ABC Nov. 12 objected to a notice of proposed rulemaking from the Department of Labor (DOL) that would rescind the current methodology for establishing wage rates for H-2B temporary workers and replace it with a system emphasizing Davis-Bacon Act wage determinations. 

In August, DOL was ordered by the U.S. District Court for the Eastern District of Pennsylvania to provide the public with an opportunity to comment on the current four-tier wage determination system and then to establish a rule using the results.  Instead of issuing a notice requesting comments, DOL proposed a new wage methodology that would require the employer to pay the highest of the following: wages established under a collective bargaining agreement; wages established under the Davis-Bacon Act or Service Contract Act for the appropriate occupation in the area of employment; and the mean wage rate established by the Bureau of Labor Statistics.  The new system is estimated to raise H-2B hourly wages in the construction industry by a minimum of $10.65 per hour. 

In comments filed with DOL, ABC noted that using inflated H-2B wage rates would make it almost impossible for smaller businesses to absorb the cost and cited a recent study by the U.S. Small Business Administration’s Office of Advocacy that shows small businesses are already paying $10,585 per employee in annual regulatory costs.  ABC also pointed out that the construction industry will be even more disadvantaged due to the extremely low net margins that are common in the industry. 

“The challenges faced in the current economic environment by construction industry small businesses that rely on the H-2B program will be significantly compounded by DOL’s proposed rule,” the comments stated. “It is entirely possible that more small businesses will be forced to close their doors as a result.” 

ABC recommended that the current H-2B methodology be preserved and pointed out that Davis-Bacon wage rates are often inflated and the methodology used to determine them is flawed.  ABC cited the unscientific methodology used by the Wage and Hour Division that relies on voluntary wage surveys, instead of statistical samples.  In addition, ABC pointed out that the surveys are structured so that unions and large businesses are more likely to respond as opposed to small businesses, artificially inflating the wage rates. Since the surveys take years to be distributed, collected, calculated and completed, the rates are also often outdated. 

ABC strongly encouraged DOL to reconsider its proposed changes to the H-2B wage determination process and maintain the current four-tier wage system.