61578 Federal Register / Vol. 75, No. 192 / Tuesday, October 5, 2010 / Proposed Rules 

DEPARTMENT OF LABOR 

Employment and Training 

Administration 

20 CFR Part 655 

RIN 1205–AB61 

Wage Methodology for the Temporary 

Non-Agricultural Employment H–2B 

Program 

AGENCY: Employment and Training 

Administration, Labor. 

ACTION: Proposed rule; request for 

comments. 

SUMMARY: The Department of Labor (the 

Department or DOL) proposes to amend 

its regulations governing the 

certification of the employment of 

nonimmigrant workers in temporary or 

seasonal non-agricultural employment 

and the enforcement of the obligations 

applicable to employers of such 

nonimmigrant workers. This Notice of 

Proposed Rulemaking (NPRM or 

proposed rule) proposes to revise and 

solicits comments on the methodology 

by which the Department calculates the 

prevailing wages to be paid to H–2B 

workers and U.S. workers recruited in 

connection with a temporary labor 

certification for use in petitioning the 

Department of Homeland Security 

(DHS) to employ a nonimmigrant 

worker in H–2B status. 

DATES: Interested persons are invited to 

submit written comments on the 

proposed rule on or before November 4, 

2010. 

ADDRESSES: You may submit comments, 

identified by Regulatory Information 

Number (RIN) 1205–AB61, by any one 

of the following methods: 

• Federal e-Rulemaking Portal 

www.regulations.gov. Follow the Web 

site instructions for submitting 

comments. 

• Mail or Hand Delivery/Courier: 

Please submit all written comments 

(including disk and CD–ROM 

submissions) to Thomas Dowd, 

Administrator, Office of Policy 

Development and Research, 

Employment and Training 

Administration, U.S. Department of 

Labor, 200 Constitution Avenue, NW., 

Room N–5641, Washington, DC 20210. 

Please submit your comments by only 

one method. Comments received by 

means other than those listed above or 

that are received after the comment 

period has closed will not be reviewed. 

The Department will post all comments 

received on http://www.regulations.gov 

without making any change to the 

comments, including any personal 

information provided. The http:// 

www.regulations.gov Web site is the 

Federal e-rulemaking portal and all 

comments posted there are available 

and accessible to the public. The 

Department cautions commenters not to 

include their personal information such 

as Social Security Numbers, personal 

addresses, telephone numbers, and 

e-mail addresses in their comments as 

such submitted information will become 

viewable by the public on the http:// 

www.regulations.gov Web site. It is the 

commenter’s responsibility to safeguard 

his or her information. Comments 

submitted through http:// 

www.regulations.gov will not include 

the commenter’s e-mail address unless 

the commenter chooses to include that 

information as part of his or her 

comment. 

Postal delivery in Washington, DC, 

may be delayed due to security 

concerns. Therefore, the Department 

encourages the public to submit 

comments through the http:// 

www.regulations.gov Web site. 

Docket: For access to the docket to 

read background documents or 

comments received, go the Federal 

eRulemaking portal at http:// 

www.regulations.gov. The Department 

will also make all the comments it 

receives available for public inspection 

during normal business hours at the 

Employment and Training 

Administration (ETA) Office of Policy 

Development and Research at the above 

address. If you need assistance to review 

the comments, the Department will 

provide you with appropriate aids such 

as readers or print magnifiers. The 

Department will make copies of the rule 

available, upon request, in large print 

and as an electronic file on computer 

disk. The Department will consider 

providing the proposed rule in other 

formats upon request. To schedule an 

appointment to review the comments 

and/or obtain the rule in an alternate 

format, contact the Office of Policy 

Development and Research at (202) 

693–3700 (VOICE) (this is not a toll-free 

number) or 1–877–889–5627 (TTY/ 

TDD). 

FOR FURTHER INFORMATION CONTACT: 

William L. Carlson, PhD, Administrator, 

Office of Foreign Labor Certification, 

ETA, U.S. Department of Labor, 200 

Constitution Avenue, NW., Room C– 

4312, Washington, DC 20210; 

Telephone (202) 693–3010 (this is not a 

toll-free number). Individuals with 

hearing or speech impairments may 

access the telephone number above via 

TTY by calling the toll-free Federal 

Information Relay Service at 1–800– 

877–8339. 

SUPPLEMENTARY INFORMATION: 

I. Revisions to 20 CFR 655.10 

A. Statutory Standard With Respect to 

Prevailing Wages and Current 

Department of Labor Regulations 

As provided by section 

101(a)(15)(H)(ii)(b) of the Immigration 

and Nationality Act (INA or Act) (8 

U.S.C. 1101(a)(15)(H)(ii)(b)), the H–2B 

visa classification for non-agricultural 

temporary workers is available to a 

foreign worker ‘‘having a residence in a 

foreign country which he has no 

intention of abandoning who is coming 

temporarily to the United States to 

perform other [than agricultural] 

temporary service or labor if 

unemployed persons capable of 

performing such service or labor cannot 

be found in this country.’’ There is an 

annual cap of 66,000 H–2B 

nonimmigrant visa approvals per fiscal 

year, divided into two biannual 

allocations of 33,000 each. 

Section 214(c)(1) of the INA requires 

DHS to consult with appropriate 

agencies before approving an H–2B visa 

petition. 8 U.S.C. 1184(c)(1). The 

regulations for U.S. Citizenship and 

Immigration Services (USCIS), the 

agency within DHS which adjudicates 

requests for H–2B status, require that an 

intending employer first apply for a 

temporary labor certification from the 

Secretary of Labor (the Secretary). 8 CFR 

214.2(h)(6). That certification informs 

USCIS that U.S. workers capable of 

performing the services or labor are not 

available, and that the employment of 

the foreign worker(s) will not adversely 

affect the wages and working conditions 

of similarly employed U.S. workers. A 

certification from the Secretary is 

currently not required for H–2B 

employment on Guam, for which 

certification from the Governor of Guam 

is required. 8 CFR 214.2(h)(6)(iii). 

The Department’s regulations at 20 

CFR part 655, Subpart A, ‘‘Labor 

Certification Process for Temporary 

Employment in Occupations other than 

Agriculture or Registered Nursing in the 

United States (H–2B Workers),’’ govern 

the H–2B labor certification process, as 

well as the enforcement process to 

ensure U.S and H–2B workers are 

employed in compliance with H–2B 

labor certification requirements. 

Applications for labor certification are 

processed by the Office of Foreign Labor 

Certification (OFLC) in ETA, the agency 

to which the Secretary has delegated her 

responsibilities described in the USCIS 

H–2B regulations. Enforcement of the 

attestations made by employers in H–2B 

applications for labor certification is 

conducted by the Wage and Hour 


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Federal Register / Vol. 75, No. 192 / Tuesday, October 5, 2010 / Proposed Rules 61579 

Division (WHD) within DOL, to which 

DHS on January 16, 2009 delegated 

enforcement authority granted to it by 

the INA. 8 U.S.C. 1184(c)(14)(B). 

As a part of the process of applying 

to employ H–2B workers, an employer 

must ensure that it will pay the workers 

hired in connection with that 

application a wage that will not 

adversely affect the wages of U.S. 

workers similarly employed. To ensure 

that this requirement is met, the 

Department has established a process 

for providing to an employer a 

prevailing wage for the job opportunity, 

below which an employer may not pay 

its H–2B workers. Until 2005, the 

process of determining prevailing wages 

was governed by General 

Administration Letter (GAL) No. 2–98 

(1998). The process required by the 

1998 GAL made use of wage rates 

determined under the Davis-Bacon Act 

(DBA), 40 U.S.C. 276a et seq., 29 CFR 

part 1, or the McNamara-O’Hara Service 

Contract Act (SCA), 41 U.S.C. 351 et 

seq., wage rates mandatory for H–2B 

occupations for which such wage 

determinations existed. In the absence 

of DBA or SCA wage rates, prevailing 

wage determinations were based on the 

Occupational Employment Statistics 

wage survey (OES), compiled by the 

Bureau of Labor Statistics (BLS). In May 

2005, as a result of legislation enacting 

section 212(p)(4) of the INA, 8 U.S.C. 

1182(p)(4), relating to the H–1B visa 

program, the Department issued 

guidance on prevailing wage 

determinations. The Department 

applied that guidance to H–2B labor 

certification applications as well as the 

H–1B temporary specialty worker and 

permanent labor certification programs. 

Under that guidance, prevailing wage 

determinations in these three visa 

programs were set based on four tiers 

tied to skill levels using the OES wage 

survey, while the use of DBA or SCA 

wage rates was at the option of the 

employer seeking the determination. 

The Department did not use notice and 

comment rulemaking when issuing that 

guidance. See ETA Prevailing Wage 

Determination Policy Guidance, Nonagricultural Immigration Programs (the 

Prevailing Wage Guidance), http:// 

www.foreignlaborcert.doleta.gov/pdf/ 

NPWHC_Guidance_Revised_

11_2009.pdf. 

In 2008, the Department proposed and 

finalized regulations that currently 

govern the H–2B temporary worker 

program. 73 FR 29942, May 22, 2008; 73 

FR 78020, Dec. 19, 2008 (the 2008 Final 

Rule). The 2008 Final Rule essentially 

codified various aspects of the 2005 

prevailing wage guidance, including 

that the prevailing wage for labor 

certification purposes shall be the 

arithmetic mean of the wages of workers 

similarly employed at the skill level in 

the area of employment. 20 CFR 

655.10(b)(2). Additionally, the 2008 

Final Rule, in accordance with the 2005 

prevailing wage guidance, continued to 

require the use of the OES Survey in 

setting the prevailing wage, in the 

absence of a collective bargaining 

agreement, an employer-provided 

survey acceptable under 20 CFR 

655.10(f), or a request from the 

employer to use the DBA or SCA wage 

determinations. The 2008 Final Rule 

also transferred the process of 

determining prevailing wages from the 

State Workforce Agencies (SWAs) to 

OFLC but did not change the method for 

calculating the wages for H–2B workers 

and U.S. workers. The activity of 

calculating and issuing prevailing wage 

determinations (PWDs) based upon 

requests from employers seeking to use 

them in connection with a foreign labor 

certification program is now conducted 

by OFLC’s National Prevailing Wage 

Center (NPWC), previously named the 

National Prevailing Wage and Helpdesk 

Center, in Washington, DC; it is 

designated in the regulation by the 

generic National Processing Center, or 

NPC. 

B. The Need for New Rulemaking 

Because the 2008 Final Rule did not 

make any changes in the method by 

which wages for H–2B workers and U.S. 

workers are calculated and continued 

the four-tiered skill system, the 

Department did not seek comment in 

the rulemaking process on the sources 

of data used to set wage rates. Since the 

2008 Final Rule took effect, however, 

the Department has grown increasingly 

concerned that the current calculation 

method does not adequately reflect the 

appropriate wage necessary to ensure 

U.S. workers are not adversely affected 

by the employment of H–2B workers. 

Additionally, the prevailing wage 

calculation methodology became the 

subject of litigation. On August 30, 

2010, the U.S. District Court in the 

Eastern District of Pennsylvania in 

Comite ́ de Apoyo a los Trabajadores 

Agricolas (CATA) v. Solis, Civil No. 

2:09–cv–240–LP, 2010 WL 3431761 

(E.D. Pa. Aug. 30, 2010), ordered the 

Department to ‘‘promulgate new rules 

concerning the calculation of the 

prevailing wage rate in the H–2B 

program that are in compliance with the 

Administrative Procedure Act no later 

than 120 days from the date of this 

order.’’ The plaintiffs in CATA had 

challenged the Department’s use of skill 

levels in establishing prevailing wages 

and the Department’s reliance upon 

OES data in lieu of DBA and SCA rates. 

The court ruled that the Department had 

violated the Administrative Procedure 

Act when it did not adequately explain 

its reasoning for using skill levels as 

part of the H–2B prevailing wage 

determinations, and that it failed to 

consider comments relating to the 

choice of appropriate data sets in 

deciding to rely on OES data rather than 

DBA and SCA in setting the prevailing 

wage rates. 

Accordingly, in order to comply with 

the Court’s order and to appropriately 

establish a wage methodology that 

adequately protects U.S. and H–2B 

workers, the Department is engaging in 

this new rulemaking to provide the 

public with notice and opportunity to 

comment on a new proposed 

methodology to determine prevailing 

wages under the H–2B program. The 

Department anticipates further 

rulemaking that will address other 

aspects of the H–2B temporary worker 

program. 

C. § 655.10 Prevailing Wage 

The proposed rule would establish 

that the prevailing wage will be the 

highest of the following: Wages 

established under an agreed-upon 

collective bargaining agreement (CBA); a 

wage rate established under the DBA or 

SCA for that occupation in the area of 

intended employment; and the 

arithmetic mean wage rate established 

by the OES for that occupation in the 

area of intended employment. The 

employer would be required to pay the 

workers at least the highest of the 

prevailing wage as determined by the 

NPC, the Federal minimum wage, the 

State minimum wage and the local 

minimum wage. 

The NPRM proposes to include 

consideration of the use of DBA wages 

and SCA wages for those occupations 

for which wages have been determined 

under either of the two Acts for the area 

of intended employment. The WHD’s 

DBA survey program has undergone a 

significant re-engineering effort in the 

last 7 years, resulting in a greatly 

improved and timely prevailing wage 

rate determination process. The wage 

determinations are maintained by type 

of public construction project (e.g., 

residential, building, highway, and 

heavy), and they are issued on a countyby-county basis. In addition, they 

include more detail for crafts (e.g., they 

distinguish between rates paid to a 

pipefitter who performs HVAC work 

and one who does not). Presently, SCA 

wage determinations are based upon 

BLS’ National Compensation Survey 

and OES survey data, and in some cases 

Federal employee data is also used. SCA 


hsrobinson on DSK69SOYB1PROD with PROPOSALS2
61580 Federal Register / Vol. 75, No. 192 / Tuesday, October 5, 2010 / Proposed Rules 

1Additionally, the decision issued by the court in 

Comite ́ de Apoyo a los Trabajadores Agricolas 

(CATA) v. Solis, 2010 WL 3431761, at *19 n.22, 

which invalidated the application of the four-tier 

wage skill levels to the H–2B program, found that 

section 212(p)(4) of the INA is limited to the H–1B 

context (if the Department argued that it was ‘‘using 

skill levels because of the statute, that explanation 

would be irrational’’). 

2 DOL analysis shows that, in about 96 percent of 

the cases, the H–2B wage is lower than the mean 

of the OES wage rates for the same occupation. See 

footnote 6. 

wage determinations now are reviewed 

yearly. Therefore, the Department has 

revisited the issue of whether to require 

the consideration of these alternative 

prevailing wage rate sources and has 

concluded that process improvements 

have made these wage surveys 

appropriate for use in this program. 

During its long practice of making wage 

determinations under these statutes, the 

Department has invested significant 

time and resources in developing 

appropriate calculation methodologies 

and making decisions about appropriate 

sources of wage data which it must 

consider in order to preserve wage 

integrity for U.S. workers. 

The Department has concluded that 

the mandatory consideration of the DBA 

and/or SCA wages for purposes of PWDs 

will address several important policy 

objectives, including protecting U.S. 

worker wages. First, it will ensure that 

each PWD reflects the highest wage 

from the most accurate and diverse pool 

of government wage data available with 

respect to a job classification and area 

of intended employment. Second, it will 

ensure compliance with mandatory 

wage standards for certain occupations. 

In addition, many of the H–2B job 

classifications already have DBA or SCA 

wages associated with the occupations; 

therefore, reinstating the explicit use of 

these wages can prevent the 

undercutting of wages in the local 

market when they more accurately 

reflect local market wages. 

Furthermore, the proposed rule would 

eliminate the use of the four-tiered wage 

structure. The Department currently 

implements this four-tiered system in 

accordance with the 2005 Prevailing 

Wage Guidance. This guidance 

differentiates the wage tiers by the level 

of experience, education, and 

supervision required to perform the job 

duties, as required for H–1B wages by 

section 212(p)(4) of the INA, from which 

the four-tiered wage system is derived. 

For the reasons stated below, the 

Department proposes to amend the 

current four-tier practice for the H–2B 

program and proposes instead a single 

OES wage level for H–2B job 

opportunities based on the arithmetic 

mean of the OES wage data for the job 

opportunities in the area of intended 

employment. 

The Department has re-examined 

section 212(p)(4) of the INA and has 

concluded that the use of the skill levels 

mandated in that provision is not legally 

required in the H–2B program. Section 

212(p)(4) of the INA was enacted in the 

context of H–1B reform in the 

Consolidated Appropriations Act of 

2005, and while it is the only paragraph 

in section 212(p) that does not reference 

any specific immigration programs to 

which it applies, it is embedded in the 

provisions dealing with prevailing 

wages for positions in the H–1B and 

permanent foreign labor categories. 

There is no legislative history indicating 

that it was or was not meant to apply 

only to the H–1B program. However, the 

other provisions of section 212(p), 

which were all added to the INA by 

Congress at the same time, all are 

specific in their application to H–1B, to 

the permanent program, or to both. 

None applies to the H–2B program.1

Thus, the Department no longer believes 

that it is bound by section 212(p)(4) to 

offer four-tiered wage levels in the 

H–2B program. The Department has 

already eliminated the four-tiered wage 

levels in the H–2A program in its Final 

Rule on that program. 75 FR 6884 (Feb. 

12, 2010). 

The wage-setting procedures no 

longer require a single wage 

determining methodology as a matter of 

administrative efficiency, which was a 

concern at the time of issuance of the 

2005 Prevailing Wage Guidance. The 

Department, which had used a twotiered wage system in its foreign labor 

certification programs before the 

enactment of section 212(p), 

implemented the four tiers in H–2B for 

administrative efficiency when it 

implemented them in the H–1B and 

permanent labor certification programs. 

At that time, the SWAs were responsible 

for providing all wage determinations. 

Training diverse State workforce staff 

around the country on multiple wage 

methodologies for different wage 

determination processes in foreign labor 

certification programs would have been 

difficult and would have inevitably 

resulted in inconsistent application and 

confusion, which is counterproductive 

to the Department’s mandate to ensure 

that H–2B employers do not offer wages 

that will adversely impact the wages of 

U.S. workers. However, the Department 

completed consolidation of its wage 

determination activities for its foreign 

labor programs in the NPWC in January 

2010. The use of a single Center to issue 

wage determinations ensures that wage 

calculations are applied consistently 

throughout a single program, thereby 

eliminating the need to use a single 

method of calculation for all programs 

for administrative efficiency. Indeed, as 

noted above, the Department already 

has stopped using the four-tiered system 

in the H–2A program as of the effective 

date of the H–2A Final Rule. 75 FR 6884 

(Feb. 12, 2010). 

The types of jobs found in the H–2B 

program involve few if any skill 

differentials necessitating tiered wage 

levels. The Department has an 

obligation to require H–2B employers to 

offer wages that do not adversely affect 

the wages of their U.S. workforce. By 

their very existence, however, multiple 

wage rates, particularly in a program in 

which most job opportunities have few 

or no skill requirements, stratify wages 

and inappropriately allow employers to 

force much of the wage-earning 

workforce into a lower wage. H–2B 

workers, most of whom fill jobs with 

low skill levels, are more likely to be 

classified at the low end of the wage 

tiers, ultimately adversely affecting the 

wages of U.S. workers in those same 

jobs. In addition, even if skill-based 

wage tiers were desirable as a 

theoretical matter, neither the OES nor 

any other comprehensive data series 

that we are aware of attempts to capture 

such variations. While the Department 

has, since 1998, created tiered wages by 

mathematically manipulating OES data 

in accordance with the statute, the 

actual OES survey instrument does not 

solicit data concerning the skill level of 

the workers whose wages are being 

reported. While the assumption that 

lower wages reflect lower skills (the 

basis for the current methodology) may 

have some validity in higher skilled 

occupations, there is no support for that 

assumption in the case of the lowerskilled occupations that predominate in 

the H–2B program. 

H–2B disclosure data from the last 10 

years demonstrates that many jobs for 

which employers seek H–2B workers— 

housekeepers, landscape workers, etc.— 

clearly require minimal skill to perform, 

have few special skill or experience 

requirements, and do not generally have 

career ladders. These jobs have typically 

resulted in a Level 1 (the lowest wage 

level) determination for the H–2B 

employer, because the jobs themselves 

do not require the employer to seek 

workers with higher skill levels. The 

result is a wage determination that is in 

fact lower than the average wage paid 

for many jobs that are of the same 

classification as those jobs filled under 

the H–2B program.2 By allowing jobs to 

be filled by H–2B workers at these lower 

wages, a tiered wage system can have a 


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Federal Register / Vol. 75, No. 192 / Tuesday, October 5, 2010 / Proposed Rules 61581 

3Absent an increase in the number of workers 

under the H–2B program to fill the temporary labor 

shortage, wages for these temporary jobs would rise 

in order to dispel the shortage, until sufficient 

additional domestic labor is attracted into the 

market. These wage increases are avoided, however, 

under the prevailing wage requirements of the 

H–2B program as currently configured. Moreover, 

when H–2B wages are set lower than wages paid to 

U.S. workers in similar jobs, as they generally are 

under the tiered wage system, the H–2B wages may 

not actually reflect the economic value of the work, 

impeding any upward pressure on wages that 

would otherwise result from the labor shortage. 

depressive effect on wages of similar 

domestic workers, ultimately adversely 

affecting the wages of U.S. workers in 

those same jobs.3 The Department 

cannot continue to allow such wage 

depression where its mandate is to 

ensure that the wages of U.S. workers 

suffer no adverse impact. 

The Department, accordingly, 

proposes to require that the arithmetic 

mean of the OES wage rates be the basis 

for determining the OES component of 

the prevailing wage rate in the H–2B 

program as it is the most effective 

available method for preventing adverse 

effect on wages. The Department 

welcomes comment on specific 

alternatives for wage calculations to 

meet its mandate for avoiding adverse 

effect on wages while ensuring that 

wages reflect economic realities in the 

marketplace for such jobs. 

Finally, the H–2B regulations 

currently allow the use of an employerprovided survey to determine the 

prevailing wage when that survey meets 

certain methodological requirements, 

even if the survey produces a lower 

wage than the OES wage. The NPRM 

proposes to eliminate the use of private 

wage surveys in the H–2B program. 

After more than 10 years of successful 

experience with the OES, the 

Department has concluded that the 

review of such surveys is an inefficient 

and unnecessary expenditure of 

government resources. While private 

surveys can provide useful information, 

the cost of reviewing the surveys 

outweighs their utility. 

By eliminating the use of such 

employer-provided surveys, the 

proposed rule also eliminates the need 

for the 2008 Final Rule provision 

allowing employers to file supplemental 

information regarding the use of a 

survey, rendering current section 

655.10(g) at least partially moot. The 

section also references the submission 

of supplemental information when there 

is a disagreement with a wage level, 

which has also been rendered moot. As 

any other issue (such as the application 

of a DBA or SCA wage) can be appealed 

through the review of a PWD by the 

Certifying Officer or by BALCA through 

the procedures of section 655.11, the 

Department is removing paragraphs 

655.10(f) and (g) of the current rule. 

II. Administrative Information 

A. Executive Order 12866 

Under Executive Order (E.O.) 12866, 

the Department must determine whether 

a regulatory action is economically 

significant and therefore subject to the 

requirements of the E.O. and to review 

by the Office of Management and 

Budget (OMB). Section 3(f) of the E.O. 

defines an economically significant 

regulatory action as an action that is 

likely to result in a rule that: (1) Has an 

annual effect on the economy of $100 

million or more, or adversely and 

materially affects a sector of the 

economy, productivity, competition, 

jobs, the environment, public health or 

safety, or State, local or tribal 

governments or communities (also 

referred to as economically significant); 

(2) creates serious inconsistency or 

otherwise interferes with an action 

taken or planned by another agency; (3) 

materially alters the budgetary impacts 

of entitlement grants, user fees, or loan 

programs, or the rights and obligations 

of recipients thereof; or (4) raises novel 

legal or policy issues arising out of legal 

mandates, the President’s priorities, or 

the principles set forth in the E.O. 

The Office of Management and Budget 

(OMB) has determined that this NPRM 

is an economically significant regulatory 

action under sec. 3(f)(1) of E.O. 12866. 

This regulation would likely result in 

transfers in excess of $100 million 

annually and consequently is 

economically significant. Accordingly, 

OMB has reviewed this NPRM. 

1. Need for Regulation 

The Department has determined for a 

variety of reasons that a new rulemaking 

effort is necessary for the H–2B program 

with respect to the wages paid to these 

workers. Chief among these reasons is 

the United States District Court for the 

Eastern District of Pennsylvania’s order 

and accompanying opinion in Comite ́

de Apoyo a los Trabajadores Agricolas 

(CATA) v. Solis, Civil No. 2:09–cv–240– 

LP, 2010 WL 3431761 (E.D. Pa. Aug. 30, 

2010), which invalidated the 

application of the four-tier wage skill 

levels to the H–2B program and required 

the Department to ‘‘promulgate new 

rules concerning the calculation of the 

prevailing wage rate in the H–2B 

program that are in compliance with the 

Administrative Procedure Act no later 

than 120 days from the date of this 

order.’’ The Department is concerned 

that the methodology for calculating 

prevailing wages at issue in the Court’s 

order does not adequately reflect the 

appropriate wage necessary to ensure 

U.S. workers are not adversely affected 

by the employment of H–2B workers. 

For these reasons, discussed in more 

detail above, the Department is 

proposing the changes contained in the 

NPRM. 

2. Alternatives 

Given the fact that the court’s order 

and accompanying opinion in Comite ́

de Apoyo a los Trabajadores Agricolas 

(CATA) v. Solis, Civil No. 2:09–cv–240– 

LP, requires the Department to 

promulgate this NPRM, the Department 

has limited its consideration of 

alternatives of wage calculations to the 

following: (1) To continue the current 

calculation methodology but provide a 

more complete justification for doing so, 

and (2) to eliminate the four tiers and 

use the arithmetic mean. For use of 

alternative government sources, the 

Department considered continuing (1) 

the optional use of DBA and SCA and 

(2) making the use of such surveys 

mandatory. For alternative wage 

sources, the Department considered, in 

addition to the continued use of CBAs, 

(1) continuing the use of private 

employer surveys and (2) elimination of 

private surveys. 

The Department considered alternate 

data sources but given the time 

constraints imposed by the court’s 

order, we were unable to fully analyze 

these alternatives. We welcome 

comments from the public on 

alternatives for wage sources that 

provide adequate protections to U.S. 

and H–2B workers. 

The alternatives proposed in this 

NPRM are those that will best achieve 

the Department’s policy objectives of 

ensuring that wages of U.S. workers are 

more adequately protected and, thus, 

that employers are only permitted to 

bring H–2B workers into the country 

where the wages and working 

conditions of U.S. workers will not be 

adversely affected. We request 

comments from the public on 

alternatives for calculating a prevailing 

wage that provides adequate protections 

to U.S. and H–2B workers. 

3. Economic Analysis 

The Department’s analysis below 

considers the expected impacts of the 

proposed NPRM provisions against the 

baseline (i.e., the 2008 Final Rule). The 

method of determining prevailing wages 

represents additional compensation for 

both H–2B and U.S. workers hired in 

response to the required recruitment. 


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4For the purpose of this analysis, H–2B workers 

are considered temporary residents of the U.S. 

5A total of 30 applications were set aside due to 

invalid data. 

6To perform this calculation, we assume that the 

weighted average wage of H–2B workers has the 

same distribution as the weighted average wage of 

the domestic workers. This may or may not be the 

case. While there is some uncertainty regarding this 

approach, it is the best methodology that can be 

applied given the available data. In about 4.1 

percent of cases, the H–2B hourly wage was higher 

than the OES wage; it is likely that, instead of 

declining, those wages would not change as a result 

of the rule, so in such cases, the wage differential 

was assumed to be zero. 

7The Department does not believe the imposition 

of these wages will cause increases in the wage 

beyond that represented by the OES arithmetic 

mean. A CBA wage may in fact be the highest of 

the applicable wages; even under the 2008 Final 

Rule, if the job opportunity were covered by a CBA, 

the wage rate set forth in the CBA would be the 

required wage. Accordingly, including the wage 

rate set forth in the CBA among the definition of 

prevailing wage will not result in an increased cost 

to the employer. As for the application of SCA and 

DBA to the PWD, in most cases, the SCA wage 

should not result in an increased cost to employers 

because in most cases, the SCA wage is based upon 

the OES mean. The application of DBA wages, and 

their potential impact on the relative wage increase, 

cannot be determined at this time, because the 

situations in which DBA would be higher than the 

location-specific OES arithmetic mean cannot be 

determined with sufficient accuracy to permit 

calculation. As a result, this analysis assumes that 

the OES wage will represent the highest of the three 

alternatives. 

8Source for total employment: ftp://ftp.bls.gov/ 

pub/suppl/empsit.ceseeb1.txt. 

9Source for total employment by industry: 2007 

Economic Census. 

10The number of visas available under the H–2B 

program is 66,000, assuming no statutory increases 

in the number of visas available for entry in a given 

year. We also assume that half of all such workers 

(33,000) in any year stay at least one additional 

year, and half of those workers (16,500) will stay 

a third year, for a total of 115,500 H–2B workers in 

a given year. The scale factor was derived by 

dividing 115,500 by the total number of workers 

certified per year on average during FY2007–2009 

(236,706). 

11The output reduction impact of reducing labor 

demand may be partially offset by capital 

The relevant benefits, costs, and 

transfers that may apply are discussed.4

The NPRM proposes to require 

employers to offer H–2B workers and 

U.S. workers hired in response to the 

recruitment required as part of the 

application a wage that is at least equal 

to the highest of the prevailing wage, or 

the Federal, State or local minimum 

wage. The prevailing wage is the highest 

of the following: (1) The wage rate set 

forth in the CBA, if the job opportunity 

is covered by a CBA that was negotiated 

at arms’ length between the union and 

the employer; (2) the wage rate 

established under the Davis-Bacon Act 

or the McNamara-O’Hara Service 

Contract Act for the occupation in the 

area of intended employment, if the job 

opportunity is in an occupation for 

which such a wage rate has been 

determined; and (3) the arithmetic mean 

of the OES-reported wage. 

To estimate the proposed hourly 

change in wages, the Department 

collected H–2B program participation 

data for fiscal year (FY) 2009. We then 

matched the OES wage rates to the H– 

2B data for the same period by standard 

occupational code (SOC). Using all 

certified or partially certified 

applications in the H–2B program data, 

we calculated the increase in wages by 

subtracting the average H–2B hourly 

wage certified from the average OES 

average hourly wage, and we weighted 

this differential by the number of 

certified workers on each certified or 

partially certified application.5 We then 

summed those products and divided the 

sum by the total number of certified 

workers of all certified or partially 

certified applications.6 Based on this 

calculation, the proposed change in the 

method of determining wages will result 

in a $4.38 increase in the weighted 

average hourly wage for H–2B workers 

and similarly employed U.S. workers 

hired in response to the recruitment 

required as part of the application.7

The Department provides an 

assessment of transfer payments 

associated with increases in wages 

resulting from the change in the wage 

determination method. Transfer 

payments, as defined by OMB Circular 

A–4, are payments from one group to 

another that do not affect total resources 

available to society. Transfer payments 

are associated with a distributional 

effect, but do not result in additional 

benefits or costs to society. The primary 

recipients of transfer payments reflected 

in this analysis are H–2B workers and 

any U.S. workers hired in response to 

the required recruitment under the 

H–2B program. The primary payors of 

transfer payments reflected in this 

analysis will be H–2B employers, and 

under the proposed higher wages in the 

NPRM, those employers who choose to 

continue to participate are likely to be 

those that have the greatest need to 

access the H–2B program. When 

summarizing the benefits or costs of 

specific provisions of this proposed 

rule, we present the 10-year averages to 

reflect the typical annual effect. 

Employment in the H–2B program 

represents a very small fraction of the 

total employment in the U.S. economy, 

both overall and in the industries 

represented in the program. The H–2B 

program is capped at 66,000 visas 

issued per year (33,000 of which are 

made available biannually), which 

represents approximately 0.05 percent 

of total nonfarm employment in the U.S. 

economy (130.9 million).8 According to 

H–2B program data for FY 2007–2009, 

the average annual numbers of H–2B 

workers certified in the top five 

industries were as follows: 

Construction—30,242; Amusement, 

Gambling, and Recreation—14,041; 

Landscaping Services—78,027; 

Janitorial Services—30,902; and Food 

Services and Drinking Places—22,948. 

These employment numbers represent 

the following percentages of the total 

employment in each of these industries: 

Construction—0.4 percent (30,242/ 

7,265,648); Amusement, Gambling, and 

Recreation—0.9 percent (14,041/ 

1,506,120); Landscaping Services—13.2 

percent (78,027/589,698); Janitorial 

Services—3.3 percent (30,902/933,245); 

and Food Services and Drinking 

Places—0.2 percent (22,948/9,617,597).9

These percentages decrease further 

when scaled to the actual number of 

entries permitted each year: 

Construction—0.2 percent (14,756/ 

7,265,648); Amusement, Gambling, and 

Recreation—0.5 percent (6,851/ 

1,506,120); Landscaping Services—6.5 

percent (38,073/589,698); Janitorial 

Services—1.6 percent (15,079/933,245); 

and Food Services and Drinking 

Places—0.1 percent (11,197/ 

9,617,597).10 As these data illustrate, the 

H–2B program represents a small 

fraction of the total employment even in 

each of the top five industries in which 

H–2B workers are found—less than 1 

percent in most of the categories. 

i. Costs 

In standard economic models of labor 

supply and demand, an increase in the 

wage rate represents an increased 

production cost to employers leading to 

a reduction in the demand for labor. 

Because production costs increase with 

an increase in the wage rate, a resulting 

decrease in profits is possible for H–2B 

employers that are unable to increase 

prices to cover the cost increase. Some 

H–2B employers, however, can be 

expected to offset the cost increase by 

increasing the price of their products or 

services. In addition, workers who 

would have been hired at a lower wage 

rate are not hired at the higher wage 

rate, resulting in forgone earnings for 

workers. In this theoretical sense, to the 

extent that the higher wages imposed by 

the rule result in lower employment and 

lower output by firms employing those 

workers, the lost profits on the foregone 

output and the lost net wages to the 

foregone workers represent a 

deadweight loss because these gains 

from trade are not attained. This effect 

will be magnified during years in which 

the cap is not reached.11


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substitution and organizational substitution 

productivity effects. When substitution occurs, the 

deadweight loss will be reduced. Substitution may 

also involve outsourcing of production elements, 

which may entail a net welfare loss to the U.S. if 

outsourcing to a supplier overseas, but only a 

transfer if outsourcing to a supplier in the U.S. 

12See, e.g., Hamermesh, Daniel S., Labor 

Demand, Princeton and Chichester, U.K.: Princeton 

University Press, 1993. 

13 DOL believes that any decline in employment 

among employers participating in the H–2B 

program will be offset by increased employment 

among new employers who previously were unable 

to hire workers under the H–2B program. Therefore, 

there would be no appreciable decline in 

employment under the program. 

14See note 11, which explains that the 

Department assumes that 50 percent of workers 

entering the H–2B program in one year will remain 

in the country the following year and that 50 

percent of those will remain in the country for a 

third year. The Department data with regard to 

certified applications cannot be used to determine 

the actual number of H–2B workers in the country. 

Certifications are made without regard to the cap on 

the number of H–2B workers admissible each year 

and are not intended to indicate whether a worker 

actually entered the country to fill a position. 

Additionally, available DHS data rely on total 

entries of H–2B workers, which may or may not 

equal the admissions of H–2B workers in a given 

year. See http://www.dhs.gov/xlibrary/assets/

statistics/yearbook/2009/table25d.xls. The 

Department of State keeps records of visas issued 

but does not publicly break down these numbers 

based on subcategories within the H category. 

http://travel.state.gov/visa/statistics/nivstats/

nivstats_4582.html. 

15Our analysis focuses on the costs related to 

H–2B workers because of the lack of data on U.S. 

workers hired in response to recruitment conducted 

in connection with an H–2B application. 

16For 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 × 30.42 days]) and would employ the 

workers for 5 days per week. Thus, total number of 

days worked equals 217 [10 months × 30.42 days 

× (5⁄7)]. 

In a practical sense, because the total 

employment under the H–2B program is 

capped at 66,000 visas, the 

macroeconomic effect of reductions in 

H–2B employment and therefore 

reductions in output is expected to be 

minimal. There has generally been 

excess demand for H–2B workers well 

beyond the 66,000 limit, and DOL 

believes that the increased wages 

resulting from the proposed rule will 

not result in fewer than 66,000 visas for 

H–2B workers because, even if some 

employers decide not to participate in 

the H–2B program, other employers who 

previously had unfilled positions will 

participate. 

For example, for the years FY2007 

through 2009, employers applied for an 

average of 236,706 certified H–2B 

positions per year. This number reflects 

the number of positions certified, rather 

than the number of actual workers who 

entered to take up those positions, 

which is capped at 66,000 per year. 

Using this number of certified workers 

to represent the quantity of labor 

demanded, and assuming an elasticity 

of labor demand of ¥0.3,12 a $4.38 (51 

percent) increase in wages would result 

in a 15 percent decline in the number 

of H–2B workers requested by 

employers, for a remaining total of 

201,200 H–2B certified positions 

requested by employers, which still far 

exceeds the 66,000 maximum visas 

allowed under the H–2B program. 

Therefore, any loss of production 

resulting from some employers 

dropping out of the program will be 

offset by production by other employers 

that would then be able to employ 

H–2B workers. Thus, DOL believes that 

for years in which the number of 

applications exceeds the number 

available under the cap, there will be no 

deadweight loss in the market for H–2B 

workers even if some employers do not 

participate in the program as a result of 

the higher H–2B wages.13 Indeed, the 

higher wages expected to result from the 

proposed rule could in turn result in a 

more efficient distribution of H–2B visas 

to employers who can less easily 

employ U.S. workers. DOL believes that 

those employers who can more easily 

attract U.S. workers will be dissuaded 

from attempting to participate in the 

H–2B program after the proposed rule 

changes, so that those employers 

participating in the H–2B program after 

the proposed rule will have a greater 

need for the program, on average, than 

those employers participating in the 

H–2B program before the proposed 

changes. 

In years in which the number of 

certified H–2B positions is less than the 

66,000 visa cap, the higher proposed 

wages resulting from this NPRM could 

be expected to result in a reduction in 

employment of H–2B workers and 

therefore a reduction in output by 

employers participating in the H–2B 

program. This employment reduction 

would be expected to be partially offset 

by increased employment of U.S. 

workers to the extent that employers 

could attract U.S. workers (by offering 

higher wages, for example) or could 

make other adjustments, such as 

substituting capital for labor, but, in a 

theoretical sense, the reduction in 

employment and output would not be 

completely offset, potentially resulting 

in some deadweight loss in production 

among H–2B employers. However, the 

history of the H–2B program suggests 

that this situation is rare. In recent 

history, the number of H–2B visas has 

reached the 66,000 cap every year 

except 2009. 

ii. Transfers 

The proposed change in the method 

of determining wages results in transfers 

from H–2B workers to U.S. workers and 

from U.S. employers to both U.S. 

workers and H–2B workers. 

A transfer from H–2B workers to U.S. 

workers arises because, as recruitment 

wages for U.S. workers increase, a larger 

number of U.S. workers may be 

attracted to work in jobs that would 

otherwise be occupied by H–2B 

workers. Additionally, faced with 

higher H–2B wages, some employers 

may find domestic workers relatively 

less expensive and may choose not to 

participate in the H–2B program and 

instead employ U.S. workers. While 

some of these U.S. workers may be 

drawn from other employment, some of 

them would otherwise remain 

unemployed or out of the labor force 

entirely, earning no salary. 

The Department, however, is not able 

to quantify these transfer payments with 

precision. Difficulty in calculating these 

transfer payments arises primarily from 

uncertainty about the number of U.S. 

workers currently collecting 

unemployment insurance benefits who 

will become employed as a result of this 

rule. 

To estimate the total transfer to H–2B 

workers via the increased wages 

resulting from the new wage 

determination method, the Department 

multiplied the total number of H–2B 

workers (115,500, which includes both 

new entrants and an assumed portion of 

those who entered in each of the two 

previous years),14 by the weighted 

average hourly wage increase ($4.38), 

the number of hours worked per day (7), 

and the total number of days worked 

(217).15,16 We estimate the total annual 

average transfer incurred due to the 

increase in wages at $769.4 million. As 

a result, OMB has determined that the 

proposed rule is an economically 

significant rule. 

The increase in the wage rates 

induces a transfer from participating 

employers not only to H–2B workers, 

but also to workers hired in response to 

the required recruitment. The higher 

wages are beneficial to U.S. workers 

because they enhance workers’ ability to 

meet the cost of living and to spend 

money in their local communities, 

which has the secondary impact of 

increasing economic activity in the 

community. These are important 

concerns to the current Administration 

and a key aspect of the Department’s 

mandate to ensure that wages of 

similarly employed U.S. workers are not 

adversely affected. 


hsrobinson on DSK69SOYB1PROD with PROPOSALS2
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17Source: ftp://ftp.bls.gov/pub/suppl/

empsit.ceseeb1.txt. 

18Source for total employment by industry: 2007 

Economic Census. The number of visas available 

under the H–2B program is 66,000, assuming no 

statutory increases in the number of visas available 

for entry in a given year. We also assume that half 

of all such workers (33,000) in any year stay at least 

one additional year, and half of those workers 

(16,500) will stay a third year, for a total of 115,500 

H–2B workers in a given year. The scale factor was 

derived by dividing 115,500 by the total number of 

workers certified per year on average during 

FY2007–2009 (236,706). 

B. Initial Regulatory Flexibility Analysis 

The Regulatory Flexibility Act of 

1980, as amended (RFA), requires 

agencies to prepare regulatory flexibility 

analyses and make them available for 

public comment when proposing 

regulations that will have a significant 

economic impact on a substantial 

number of small entities. See 5 U.S.C. 

603. If the rule is not expected to have 

a significant economic impact on a 

substantial number of small entities, the 

RFA allows an agency to certify such, in 

lieu of preparing an analysis. See 5 

U.S.C. 605. For the reasons explained in 

this section, the Department believes 

this NPRM is not likely to impact a 

substantial number of small entities 

and, therefore, an initial regulatory 

flexibility analysis is not required by the 

RFA. However, in the interest of 

transparency and to provide a full 

opportunity for public comment, we 

have prepared the following Initial 

Regulatory Flexibility Analysis to assess 

the impact of this regulation on small 

entities, as defined by the applicable 

Small Business Administration (SBA) 

size standards. We specifically request 

comments on the following burden 

estimates, including the number of 

small entities affected by the 

requirements, and on alternatives that 

could reduce the burden on small 

entities. The Chief Counsel for 

Advocacy of the Small Business 

Administration was notified of a draft of 

this proposed rule upon submission of 

the proposed rule to OMB under E.O. 

12866, as amended, ‘‘Regulatory 

Planning and Review’’ 58 FR 51735, Oct. 

4, 1993; 67 FR 9385, Feb. 28, 2002; 72 

FR 2763, Jan. 23, 2007. 

Because employers seeking to 

participate in the H–2B program are 

derived from virtually all segments of 

the economy and across industries, 

those participating businesses are a 

small portion of the national economy 

overall. A Guide for Government 

Agencies: How to Comply with the RFA, 

Small Business Administration, at 20 

(‘‘the substantiality of the number of 

businesses affected should be 

determined on an industry-specific 

basis and/or the number of small 

businesses overall’’). 

Employment in the H–2B program 

represents a very small fraction of the 

total employment in the U.S. economy, 

both overall and in the industries 

represented in the H–2B program. The 

H–2B program is capped at 66,000 visas 

issued per year, which represents 

approximately 0.05 percent of total 

nonfarm employment in the U.S. 

economy (130.9 million).17 According to 

H–2B program data for FY2007–2009, 

the average annual numbers of H–2B 

workers certified in the top five 

industries were as follows: 

Construction—30,242; Amusement, 

Gambling, and Recreation—14,041; 

Landscaping Services—78,027; 

Janitorial Services—30,902; and Food 

Services and Drinking Places—22,948. 

When the number of workers certified is 

scaled to reflect the actual number of 

entries permitted each year, given the 

H–2B visa cap of 66,000 workers, the 

data reflect that H–2B workers represent 

the following percentages of the total 

employment in each of these industries: 

Construction—0.2 percent (14,756/ 

7,265,648); Amusement, Gambling, and 

Recreation—0.5 percent (6,851/ 

1,506,120); Landscaping Services—6.5 

percent (38,073/589,698); Janitorial 

Services—1.6 percent (15,079/933,245); 

and Food Services and Drinking 

Places—0.1 percent (11,197/ 

9,617,597).18 As these data illustrate, the 

H–2B program represents a small 

fraction of the total employment even in 

each of the top five industries in which 

H–2B workers are found. 

1. Description of the Reasons That 

Action by the Agency Is Being 

Considered 

The Department has determined for a 

variety of reasons that a new rulemaking 

effort is necessary for the H–2B program 

with respect to the wages paid to these 

workers. Chief among these reasons is 

the United States District Court for the 

Eastern District of Pennsylvania’s order 

and accompanying opinion in Comite ́

de Apoyo a los Trabajadores Agricolas 

(CATA) v. Solis, Civil No. 2:09–cv–240– 

LP, 2010 WL 3431761 (E.D. Pa. Aug. 30, 

2010), which invalidated the 

application of the four-tier wage skill 

levels to the H–2B program and required 

the Department to ‘‘promulgate new 

rules concerning the calculation of the 

prevailing wage rate in the H–2B 

program that are in compliance with the 

Administrative Procedure Act no later 

than 120 days from the date of this 

order.’’ The Department is concerned 

that the methodology for calculating 

prevailing wages at issue in the Court’s 

order does not adequately reflect the 

appropriate wage necessary to ensure 

U.S. workers are not adversely affected 

by the employment of H–2B workers. 

2. Succinct Statement of the Objectives 

of, and Legal Basis for, the Proposed 

Rule 

The Department has grown 

increasingly concerned that the current 

prevailing wage calculation method 

does not adequately reflect the 

appropriate wage necessary to ensure 

U.S. workers are not adversely affected 

by the employment of H–2B workers. 

Accordingly, the Department is 

proposing to establish a new wage 

methodology that adequately protects 

U.S. and H–2B workers. The legal basis 

for the proposed rule is the 

Department’s authority, as delegated 

from DHS under its regulations at 8 CFR 

214.2(h)(6), to grant temporary labor 

certifications under the H–2B program. 

Additionally, as discussed earlier, the 

Department is subject to an order from 

the United States District Court for the 

Eastern District of Pennsylvania to 

‘‘promulgate new rules concerning the 

calculation of the prevailing wage rate 

in the H–2B program that are in 

compliance with the Administrative 

Procedure Act no later than 120 days 

from the date of this order.’’ Comite ́ de 

Apoyo a los Trabajadores Agricolas 

(CATA) v. Solis, Civil No. 2:09–cv–240– 

LP, 2010 WL 3431761 (E.D. Pa. Aug. 30, 

2010). 

3. Description of, and Where Feasible, 

an Estimate of the Number of Small 

Entities to Which the Proposed Rule 

Will Apply 

Definition of a Small Business 

A small entity is one that is 

independently owned and operated and 

that is not dominant in its field of 

operation. The definition of small 

business varies from industry to 

industry to properly reflect industry size 

differences. An agency must either use 

the SBA definition for a small entity or 

establish an alternative definition for 

the industry. The Department has 

conducted a small entity impact 

analysis on small businesses in the five 

industries with the largest number of 

H–2B workers and for which data were 

available, as mentioned above: 

Landscaping Services; Janitorial 

Services (includes housekeeping 

services); Food Services and Drinking 

Places; Amusement, Gambling, and 

Recreation; and Construction. These top 

five industries accounted for almost 75 

percent of the total number of H–2B 


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19According to H–2B program data, the average 

annual number of firms (of all sizes) and H–2B 

workers certified for these industries during 

FY2007–2009 were as follows: Landscaping 

Services, Firms—2,754, Workers—78,027; Janitorial 

Services, Firms—788, Workers—30,902; Food 

Services and Drinking Places, Firms—851, 

Workers—22,948; Amusement, Gambling, and 

Recreation, Firms—227, Workers—14,041; and 

Construction, Firms—860, Workers—30,242. 

20The SBA small business size standards for 

construction range from $7 million (land 

subdivision) to $33.5 million (general building and 

heavy construction). However, because employers 

representing all types of construction businesses 

may apply for certification to employ H–2B 

workers, the Department used an average of $20.7 

million as the size standard for construction. 

21The total number of firms classified as small 

entities in these industries is as follows: 

Landscaping Services, 63,210; Janitorial Services, 

45,495; Food Services and Drinking Places, 293,373; 

Amusement, Gambling, and Recreation, 43,726; and 

Construction, 689,040. 

22Source: 2002 County Business Patterns and 

2002 Economic Census. These data do not 

distinguish between U.S. workers and foreign 

workers. 

23The Department does not believe the 

imposition of these wages will cause increases in 

the wage beyond that represented by the OES 

arithmetic mean. A CBA wage may in fact be the 

highest of the applicable wages; even under the 

2008 Final Rule, if the job opportunity were 

covered by a CBA, the wage rate set forth in the 

CBA would be the required wage. Accordingly, 

including the wage rate set forth in the CBA among 

the definition of prevailing wage will not result in 

an increased cost to the employer. As for the 

application of SCA and DBA to the PWD, in most 

cases, the SCA wage is equivalent to the arithmetic 

mean of the OES wage, and will also not result in 

an increased cost to employers beyond that 

represented by the change in the OES from the four 

tiers to the arithmetic mean. The application of 

DBA wages, and their potential impact on the 

relative wage increase, cannot be determined at this 

time. As a result, this analysis assumes that the OES 

wage will represent the highest of the three 

alternatives. 

workers certified during FY2007– 

2009.19

One industry, Forest Services, made 

the initial top-five list but is not 

included in this analysis because the 

only data available for forestry also 

include various agriculture, fishing, and 

hunting activities. Relevant data for 

Forestry only were not available. The 

Department requests the public to 

propose possible sources of data or 

information on the revenues and 

average number of workers of a typical 

small Forestry firm. 

We have adopted the SBA small 

business size standard for each of the 

five industries, which is a firm with 

annual revenues equal to or less than 

the following: Landscaping Services, $7 

million; Janitorial Services, $16.5 

million; Food Services and Drinking 

Places, $7 million; Amusement, 

Gambling, and Recreation, $7 million; 

and Construction, $20.7 million.20

The Department has used 

representative data because actual data 

regarding entity size is not uniformly 

collected in the H–2B program. The 

Department added information 

collection elements surrounding entity 

size, revenue, and number of all 

employees in early 2009, specifically to 

obtain information regarding the size 

and status of program participants. This 

would provide the Department with a 

little over a year of program data 

regarding participants’ size and status. 

However, these data elements are not 

required to be provided in order for an 

employer to submit the Application for 

Temporary Employment Certification, 

and employers accordingly have the 

option of not providing information 

about their size, employee complement, 

and revenues without penalty in the 

application process. As a result, the 

information on the size and status of 

program participants that has been 

collected since 2009 is therefore not 

sufficient to provide to the Department 

statistically valid data to use in 

analyzing the actual impact on small 

businesses. 

4. Description of the Projected 

Reporting, Recordkeeping and Other 

Compliance Requirements of the 

Proposed Rule 

The proposed rule does not impose 

any reporting or recordkeeping 

requirements. 

With regard to other compliance 

requirements, the Department has 

estimated the incremental costs for 

small businesses from the baseline. For 

this proposed rule, the baseline is the 

2008 Final Rule. This Initial Regulatory 

Flexibility Analysis reflects the 

incremental cost of this rule as it adds 

to the requirements in the 2008 Final 

Rule. Using available data, we have 

estimated the costs of the increased 

wages and the time required to read and 

review the Final Rule. 

The Department receives an average 

of 8,717 applications annually (which is 

not necessarily the same as the number 

of applicants, because one employer 

may file more than one application) for 

the H–2B program, and the Department 

estimates that an average of 6,980 of 

those applications result in petitions for 

H–2B workers that are approved by 

DHS. Even if all 6,980 applications are 

filed by unique small entities, the 

percentage of small entities authorized 

to employ temporary non-agricultural 

workers will be less than 1 percent of 

the total number of small entities in 

these industries.21 Based on this 

analysis, the Department estimates that 

the rule will impact less than 1 percent 

of the total number of small businesses. 

A detailed industry-by-industry analysis 

is provided below. 

To examine the impact of this 

proposed rule on small entities, the 

Department evaluates the impact of the 

incremental costs on a hypothetical 

small entity of average size, in terms of 

the total number of both U.S. and 

foreign workers, in each industry if it 

were to fill 50 percent of its workforce 

with H–2B workers. There are no 

available data to estimate the 

breakdown of the workforce into U.S. 

and foreign workers. Based on 

Economic Census data, the total number 

of workers (including both U.S. and 

foreign workers) for this hypothetical 

small business is as follows: 

Landscaping Services, 2.3 workers; 

Janitorial Services, 11.3 workers; Food 

Services and Drinking Places, 6.3 

workers; Amusement, Gambling, and 

Recreation, 5.0 workers; and 

Construction, 6.3 workers.22

Also using Economic Census data, we 

derived the annual revenues for small 

entities in each of the top five industries 

by multiplying the average number of 

workers by the average revenue per 

worker for each of the industries. The 

Department estimates that small 

businesses in the top five industries 

have the following annual revenues: 

Landscaping Services, $0.181 million; 

Janitorial Services, $0.336 million; Food 

Services and Drinking Places, $0.223 

million; Amusement, Gambling, and 

Recreation, $0.209 million, and 

Construction, $0.884 million. 

a. Change in the Method of Determining 

Wages for H–2B Workers 

The Department proposes to require 

employers to offer H–2B workers and to 

any similarly employed U.S. worker 

hired in response to the recruitment 

required as part of the application a 

wage that is at least equal to the 

prevailing wage, or the Federal, State or 

local minimum wage, whichever is 

highest. The prevailing wage is the 

highest of the following: (1) The wage 

rate set forth in the CBA, if the job 

opportunity is covered by a CBA that 

was negotiated at arms’ length between 

the union and the employer; (2) the 

wage rate established under the DavisBacon Act or the McNamara-O’Hara 

Service Contract Act for the occupation 

in the area of intended employment if 

the job opportunity is in an occupation 

for which such a wage rate has been 

determined; and (3) the arithmetic mean 

of the OES-reported wage.23

To estimate the proposed hourly 

change in wages, the Department 

collected H–2B program participation 

data for FY2009. We then matched the 

OES wage rates to the H–2B data for the 


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24A total of 30 applications were set aside due 

to invalid data. 

25These wage increases reflect the differences 

between the OES wages and the H–2B wages for the 

occupations most closely associated with each 

industry. This estimate may slightly understate the 

wage increase because cases in which the H–2B 

wages were higher than OES wages would bias the 

estimate downward; however, this occurred in only 

about 4.1 percent of all cases. 

26For 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 × 30.42 days]) and would employ the 

workers for 5 days per week. Thus, total number of 

days worked equals 217 [10 months × 30.42 days 

× (5⁄7)]. 

27The 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. 

28The 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. 

29The source of the numerator (i.e., the number 

of certified H–2B employers) is H–2B program data 

for FY2007–2009. The source of the denominator 

(i.e., the total number of U.S. businesses meeting 

the SBA small-size criteria) is the 2002 County 

Business Patterns and 2002 Economic Census. 

http://www.census.gov/econ/susb/data/ 

susb2002.html. We multiply the numerator by 0.50 

to reflect our assumption that 50 percent of H–2B 

employers are small businesses. 

same period by SOC. Using all certified 

or partially certified applications in the 

H–2B program data, we calculated the 

increase in wages for each industry by 

subtracting the H–2B hourly wage 

certified from the OES average hourly 

wage and then estimated the average of 

those differences for each industry.24

These calculations yielded the 

following hourly wage increases by 

industry associated with this proposed 

rule: Landscaping services, $3.60; 

Janitorial Services, $3.72; Food Services 

and Drinking Places, $1.29; Amusement, 

Gambling, and Recreation, $1.37; and 

Construction, $10.61.25

To estimate the total cost to the 

average small entity of increased wages 

for H–2B workers due to the new wage 

determination method, the Department 

multiplied the average hourly increase 

in wages for the top five industries by 

the average total number of days worked 

by H–2B workers, the number of hours 

worked per day, and the average 

number of H–2B workers employed by 

small entities in each of the top five 

industries.26 Our estimates of the total 

annual average cost incurred due to the 

increase in wages for the average small 

employer in the top five industries are 

as follows: Landscaping Services, 

$6,562 ($3.60 × 217 × 7 × 1.2); Janitorial 

Services, $32,209 ($3.72 × 217 × 7 × 5.7); 

Food Services and Drinking Places, 

$6,270 ($1.29 × 217 × 7 × 3.2); 

Amusement, Gambling, and Recreation, 

$5,203 ($1.37 × 217 × 7 × 2.5); and 

Construction, $51,573 ($10.61 × 217 × 7 

× 3.2). 

b. Reading and Reviewing the New 

Processes and Requirements 

During the first year that this rule 

would be in effect, employers would 

need to learn about the new PWD. We 

estimate this cost for a hypothetical 

small entity which is interested in 

applying for H–2B workers by 

multiplying the time required to read 

the new rule and any educational and 

outreach materials that explain the wage 

calculation methodology under the rule 

by the average compensation of a 

human resources manager.27 In the first 

year of the rule, the Department 

estimates that the average small 

business participating in the program 

will spend approximately 1 hour of staff 

time to read and review the new 

regulation, which amounts to 

approximately $61.42 ($61.42 × 1) in 

labor costs in the first year.28

c. Total Cost Burden for Small Entities 

The Department’s calculations 

indicate that for a hypothetical small 

entity in the top five industries that 

applies for one worker (representing the 

smallest of the small entities that hire 

H–2B workers), the total average annual 

costs of the NPRM are as follows: 

Landscaping Services, $5,794; Janitorial 

Services, $5,976; Food Services and 

Drinking Places, $2,281; Amusement, 

Gambling, and Recreation, $2,402, and 

Construction, $16,455. Similarly, the 

analogous costs for employers in the top 

five industries that hire the average 

number of H–2B workers for their 

respective industries are as follows: 

Landscaping Services, $6,638; Janitorial 

Services, $33,004; Food Services and 

Drinking Places, $6,832; Amusement, 

Gambling, and Recreation, $5,760, and 

Construction, $51,481. 

The proposed rule is expected to have 

a significant economic impact on a 

hypothetical small entity that applied 

for enough workers to fill 50 percent of 

its workforce. While applying to hire 

H–2B workers is voluntary, and any 

employer (small or otherwise) may 

entirely avoid costs associated with the 

proposed changes by choosing not to 

apply, an employer, whether it 

continues to participate in the H–2B 

program or fills its workforce with U.S. 

workers, could face sizeable costs. 

However, increased employment 

opportunities for U.S. workers and 

higher wages for both H–2B and U.S. 

workers provide a broad societal benefit 

that in the Department’s view outweighs 

these costs. 

The small entities that have 

historically applied for H–2B workers, 

however, represent very small 

proportions of all small businesses. The 

following are the percentages of firms 

that were certified for H–2B workers 

among all small U.S. businesses in their 

respective industries: Landscaping 

Services, 2.2 percent [(2,754 × 0.50)/ 

63,210]; Janitorial Services, 0.9 percent 

[(788 × 0.50)/45,595]; Food Services and 

Drinking Places, 0.1 percent [(851 × 

0.50)/293,373]; Amusement, Gambling, 

and Recreation, 0.3 percent [(227 × 

0.50)/43,726], and Construction, 0.1 

percent [(860 × 0.50)/689,040].29 Due to 

the statutory annual cap on available 

visas, the percentage of small entities 

receiving H–2B visas, to which the full 

cost burden would apply, would be 

even lower. 

Therefore, the Department estimates 

that this proposed rule will have a net 

direct cost impact on a very limited 

number of small non-agricultural 

employers above the baseline of the 

current costs incurred by the program as 

it is currently implemented under the 

2008 Final Rule. Accordingly, the 

proposed rule is not expected to impact 

a substantial number of small entities. 

The Department specifically requests 

comments on these burden estimates, 

including the number of small entities 

affected by this proposed change in 

prevailing wage methodology, and on 

how the final rule can reduce burden on 

small entities while meeting the 

statutory requirement that the 

employment of H–2B workers not 

adversely affect the wages and working 

conditions of similarly employed U.S. 

workers. 

5. Identification of All Relevant Federal 

Rules That May Duplicate, Overlap or 

Conflict With the Proposed Rule 

The Department is not aware of any 

relevant Federal rules that duplicate, 

overlap or conflict with the proposed 

rule. 

6. Alternatives Considered as Options 

for Small Entities Businesses 

While the Department believes this 

proposed regulation would not impact a 

substantial number of small entities, we 

recognize the potential impact on small 

businesses and have considered 

alternatives to minimize such impacts. 

The Department’s mandate under the 

H–2B program is to set requirements for 

employers that wish to hire temporary 

foreign non-agricultural workers. Those 

requirements are designed to ensure that 


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foreign workers are used only if 

qualified domestic workers are not 

available and that the hiring of H–2B 

workers will not adversely affect the 

wages and working conditions of 

similarly employed domestic workers. 

These regulations set those minimum 

standards with regard to wages. The 

required wage rate is a critical aspect of 

the H–2B program that determines 

whether U.S. workers’ wages will be 

adversely affected by the admission of 

foreign workers. To create different and 

likely lower standards for one class of 

employers (e.g., small businesses) 

would essentially sanction the very 

adverse effect that the Department is 

compelled to prevent. 

The Department considered alternate 

data sources to determine prevailing 

wages, but given the time constraints 

imposed by the court’s order and the 

absence of available data, we were 

unable to fully analyze these 

alternatives. The only available sources 

of information that we are aware of for 

setting the prevailing wage are the OES, 

DBA/SCA, and surveys created by 

private entities. The NRPM discusses 

the agency’s proposal about how those 

sources should be used. It would be 

difficult, if not impossible, to cost out 

any alternative use of these sources. For 

example, to the Department’s 

knowledge there is no accessible data 

base of acceptable private surveys that 

would allow us to determine the cost 

implications of allowing their continued 

use. While the Department has been 

unable to fully analyze other viable 

options for the calculation of prevailing 

wages for small entities, the Department 

invites comments on the availability, 

usefulness and costs of other potential, 

reliable data sources. 

Ultimately the decision of an 

employer to apply for H–2B workers is 

a voluntary choice. That is, any 

individual employer can avoid the costs 

associated with the NPRM by not 

applying for H–2B workers. 

C. Unfunded Mandates Reform Act of 

1995 

Title II of the Unfunded Mandates 

Reform Act of 1995 (2 U.S.C. 1531) 

directs agencies to assess the effects of 

Federal regulatory actions on State, 

local, and tribal governments, and the 

private sector. The proposed rule has no 

Federal mandate, which is defined in 

2 U.S.C. 658(6) to include either a 

‘‘Federal intergovernmental mandate’’ or 

a ‘‘Federal private sector mandate.’’ A 

Federal mandate is any provision in a 

regulation that imposes an enforceable 

duty upon State, local, or tribal 

governments, or imposes a duty upon 

the private sector which is not 

voluntary. A decision by a private entity 

to obtain an H–2B worker is purely 

voluntary and is, therefore, excluded 

from any reporting requirement under 

the Act. 

D. Small Business Regulatory 

Enforcement Fairness Act of 1996 

The Department has determined that 

this rulemaking does not impose a 

significant impact on a substantial 

number of small entities under the RFA; 

therefore, the Department is not 

required to produce any compliance 

guides for small entities as mandated by 

the SBREFA. The Department has, 

however, concluded that this proposed 

rule is a major rule requiring review by 

the Congress under the SBREFA because 

it will likely result in: (1) An annual 

effect on the economy of $100 million 

or more; (2) a major increase in costs or 

prices for consumers, individual 

industries, Federal, State or local 

Government agencies, or geographic 

regions; or (3) significant adverse effects 

on competition, employment, 

investment, productivity, innovation, or 

on the ability of U.S.-based enterprises 

to compete with foreign-based 

enterprises in domestic or export 

markets. 

E. Executive Order 13132—Federalism 

The Department has reviewed this 

proposed rule in accordance with E.O. 

13132 regarding federalism and has 

determined that it does not have 

federalism implications. The proposed 

rule does not have substantial direct 

effects on States, on the relationship 

between the States, or on the 

distribution of power and 

responsibilities among the various 

levels of government as described by 

E.O. 13132. Therefore, the Department 

has determined that this proposed rule 

will not have a sufficient federalism 

implication to warrant the preparation 

of a summary impact statement. 

F. Executive Order 13175—Indian 

Tribal Governments 

This proposed rule was reviewed 

under the terms of E.O. 13175 and 

determined not to have tribal 

implications. The proposed rule does 

not have substantial direct effects on 

one or more Indian tribes, on the 

relationship between the Federal 

Government and Indian tribes, or on the 

distribution of power and 

responsibilities between the Federal 

Government and Indian tribes. As a 

result, no tribal summary impact 

statement has been prepared. 

G. Assessment of Federal Regulations 

and Policies on Families 

Section 654 of the Treasury and 

General Government Appropriations 

Act, enacted as part of the Omnibus 

Consolidated and Emergency 

Supplemental Appropriations Act of 

1999 (Pub. L. 105–277, 112 Stat. 2681) 

requires the Department to assess the 

impact of this proposed rule on family 

well-being. A rule that is determined to 

have a negative effect on families must 

be supported with an adequate 

rationale. 

The Department has assessed this 

proposed rule and determines that it 

will not have a negative effect on 

families. 

H. Executive Order 12630—Government 

Actions and Interference With 

Constitutionally Protected Property 

Rights 

The proposed rule is not subject to 

E.O. 12630, Governmental Actions and 

Interference with Constitutionally 

Protected Property Rights, because it 

does not involve implementation of a 

policy with takings implications. 

I. Executive Order 12988—Civil Justice 

The proposed rule has been drafted 

and reviewed in accordance with E.O. 

12988, Civil Justice Reform, and will not 

unduly burden the Federal court 

system. The Department has developed 

the proposed rule to minimize litigation 

and provide a clear legal standard for 

affected conduct, and has reviewed the 

proposed rule carefully to eliminate 

drafting errors and ambiguities. 

J. Plain Language 

The Department drafted this NPRM in 

plain language. 

K. Paperwork Reduction Act 

As part of its continuing effort to 

reduce paperwork and respondent 

burden, the Department conducts a 

preclearance consultation program to 

provide the general public and Federal 

agencies with an opportunity to 

comment on proposed and continuing 

collections of information in accordance 

with the Paperwork Reduction Act of 

1995 (PRA) (44 U.S.C. 3506(c)(2)(A)). 

This process helps to ensure that the 

public understands the Department’s 

collection instructions; respondents 

provide requested data in the desired 

format; reporting burden (time and 

financial resources) is minimized; 

collection instruments are clearly 

understood; and the Department 

properly assesses the impact of 

collection requirements on respondents. 

The PRA requires all Federal agencies 

to analyze proposed regulations for 


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potential time burdens on the regulated 

community created by provisions 

within the proposed regulations that 

require the submission of information. 

These information collection (IC) 

requirements must be submitted to the 

OMB for approval. Persons are not 

required to respond to a collection of 

information unless it displays a 

currently valid OMB control number as 

required in 5 CFR 1320.11(l) or it is 

exempt from the PRA. 

The majority of the IC requirements 

for the current H–2B program are 

approved under OMB control number 

1205–0466 (which includes ETA Form 

9141 and ETA Form 9142). There are no 

burden adjustments that need to be 

made to the analysis. For an additional 

explanation of how the Department 

calculated the burden hours and related 

costs, the PRA package for information 

collection OMB control number 1205– 

0466 may be obtained by contacting the 

PRA addressee shown below or at 

http://www.RegInfo.gov. 

PRA Addressee: Sherril Hurd, Office 

of Policy Development and Research, 

U.S. Department of Labor, Employment 

& Training Administration, 200 

Constitution Avenue, NW., Room 

N–5641, Washington, DC 20210. 

Telephone: 202–693–3700 (this is not a 

toll-free number). 

List of Subjects in 20 CFR Part 655 

Administrative practice and 

procedure, Employment, Employment 

and training, Enforcement, Foreign 

workers, Forest and forest products, 

Fraud, Health professions, Immigration, 

Labor, Longshore and harbor work, 

Migrant workers, Nonimmigrant 

workers, Passports and visas, Penalties, 

Reporting and recordkeeping 

requirements, Unemployment, Wages, 

Working conditions. 

Accordingly, ETA proposes to amend 

20 CFR part 655 as follows: 

Title 20—Employees’ Benefits 

PART 655—TEMPORARY 

EMPLOYMENT OF FOREIGN 

WORKERS IN THE UNITED STATES 

1. Revise the authority citation for 

part 655 to read as follows: 

Authority: Section 655.0 issued under 8 

U.S.C. 1101(a)(15)(E)(iii), 1101(a)(15)(H)(i) 

and (ii), 1182(m), (n) and (t), 1184(c), (g), and 

(j), 1188, and 1288(c) and (d); sec. 3(c)(1), 

Pub. L. 101–238, 103 Stat. 2099, 2102 (8 

U.S.C. 1182 note); sec. 221(a), Pub. L. 101– 

649, 104 Stat. 4978, 5027 (8 U.S.C. 1184 

note); sec. 303(a)(8), Pub. L. 102–232, 105 

Stat. 1733, 1748 (8 U.S.C. 1101 note); sec. 

323(c), Pub. L. 103–206, 107 Stat. 2428; sec. 

412(e), Pub. L. 105–277, 112 Stat. 2681 (8 

U.S.C. 1182 note); sec. 2(d), Pub. L. 106–95, 

113 Stat. 1312, 1316 (8 U.S.C. 1182 note); 

Pub. L. 109–423, 120 Stat. 2900; and 8 CFR 

214.2(h)(4)(i). 

Section 655.00 issued under 8 U.S.C. 

1101(a)(15)(H)(ii), 1184(c), and 1188; and 8 

CFR 214.2(h). 

Subparts A and C issued under 8 CFR 

214.2(h). 

Subpart B issued under 8 U.S.C. 

1101(a)(15)(H)(ii)(a), 1184(c), and 1188; and 8 

CFR 214.2(h). 

Subparts D and E authority repealed. 

Subparts F and G issued under 8 U.S.C. 

1288(c) and (d); and sec. 323(c), Pub. L. 103– 

206, 107 Stat. 2428. 

Subparts H and I issued under 8 U.S.C. 

1101(a)(15)(H)(i)(b) and (b)(1), 1182(n) and 

(t), and 1184(g) and (j); sec. 303(a)(8), Pub. L. 

102–232, 105 Stat. 1733, 1748 (8 U.S.C. 1101 

note); sec. 412(e), Pub. L. 105–277, 112 Stat. 

2681; and 8 CFR 214.2(h). 

Subparts J and K authority repealed. 

Subparts L and M issued under 8 U.S.C. 

1101(a)(15)(H)(i)(c) and 1182(m); sec. 2(d), 

Pub. L. 106–95, 113 Stat. 1312, 1316 (8 U.S.C. 

1182 note); Pub. L. 109–423, 120 Stat. 2900; 

and 8 CFR 214.2(h). 

2. Amend § 655.10, by: 

a. Revising paragraphs (b) 

introductory text, (b)(1), and (b)(2); 

b. Removing paragraphs (b)(4) and 

(b)(5) and redesignating paragraph (b)(3) 

as (b)(4) and (b)(6) as (b)(5); 

c. Adding a new paragraph (b)(3); and 

d. Removing paragraphs (f) and (g) 

and redesignating paragraphs (h) as (f), 

and (i) as (g). 

§ 655.10 Determination of prevailing wage 

for temporary labor certification purposes. 

* * * * * 

(b) Basis for prevailing wage 

determinations. The prevailing wage is 

the highest of the following: 

(1) The wage rate set forth in the 

collective bargaining agreement (CBA), 

if the job opportunity is covered by a 

CBA that was negotiated at arms’ length 

between the union and the employer; 

(2) The wage rate established under 

the Davis-Bacon Act or the McNamaraO’Hara Service Contract Act for the 

occupation in the area of intended 

employment if the job opportunity is in 

an occupation for which such a wage 

rate has been determined; or 

(3) The arithmetic mean of the wages 

of workers similarly employed in the 

occupation in the area of intended 

employment as determined by the OES. 

This computation will be based on the 

arithmetic mean wage of all workers in 

the occupation. 

* * * * * 

Signed in Washington this 1st day of 

October 2010. 

Jane Oates, 

Assistant Secretary, Employment and 

Training Administration. 

[FR Doc. 2010–25142 Filed 10–4–10; 8:45 am] 

BILLING CODE 4510–FP–P 


hsrobinson on DSK69SOYB1PROD with PROPOSALS2