The substance and impact of the H-2B guestworker program appropriations riders some members of Congress are trying to renew

On June 8, the Senate Subcommittee on Immigration and the National Interest held a hearing on the H-2B temporary foreign worker program—a guestworker program that allows U.S. employers to hire workers from abroad for lesser-skilled occupations like landscaping, hospitality, seafood processing, and construction. It is a well-known fact the the program is rife with abuses, and I’ve shown how employers can legally underpay migrant workers in the program. News reports have revealed that employers use it try to avoid hiring American workers and that enforcement is lacking. (For more background, see EPI’s FAQ on the H-2B program.)

The hearing was timely because H-2B is currently a live issue on Capitol Hill. By that I mean Congress is considering provisions (also known as riders) to the omnibus appropriations bill that will fund the government for all of fiscal year 2017, which would extend riders amending the H-2B program that are currently in force during fiscal 2016. These riders deregulate the program by making it easier to exploit and underpay migrant workers while restricting the access of U.S. workers to jobs in their own communities. The riders also expand the program, allowing it to as much as quadruple in size. Members of Congress who want to grow the H-2B program, while keeping wages low for migrant workers, are again trying to hijack the appropriations process because there isn’t enough political support to pass the H-2B riders as a standalone bill.

Until now, very little has been written about the the substance of the riders and the H-2B rules they affect, or the impact they are having on the program and on the wages and working conditions of U.S. and migrant workers in the main H-2B occupations. The following is an excerpt from my congressional testimony on the H-2B program, which has been updated and edited for clarity; it explains in detail what you need to know about the H-2B riders.

Introduction

It is important to note first that on April 29, 2015, the Obama administration’s Department of Homeland Security (DHS) and Department of Labor (DOL) published an Interim Final Rule that revamped the rules governing the H-2B program (the 2015 IFR) along with a new wage rule governing the minimum wages that employers must pay their H-2B workers (the 2015 Final Wage Rule). Both rules went immediately into effect upon publication. The 2015 IFR was hailed by workers’ rights groups as an important step forward for improving the program and for protecting the rights of both migrant and U.S. workers, and the 2015 Final Wage Rule restricted the use of private wage surveys, a tool used by employers to set wages lower for H-2B workers than the local average wage that would normally be required (which is set according to data from the DOL’s Occupational Employment Statistics survey). After the 2015 IFR and 2015 Final Wage Rule had been in force for just a few months, legislative riders were included in the Consolidated Appropriations Act of 2016 (an omnibus bill to fund the government during fiscal 2016), making a number of changes to the H-2B program, and the bill was eventually signed into law in December 2015. One of the appropriations riders will expand the size of the program, and the others are targeted at watering down the new worker protections extended to both migrant and American workers by the 2015 IFR and the wage rates that the 2015 Final Wage Rule required.

Substance and impact of the 2016 H-2B appropriations riders

1. Expanded use of private wage surveys

Substance: The substance of the amendment that affects the H-2B wage rule is found in Section 112 of Division H, Title I of the Consolidated Appropriations Act of 2016, which requires that:

The determination of prevailing wage for the purposes of the H-2B program shall be the greater of—(1) the actual wage level paid by the employer to other employees with similar experience and qualifications for such position in the same location; or (2) the prevailing wage level for the occupational classification of the position in the geographic area in which the H-2B nonimmigrant will be employed, based on the best information available at the time of filing the petition. In the determination of prevailing wage for the purposes of the H-2B program, the Secretary [of Labor] shall accept private wage surveys even in instances where Occupational Employment Statistics survey data are available unless the Secretary determines that the methodology and data in the provided survey are not statistically supported [emphasis added].

As a result, employers will likely be permitted to use private wage surveys in a much broader range of circumstances, and this may result in H-2B workers being paid wages that are below the OES local average wage for their jobs. So far DOL has only given a preliminary indication of how it will interpret, implement, and enforce some of the December 2015 amendments to the H-2B program in the Consolidated Appropriations Act of 2016. DOL has not, however, explained in detail how it will implement the provisions relating to private wage surveys. DOL has also not yet indicated whether it will publish new regulations to implement these changes, either as an interim final rule or as a regulation that is subject to notice and comment procedures under the Administrative Procedure Act.

Impact: It is likely that many fiscal 2016 H-2B prevailing wage determination applications had already been submitted before the appropriation rider authorization to broaden the use of employer wage surveys had become law. As a result, it is likely that the survey rider may not have a large impact on 2016 H-2B wage rates. However, since February 2016, the DOL has been increasingly willing to accept employer-provided wage surveys. It follows that if employers anticipate as of the beginning of fiscal 2017 that appropriations language will permit the submission and acceptance of employer-provided wage surveys in lieu of the Bureau of Labor Statistics (BLS) Occupational Employment Statistics (OES) wage survey data, then the likelihood that private wage surveys will push down average H-2B wage rates to below-average wage levels will be very significant.

2. Returning worker exemption

Substance: One of the most significant changes to the H-2B program in the Consolidated Appropriations Act of 2016 is found in Section 565 of Division F, Title V, commonly referred to as the “returning worker exemption,” which exempts foreign workers who participated in the H-2B program in fiscal 2013, 2014, or 2015 from being counted under the program’s annual numerical limitation of 66,000 in fiscal 2016. This could lead to a large increase in the number of H-2B workers in the United States; as a result of the returning worker exemption, the size of the H-2B program could as much as quadruple. However, previous years in which the returning worker exemption was the law of the land suggest the number of H-2B workers is more likely to double or triple, but ultimately will depend on employer demand. In fiscal 2007 for example, the last year the returning worker exemption was in place, nearly 130,000 H-2B visas were issued.

Impact: At present, neither DOL, DHS, nor the State Department has published the number of H-2B returning workers who have been issued visas so far for fiscal 2016. The Congressional Budget Office—at the request of Speaker of the House Paul Ryan (R-Wisc.)—estimated that the number of H-2B workers in fiscal 2016 would increase by 8,000 beyond the annual cap of 66,000 as a result of the returning worker exemption. But the CBO’s estimate has already been proven to be inaccurate; on the day of the Subcommittee hearing it was revealed that:

According to statistics received by the Committee from U.S. Citizenship and Immigration Services (USCIS), as of June 2, 2016, USCIS has already approved petitions for 12,727 returning workers, with 1,171 potential additional returning workers in the pipeline. That’s a potential total, so far, of 13,898 returning workers this fiscal year. That number exceeds by almost 75% the Congressional Budget office’s estimate of only 8,000 H-2B returning workers this fiscal year.

As the CBO report notes, the fiscal 2016 returning worker exemption did not become law until near the end of the first quarter of fiscal 2016, and as a result, it’s possible that the returning worker exemption will not lead to as large of an increase in the number of H-2B workers beyond the 66,000 annual numerical limit in fiscal 2016 as would have occurred had the exemption been in place since the beginning of the fiscal year. H-2B employers may not have had enough time to prepare to take full advantage of the exemption by finding and hiring migrant workers who were employed as H-2B workers in the past three fiscal years. But the nearly 13,000 returning H-2B workers approved so far in fiscal 2016 shows there has already been a sizeable increase in the number of H-2B workers as a result of the returning worker exemption rider.

A much larger increase in the number of H-2B workers is likely to occur, however, if the returning worker exemption is extended for the entire 2017 fiscal year and beyond. If H-2B employers are able to anticipate and plan for an exemption from the annual numerical limit when submitting their applications for H-2B labor certification in fiscal 2017, then it is predictable that the number of H-2B workers will increase far above the cap, as it did in fiscal 2005–2007.

3. Corresponding employment

Substance: DOL has been prohibited in fiscal 2016 from using appropriated funds to enforce H-2B regulations that require “employers of H-2B workers to provide at least the same wages and other working conditions as they provide to H-2B workers to certain U.S. workers performing substantially the same work identified in the labor certification or performed by the H-2B workers.” This is known as the rule on corresponding employment. The rule on corresponding employment requires H-2B employers to pay their similarly situated “corresponding” U.S. worker employees no less than the wage rates paid to H-2B workers. It also requires that H-2B employers offer their corresponding U.S. workers the same benefits offered to H-2B workers, for instance, paid meals, transportation, or housing.

Impact: Under the appropriations rider, DOL may not use funds appropriated in fiscal 2016 to enforce the rule on corresponding employment. The rule still exists on paper, but DOL may not enforce it, which in practice means that employers will not be sanctioned for violating the corresponding employment rule. That means that employers will be able to discriminate against U.S. workers and offer higher wages and additional benefits to H-2B workers without offering them to American workers. While it may seem counterintuitive that an H-2B employer would offer higher wages and/or better benefits to a migrant employee, this allows the employer to discourage American workers from remaining on the job. It is interesting to note that no senator or representative has publicly articulated the basis for denying U.S. workers the same wage rates and benefits offered to H-2B workers in the appropriations legislation.

4. Three-fourths guarantee

Substance: Under the 2015 IFR, H-2B employers must “offer [H-2B] workers full-time employment for a total number of work hours equal to at least three-fourths of the workdays of each 12-week period (or 6-week period if the employment covered by the job order is less than 120 days),” with a workweek calculated as lasting 35 hours. In simpler terms, each employer must now guarantee each worker a total number of paid work hours equal to at least three-fourths of the workdays in the job order that induced the workers to come to the U.S. Without this rule, H-2B workers could come to the United States for a temporary job opportunity, only to find that there are not enough work hours to allow them to earn enough to break even.

Impact: Under the appropriations rider targeted at the three-fourths guarantee, DOL may not use any funds appropriated in fiscal 2016 to enforce the three-fourths guarantee. The rule still exists on paper, but DOL may not enforce it, which in practice means that employers will not be sanctioned for failing to offer H-2B workers a minimum number of work hours. H-2B workers are greatly harmed when they do not have enough work hours to earn enough to live, save, and pay back the debts incurred to labor recruiters in order to obtain their job.

5. Prohibition on DOL conducting audit examinations and assisted recruitment activities

Substance: The Consolidated Appropriations Act of 2016 also prevents DOL from using funds to audit H-2B applications or to conduct audits or assisted or supervised recruitment under 20 CFR § 655.70 and 20 CFR § 655.71. Under 20 CFR § 655.70 DOL has the discretion and authority to audit H-2B labor certifications submitted by employers—the key part of which is the recruitment of U.S. workers to determine if any U.S. workers are available and willing to be employed for the employer’s job opening—before an employer may hire an H-2B worker for the job. If the situation is warranted, under 20 CFR § 655.71, DOL may require the audited employer to conduct recruitment activities under the supervision of DOL. If the employer refuses to comply with the audit or the supervised recruitment, the employer can be debarred from using the H-2B program. 20 CFR § 655.70 and 20 CFR § 655.71 are important rules that guard the integrity of the statutory requirement that H-2B employers first recruit American workers before hiring an H-2B worker.

Impact: Many migrant and worker advocates have been consistently disappointed with DOL’s failure to enforce regulations and requirements of the H-2B program. Many of the deficiencies in enforcement were laid bare in “The Pushovers,” an investigative news report about DOL enforcement in the H-2B and H-2A programs. Nevertheless, when DOL finds that U.S. workers have not been given an adequate opportunity to apply for and get hired for certain job vacancies, assisted and supervised recruitment provides a legitimate means for addressing this. Audits have allowed DOL to probe issues such as the failure of H-2B employers to hire U.S. workers, and when H-2B employers seek to exclude U.S. workers from job opportunities in favor of H-2B workers.

Stripping DOL’s ability to audit the recruitment efforts of employers, or to require employers to recruit when they have failed to do so, and finally, to debar employers who fail to first recruit American workers before they hire an H-2B guestworker, severely hampers DOL’s enforcement efforts. But perhaps more importantly, this particular H-2B appropriations rider strikes at the heart of the integrity of the H-2B program. If DOL cannot audit employers to enforce the basic premise of the H-2B program—that H-2B workers should not be hired unless there are no U.S. workers available—then employers may simply bypass the U.S. workforce for any and all H-2B job openings.

Duration of the fiscal 2016 H-2B appropriations riders

Most of the December 2015 amendments to the H-2B program, including the amendment to the 2015 Wage Rule, will remain in place for all of fiscal 2016. If no further amendments are made through standalone legislation or to the appropriations bill to fund the U.S. government in fiscal 2017, the original 2015 Final Wage Rule (as promulgated in April 2015) and the 2015 IFR would become effective again at the beginning of fiscal 2017, and the returning worker exemption and the restrictions on using appropriated funds to enforce the H-2B rules listed above would expire.