A federal district court has ruled that the U.S. Department of Labor’s 2025 Interim Final Rule establishing the current Adverse Effect Wage Rate methodology is unlawful. The court, however, did not immediately vacate the rule. Current AEWRs therefore remain in effect while DOL develops a replacement methodology.
In United Farm Workers v. U.S. Department of Labor, the Eastern District of California found that several key components of the rule were arbitrary and capricious. These included the two-tier wage structure, the housing adjustment, DOL’s reliance on Occupational Employment and Wage Statistics data, and the rule for assigning a single occupational wage rate to jobs involving multiple duties.
The court also found that DOL lacked sufficient justification to bypass the normal notice-and-comment process for most of these changes. Although the discontinuation of USDA’s Farm Labor Survey justified prompt selection of a new wage data source, the court found it did not justify immediately adopting the rule’s other provisions.
What Happens Next
The court ordered DOL to “promptly” develop and publish a new AEWR methodology. DOL must submit an initial status report within two weeks outlining its anticipated timeline.
DOL must also notify state workforce agencies, employers, and the public within seven days that employers may later be required to make wage-adjustment payments. The potential adjustment period begins when DOL sends that notice and ends when the replacement methodology is issued.
Any wage adjustment would potentially apply to qualifying H-2A workers and U.S. workers in corresponding employment who received less than the new AEWR ultimately established by DOL. The court has not yet ordered backpay. It reserved that issue until the new rates are available and the parties have submitted additional briefing.
Significant Questions Remain
The ruling creates substantial uncertainty for agricultural employers.
We do not yet know how DOL will respond. The agency could seek appellate review, request a stay, begin a new rulemaking process, or pursue some combination of those options.
The nationwide reach of the order may also be challenged. Although the court did not issue a conventional nationwide injunction or vacate the rule, its directives to DOL and its potential wage-adjustment remedy appear intended to operate nationally. The U.S. Supreme Court recently restricted universal injunctions in Trump v. CASA, Inc., while expressly leaving unresolved whether the Administrative Procedure Act authorizes courts to set aside agency action on a nationwide basis. Whether this order is consistent with that precedent may become an issue on appeal.
Other critical questions include:
- Whether the court will ultimately require backpay.
- What methodology DOL will adopt.
- How quickly DOL will publish replacement AEWRs.
- How much higher the replacement rates will be, if at all.
- How any wage differential will be calculated and administered.
What Employers Should Do Now
Employers should continue paying the currently applicable AEWR or any higher applicable wage. The order does not immediately change existing wage rates.
Once DOL issues the required notice, employers should carefully preserve payroll, time, occupational-classification, and job-duty records for H-2A workers and workers in corresponding employment. Those records may be needed to calculate wage adjustments if the replacement AEWRs exceed the rates paid during the covered period.
Western Growers will continue monitoring DOL’s response, any appeal or request for a stay, and further proceedings concerning the replacement methodology and potential backpay.
For questions about the court’s ruling or the H-2A program in general, please contact the Western Growers H-2A Services Team.