3465]]

effect on the wages of U.S. workers who are similarly employed or who 
could be similarly employed. As discussed earlier, the Department must 
set a prevailing wage that assures that U.S. workers who might be 
interested in a job will be paid a wage that approximates the wages 
available to other U.S. workers in the same occupation. Only if there 
are insufficient U.S. workers to fill that job at that wage may H-2B 
workers be hired to make up the labor shortfall.
4. Piece Rates
    Several commenters in the seafood processing industry proposed that 
in light of the prevailing practice in the industry in which workers 
are paid a piece rate based on production, the Department should permit 
employers to pay a piece rate based on production for the production-
based work and a prevailing wage rate for all non-processing work. The 
Department notes that it does not prohibit incentive piece rates, 
provided that the piece rates produce earnings that meet the required 
prevailing wage.
    Having considered the proposed alternatives, the Department has 
concluded that none would satisfactorily effectuate the Department's 
objective of ensuring that wages and working conditions of U.S. workers 
are more adequately protected than under the current prevailing wage 
determination process, while maintaining an efficient and consistent 
administrative process. The Department believes the alternatives 
proposed would at worst reduce and at best not improve the efficiency 
and consistency of the prevailing wage determination process, or would 
directly or indirectly adversely effect the wages of U.S. workers who 
might take H-2B jobs. Finally, the Department must ensure that in the 
H-2B program the wages offered to H-2B workers and U.S. workers 
recruited under H-2B job orders are the same wages and terms of 
employment offered to U.S. workers recruited by employers not 
participating in the H-2B program, that is, are the prevailing wages. 
Any method that results in offering H-2B workers lower than average 
wages adversely affects U.S. workers responding to H-2B-related 
recruitment. Similarly, any method that results in an employer 
recruiting for job opportunities using experience requirements that are 
higher than necessary or not normal to the occupation creates 
artificial entry barriers for potentially interested U.S. workers. 
While the Department appreciates the proposed alternatives received, it 
has concluded that none of the alternatives provided better 
accomplishes the Department's policy objectives than the prevailing 
wage determination method contained in the Final Rule.

F. Elimination of Private Wage Surveys

    The Department received a wide range of comments about its proposal 
to eliminate employer-provided surveys from the prevailing wage 
determination process in the H-2B program. Some commenters supported 
the Department's proposal, some opposed it, and others sought to 
retain, but modify, the employer-provided survey review process.
    The commenters supporting the Department's proposal to eliminate 
employer-provided surveys cited reasons including increased clarity and 
efficiency in the prevailing wage determination process; elimination of 
a wage source with inconsistent quality and accuracy; less uncertainty 
related to compliance; elimination of redundancy with the work the 
Department already performs in collecting vast amounts of 
representative wage data; and successful experience with OES. One 
commenter specifically noted that the Department's progress in 
consolidating prevailing wage determination processing in one national 
center and the resulting increased consistency supports eliminating 
employer-provided surveys as inefficient and unnecessary. While several 
commenters asserted that the only way to determine the wage where there 
is no adverse impact on U.S. workers is through surveys, either 
conducted by the employer or the Government, one commenter further 
opined that the Government was in a better position to gather wage 
information and undertake wage surveys than a private employer.
    In contrast, commenters opposed to the Department's proposal to 
eliminate employer-provided surveys argued that the value of private 
surveys in the prevailing wage determination process justifies the 
administrative cost. Many of the commenters who wished to retain the 
employer-provided survey review process acknowledged that the current 
process was not workable in a time-sensitive program like H-2B, 
contending that more employers would use employer-provided surveys if 
the survey submission process was more user-friendly and survey review 
requirements were not so strict. The commenters who wished to retain, 
but modify, the employer-provided survey review process offered a 
variety of suggestions to do so. Some commenters suggested shifting 
review of private surveys to a disinterested third-party, with the cost 
of such review borne by the industry sponsoring the survey. One 
commenter suggested the Department require surveys to be conducted by a 
reliable third party, such as a state agency, or to be ``peer 
reviewed.'' Some commenters suggested the Department make approved 
employer-provided surveys available for use by all employers with the 
same occupation within the same area of intended employment. Other 
commenters suggested simplifying private survey submission instructions 
(but did not offer suggestions about how to do this), while others 
suggested revising the review criteria.
    After reviewing all of the comments on the employer-provided survey 
review process, the Department concludes that the prevailing wage rate 
is best determined through reliable Government surveys of wage rates, 
rather than employer-provided surveys that employ varying methods, 
statistics, and surveys. The Department has concluded that using only 
CBA, SCA, DBA, and OES to determine the prevailing wage is the most 
consistent, efficient, and accurate means of determining the prevailing 
wage rate for the H-2B program. The Department acknowledges, as it did 
in the preamble to the NPRM, that some private surveys may provide 
useful information. However, the Department agrees that employer-
provided surveys, generally, are not consistently reliable. To 
illustrate, many H-2B employers in the ski industry and the crab 
processing industry in FY 2009 attempted to use surveys that did not 
meet the basic criteria outlined by the 2005 Prevailing Wage Guidance, 
but which had been previously accepted by the SWAs. Moreover, employers 
typically provide private surveys when the result is to lower wages 
below the prevailing wage rate. Such a result is contrary to the 
Department's role in ensuring no adverse impact. While the Department 
appreciates commenters' suggestions for alleviating the Department's 
administrative costs, the Department will not endorse specific private 
surveys in the H-2B program, in part because of the comprehensive 
public surveys available to calculate the prevailing wage, and in part 
to avoid the administrative inefficiency of endorsing surveys that 
frequently change. The Department believes the values commenters 
identified, including expedience, consistency, fairness, and accuracy, 
are best accomplished by using CBA, SCA, DBA, and OES wages, not 
employer-provided surveys. Moreover, the Department has

[[Page 3466]]

concluded that the use of CBA, SCA, DBA, and OES wages will not only 
protect U.S. worker wages, but also will simplify the H-2B process for 
both the Department and employers.\21\ Given the quality of the three 
public wage data sources the Department will use and the Department's 
interest in providing accurate and consistent prevailing wage rates on 
a fast turn around, the cost of reviewing such private surveys far 
outweighs their usefulness in the H-2B program.
---------------------------------------------------------------------------

    \21\ The Department has so far retained the use of private 
surveys in both the H-1B and the PERM programs. The H-1B program 
statutorily requires the use of some level of alternate information. 
While we may well in future review the use of private surveys in the 
PERM program, the Department has decided that this rule is not the 
vehicle in which to perform this activity.
---------------------------------------------------------------------------

    Several submissions, including two from employers and one from an 
individual, suggested that the wage surveys used to determine H-2B 
prevailing wages should only sample temporary workers. However, a wage 
survey of temporary workers may include workers who provide short-term 
services to fill in for sick or vacationing employees, while H-2B 
workers essentially become full-time workers for the entire period of 
need which may last for most of the year. Moreover, limiting the survey 
universe in this way would produce results inconsistent with the 
Department's responsibility to prevent the employment of temporary 
foreign workers under the H-2B program from adversely impacting U.S. 
workers, regardless of whether the U.S. workers are temporary or 
permanent. The sole use of temporary workers' wages would depress 
prevailing wage calculations, applying substantial downward pressure on 
wages for similar, permanent work within the region. Therefore, the 
Department will continue to use wage surveys that include permanent 
workers.
    One commenter expressed concern that eliminating employer-provided 
surveys made Board of Alien Labor Certification Appeals (BALCA) review 
an insufficient legal recourse for employers, in that the review would 
evaluate only whether the Department had made an error in position 
classification rather than prevailing wage rate accuracy. It is correct 
that BALCA review will not permit the introduction of private surveys 
to challenge the determination; this is a necessary corollary to the 
elimination of private surveys in the program, and is a necessary 
product of the limitations upon BALCA as an administrative appellate 
unit charged with judging the Department's compliance with its 
regulations. The proposed rule does not, moreover, eliminate BALCA's 
role in the H-2B program. Employers may continue to request BALCA 
review when an employer disagrees with the Department's application of 
the prevailing wage determination process at 20 CFR 655.11(e).
    Several commenters suggested that some jobs in some industries are 
so unique that they are not represented by any SOC classification or 
are so remotely located that OES wage data is too broad to produce a 
realistic wage rate. These commenters suggested that surveys other than 
OES are necessary to accurately assess prevailing wages for these 
unique or remote jobs. The Department believes, however, that almost 
every job opportunity is effectively captured in the OES or the SCA or 
DBA wage determination rates and remote locations are effectively 
incorporated into the areas of intended employment reported in these 
wage sources.
    The crab processing industry's crab picker occupation was cited by 
many commenters, including the Chief Counsel for Advocacy, SBA, for 
instance, as an example of the mismatched job in OES. Others cited the 
ski instructor for a mismatched job classification. Under the OES, crab 
pickers are classified as Meat, Poultry, and Fish Cutters and Trimmers. 
The selection of this category when setting up the SOC was not 
inadvertent as evidenced by the crosswalk from the predecessor 
categorization, the Dictionary of Occupational Titles (DOT) from the 
job occupation of ``crab meat processor'' (DOT title 525.687-126) to 
the O*NET job classification of Meat Cutters. While specific duties of 
a crab picker are not included in the OES classification, a crab picker 
is an appropriate fit within that classification, since removing the 
meat from cooked crabs and sorting into categories (backfin, claw, 
etc.) for packaging and sale, as the job is described by many employers 
in that industry, could be easily encompassed by the duties outlined in 
the O*NET job classification of the meat cutter.\22\ The existence of a 
job in the DOT, and its mapping to an SOC code as evidenced in the 
crosswalk from DOT to SOC, is an objective demonstration that the 
Department deliberately considered and aligned that job to an SOC code, 
making the SOC code now in use equivalent for these purposes to the 
former job description in the DOT. The Department further notes that 
SOC code classification modifications may be requested through a 
process administered by the BLS that is specifically established for 
that purpose, in which members of the public, included affected 
industries, may participate. We encourage employers believing that the 
SOC code in which their position has been classified is not 
representative to participate in this established process.\23\
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    \22\ As defined in O*NET, the classification includes the 
following tasks: Using knives, cleavers, meat saws, bandsaws, or 
other equipment to perform meat cutting and trimming; cutting and 
trimming meat to prepare for packing; obtaining and distributing 
specified meat or carcass; and separating meats and byproducts into 
specified containers and seal containers.
    \23\ See http://www.bls.gov/soc/revisions.htm.
---------------------------------------------------------------------------

    One commenter suggested that some private surveys sometimes produce 
results below the Federal, State, or local minimum wages and have been 
used as a mechanism to lower H-2B wages to a level that displaces U.S. 
workers and adversely affects U.S. workers' wages and working 
conditions. Two commenters suggested that the Department, by accepting 
employer-provided surveys, would be authorizing the payment of wage 
rates lower than the prevailing wage rate as determined by reliable 
Government sources. One commenter argued that allowing private surveys, 
with wages below the prevailing wage rate, impedes the upward pressure 
on wages that would otherwise occur in a labor shortage situation. 
Similarly, other commenters asserted that acceptance of employer-
provided surveys in industries or occupations dominated by temporary 
workers results in a stagnant and inaccurate prevailing wage rate. Yet 
another commenter suggested that employer-provided surveys undermine 
the consistency of prevailing wage rates in the program.
    The Department agrees that employer-provided surveys, generally, 
are not consistently reliable. Wage surveys that find that some 
employers are paying rates higher than the Department's prevailing wage 
determination do not require review; employers are always able to pay 
higher than the required prevailing wage rate. The Department believes 
that administrative resources are not best spent on reviewing employer-
provided surveys, especially when such surveys are provided typically 
to avoid using a survey that produces a higher wage. The Department, 
however, acknowledges that there are some very specific situations in 
which a survey can provide information to which the Department does not 
currently have access. For example, there are geographic locations that 
are not included in BLS' data collection area

[[Page 3467]]

(such as the Commonwealth of the Northern Mariana Islands (CNMI)). 
Where there is no data from which to determine an OES wage and where 
there are no applicable CBA, DBA or SCA wages, employers in those 
locations will continue to have the opportunity to submit wage surveys.
    The Department also acknowledges that there may be other very 
limited circumstances in which an employer-provided wage survey may be 
potentially appropriate. This would occur where the employer is able to 
demonstrate it cannot use a collective bargaining agreement wage 
because it is not a party to a CBA, and cannot use a DBA wage, an SCA 
wage, or an OES wage because the job opportunity is not accurately 
represented within the job classification used in those surveys. In 
this regard, we are also mindful that the migration to SOC codes was 
not a perfect match in every case. The Department is particularly aware 
of the use of the generalized set of occupations as ``all other'' 
categories in the SOC, in which a meaningful comparison to the DOT 
becomes more problematic. Accordingly, to show that a job opportunity 
is not accurately represented within the SOC job classification system, 
an employer must demonstrate that the job opportunity was not in the 
DOT or if the job opportunity was in the DOT, the crosswalk from the 
DOT to the SOC Codes places the DOT job in an ``all other'' category in 
the SOC. Accordingly, the employer must demonstrate that the job 
entails job duties which require knowledge, skills, abilities, and work 
tasks that are significantly different than those in any SOC 
classification other than with the ``all other'' category.\24\
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    \24\ We received a number of comments from the ski industry 
seeking the opportunity to continue to use the surveys it has 
submitted in the past. Whether ski instructors qualify under this 
standard will be assessed when and if a request is submitted under 
this regulation.
---------------------------------------------------------------------------

    Employers should submit a request to use a private survey no later 
than 180 days before the initiation of planned recruitment. This will 
provide the Department with enough time to analyze the job duties 
submitted and request additional information. Job titles are not used 
consistently among employers, and the Department will conduct a careful 
review of the duties, activities and tasks associated with the job 
opportunity to determine whether the employer's assessment of how the 
job opportunity was treated under the DOT is accurate and whether the 
job is actually significantly different than any job described in the 
SOC classification other than with the ``all other'' category. If the 
Department concludes that it is appropriate to allow the submission of 
a survey, the employer will then be permitted to submit its survey for 
evaluation to ensure that it meets the Department's standards for the 
validity of the statistical methodology and the reliability of data. 
There will be no appeal from the determination of qualifying for use of 
a private survey, although there can be an appeal from the 
acceptability of the prevailing wage determination itself. The 
Department will issue revised Prevailing Wage Guidance, including 
changes necessary to conform to this regulation. This includes the 
requirement that any survey instrument submitted cannot include the 
wages of H-2B workers or other nonimmigrant workers in calculating the 
wages. The Department has added this requirement to ensure that wages 
of H-2B workers do not establish the parameters by which the wages of 
all workers would be measured, as this could have the net effect of 
creating a permanent subset of lower wages in that occupation or area 
of employment.
    A number of commenters expressed concern that there is currently no 
alternative mechanism for labor organizations, worker advocate 
organizations, or other worker representatives to submit alternative 
surveys supporting higher wage rates. In none of our immigration 
programs has the Department ever permitted entities other than the 
employer to submit prevailing wage surveys. We have found no 
justification for departing from this practice.

G. Multiple Worksite Wage Methodology

    The Department received comments from individual employers, labor 
unions, worker advocate groups, and a Congressional committee proposing 
that we revise the current process for determining wage requirements in 
those occupations that consist of employment in multiple locations 
under an approved labor certification. These commenters suggested that 
the Department require an employer to pay the highest prevailing wage 
rate out of all the areas of employment in which workers will be 
assigned for all the work performed throughout the itinerary. Many of 
these commenters stated that such a change is needed to prevent 
employers from exploiting wage rates in the most economically depressed 
labor markets. However, historically, the Department has required that 
employers pay workers the prevailing wage rate for the job opportunity 
in the area of intended employment, as this is the most effective way 
to avoid adverse effect in that area. All proposed and existing wage 
calculations, whether based on the provisions of the SCA, DBA, OES, or 
applicable Federal, State, or local laws, are determined based on the 
area of intended employment. Revising the requirement to create a 
single wage determination regardless of the actual area of intended 
employment would be contrary to how the Department has determined and 
applied wage calculations for the H-2B program. The Department does not 
believe that there is a need at this time to revise this long-standing 
provision. Additionally, the Department in no way intends to hinder an 
employer's ability to pay its H-2B and U.S. workers the highest 
prevailing wage rate for the areas in which they will be assigned for 
all the work to be performed under the H-2B application, if it so 
desires.
    Along similar lines, a commenter in the forest industry suggested 
the use of a regional wage methodology linking a number of worksites on 
an itinerary over a wide geographic area. The commenter takes no 
position on whether such a methodology would be appropriate for H-2B 
employers in other industries and occupations besides the forestry-
related industry. Though the Department appreciates this suggestion, it 
has concluded that the SCA and OES provide various forestry occupations 
enough flexibility to accommodate the job opportunities in each area of 
intended employment. As discussed above, the Department has a history 
of determining wages based on the area of intended employment and we 
are not adopting alternative methodologies that would revise that 
position.

III. 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 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

[[Page 3468]]

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.
    OMB has determined that this Final Rule is an economically 
significant regulatory action under section 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 Final Rule.
1. Need for Regulation
    The Department has determined that a new wage methodology is 
necessary for the H-2B program. Although many commenters supported the 
Department's proposal, others questioned the Department's decision to 
change the methodology for determining the prevailing wage rate. The 
Department's decision to evaluate the prevailing wage, however, aligns 
with the Department's mandate under the H-2B program to ensure that 
U.S. workers are not adversely affected by the employment of H-2B 
workers. The order in the recent court decision in CATA v. Solis merely 
prompted a more expeditious review of this important issue. As noted in 
the NPRM, the Department has grown increasingly concerned that the 
current calculation method of the prevailing wage rate does not 
adequately reflect the appropriate prevailing wage necessary to ensure 
that U.S. workers are not adversely affected by the employment of H-2B 
workers. Some commenters stated that the Department lacked the data to 
support this decision. The Department analyzed the breakdown of wages 
by OES level of 4,694 submitted requests for prevailing wages (all 
requests submitted from the inception of the electronic PWD request 
submission system on January 21, 2010 to November 7, 2010). According 
to this analysis, 74 percent of H-2B positions were certified at the 
Level I wage rates during that period. The percentages of H-2B 
positions certified at Levels II, III, and IV were 10.5, 8.2, and 6.9, 
respectively. In approximately 96 percent of the cases, the wage rates 
certified for the H-2B positions were lower than the mean of the OES 
wage rates for the same occupation. The Department therefore asserts 
that a reevaluation of the current prevailing wage determination 
methodology is empirically justified.
    The Final Rule defines the prevailing wage to be the highest of: 
(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 a union 
and an employer; (2) the wage rate established under the DBA or the SCA 
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 OES-reported wage. The 
OES wage level under the new methodology would effectively result in 
the payment of higher wages that would conform more closely to the 
wages paid by non-H-2B employers according to the results of the OES 
survey. Thus, it is the Department's position that when the certified 
prevailing wage is based on the OES survey, using the arithmetic mean 
will ensure that H-2B workers are paid a wage that will not adversely 
affect the wages of U.S. workers similarly employed.
2. Economic Analysis
    The Department's analysis below compares the expected impacts of 
this Final Rule to the baseline (i.e., the 2008 Final Rule). According 
to the principles contained in OMB Circular A-4, the baseline for this 
rule would be the situation in which the proposed rule is not adopted. 
Thus, the baseline for this H-2B prevailing wage regulation is the 
four-tier wage structure derived from the OES wage survey, as outlined 
in the 2008 Final Rule.
    The change in the method of determining prevailing wages under this 
Final Rule will result in additional compensation for both H-2B workers 
and U.S. workers hired in response to the required recruitment. In this 
section, the Department discusses the relevant benefits, costs, and 
transfers that may apply to this Final Rule.\25\
---------------------------------------------------------------------------

    \25\ For the purpose of this analysis, the Department considers 
H-2B workers as temporary residents of the U.S.
---------------------------------------------------------------------------

    This Final Rule changes the OES component of the prevailing wage 
determination to the arithmetic mean of the OES wages for a given area 
of employment and occupation. This Final Rule requires employers to 
offer H-2B workers and U.S. workers hired in response to the required 
H-2B recruitment a wage that is at least equal to the highest of the 
prevailing wage, or the Federal, State or local minimum wage. Under the 
Final Rule, the prevailing wage is the highest of the following: (1) 
The wage rate set in a CBA, if the job opportunity is covered by a CBA 
that was negotiated at arms' length between a union and an employer; 
\26\ (2) the wage rate established under the DBA or the SCA for the 
occupation in the area of intended employment, if the job opportunity 
is in an occupation for which a wage rate has been determined; or (3) 
the arithmetic mean of the OES-reported wage.
---------------------------------------------------------------------------

    \26\ 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 in the CBA would be the required 
wage. Accordingly, including the wage rate set forth in the CBA in 
the definition of prevailing wage will not result in an increased 
cost to the employer.
---------------------------------------------------------------------------

    With two exceptions, noted below, the Department calculated the 
change in hourly wages by matching the OES arithmetic mean wage rates 
to the H-2B data by the standard occupational classification (SOC) code 
and the metropolitan statistical area (MSA) of employment. We also 
matched the SCA and DBA wage rates (exclusive of fringe benefits) to 
the H-2B data using the occupational title specified in the H-2B 
program data and the county of employment.\27\ For some occupations and 
counties, SCA and DBA wages had not been determined; in those cases, 
the SCA and DBA wages did not enter our calculations. In the 
Department's experience under the H-2B program, the work of landscape 
laborers generally involves grounds maintenance of the kind contained 
in SCA and OES job descriptions. Construction related landscaping--the 
construction of planters, walkways and similar structures as part of 
building construction projects as used in DBA job descriptions--is 
rarely applicable to H-2B employment. Accordingly, either SCA or OES 
rates were used to estimate costs for landscape laborers. Similarly, 
SCA job descriptions are generally more reflective of H-2B 
reforestation occupations than are OES job descriptions; therefore, SCA 
wage rates were used to estimate the effect of the Final Rule on 
reforestation employers. This analysis is based on job titles rather 
than actual job duties. After implementation, the Department will 
closely compare the job duties listed on the Application to the job 
duties listed in the SOC, SCA Dictionary of Occupation Titles and the 
DBA wage determinations to identify the most appropriate basis for 
determining the prevailing wage.
---------------------------------------------------------------------------

    \27\ Once this Final Rule is effective, the prevailing wage will 
be determined not by comparing job titles, but by comparing job 
duties listed on the employer's application with the occupational 
definitions in the SOC (for OES), the Dictionary of Occupational 
Titles (for SCA), or the DBA wage determination.
---------------------------------------------------------------------------

    Using certified and partially certified applications in the H-2B 
program data, we calculated the increase in wages by selecting the 
highest wage among the OES arithmetic mean, the SCA, and DBA wage. We 
then subtracted the average H-2B hourly wage certified from the highest 
of the three wages, and we weighted this differential by the

[[Page 3469]]

number of certified workers on each certified or partially certified 
application.\28\ We then summed those products and divided the sum by 
the total number of certified workers from the certified or partially 
certified applications.\29\ Based on this calculation, we estimate that 
the change in the method of determining wages will result in a $4.83 
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 H-2B application.
---------------------------------------------------------------------------

    \28\ The Department weighted the wage differentials by the 
number of certified workers as opposed to the number of workers 
requested because a decrease in number of workers granted may occur 
for reasons other than that a U.S. worker was hired in response to 
the recruitment.
    \29\ In all wage calculations where we found that the baseline 
H-2B wage is higher than any alternative wage considered, we assumed 
that the baseline wage prevails. That is, we assumed that the wage 
increase is zero for those cases. This situation, however, is rare; 
the baseline prevailing wage exceeded the OES mean in approximately 
4 percent of the cases.
---------------------------------------------------------------------------

    This approach for calculating the expected changes in hourly wages 
relative to the baseline is more accurate than the approach the 
Department used in the analysis presented in the NPRM in two ways. 
First, the calculations presented in this analysis use the highest wage 
among the OES arithmetic mean, the SCA, and DBA wages.\30\ In the 
analysis presented in the NPRM, the SCA and DBA wages were not directly 
accounted for in these calculations. Second, the calculations presented 
in this analysis use wage data for each MSA or county where the H-2B 
work actually took place.\31\ In the analysis presented in the NPRM, on 
the other hand, the Department used the national values rather than 
location-specific data.
---------------------------------------------------------------------------

    \30\ These are hourly wage rates and do not include fringe 
benefits.
    \31\ A recent Congressional Research Service (CRS) report used a 
wage calculation approach that is similar to that used in this Final 
Rule. The report found that the SCA and DBA wage rates are in some 
cases higher than the OES arithmetic mean for a given job 
opportunity. This is consistent with the findings of the analysis 
conducted for this Final Rule. The CRS report, however, did not rely 
on wage data for each county where the work actually took place. 
Also, the CRS report was limited to a selected group of occupations 
and counties. Source: ``Potential Impact of Proposed Regulations on 
the Wages of H-2B Workers,'' Congressional Research Service, October 
2010.
---------------------------------------------------------------------------

    More specifically, because the employer's address frequently does 
not represent the area where the work actually takes place, the 
Department conducted a manual extraction of area-of-employment data 
from the submitted H-2B applications, including the city, state, and 
zip code corresponding to the area of employment. The Department used a 
random sample of 500 certified or partially-certified applications from 
Calendar Year (CY) 2009 H-2B program data.\32\ The $4.83 increase in 
the weighted average hourly wage for H-2B workers (and U.S. workers 
hired in response to the recruitment required as part of the H-2B 
application) was calculated using this data sample.
---------------------------------------------------------------------------

    \32\ The Department's program database does not collect city and 
zip code data for the work locations for the certifications. 
Therefore, in order to extract that data, the Department hand-
selected a random sample from the CY 2009 filed applications to 
calculate the wage increases. The Department used CY 2009 as a 
representative year. Although some commenters suggested that FY 2009 
was not a representative year for use of the H-2B program, the 
random sample chosen was consistent with standard statistical 
methods. Further, the Department selected the data from the calendar 
year rather than the fiscal year to allay such concerns, but at the 
same time, represent the most recent data available.
---------------------------------------------------------------------------

    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 are H-2B 
employers. Under the higher wage obligation defined in the Final Rule, 
those employers who participate in the H-2B program are likely to be 
those that have the greatest need to access the H-2B program. When 
summarizing the benefits, costs, or transfers of this rule, we present 
the 10-year averages to reflect the typical annual effect.\33\
---------------------------------------------------------------------------

    \33\ The 10-year analysis period starts on January 1, 2012 and 
ends on December 31, 2021 since the Final Rule is effective for 
wages paid to H-2B workers and U.S. workers recruited in connection 
with an H-2B labor certification for all work performed on or after 
January 1, 2012.
---------------------------------------------------------------------------

    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; assuming that half of all entering 
workers stay at least one additional year, and half of those workers 
stay a third year, H-2B workers represent approximately 0.09 percent of 
total U.S. nonfarm employment (130.9 million).\34\
---------------------------------------------------------------------------

    \34\ For this and subsequent calculations, we used an estimated 
total of 115,500 H-2B workers because 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) but 
employers can hire H-2B workers with existing visas for two 
additional years. Assuming 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, there will be a total of 
115,500 H-2B workers in a given year. That is, in our calculations, 
we use 66,000 as the annual number of new entrants and 115,500 as 
the total number of H-2B workers in a given year during the 10-year 
time horizon. Source: ftp://ftp.bls.gov/pub/suppl/empsit.ceseeb1.txt.
---------------------------------------------------------------------------

    According to H-2B program data for FY 2007-2009, the average annual 
numbers of H-2B workers certified in the top five industries \35\ 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 we scale these figures 
in accordance with the 66,000 cap, these certifications yield 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).\36\ Thus, as these data illustrate, the H-
2B program represents a relatively small fraction of the total 
employment, even in each of the top five industries in which H-2B 
workers are found.
---------------------------------------------------------------------------

    \35\ One industry, forestry services, made the initial top-five 
list based on the number of H-2B workers certified; however, the 
employment data was insufficient to include it in this section. Data 
on employment size and business revenue were available for forestry 
and, thus, this industry is included in the Regulatory Flexibility 
Analysis at section B of this Administrative Information section.
    \36\ 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 
(49.8 percent) was derived by dividing 115,500 by the total number 
of workers certified per year on average during FY 2007-2009 
(236,706).
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    In the remaining sections of this analysis, we first present the 
costs resulting from the Final Rule, including an increase in H-2B 
employer expenses that could lead to a decrease in production. The 
Department predicts that most of these costs, which would result from a 
decrease in current H-2B participation by employers who cannot afford 
the increased labor costs or who

[[Page 3470]]

can more easily fill empty positions with U.S. workers, will be borne 
by an influx of employers who have the need for additional temporary 
labor but do not currently participate in the H-2B program. We then 
discuss the transfers from H-2B workers to U.S. workers and from U.S. 
employers to U.S. and H-2B workers resulting from the change in wage 
determination methodology. Finally, we analyze a total of four 
alternatives \37\ and explain why the Department chose to eliminate the 
four-tiered OES wage structure and adopt the OES arithmetic mean absent 
a higher CBA, DBA, or SCA wage.
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    \37\ Although only four alternative arguments have undergone 
quantitative analysis in this section, there are an additional ten 
alternative suggestions that contain a qualitative discussion in 
section II.C of this Final Rule.
---------------------------------------------------------------------------

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.\38\ In addition, workers who would have been 
hired at a lower wage rate may not be hired at the higher wage rate, 
resulting in forgone earnings for workers. In this sense, to the extent 
that the higher wages imposed by the rule result in lower employment 
and lower output by firms who had employed those workers, the lost 
profits on the foregone output and the lost net wages to the foregone 
workers represent a deadweight loss. In economics, a deadweight loss is 
a loss of economic efficiency that can occur when equilibrium for a 
good or service is not optimal. This effect will be magnified during 
years in which the cap is not reached.\39\
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    \38\ Although employers may pass costs onto their customers, 
data does not exist from which to estimate the amount or extent to 
which costs would be absorbed by customers. Therefore, the 
Department was not able to quantify this cost offset.
    \39\ The output reduction impact of reducing labor demand may be 
in some cases partially offset by capital substitution and 
organizational substitution productivity effects. When substitution 
occurs, the deadweight loss will be reduced.
---------------------------------------------------------------------------

    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 are 
expected to be minimal. There has generally been excess demand for H-2B 
workers well beyond the 66,000 limit, and the Department believes that 
the increased wages resulting from the 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 were unable to secure visas for H-2B workers before the cap 
was met, and therefore operated without a complete workforce, will 
participate.
    For example, for FY 2007 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 the program to fill 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,\40\ a $4.83 (56 percent) increase in wages would 
result in a 16.8 percent decline in the number of H-2B workers 
requested by employers, for a remaining total of 196,939 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 who would then be able 
to fill previously vacant positions.
---------------------------------------------------------------------------

    \40\ See, e.g., Hamermesh, Daniel S., Labor Demand, Princeton 
and Chichester, U.K.: Princeton University Press, 1993.
---------------------------------------------------------------------------

    Thus, the Department believes that for years in which the number of 
applications exceeds the number of workers 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. Indeed, the higher wages expected to result from the 
Final Rule could in turn result in a more efficient distribution of H-
2B visas to employers who can less easily attract available U.S. 
workers. The Department 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 Final Rule goes into effect, 
so that those employers participating in the H-2B program after the 
rule is in place will be those that have a greater need for the 
program, on average, than those employers participating in the H-2B 
program before the Final Rule goes into effect. 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 wages resulting from this Final 
Rule 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 or could in 
some cases make other adjustments, such as substituting capital for 
labor; but, in a sense, the reduction in employment and output would 
not be completely offset, potentially resulting in some deadweight loss 
in production among H-2B employers. The history of the H-2B program, 
however, suggests that this situation is rare. In recent history, the 
number of H-2B visas has reached the 66,000 cap every year except FY 
2009 and FY 2010.
ii. Transfers
    The 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 wages increase, jobs that would otherwise be 
occupied by H-2B workers will be more acceptable to a larger number of 
U.S. workers. Additionally, faced with higher H-2B wages, some 
employers may find domestic workers relatively less expensive and may 
choose to not participate in the H-2B program and, instead, employ U.S. 
workers. Although some of these U.S. workers may be drawn from other 
employment, some of them may otherwise be or remain unemployed or out 
of the labor force entirely, earning no compensation.
    The Department is not able to quantify these transfer payments with 
precision, however. 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 in the U.S. in a given year 
(115,500), which includes both new entrants and an assumed portion of 
those who entered in each of the two

[[Page 3471]]

previous years,\41\ by the weighted average hourly wage increase 
($4.83), the number of hours worked per day (7), and the total number 
of days worked (217).\42\ On this basis, we estimate the total annual 
average transfer incurred due to the increase in wages at $847.4 
million. As a result, OMB has determined that the rule is an 
economically significant rule.
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    \41\ The Department's data on 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 is based 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.
    \42\ For the number of hours worked per day, we use 7 hours as 
typical. For the number of days worked, we assume that the employer 
will retain the H-2B worker for the maximum time allowed (10 months, 
or 304 days [10 months x 30.42 days]) and will 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\)].
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    The increase in the wage rates induces a transfer from 
participating employers not only to H-2B workers, but also to U.S. 
workers hired in response to the required H-2B 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 and, therefore, generates employment in the community. These 
are important concerns and a key aspect of the Department's mandate to 
ensure that wages of similarly employed U.S. workers are not adversely 
affected.\43\
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    \43\ An additional transfer noted by a commenter is increased 
remittances to the worker's home country. The Department, however, 
does not have data on the remittances made by H-2B workers to their 
countries of origin.
---------------------------------------------------------------------------

    Several commenters indicated that the increase in the wages of H-2B 
workers could impact the career ladder established by H-2B employers 
for non-H-2B employees. The Department recognizes that career ladders 
of non-H-2B workers could potentially be impacted by the wage increase 
but is unable to quantify that impact because of the lack of data to 
ascertain the degree to which H-2B employers will react by increasing 
wages for their other workers.
    Similarly, our calculations do not include the wage increase of 
U.S. workers hired in response to the required recruitment because of 
lack of data on these workers.
3. Alternatives
    Several commenters proposed alternatives to the wage calculation 
methodology. In response to these comments, the Department analyzed the 
following wage calculation alternatives: (1) To continue the current 
calculation methodology but provide a more complete justification for 
doing so; (2) to eliminate the four tiers and use the OES arithmetic 
mean as the OES component of the prevailing wage determination; (3) to 
eliminate the four tiers and use the OES median as the OES component of 
the prevailing wage determination; and (4) use the proposed 
methodology--alternative 2--but require the provision of fringe 
benefits.
    The Department conducted economic analyses of the four alternatives 
to better understand their impacts. Below is a discussion of each 
alternative along with an estimation of their associated transfers. 
Transfers for each alternative use the 2008 Final Rule as the baseline. 
In addition, for each alternative that was not chosen, we include a 
discussion on why the alternative was not chosen. Finally, we summarize 
the total transfers associated with each alternative considered.
i. Continue the Current Calculation Methodology
    This alternative was espoused by several commenters, including the 
Chief Counsel for Advocacy, SBA. For the reasons discussed throughout 
this Final Rule, continuing the current calculation methodology that 
relies on the four tiers does not provide adequate protections to U.S. 
and H-2B workers. The existing procedure for extracting tiered wages 
from the basic OES wage survey data was adopted without any systematic 
effort to determine if that system was empirically justified. The OES 
wage surveys collect no data about the skill levels or duties performed 
by the workers at any particular wage level. Although lower wages may 
be associated with lower skill levels and responsibilities in 
professional occupations, there is no evidence to suggest that such a 
relationship exists in the lower skilled occupations that predominate 
in the H-2B program. Even if there were some evidence of the existence 
of skill-based wage differences with these occupations, the OES survey 
does not purport to capture such differences. In the absence of such 
information, our responsibility to set wage rates that avoid adverse 
effect on wages compels us to use the highest of the SCA or DBA rates, 
the wage established under an existing CBA, or the OES arithmetic mean 
wage as the principal wage-setting tool. The cost associated with this 
alternative is zero because it represents the baseline, that is, the 
alternative where no action is taken by the Department. The Department, 
therefore, rejected this alternative.
ii. Eliminate the Four Tiers and Use the Highest of the Wage Rates Set 
Forth Under the CBA, DBA, SCA, or OES Arithmetic Mean
    This alternative is the method required by the Final Rule which 
defines the prevailing wage to be the highest of: (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 a union and an employer; (2) the 
wage rate established under the DBA or the SCA 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 OES-reported wage. This alternative represents 
the policy that will best achieve the Department's policy objectives of 
ensuring that wages and working conditions of U.S. workers are more 
adequately protected and, thus, will not be adversely affected by the 
admission of H-2B workers to the country.
    As discussed above, the elimination of the four tiers and the use 
of the highest of the wage rates set forth under the CBA, DBA, SCA, or 
OES where the arithmetic mean would constitute the OES wage rate will 
result in a total annual average transfer of $847.4 million to H-2B 
workers.
iii. Eliminate the Four Tiers and Use the Highest of the Wage Rates Set 
Forth Under the CBA, DBA, SCA, or OES Median
    This alternative represents the elimination of the four tiers and 
the highest of the wage rates set forth under the CBA, DBA, SCA, or OES 
where the OES median constitutes the OES wage rate. To estimate the 
total transfer to H-2B workers via the increased wages resulting from 
the use of the median, we used the same methodology discussed above to 
calculate the wage differential for the OES mean. The Department 
multiplied the total number of H-2B workers in a given year (115,500), 
which includes both new entrants and an assumed portion of those who 
entered in each of the two previous years, by the weighted average 
hourly wage increase estimated using the OES median ($4.64), the number 
of hours worked per day (7),

[[Page 3472]]

and the total number of days worked (217). We estimate the total annual 
average transfer incurred due to the increase in wages represented by 
the median at $814.1 million.
    The Department rejected this methodology. Although the numbers are 
generally comparable to the arithmetic mean, the median does not 
represent the best ``average'' wage across a distribution. The median 
wage represents only the midpoint of the range of wage values; it does 
not account for the actual average. The mean is widely considered to be 
the best measure of central tendency for a normally distributed sample, 
as it is the measure that includes all the values in the data set for 
its calculation, and any change in any of the wage rates will affect 
the value of the mean. This is not the case with the median. The 
Department has traditionally relied on arithmetic means for wage 
programs and has determined that these reasons make continuing reliance 
on the mean, rather than the median, logical.
iv. Use the Proposed Methodology but Require the Provision of Fringe 
Benefits
    To estimate the total transfer to H-2B workers from the increased 
wages resulting from the elimination of the four tiers and the 
inclusion of fringe benefits, the Department multiplied the estimated 
annual number of H-2B workers (115,500), by the weighted average hourly 
wage increase represented by the DBA wages plus fringe benefits 
($7.20), the number of hours worked per day (7), and the total number 
of days worked (217). For records where DBA wages and fringes were not 
available, we used the OES mean (as calculated according to option 2) 
plus the SCA health and welfare (H&W) $3.35 flat fringe.\44\ We 
estimate the total annual average transfer incurred due to the increase 
in wages represented by the wages plus fringe benefits at $1,263.2 
million.\45\
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    \44\ Health and welfare includes life, accident, and health 
insurance plans, sick leave, pension plans, civic and personal 
leave, severance pay, and savings and thrift plans. Minimum employer 
contributions costing an average of $3.35 per hour are computed on 
the basis of all hours worked by employees employed on the contract.
    \45\ See the RFA analysis at section II.C of the Administrative 
Information section for a more descriptive analysis of the wage 
differential between DBA and fringe benefits and the prevailing wage 
under the OES mean for the construction industry.
---------------------------------------------------------------------------

    The Department historically has not required the payment of fringe 
benefits to H-2B workers, even before 2005, when the payment of DBA 
wage rates was mandatory for occupations where such wage determinations 
existed. See 75 FR 61578, 61579, Oct. 5, 2010 (``Wage Methodology for 
the Temporary Non-Agricultural Employment H-2B Program'' Proposed 
Rule). Under this Final Rule, the Department will again certify the DBA 
wage as the prevailing wage rate that must be paid to H-2B workers if 
those rates are the highest in those occupations in the area of 
intended employment among the rates listed in Sec.  655.10. For H-2B 
positions for which the DBA wage is not applicable, the Department 
believes that not requiring fringe benefit payments is an appropriate 
reflection of the Department's historical practices. As previously 
noted, fringe benefits costs have never been included in H-2B wage 
determinations. The Department reaffirms its belief that requiring 
fringe benefit payments to H-2B workers is not necessary in order to 
prevent an adverse effect on the wages and working conditions of U.S. 
workers.
v. Summary of Alternatives Analyzed Quantitatively
    Exhibit 1 below summarizes the total 10-year transfers incurred for 
the wage methodology alternatives discussed above relative to the 
baseline. The 10-year analysis period starts on January 1, 2012 \46\ 
and ends on December 31, 2021. The alternative of regional SCA wages 
applies to forestry workers only. We use discount rates of 7 and 3 
percent to estimate the transfers over the 10-year analysis period.
---------------------------------------------------------------------------

    \46\ The Final Rule is effective for wages paid to H-2B workers 
and U.S. workers recruited in connection with an H-2B labor 
certification for all work performed on or after January 1, 2012.
[GRAPHIC] [TIFF OMITTED] TR19JA11.048

[[Page 3473]]

B. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) at 5 U.S.C. 603 requires 
agencies to prepare a regulatory flexibility analysis to determine 
whether a regulation will have a significant economic impact on a 
substantial number of small entities. Section 605 of the RFA allows an 
agency to certify a rule in lieu of preparing an analysis if the 
regulation is not expected to have a significant economic impact on a 
substantial number of small entities. Further, under the Small Business 
Regulatory Enforcement Fairness Act of 1996, 5 U.S.C. 801 (SBREFA), an 
agency is required to produce compliance guidance for small entities if 
the rule has a significant economic impact. For the reasons explained 
in this section, the Department believes this Final Rule is not likely 
to impact a substantial number of small entities and, therefore, a 
final regulatory flexibility analysis is not required by the RFA. 
However, in the interest of transparency, we have prepared the 
following Final Regulatory Flexibility Analysis to assess the impact of 
this regulation on small entities, as defined by the applicable Small 
Business Administration (SBA) size standards.
    Employers seeking to participate in the H-2B program come from 
virtually all industries and segments of the economy and industries. 
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 small percentage 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; assuming that half of all entering 
workers stay at least one additional year, and half of those workers 
stay a third year, the 115,500 H-2B workers working in the U.S. in a 
year represent approximately 0.09 percent of total U.S. nonfarm 
employment (130.9 million).\47\
---------------------------------------------------------------------------

    \47\ Source: ftp://ftp.bls.gov/pub/suppl/empsit.ceseeb1.txt.
---------------------------------------------------------------------------

    According to H-2B program data for FY 2007-2009, the average annual 
numbers of H-2B positions certified by ETA in the top six industries 
were as follows: construction--30,242; amusement, gambling, and 
recreation--14,041; landscaping services--78,027; janitorial services--
30,902; food services and drinking places--22,948; and forestry 
services--18,387. As explained below, this Final Rule provides an 
enhanced analysis of the impact on small businesses, including 
extending the analysis to forestry services. Thus, we present analysis 
on the top six industries (rather than the top five industries 
presented in the NPRM).\48\
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    \48\ Although we were not able to obtain industry employment 
data for the forestry support services industry, we were able to 
obtain revenue and employment data for this industry from the 
business data provider ReferenceUSA. ReferenceUSA relies primarily 
on phone verification and public data sources to obtain employment 
and revenue figures for businesses of different sizes.
---------------------------------------------------------------------------

    When the actual number of entries permitted each year (given the H-
2B visa cap of 66,000 workers) is accounted for, 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).\49\ As these data illustrate, the H-2B 
program represents a small fraction of the total employment in the top 
industries in which H-2B workers are found. The Economic Census does 
not contain industry employment data for forestry support services; 
therefore, the Department is not able to calculate the percentage of 
total employment represented by H-2B workers in that industry.
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    \49\ The scale factor was derived by dividing 115,500 by the 
total number of workers certified per year on average during FY 
2007-2009 (236,706). Please see the transfer payments subsection in 
the E.O.12866 section above for a discussion of how we derived the 
number of H-2B workers in a given year (115,500).
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1. Description of the Reasons That Action by the Agency Is Being 
Considered
    The Department has determined that a new wage methodology is 
necessary for the H-2B program. The Department's decision to reevaluate 
the prevailing wage aligns with the Department's mandate under the H-2B 
program to ensure that U.S. workers are not adversely affected by the 
employment of H-2B workers. The order in the recent court decision in 
CATA v. Solis, Civil No. 2:09-cv-240-LP, 2010 WL 3431761 (E.D. Pa. Aug. 
30, 2010) merely prompted a more expeditious review of this important 
issue. As noted in the NPRM, the Department has grown increasingly 
concerned that the current method of calculating the prevailing wage 
does not produce rates that adequately reflect the appropriate wage 
necessary to ensure that U.S. workers are not adversely affected by the 
employment of H-2B workers.
    As discussed in the E.O. 12866 analysis, the Department analyzed 
the breakdown of wages by OES level of 4,694 submitted requests for a 
prevailing wage submitted this calendar year. This analysis found that 
74 percent of H-2B positions were certified at the Level I wage rates; 
the percentages of H-2B positions certified at Levels II, III, and IV 
were 10.5, 8.2, and 6.9, respectively.
    The existing procedure for extracting tiered wages from the basic 
OES wage survey data was adopted without any systematic effort to 
determine if that system was empirically justified. The OES wage 
surveys collect no data about the skill levels or duties performed by 
the workers at any particular wage level. Although lower wages may be 
associated with lower skill levels and responsibilities in professional 
occupations, there is no evidence to suggest that such a relationship 
exists in the lower skilled occupations that predominate in the H-2B 
program. Even if there were some evidence of the existence of skill-
based wage differences with these occupations, the OES survey does not 
purport to capture such differences.
    The Final Rule defines the prevailing wage to be the highest of: 
(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 a union 
and an employer; (2) the wage rate established under the DBA or the SCA 
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 OES-reported wage. The 
OES wage level under the new methodology would effectively result in 
the payment of wages that would conform more closely to the wages paid 
by non-H-2B employers according to the results of the OES survey. Thus, 
it is the Department's position that when the certified prevailing wage 
is based on the OES survey, using the arithmetic mean will not 
adversely affect the wages of U.S. workers similarly employed.
2. Succinct Statement of the Objectives of, and Legal Basis for, the 
Rule
    The Department is proposing to establish a new wage methodology 
that adequately protects the wages of U.S. and H-2B workers. The legal 
basis for

[[Page 3474]]

the rule is the Department's authority, 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 the CATA v. Solis order, which 
requires 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.'' That date was subsequently modified to 
give the Department until January 18, 2011 to promulgate the rule.
3. Description of, and Where Feasible, an Estimate of the Number of 
Small Entities to Which the 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 six industries with the largest number of H-2B 
workers, as mentioned above: landscaping services; janitorial services 
(includes housekeeping services); food services and drinking places; 
amusement, gambling, and recreation; construction; and forestry support 
services. These top six industries accounted for 82 percent of the 
total number of H-2B workers certified during FY 2007-2009.\50\
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    \50\ According to H-2B program data, the average annual number 
of firms (of all sizes) and H-2B workers certified for these 
industries during FY 2007-2009 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; construction, firms--860, workers--
30,242; and forestry support services, firms--130, workers--18,387.
---------------------------------------------------------------------------

    We have adopted the SBA small business size standard for each of 
the six 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; construction, $20.7 
million; and forestry support services, $7 million.\51\
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    \51\ 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 the 
average of $20.7 million as the size standard for construction.
---------------------------------------------------------------------------

    Several commenters expressed a concern that the Department made the 
assumption in the NPRM analysis that 50 percent of all H-2B employers 
are small businesses, asserting that this assumption was not based on 
data. In response to this concern, the Department has obtained third-
party data to improve the analysis. Specifically, to identify annual 
revenue and employment for H-2B employers, the Department used data 
from the business data provider ReferenceUSA and matched them to H-2B 
program data. ReferenceUSA relies primarily on phone verification and 
public data sources to obtain employment and revenue figures for 
businesses of different sizes.\52\
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    \52\ As stated in the NPRM, the revenue figure is part of the 
information collection but is not required for successful completion 
of the application. It has also been part of the application only 
since the implementation of the ETA-9142 in 2009. The Department 
began collecting revenue data at the behest of the SBA to be better 
able to calculate such figures but the data is at best minimal and 
sporadically provided and, in the Department's view, the data that 
we have collected is not adequately representative of revenue 
figures for employers using the program. Therefore, the Department 
has concerns about the statistical validity of the data. This is why 
the Department chose to rely on an outside source (ReferenceUSA) for 
revenue and employment data that is more comprehensive than the data 
received in program applications.
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    In order to ensure that the interests of small business were 
adequately considered, the Department assumed that all H-2B employers 
with no revenue or employment data available from ReferenceUSA are 
small.
4. Description of the Projected Reporting, Recordkeeping and Other 
Compliance Requirements of the Rule
    The rule does not impose any reporting or recordkeeping 
requirements. Other provisions in the current regulations impose those 
requirements.
    For other compliance requirements, this RFA estimates the 
incremental costs for small businesses from the baseline, that is, from 
the 2008 Final Rule. The baseline for this rule is the burden of 
participating in the program under the existing requirements, and is 
represented by a prevailing wage calculation methodology that uses the 
four tier wage structure based on the stratification of the OES survey. 
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 
(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 
results in petitions for H-2B workers that are approved by DHS. Even if 
all 6,980 applications were filed by unique small entities, the 
percentage of small entities authorized to employ temporary non-
agricultural workers would be less than 1 percent of the total number 
of small entities in the six industries with the largest number of H-2B 
workers.\53\ Based on this analysis, the Department estimates that the 
rule will impact less than 1 percent of the total number of small 
businesses in the top six industries. Because any small business could 
apply and receive certification under the program, the universe is all 
small businesses in the relevant industries that participate in the 
program. A detailed industry-by-industry analysis is provided below. 
Several commenters, including the Chief Counsel for Advocacy, SBA, 
cited two court decisions involving fishing quotas \54\ to suggest that 
the Department incorrectly over-estimated the universe of potentially 
affected businesses. Those cases are not relevant because they resulted 
from an agency decision to issue a certification that the rule in 
question did not significantly impact a substantial number of small 
businesses. The Department has not made such a certification here. That 
being said, the Department does not believe it over-estimated the 
number of potentially affected businesses based on the analysis 
presented above.
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    \53\ 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; construction, 
689,040; and forestry support services, 1,353. Source: 2002 County 
Business Patterns and 2002 Economic Census. http://www.census.gov/econ/susb/data/susb2002.html.
    \54\ Southern Offshore Fishing Association v. Daley, 97-1134-
CIV-T-23C, slip op. (Oct. 16, 1998); North Carolina Fisheries 
Association v. Daley, 27 F. Supp. 2d 650 (E.D. Va. 1998).
---------------------------------------------------------------------------

    To examine the impact of this rule on small entities, the 
Department evaluated the impact of the incremental costs on a 
hypothetical small entity of average size. We used individual employer 
revenue and employment data from ReferenceUSA to determine which 
certified or partially certified applicants were considered small by 
using the industry-specific SBA size standards. Using H-2B program 
data, the Department estimates the average number of H-2B workers for 
small

[[Page 3475]]

businesses in the top six industries at any given time are as follows: 
landscaping services, 5.8 workers; janitorial services, 6.9 workers; 
food services and drinking places, 4.2 workers; amusement, gambling, 
and recreation, 11.4 workers; construction, 6.6 workers; and forestry 
support services, 25.4 workers.\55\
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    \55\ The Department estimated that approximately 28 percent of 
certified H-2B workers are actually hired by dividing the annual H-
2B visa cap (66,000) by the total number of positions certified per 
year on average during FY 2007-2009 (236,706). We then applied this 
percentage to the number of workers certified in certifications 
granted in each of the six industries to approximate the 
distribution of the 66,000 H-2B visas by multiplying 28 percent by 
the number of workers certified for each certified or partially 
certified H-2B application.
---------------------------------------------------------------------------

    Using the data obtained from ReferenceUSA, we then derived the 
annual revenues for small entities in each of the top six industries. 
The Department estimates that small businesses in the top six 
industries have the following average annual revenues: landscaping 
services, $1.781 million; janitorial services, $4.240 million; food 
services and drinking places, $1.607 million; amusement, gambling, and 
recreation, $1.490 million; construction, $4.788 million; and forestry 
support services, $1.299 million.\56\
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    \56\ As indicated above, the SBA small business size standards 
are highest for construction and janitorial services.
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i. Change in the Method of Determining Wages for H-2B Workers
    This Final Rule requires employers to offer H-2B workers and U.S. 
workers hired in response to the required H-2B recruitment, a wage that 
is at least equal to the highest of the prevailing wage, or the 
Federal, State, or local minimum wage. Under the Final Rule, the 
prevailing wage is defined as the highest of the following: (1) The 
wage rate established 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 DBA or the SCA 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 OES-reported wage.\57\ 
This Final Rule changes the methodology for calculating the prevailing 
wage to the arithmetic mean of the OES wages for a given area of 
employment and occupation.
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    \57\ 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 in the CBA would be the required 
wage. Accordingly, including the CBA wage rate in the definition of 
prevailing wage will not result in an increased cost to the employer 
covered by the CBA.
---------------------------------------------------------------------------

    With two exceptions, noted below, the Department calculated the 
change in hourly wages by matching the OES wage rates to the H-2B data 
by the SOC and the MSA of employment. We also matched the SCA and DBA 
wage rates to the H-2B data using the occupational title specified in 
the H-2B program data and the county of employment.\58\ For some 
occupations and counties, SCA and DBA wages have not been determined; 
in those cases, the SCA and DBA wages did not enter our calculations. 
In the Department's experience under the H-2B program, the work of 
landscape laborers generally involves grounds maintenance of the kind 
contained in SCA and OES job descriptions. Construction related 
landscaping--the construction of planters, walkways and similar 
structures as part of building construction projects as used in DBA job 
descriptions--is rarely applicable to H-2B employment. Accordingly, SCA 
and OES rates were used to estimate costs for landscape laborers. 
Similarly, SCA job descriptions are generally more reflective of H-2B 
reforestation occupations than are OES job descriptions; therefore, SCA 
wage rates were used to estimate the effect of the Final Rule on 
reforestation employers. This analysis is based on job titles rather 
than actual job duties. After implementation, the Department will 
closely compare the job duties listed on the Application to the job 
duties listed in the SOC, SCA Dictionary of Occupation Titles, and the 
DBA wage determinations to identify the most appropriate basis for 
determining the prevailing wage.
---------------------------------------------------------------------------

    \58\ Once this Final Rule is effective, the prevailing wage will 
be determined not by comparing job titles, but by comparing job 
duties listed on the employer's application with the occupational 
definitions in the SOC (for OES), the Dictionary of Occupational 
Titles (for SCA), or the DBA wage determination.
---------------------------------------------------------------------------

    Using certified and partially certified applications in the H-2B 
program data, we calculated the increase in wages by selecting the 
highest wage among the OES arithmetic mean, the SCA wage determination, 
and DBA wage determination. We then subtracted the average H-2B hourly 
wage certified from the highest of the three wages, and we weighted 
this differential by the number of certified workers on each certified 
or partially certified application. We then summed those products and 
divided the sum by the total number of certified workers from the 
certified or partially certified applications.\59\ Based on this 
calculation, the change in the method of determining wages will result 
in a $4.83 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 H-2B application).
---------------------------------------------------------------------------

    \59\ In all wage calculations where we found that the baseline 
H-2B wage is higher than any alternative wage considered, we assumed 
that the baseline survey prevails. That is, we assumed that the wage 
increase is zero for those cases. This situation, however, is rare; 
the prevailing wage exceeded the OES mean in approximately 4 percent 
of the cases.
---------------------------------------------------------------------------

    This approach for calculating the expected changes in hourly wages 
relative to the baseline is more accurate than the approach the 
Department used in the analysis presented in the NPRM in two ways. 
First, the calculations presented in this analysis use the highest wage 
among the OES arithmetic mean and the SCA and DBA wage determinations. 
In the analysis presented in the NPRM, the SCA and DBA wages were not 
directly accounted for in these calculations. Second, the calculations 
presented in this analysis use wage data for each county where the H-2B 
work actually took place.\60\ In the analysis presented in the NPRM, on 
the other hand, the Department used the national values rather than 
location-specific data.
---------------------------------------------------------------------------

    \60\ A recent Congressional Research Service (CRS) report used a 
wage calculation approach that is similar to that used in this Final 
Rule. The report found that the SCA and DBA wage rates are in some 
cases higher than the OES arithmetic mean for a given job 
opportunity. This is consistent with the findings of the analysis 
conducted for this Final Rule. The CRS report, however, did not rely 
on wage data for each county where the work actually took place. 
Also, the CRS report was limited to a selected group of occupations 
and counties. Source: ``Potential Impact of Proposed Regulations on 
the Wages of H-2B Workers,'' Congressional Research Service, October 
2010.
---------------------------------------------------------------------------

    More specifically, because the employer's address frequently does 
not represent the area where the work actually takes place, the 
Department conducted a manual extraction of area-of-employment data 
from the submitted H-2B applications, including the city, state, and 
zip code corresponding to the area of employment. The Department used a 
random sample of 500 certified or partially-certified applications from 
Calendar Year (CY) 2009 H-2B program data.\61\ The $4.83 increase in 
the

[[Page 3476]]

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 H-2B application) was calculated using this data sample.
---------------------------------------------------------------------------

    \61\ The Department used the Calendar Year 2009 as a 
representative year. Although some commenters suggest that FY 2009 
was not a representative year for use of the H-2B program, the 
random sample chosen was consistent with standard statistical 
methods and was selected from the calendar year, rather than the 
fiscal year, to reach data outside the FY 2009 data while 
representing the most recent data available. Calendar Year 2009 
applications, for example, reach back to applications filed under 
the regulations in place before the 2008 Final Rule, and were filed 
using Form ETA 750. In addition, the Department's program database 
does not collect city and zip code data for the work locations for 
the certifications. Therefore, to extract that data, the Department 
hand-selected a random sample from the CY2009 filed applications to 
calculate the wage increases.
---------------------------------------------------------------------------

    These calculations yielded the following hourly wage increases by 
industry associated with this rule: landscaping services, $4.32; 
janitorial services, $5.81; food services and drinking places, $2.59; 
amusement, gambling, and recreation, $6.61; construction, $9.72; and 
forestry support services, $1.23.\62\
---------------------------------------------------------------------------

    \62\ For the number of hours worked per day, we use 7 hours as 
typical for an average. For the number of days worked, we assumed 
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\)].
---------------------------------------------------------------------------

ii. 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.\63\ 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.\64\
---------------------------------------------------------------------------

    \63\ 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.
    \64\ 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.
---------------------------------------------------------------------------

iii. Total Cost Burden for Small Entities
    This section presents the total cost burden for small entities, 
which includes both the wage cost (by far the largest component) and 
the cost to read and review the rule (applies to the first year only). 
The Department's calculations indicate that for a hypothetical small 
entity in each of the top six 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 rule are: landscaping 
services, $6,568; janitorial services, $8,832; food services and 
drinking places, $3,940; amusement, gambling, and recreation, $10,047; 
construction, $14,771; and forestry support services, $1,875.
    The analogous average annual costs for small employers in the top 
six industries that hire the average number of H-2B workers are as 
follows: landscaping services, $38,082; janitorial services, $61,286; 
food services and drinking places, $16,528; amusement, gambling, and 
recreation, $114,929; construction, $97,657; and forestry support 
services, $47,433. As a percent of revenue, these costs represent the 
following: landscaping services, 2.14 percent; janitorial services, 
1.45 percent; food services and drinking places, 1.03 percent; 
amusement, gambling, and recreation, 7.71 percent; construction, 2.04 
percent; and forestry support services, 3.65 percent.
    The Department considers that a rule has a ``significant economic 
impact'' when the total annual cost associated with the rule is equal 
to or exceeds 1 percent of annual revenue. Thus, the rule is expected 
to have a significant economic impact on the average participating 
small entity in each of the top six industries. Although applying to 
hire H-2B workers is voluntary, and any employer (small or otherwise) 
may choose 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 U.S. workers 
and H-2B workers provide a broad societal benefit that, in the 
Department's view, outweighs these costs.
    Several commenters indicated that the increase in the wages of H-2B 
workers could impact the career ladder established by H-2B employers 
for non-H-2B employees by adversely impacting the ability to pay those 
in career ladders a higher wage, thus compressing wages for supervisory 
positions. The Department recognizes that career ladders could 
potentially be impacted by the wage increase; however, a lack of data 
about the prevalence of such career ladders and the ways in which 
employers might restructure them makes any potential effect impossible 
to quantify.
    Similarly, our calculations do not include the wage increases of 
U.S. workers hired in response to the required recruitment who must be 
paid the same wages as H-2B workers because we do not have a basis for 
estimating how many of these workers are hired as a direct result of 
the recruitment effort.
    The small entities that have historically applied for H-2B workers 
represent relatively 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, 2.3 percent (1,462/63,210); janitorial services, 
1.0 percent (436/45,495); food services and drinking places, 0.1 
percent (350/293,373); amusement, gambling, and recreation, 0.4 percent 
(164/43,726); construction, 0.1 percent (358/689,040); and forestry 
support services, 6.8 percent (92/1,353).\65\ 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.
---------------------------------------------------------------------------

    \65\ The source of the numerator (i.e., the number of certified 
H-2B employers) is H-2B program data for FY 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.
---------------------------------------------------------------------------

    The Department considers that a rule has an impact on a 
``substantial number of small entities'' when the total number of small 
entities impacted by the rule is equal to or exceeds 10 percent of the 
relevant universe of small entities in a given industry. See, e.g., 73 
FR 78049, Dec. 19, 2008. The Department has used the 10 percent 
threshold in previous regulations. Therefore, this rule is not expected 
to impact a substantial number of small entities.
5. Identification of All Relevant Federal Rules That May Duplicate, 
Overlap or Conflict With the Rule
    The Department is not aware of any relevant Federal rules that 
duplicate, overlap or conflict with the rule.
6. Summary of Issues Raised in Response to the IRFA
    The Department received a number of comments related to its IRFA 
analysis including, as mentioned above, one submitted by the Chief 
Counsel for Advocacy, SBA. Several of these comments, including the 
Chief Counsel for Advocacy, SBA comment, focused on the Department's 
choice of the universe of potential H-2B participants.

[[Page 3477]]

Some of these comments asserted that the Department did not correctly 
identify the universe of small entities to whom the analysis must be 
directed, while other comments stated that the Department did in fact 
correctly identify the universe of small entities affected by the rule.
    Other comments, including the Chief Counsel for Advocacy, SBA 
comment, asserted that the Department did not use its own data with 
regard to the revenue and size of businesses participating in the 
program. Comments, including that submitted by the Chief Counsel for 
Advocacy, SBA, also asserted the Department did not include an analysis 
of the impacts on the forestry industry with respect to its IRFA 
analysis. These comments have been discussed previously in this 
Regulatory Flexibility Act analysis. For example, this Regulatory 
Flexibility Act analysis now includes an analysis of impacts in the 
forestry industry in response to these comments.
    Other commenters were critical of the fact that the RFA analysis 
did not consider the broader effects on the economy since companies 
using the H-2B program may be forced to scale back on employees or on 
downstream purchases of equipment, inventory or products as a result of 
increased labor costs. The Department cannot estimate such costs, even 
assuming their existence.
    The Department also received several comments recommending the use 
of the Department's data on the H-2B program, available on its Web 
site, to demonstrate the impact on employers, particularly small 
employers, in various economic sectors. Several commenters, including 
the Chief Counsel for Advocacy, SBA, sought to derive applicable 
numbers of H-2B workers from the data available from the certifications 
employed by DOL. The Department does not believe that its data can be 
relied upon for the number of H-2B individuals employed in the U.S. at 
any one time. Employers may file an application as an extension of 
their normal recruitment efforts, which may or may not result in the 
hiring of H-2B workers. As discussed above, the Department certifies 
more workers than can be legally admitted under the H-2B program. The 
Department has no data that indicate the number of certified workers 
who are actually hired after a certification has been adjudicated.\66\ 
The Department believes its calculations in this final Regulatory 
Flexibility Analysis more accurately reflect the usage of the H-2B 
program by employers.
---------------------------------------------------------------------------

    \66\ One commenter suggested the Department use the Department 
of State's data regarding H-2B visas issued. The Department thanks 
the commenter for pointing out the availability of these numbers. 
However, even the number of H-2B visas issued in any given fiscal 
year does not necessarily represent actual employment of workers in 
H-2B status, much less in any given industry sector. That number 
does not take into account the number of those H-2B workers who do 
not enter or who are replaced with a U.S. worker prior to 
employment, or the changes or extensions of status granted for H-2B 
status.
---------------------------------------------------------------------------

    Many commenters discussed the economic impact of the proposed rule 
on their own operations. These comments focused on the overall impact 
of the burden and specifically on the burden imposed on the imposition 
of a Final Rule, at a time when contracts and financial obligations 
have been set for the coming season and prices for services have been 
set and cannot be renegotiated. As discussed in detail above, employers 
participating in the H-2B program have always been required to meet the 
conditions of the labor certification, which include the payment of a 
valid prevailing wage. The fact that a new wage methodology may result 
in wages in excess of anticipated labor costs does not minimize the 
Department's obligation to ensure the avoidance of adverse impact on 
the wages of U.S. workers. Even though the NPRM provided notice to 
program users of the Department's intent with respect to recognizing 
that this adverse impact was not being met under the current 
methodology and so changes would be made, the Department recognizes the 
commitments that employers have made in reliance on the current 
methodology. In recognition of these comments and this impact, and in 
order to provide employers with sufficient time to plan for their labor 
needs for the next year and to minimize the disruption to their 
operations, the Department is delaying implementation of this Final 
Rule so that the prevailing wage methodology set forth in this Rule 
applies only to wages paid for work performed on or after January 1, 
2012. Moreover, the Department has no data that indicate the number of 
certified workers who are actually hired after a certification has been 
adjudicated. The Department believes its calculations in this final 
Regulatory Flexibility Analysis more accurately reflect the usage of 
the H-2B program by employers.
    In addition, several commenters, including the Chief Counsel for 
Advocacy, SBA, asserted that the Department did not provide viable 
alternatives in its IRFA. A full discussion of alternatives is 
contained below. For the reasons stated in the quantitative and 
qualitative discussion of the alternatives, the Department has decided 
to retain the proposal of the NPRM of defining the prevailing wage to 
be the highest of the CBA, DBA or SCA wage determinations, or the 
arithmetic mean of the OES to best avoid adverse impact.
7. Alternatives Considered as Options for Small Entities
    As noted in section 3 of the E.O. 12866 analysis, several 
commenters proposed alternatives to the wage calculation methodology. 
In response to these comments, the Department analyzed the following 
wage calculation alternatives: (1) To continue the current calculation 
methodology but provide a more complete 000000justification for doing 
so; (2) to eliminate the four tiers and use the OES arithmetic mean as 
the OES component of the prevailing wage determination; (3) to 
eliminate the four tiers and use the OES median as the OES component of 
the prevailing wage determination; and (4) use the new methodology--
alternative 2--but also require the provision of fringe benefits.\67\ 
Below is a discussion of each alternative along with an estimation of 
their associated impacts on small entities.
---------------------------------------------------------------------------

    \67\ The Department notes that although only four alternative 
arguments have undergone quantitative analysis in this section, 
there are an additional nine alternative suggestions that contain a 
qualitative discussion in section C of this Administrative 
Information section.
---------------------------------------------------------------------------

i. Continue the Current Calculation Methodology
    For the reasons discussed throughout this Final Rule, continuing 
the current calculation methodology that relies on the four tier wage 
structure does not provide adequate protections to U.S. and H-2B 
workers. The existing procedure for extracting tiered wages from the 
basic OES wage survey data was adopted without any systematic effort to 
determine if that system was empirically justified. The OES wage 
surveys collect no data about the skill levels or duties performed by 
the workers at any particular wage level. Although lower wages may be 
associated with lower skill levels and responsibilities in professional 
occupations, there is no evidence to suggest that such a relationship 
exists in the lower skilled occupations that predominate in the H-2B 
program. Even if there were some evidence of the existence of skill-
based wage differences with these occupations, the OES survey does not 
purport to capture such differences. In the absence of such 
information, our responsibility to set wage rates that avoid adverse 
effect on

[[Page 3478]]

wages compels us to use the highest of the SCA or DBA rates, the wage 
established under an existing CBA, or the OES arithmetic mean wage as 
the principal wage-setting tool. The cost associated with this 
alternative is zero because it represents the baseline, that is, the 
alternative where no action is taken by the Department. The Department 
recognized that action needed to be taken and, therefore, rejected this 
alternative.
ii. Eliminate the Four Tiers and Use the Highest of the Wage Rates Set 
Forth Under the CBA, DBA, SCA, or OES Arithmetic Mean
    This alternative is the method required by the Final Rule which 
defines the prevailing wage to be the highest of: (1) The wage rate set 
forth in the CBA, if the job opportunity is covered by a CBA that was 
negotiated at arm's length between a union and an employer; (2) the 
wage rate established under the DBA or the SCA 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 OES-reported wage. This alternative represents 
the arithmetic mean of the wages of workers in similar occupations in 
the area of employment, as determined by the OES. This method will best 
achieve the Department's policy objectives of ensuring that wages of 
U.S. workers are more adequately protected and, thus, will not be 
adversely affected by the admission of H-2B workers into the country.
    As discussed above, the replacement of the four-tiered wage 
structure with the highest of the wage rates set forth under the CBA, 
DBA, SCA, or OES where the arithmetic mean would constitute the OES 
wage rate will result in the following total average annual cost for a 
hypothetical small entity that applies for one worker: landscaping 
services, $6,568; janitorial services, $8,832; food services and 
drinking places, $3,940; amusement, gambling, and recreation, $10,047; 
construction, $14,771; and forestry support services, $1,875. The 
analogous costs for employers that hire the average number of H-2B 
workers for their respective industries are as follows: landscaping 
services, $38,082; janitorial services, $61,286; food services and 
drinking places, $16,528; amusement, gambling, and recreation, 
$114,929; construction, $97,657; and forestry support services, 
$47,433.
    These increases are more than justified by the need for a wage rate 
that is based on the prevailing wage that is actually paid to similarly 
employed U.S. workers as demonstrated by OES mean wage rates, as well 
as the SCA and DBA wage rates. As noted above, the current methodology 
requires payment based on the unsupported assumption that skill-based 
wage differences are common in low-skilled H-2B jobs, and that the OES 
survey provides a basis for measuring a skill-based wage differential.
iii. Eliminate the Four Tiers and Use the Highest of the Wage Rates Set 
Forth Under the CBA, DBA, SCA, or OES Median
    This alternative would replace the four-tiered wage structure with 
the highest of the wage rates set forth under the CBA, DBA, SCA, or OES 
where the OES median constitutes the OES wage rate. The Department used 
the same methodology discussed above to calculate the wage differential 
for this alternative. These calculations yielded the following hourly 
wage increases by industry associated with this rule: landscaping 
services, $4.18; janitorial services, $5.76; food services and drinking 
places, $2.47; amusement, gambling, and recreation, $6.38; 
construction, $9.39; and forestry support services, $1.23.
    Using the OES median hourly wages, the Department's calculations 
indicate that for a hypothetical small entity that applies for one 
worker (representing the smallest of the small entities that hire H-2B 
workers), the total average annual costs of the rule are as follows: 
landscaping services, $6,356; janitorial services, $8,756; food 
services and drinking places, $3,758; amusement, gambling, and 
recreation, $9,697; construction, $14,270; and forestry support 
services, $1,875. The analogous costs for employers that hire the 
average number of H-2B workers for their respective industries are as 
follows: landscaping services, $36,848; janitorial services, $60,759; 
food services and drinking places, $15,762; amusement, gambling, and 
recreation, $110,930; construction, $94,342; and forestry support 
services, $47,433.
    The Department rejected this methodology. Although the median wage 
is generally comparable to the arithmetic mean, the median does not 
represent the most predominant wage across a distribution. The median 
wage represents only the midpoint of the range of wage values; it does 
not account for the actual average. The mean is widely considered to be 
the best measure of central tendency for a normally distributed sample, 
as it is the measure that includes all the values in the data set for 
its calculation, and any change in any of the wage rates will affect 
the value of the mean. This is not the case with the median. The 
Department has traditionally relied on arithmetic means for wage 
programs and has determined that these reasons make continuing reliance 
on the mean, rather than the median, logical.
iv. Use the New Methodology but Require the Provision of Fringe 
Benefits
    This alternative would replace the four-tiered wage structure with 
the inclusion of fringe benefits. To calculate the change in hourly 
wages, the Department matched the DBA wages plus fringe benefits to the 
H-2B data for construction workers by the occupational title and the 
county of employment. Using certified and 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 
DBA wages plus fringe benefits, and we weighted this differential by 
the number of certified workers on each certified or partially 
certified applications. For cases for which there was no applicable DBA 
wage or fringe available, we used the OES mean and the SCA health and 
welfare (H&W) $3.35 flat fringe.\68\ We then summed those products and 
divided the sum by the total number of certified workers from the 
certified or partially certified applications. This calculation yielded 
an hourly wage increase of $7.20.
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    \68\ Health and welfare includes life, accident, and health 
insurance plans, sick leave, pension plans, civic and personal 
leave, severance pay, and savings and thrift plans. Minimum employer 
contributions costing an average of $3.35 per hour are computed on 
the basis of all hours worked by employees employed on the contract.
---------------------------------------------------------------------------

    To estimate the total cost to the average small entity of increased 
wages for H-2B workers associated with the inclusion of fringe 
benefits, the Department multiplied the average hourly increase in 
wages 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 all small entities identified in the H-2B data sample.\69\ 
The Department's calculations indicate that for a hypothetical small 
entity that applies for one worker (representing the smallest of the 
small entities that hire H-2B workers), the total average annual

[[Page 3479]]

costs (to include the wage increase and the cost to read the rule in 
the first year) of the rule is $10,943. The analogous cost for 
employers that hired the average number of H-2B workers is $70,002.
---------------------------------------------------------------------------

    \69\ 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 Department historically has not required the payment of fringe 
benefits to H-2B workers, even before 2005, when the payment of DBA 
wage rates was mandatory for occupations where such wage determinations 
existed. See 75 FR 61578, 61579, Oct. 5, 2010 (``Wage Methodology for 
the Temporary Non-Agricultural Employment H-2B Program'' Proposed 
Rule). Under this Final Rule, the Department will again certify the DBA 
wage as the prevailing wage rate that must be paid to H-2B workers if 
those rates are the highest in those occupations in the area of 
intended employment among the rates listed in Sec.  655.10. For H-2B 
positions for which the DBA wage is not applicable, the Department 
believes that not requiring fringe benefit payments is an appropriate 
reflection of the Department's historical practices. As previously 
noted, fringe benefits costs have never been included in H-2B wage 
determinations. The Department reaffirms its belief that requiring 
fringe benefit payments to H-2B workers is not necessary in order to 
prevent an adverse effect on the wages and working conditions of U.S. 
workers.
v. Summary of Alternatives Analyzed Quantitatively
    According to the analysis, this regulation will not impact a 
substantial number of small entities. However, we recognize the 
potential impact on small businesses and have considered alternatives 
to minimize such impacts. Exhibit 2 below summarizes the average cost 
per average small entity (that is, a small entity with the average 
number of employees) for each industry. Exhibit 3 presents the ratio of 
average cost to average revenue for each industry. 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 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. 
Although the Final Rule can have a significant impact on small 
businesses that use the H-2B program, those costs can be avoided since 
ultimately an employer's decision to petition to hire H-2B workers is 
voluntary.

                         Exhibit 2--Average Annual Cost per Small Entity of Average Size
----------------------------------------------------------------------------------------------------------------
                                                                 Food
                                   Landscaping   Janitorial   services &   Amusement,
                                     services     services     drinking   gambling, &  Construction    Forestry
                                                                places     recreation
----------------------------------------------------------------------------------------------------------------
Take no action...................            0            0            0            0             0            0
Highest of the CBA, DBA, SCA, and      $38,082      $61,286      $16,528     $114,929       $97,657      $47,433
 OES mean........................
Highest of the CBA, DBA, SCA, and      $36,848      $60,759      $15,762     $110,930       $94,342      $47,433
 OES median......................
                                  ------------------------------------------------------------------------------
Inclusion of fringe benefits.....                                     $70,002
----------------------------------------------------------------------------------------------------------------

              Exhibit 3--Ratio of Average Cost to Average Revenue for Small Entity of Average Size
----------------------------------------------------------------------------------------------------------------
                                                                     Food
                                                                   services  Amusement,
                                         Landscaping  Janitorial      &       gambling,  Construction   Forestry
                                           services    services    drinking       &
                                                                    places   recreation
----------------------------------------------------------------------------------------------------------------
Take no action.........................           0            0          0           0            0           0
Highest of the CBA, DBA, SCA, and OES         2.14%        1.45%      1.03%       7.71%        2.04%       3.65%
 mean..................................
Highest of the CBA, DBA, SCA, and OES         2.07%        1.43%      0.98%       7.44%        1.97%       3.65%
 median................................
                                        ------------------------------------------------------------------------
Inclusion of fringe benefits...........                                   2.89%
----------------------------------------------------------------------------------------------------------------

8. Additional Alternatives
    As noted elsewhere in the Administrative Information section, the 
Department received many comments that suggested other alternatives to 
the prevailing wage methodology proposed in the NPRM. Four of those 
alternatives have been summarized in sections A and B of this 
Administrative Information section because the Department conducted 
quantitative analysis on those alternatives. The additional nine 
alternatives are summarized here. The Department conducted a 
qualitative rather than quantitative analysis on these alternatives 
because a quantitative analysis was either not possible or was 
unnecessary due to the nature of the alternative suggested.
i. When Other Methods Are Inapplicable, Use a Multiplier of the 
Federal, State or Local Minimum Wage for a ``Living Wage'' That Is 
Higher Than the Federal, State or Local Minimum Wage
    Several commenters requested the Department to consider 
alternatives that could be used when none of the prevailing wage 
methodologies is available. In particular, one commenter found that the 
2010 NPRM mentioned requiring employers to use the Federal, State or 
local minimum wage rates but did not actually include it as an option 
for determining the prevailing wage. This commenter further noted that 
S. 2910, a bill introduced by Senator Bernie Sanders in December 2009, 
included a provision that would make the minimum wage payable to H-2B 
or similarly employed U.S. workers 150 percent of the Federal minimum 
wage under the FLSA. This commenter proposed that the Department adopt 
and

[[Page 3480]]

expand this proposal to require a wage that is not less than 200 
percent of the Federal, State, or local minimum wage.
    The Department rejects this proposal, along with the similar 
proposal that the prevailing wage for reforestation workers be set at 
115 percent of the Federal or State minimum wage. The purpose of this 
rulemaking is to establish a methodology for calculating the prevailing 
wage for a specific occupation within a particular area of employment. 
Although raising the minimum wage payable under the program might be 
consistent with the program's mandate to protect U.S. workers from 
adverse effect, a wage rate that is some multiple of the minimum wage 
is by definition not a prevailing wage, and therefore is not 
appropriate for this rulemaking.
ii. Allow for Specific Experience-Based Wage Levels
    Many commenters requested that the Department continue to establish 
wage increases based on the experience of the worker. These commenters 
argue that employers should be permitted to increase the wages of an H-
2B worker based on years of experience, that is, an entry-level worker 
should not earn the same wage as someone who has been performing the 
job for several years. Thus, these commenters argue that creating a 
``one-tiered'' system as proposed by the Department would artificially 
inflate the wages of unskilled workers. Another commenter stated that 
under the proposed prevailing wage methodology, the Department removes 
the employer's ability to properly manage and reward employees for a 
job well done.
    As noted in the NPRM, however, the Department does not believe that 
the level of experience a worker possesses should be a factor in 
determining minimum wages for low-skilled positions. It is the 
Department's position that experience differentiation is unnecessary 
for this program for several reasons.
    First, the Department notes that the number of years of experience 
is irrelevant to the job description itself. In fact, 74.4 percent of 
the positions in the H-2B program are currently classified as Level I 
positions. For these positions, H-2B workers are hired if they can 
perform the task with little or no preparation. As discussed in this 
Final Rule, almost all jobs for which employers seek H-2B workers 
require little, if any, skill--an assertion with which few commenters 
disagreed. H-2B disclosure data from FY 2007 to 2009 demonstrates that 
most of the jobs for which the greatest annual numbers of H-2B workers 
were certified in the top five industries--construction; amusement, 
gambling and recreation; landscaping services; janitorial services; and 
food services and drinking places--require minimal skill to perform, 
according to every standardized source available to the Department, 
such as the SOC, O*NET and the Occupational Outlook Handbook. These 
jobs, which made up the majority of occupations certified in those 
years, include, but are not limited to, landscaper laborer, 
housekeeping cleaner, construction worker, forestry worker, and 
amusement park worker, all of which require less than 2 years of 
experience to perform. These jobs have typically been granted a Level I 
wage determination, which is lower than the average wage paid to 
similarly employed workers in job classifications in non-H-2B jobs.\70\
---------------------------------------------------------------------------

    \70\ The Department, in fact, recognized the need for 
consistency in the approach to establishing prevailing wages when it 
federalized the prevailing wage determination system in the 2008 
Final Rule.
---------------------------------------------------------------------------

    Second, the Department noted in the NPRM that it was artificially 
manipulating the OES data to create the tiered wage system in 1998.\71\ 
The OES survey instrument in itself does not solicit data on skill 
level; the four-tiered wage structure therefore did not truly represent 
skills-based play.
---------------------------------------------------------------------------

    \71\ Id.
---------------------------------------------------------------------------

    Moreover, this rule does not prevent monetary rewards for those 
employees who have earned them through experience, skill acquisition, 
or employer loyalty. Nothing in this Final Rule prevents, nor should be 
construed to prevent, the employer from paying its workers, U.S. or H-
2B, more than the required prevailing wage. This Final Rule merely 
establishes a minimum wage for specific occupations in a locality.
iii. Allow the Use of Regional Wages for the Reforestation Industry
    A few reforestation contractors recommended that the Department 
adopt methods of compensating reforestation workers that are not based 
on specific locations, citing inevitable deviations (due to weather, 
ground conditions, contractor demands) in an itinerant work schedule. 
One commenter proposed the use of a prevailing wage for a wider region, 
similar to the H-2A program's AEWRs, which typically cover several 
states with a single wage rate. This would allow employers to deviate 
from identified worksites as long as they pay workers at least the 
established rate. The Department recognizes that the uncertainties 
inherent in reforestation can make it difficult to determine if and 
where employees will be working as conditions change during the 
contract period. The Department notes that in situations where projects 
stretch across multiple localities with different prevailing wages, the 
employer can avoid the complexity inherent in itinerant work by paying 
the highest of the prevailing wages of those areas listed on the job 
order, which would effectively act as a regional wage. Prevailing wage 
rates for reforestation work are generally the same across contiguous 
counties--and frequently noncontiguous counties--in the same State.
    The Department has concluded that it is not feasible or desirable 
to establish regional wage rates for particular industries in the H-2B 
program. The prevailing wage rates are locality-based in order to 
fulfill the Department's requirement to prevent adverse effect on U.S. 
workers within the area of intended employment. The Department believes 
that the establishment of a regional wage rate could result in an 
arbitrary rate not based on labor market conditions--U.S. workers in 
some localities might make more than this rate, in which case the 
prevailing wage would suppress U.S. worker earnings--and therefore 
would be contrary to the intent of the H-2B program.\72\
---------------------------------------------------------------------------

    \72\ The Department does not find that the same issues apply to 
the use of a regional wage in the H-2A program, as there is 
typically little variation in agricultural wage rates within the 
USDA regions.
---------------------------------------------------------------------------

iv. Use BLS Wages
    One commenter suggested that the Department use BLS wages that are 
the basis for OES wages. Rather than use the OES for MSAs, this 
commenter contends that the Department should just use the BLS wage as 
the prevailing wage for the intended area of employment for the job 
category that is the latest published 25 percentile rate. The 
Department notes that the BLS wages are already the basis for the OES 
prevailing wage rates proposed in the NPRM and adopted in this Final 
Rule. The OES rates represent a more localized wage rate based on more 
sophisticated analysis and are a more accurate indicator of the 
prevailing wages for a SOC classification in any given locality.
    Another commenter noted that the NPRM indicated that H-2B workers 
comprise a small proportion of the U.S. labor force--less than 1 
percent of most job categories--and that since most of those positions 
are low skilled and low paid, it follows that U.S. workers occupy 99 
percent of highest paying jobs in any given category. Based on this

[[Page 3481]]

conclusion, the commenter proposed that to prevent adverse effect on 
the wages of U.S. workers, the prevailing wage should be based on the 
BLS 10th percentile wage estimate for the occupation in the area of 
employment. The commenter further noted that this would keep the H-2B 
workers in the lowest 10 percent of the wage category and the U.S. 
workers in the highest 90 percent of the wage category, therefore 
avoiding any adverse effect on the wages or working conditions of U.S. 
workers.
    Although the Department appreciates the suggestion for avoiding the 
adverse effect on similarly employed U.S. workers, this commenter's 
proposal reflects a misunderstanding of the purpose behind the change 
in prevailing wage methodology. The Department's role in the H-2B 
program is not to determine the wages of H-2B workers, per se, but 
rather to set an appropriate prevailing wage--a floor--for the job 
opportunity that will ensure no adverse effect on the wages of U.S. 
workers who are similarly employed or who could be similarly employed. 
As discussed earlier, the Department must set a prevailing wage that 
assures that U.S. workers who might be interested in a job will be paid 
a wage that approximates the wages available to other U.S. workers in 
the same occupation. Only if there are insufficient U.S. workers to 
fill that job at that wage may H-2B workers be hired to make up the 
labor shortfall.
v. Collective Bargaining Agreements
    The Department proposed retaining from the 2008 Final Rule the 
inclusion of a collective bargaining wage as the prevailing wage if the 
job opportunity is covered by an agreement that was negotiated at arms' 
length between the collective bargaining unit and the employer. Several 
commenters supported this proposal, but suggested that the Department 
go further and require that whenever a CBA covers workers in a 
particular geographic region and a specific occupational 
classification, the wage rate negotiated in the CBA should apply to all 
employers in the region who wish to hire H-2B workers in the same 
occupation classification, even those that are not signatory to the CBA 
or who have no collective bargaining unit in that occupation.
    A CBA is a contractual agreement negotiated at arms' length between 
more or less equal parties. The provisions of a CBA reflect a 
negotiation process and a series of concessions between the parties to 
the agreement that would not apply to other parties not involved in the 
negotiations. The negotiation of a CBA also involves agreement on a 
range of issues, wages, working conditions, work rules and many others, 
all of which combine to lead to a complete agreement, only one of whose 
elements involves wages. For example, one set of negotiating parties 
may agree to a lower wage in return for a guarantee of job security 
while another set may agree to higher wages at a greater risk of job 
cuts. Thus, the Department is unwilling to use a collectively-bargained 
wage outside the workplace for which it has been negotiated unless that 
wage has been determined to be prevailing through the SCA, DBA, or OES 
wage determination process.
    By contrast, another commenter objected to the use of a wage higher 
than a CBA wage in an employment situation in which a CBA applies, 
noting that where an employer is subject to a CBA, paying a wage other 
than the CBA scale rate may violate the terms of the agreement and have 
ramifications under contract and labor law. However, the Department 
must consistently use the prevailing wage rate under the H-2B program 
in order to ensure that U.S workers have meaningful access to these 
positions and do not experience wage depression as a result of 
employers hiring foreign workers at less than prevailing wages. A CBA 
rate that has fallen below the minimum wage would not be valid. 
Similarly, a CBA rate below the prevailing wage would not be a valid 
wage for purposes of the H-2B program.
vi. Set Wages at 90th Percentile Wage Because the Arithmetic Mean Wage 
Is Less Than the Average Worker's Compensation
    Some commenters noted that although the arithmetic mean represents 
an improvement to a stratified wage rate system, it will not do enough 
to protect U.S. workers from adverse effect. At least one such 
commenter suggested the Department set the prevailing wage at the 90th 
percentile of the OES wage instead of the arithmetic mean to account 
for any fringe benefits without which the wages of U.S. workers who are 
similarly employed would be depressed.
    The Department rejects this commenter's proposal. The 90th 
percentile is not a reflection of the prevailing wage of workers in the 
U.S. and therefore, is not appropriate for the purposes of this 
rulemaking. Setting the prevailing wage at the 90th percentile would be 
comparable to or slightly higher than the current Level IV wage, which 
applies to only 6.92 percent of the workers in the program, and 
therefore cannot be considered prevailing. Further, as discussed in 
another section, employers are not precluded from providing workers 
with a higher wage. Requiring the arithmetic mean will ensure that 
employers offer wages comparable to those that U.S. workers expect for 
a given occupation within a particular locality without unduly 
disadvantaging employers.
vii. Allow Employers To Compensate Workers Through Production Rate 
(i.e., ``Piece Rate'') During Processing and Prevailing Wage for all 
Non-processing
    Several commenters in the seafood processing industry proposed that 
in light of the prevailing practice in the industry in which workers 
are paid a piece-rate based on production, the Department should permit 
employers to pay a piece-rate based on production for the production-
based work and a prevailing wage rate for all non-processing work. The 
Department notes that it does not prohibit incentive piece rates, 
provided that the piece rates produce earnings that meet the required 
prevailing wage.
    Having considered the proposed alternative, the Department has 
concluded that it would not satisfactorily effectuate the Department's 
objective of ensuring that wages and working conditions of U.S. workers 
are more adequately protected than under the current prevailing wage 
determination process, while maintaining an efficient and consistent 
administrative process. The Department believes the alternatives 
proposed would at worst reduce and at best not improve the efficiency 
and consistency of the prevailing wage determination process, or would 
directly or indirectly adversely affect the wages of U.S. workers who 
might take H-2B jobs. Finally, the Department must ensure that in the 
H-2B program the wages offered to H-2B workers and U.S. workers 
recruited under H-2B job orders are the same wages and terms of 
employment offered to U.S. workers recruited by employers not 
participating in the H-2B program, that is, are the prevailing wages. 
Any method that results in offering H-2B workers lower than average 
wages adversely affects U.S. workers responding to H-2B-related 
recruitment. Similarly, any method that results in an employer 
recruiting for job opportunities using experience requirements that are 
higher than necessary or not normal to the occupation creates 
artificial entry barriers for potentially interested U.S. workers. 
While the Department appreciates the proposed alternatives suggested, 
it has concluded that none of

[[Page 3482]]

the alternatives provided better accomplishes the Department's policy 
objectives than the prevailing wage determination method contained in 
the Final Rule.
viii. Reinstate the Use of SWA Surveys To Effectively Determine the 
Appropriate Wage for Any Occupation in That State
    One commenter suggested a wage methodology that would have SWAs, 
rather than employers and/or the Department, conduct surveys to 
effectively determine the appropriate wage for any occupation in a 
particular State. Before 1998, when the program was much smaller, SWAs 
did in fact conduct surveys to produce prevailing wages. The financial 
resources available today to be devoted to such an activity, in 
particular given the expansion of the program and the resources 
available elsewhere (specifically, OES, DBA, and SCA) no longer make 
this a viable option. In addition, the inconsistencies that resulted 
from State to State in the treatment of the same job opportunity, 
reflecting not the local conditions but the quality of the surveyors 
and the collection instruments used, created difficulties that the 
benefits of using such surveys do not outweigh. Reliance on SWA surveys 
in our non-agricultural immigration programs was largely abandoned in 
1998 because the OES provides a more reliable and cost-effective means 
for producing prevailing wage rates on consistent basis across the 
country. For these reasons, the Department has determined that the OES 
survey with its standardized job descriptions, compensation data 
collection and analysis, and DBA and SCA wage determinations provide a 
much more accurate portrayal of wage information than State surveys.
ix. Include Only the Wages of Temporary Workers in Determining the 
Prevailing Wage for the H-2B Program
    Several submissions, including two from employers and one from an 
individual, suggested that the wage surveys used to determine H-2B 
prevailing wages should only sample temporary workers. However, a wage 
survey of temporary workers may include workers who provide short-term 
services to fill in for sick or vacationing employees, whereas H-2B 
workers essentially become full-time workers for the entire period of 
need. Moreover, limiting the survey universe in this way would produce 
results inconsistent with the Department's responsibility to prevent 
the employment of temporary foreign workers under the H-2B program from 
adversely impacting U.S. workers, regardless of whether they are 
temporary or permanent. The sole use of temporary workers' wages would 
depress prevailing wage calculations, applying substantial downward 
pressure on wages for similar, permanent work within the region. 
Therefore, the Department will continue to use wage surveys that 
include permanent workers to make H-2B prevailing wage determinations.
x. Summary of Other Alternatives
    Having considered the proposed alternatives, the Department has 
concluded that none would satisfactorily effectuate the Department's 
objective of ensuring that wages and working conditions of U.S. workers 
are more adequately protected than under the current prevailing wage 
determination process, while maintaining an efficient and consistent 
administrative process. The Department believes the alternatives 
proposed would at worst reduce and at best not improve the efficiency 
and consistency of the prevailing wage determination process, or would 
directly or indirectly adversely affect the wages of U.S. workers who 
might take H-2B jobs. Finally, the Department must ensure that in the 
H-2B program the wages paid to H-2B workers do not adversely affect the 
wages paid to U.S. workers and U.S. workers recruited under H-2B job 
orders by employers not participating in the H-2B program. Any method 
that results in offering H-2B workers lower than average wages 
adversely affects U.S. workers similarly employed. While the Department 
appreciates the proposed alternatives received, it has concluded that 
none of the alternatives provided better accomplishes the Department's 
policy objectives than the prevailing wage determination method 
contained in the Final Rule.
9. Steps To Minimize Economic Impact on Small Entities
    As the Department explained in its IRFA analysis, it recognizes the 
potential impact on small businesses that this Final Rule will have and 
has reviewed alternatives to minimize such impacts. The Department's 
mandate under the H-2B program as extended to it by the Department of 
Homeland Security under the INA is to set requirements for employers 
that wish to hire temporary foreign non-agricultural workers. Those 
requirements are designed to ensure that 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. This Final Rule sets those 
minimum standards with regard to wages. As discussed throughout this 
Final Rule, the required wage rate, as established by the methodology 
set in this rule, determines whether U.S. workers' wages will be 
adversely affected by the hiring of an H-2B worker. A different and 
presumably lower standard applied to small business would potentially 
result in the very adverse effect that the Department is compelled to 
prevent. As a result, a different standard for this class of employers 
cannot be implemented by the Department.
    However, the Department recognizes the impact that wage increases 
are likely to have on businesses, including small businesses, that have 
in recent years relied on H-2B visas. In particular, the Department 
recognizes the commitments that employers have made in reliance on the 
current methodology, which has been expressed by many employers. In 
recognition of this impact, and in order to provide employers with 
sufficient time to plan for their labor needs for the next year and to 
minimize the disruption to their operations, the Department is delaying 
implementation of this Final Rule so that the prevailing wage 
methodology set forth in this Rule applies only to wages paid for work 
performed on or after January 1, 2012.

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. This Final 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

[[Page 3483]]

the Small Business Regulatory Enforcement Fairness Act of 1996 
(SBREFA). The Department has, however, concluded that this 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 Final Rule in accordance with E.O. 
13132 regarding federalism and has determined that it does not have 
federalism implications. The 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 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 Final Rule was reviewed under the terms of E.O. 13175 and 
determined not to have tribal implications. The 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 Final 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 Final Rule and determined that it 
will not have a negative effect on families.

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

    The Final 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 Final 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 Final Rule 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 helps to ensure that the public understands the 
Department's collection instructions; respondents can provide the 
requested data in the desired format, reporting burden (time and 
financial resources) is minimized, collection instruments are clearly 
understood, and the Department can properly assess the impact of 
collection requirements on respondents.
    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). The information collection (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). This rule imposes no 
new information collection requirements and 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 packages for these information collections may 
be obtained from the RegInfo.gov Web site at http://www.reginfo.gov/public/do/PRAMain or by contacting the Department at: Office of Policy 
Development and Research, Department of Labor, 200 Constitution Ave., 
NW., Washington, DC 20210 or by phone request to 202-693-3700 (this is 
not a toll-free number) or by e-mail at DOL_PRA_PUBLIC@dol.gov.

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.

0
Accordingly, ETA amends 20 CFR part 655 as follows:

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

0
1. The authority citation for part 655 continues 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).

0
2. Amend Sec.  655.10 by:
0
a. Revising paragraphs (b) introductory text, (b)(1), and (2);

[[Page 3484]]

0
b. Removing paragraphs (b)(4) and (b)(5) and redesignating paragraph 
(b)(3) as (b)(4) and (b)(6) as (b)(5);
0
c. Adding new paragraphs (b)(3), (b)(6), and (b)(7); and
0
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 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 DBA or SCA 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.
* * * * *
    (6) In geographic areas where the OES does not gather wage data, 
including but not limited to the jurisdiction of the Commonwealth of 
the Northern Mariana Islands, and there is no CBA, DBA, or SCA wage 
available for the job opportunity, the NPC will consider wage 
information in the form of a wage survey provided by an employer in 
making a prevailing wage determination. Such a survey may only be 
submitted with a request for a prevailing wage determination. A request 
filed under this paragraph does not need to be preceded by a request 
and approval to submit wage information as described in paragraph 
(b)(7) of this section.
    (7)(i) An employer may submit a written request to the 
Administrator, OFLC to provide a private wage survey for OFLC to 
consider in making a prevailing wage determination which must 
demonstrate that the following factors are present:
    (A) There is no CBA, DBA, or SCA wage available for the job 
opportunity;
    (B) The job opportunity was not listed in the Dictionary of 
Occupational Titles (DOT) and is not listed in the Standard 
Occupational Classification (SOC) system, or if the job opportunity was 
listed in the DOT or is listed in the SOC system, the DOT crosswalk to 
the SOC system links to an occupational classification signifying a 
generalized set of occupations as ``all other''; and
    (C) The job description entails job duties which require knowledge, 
skills, abilities, and work tasks that are significantly different, as 
defined in guidance to be issued by the OFLC, than those in any other 
SOC occupation.
    (ii) The Administrator, OFLC may approve or deny an employer's 
written request to provide a wage survey. If the Administrator, OFLC 
approves the employer's written request, the Administrator, OFLC will 
send an approval letter to the employer. Approvals shall be valid for 1 
year from the date of approval and only for the job opportunity and 
area of intended employment specified in the original written request. 
This approval does not constitute an acceptance of any particular wage 
survey.
    (iii) If approval is granted, the employer may submit a request for 
a prevailing wage determination to the NPC along with a copy of the 
Administrator, OFLC's approval letter and a complete copy of the 
private survey. The NPC will evaluate the adequacy of the data provided 
and validity of the statistical methodology used in conducting the 
survey in accordance with guidance issued by the OFLC National Office.
    (iv) In each case where the employer submits a wage survey for 
which it seeks acceptance, the employer must provide specific 
information about the survey methodology, including such items as 
sample size and source, sample selection procedures, and survey job 
descriptions, to allow a determination of the adequacy of the data 
provided and validity of the statistical methodology used in conducting 
the survey in accordance with guidance issued by the OFLC National 
Office.
    (v) The survey must be based upon recently collected data:
    (A) Any published survey must have been published within 24 months 
of the date of submission, must be the most current edition of the 
survey, and must be based on data collected not more than 24 months 
before the publication date.
    (B) A survey conducted by the employer must be based on data 
collected within 24 months of the date it is submitted for 
consideration.
    (vi) The survey cannot as any part of its data wage information 
reflect the wages of H-2B workers or other nonimmigrant workers.
    (vii) If the NPC does not approve the survey for use in the H-2B 
program, the NPC shall inform the employer in writing of the reasons 
the survey was not accepted. An employer may appeal the NPC's decision 
in accordance with Sec.  655.11.
* * * * *

    Signed in Washington this 14th day of January 2011.
Jane Oates,
Assistant Secretary, Employment and Training Administration.
[FR Doc. 2011-1117 Filed 1-18-11; 8:45 am]
BILLING CODE 4510-FP-P
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