AEWR ruling

Bags of hand-harvested onions at Peri & Sons farms, Yerington, Nev. The company unsuccessfully sued to stop a minimum wage increase it says will cost it $3.7 million this year.

A federal judge won’t roll back the minimum wage for agricultural foreign guestworkers to 2018 levels, which leaves growers grappling with higher costs and trying to figure out how to get the government to change how it calculates the increases.

“Even though a judge ruled, we need our legislators to put pressure on because this adverse wage thing is an absolute joke,” said Darwin McKay, 74, who grows turf in Idaho and Nevada for lawns and golf courses.

“We have no say in it whatsoever. We have our crop planning, budget and financing all done and then they come along with an AEWR increase of 23%. This needs to be reversed immediately,” said McKay who uses fewer H-2A workers than he once did.

The Adverse Effect Wage Rate, known as AEWR, is the minimum wage for H-2A-visa foreign guestworkers. It is intended to ensure hiring of foreign workers does not depress the wages of domestic workers.

The U.S. Department of Labor has never shown actual adverse effect but assumes there is one in setting an arbitrary premium minimum wage based on USDA wage surveys, said Michael Marsh, president and CEO of the National Council of Agricultural Employers. The surveys tend to perpetuate a never-ended upward cycle, he said.

NCAE sought an injunction Jan. 7 to stop 2019 increases averaging 6.3% nationwide and 22.8 percent in Nevada, Utah and Colorado. That’s a raise from $10.69 to $13.13 per hour in those three states.

Nationally, the increases will cost farms hundreds of millions of dollars while hourly earnings for all U.S. employment is up just 2.8 percent and crop prices are level or decreasing, Marsh has said.

U.S. District Judge Timothy J. Kelly in Washington, D.C., heard arguments Jan. 28 and ruled March 19 that a six-year statute of limitations to challenge DOL’s rule of calculating increases had expired.

“We said that didn’t apply because the rule is arbitrary and capricious on its face,” Marsh said.

NCAE is contemplating whether to appeal the ruling or seek remedy through H-2A rule changes DOL will soon propose.

But Joel Anderson, executive director of the Snake River Farmers Association in Heyburn, Idaho, said there’s nothing he’s heard of in the proposed rule changes that addresses how the AEWR is set.

When DOL adopted H-2A rule changes in the Bush administration, it acknowledged the AEWR determination method was flawed, Anderson said.

The Bush changes were struck down by the Obama administration.

“We have to be engaged legislatively, administratively and in the legal fight to have a hope of solving the problem,” Anderson said.

Snake River Farmers assists 615 grower members in bringing in more than 4,000 H-2A workers annually. It’s mostly in the mountain West but also the Midwest and South and for many kinds of crops.

This year’s AEWR increase “damages many of our members” because they signed contracts selling crops in advance at an assumed incremental AEWR increase and can’t renegotiate those contracts, he said.

“Our growers have to adjust, take acres out of production, bring in fewer workers, get more done with less,” Anderson said. “Several have said they are thinking of selling out and some have elected to lease out their land instead of working it themselves.”

Peri & Sons Farms, a top fresh-market onion and vegetable producer in Yerington, Nev., is co-plaintiff in the lawsuit with NCAE.

The 100-plus year old farm operates in Yerington and California’s San Joaquin and Imperial valleys and employed 1,768 H-2A workers in 2018. The AEWR increase will cost Peri & Sons about $3.7 million, the lawsuit states.

Owner David Peri, 61, told Capital Press the $3.7 million is on top of what he already spends on labor and is just for hand-tending and harvesting of 7,500 acres of vegetables near Yerington, not the California operations.

“I don’t know if there’s a heck of a lot we can do without appealing and I don’t know if it’s worth the rub. I think we’re stuck with a high AEWR and will have to be more efficient and get rid of some man-hours, if possible,” Peri said.

“We expected an increase in the AEWR but nothing like this. It won’t put us out of business but makes it harder to buy equipment and retool, to keep up,” he said.

The Northwest farm labor association WAFLA provided 15,771 H-2A workers in the Northwest in 2018.

Prior to the ruling, Dan Fazio, WAFLA director, said the lawsuit was an “uphill battle” because the law gives DOL discretion in how it sets the AEWR. Afterward, he said it’s only more difficult given the statute of limitation problem.

Fazio said NCAE has a valid point that DOL has never shown adverse effect.

In Washington and Oregon, the AEWR increased from $14.12 per hour to $15.03. Small growers in Central Washington said they can’t afford it so WAFLA is offering reduced rates to help them with 300 to 500 workers. It will be for apple and pear harvest from Aug. 10 through Nov. 1. Several growers have signed up and others are still considering it, Fazio said.

Central Washington field reporter

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