Waynesville company sues Labor Department

Archived News

Waynesville company sues Labor Department

Farm Labor, along with several farms the company represents is suing the Department of Labor over a new rule it says will cost the company upwards of $3 million per year.

Waynesville’s USA Farm Labor is suing the federal government in hopes of changing a new rule it claims will cost the company hundreds of thousands, perhaps even millions, of dollars per year.

The suit, which was filed on April 10 on behalf of the company and several of the farms it serves, calls attention to a change implemented by the Department of Labor under President Joe Biden. The defendants are all Department of Labor officials including Julie Su, the current acting Secretary of Labor whose fate will be determined by the outcome of a heated mostly party-lines battle in the U.S. Senate for her confirmation.

news juliesu

Julie Su is the top defendant in the lawsuit. She is currently the Acting Secretary of Labor, and President Joe Biden has been trying to push her confirmation through the Senate. DOL photo

At odds is a change to the H-2A visa program.

The Immigration and Nationality Act of 1952 established the H-2 nonimmigrant visa program, and Congress created the current, more specified H-2A program in 1986 to balance the needs of farmers and laborers. It allows farmers who declare that they can’t find domestic labor to hire migrant workers who are approved through a consular vetting process.

Related Items

The late John R. Norton III, who served as Deputy Secretary of Agriculture under President Ronald Reagan and passed away in 2016, explained to Congress the labor situation when the H-2A program was being established.

“In agriculture, undocumented workers are primarily engaged in seasonal harvest work throughout the U.S,” Norton said. “As we move toward implementation of employer sanctions, we must at the same time prevent labor shortfalls and dislocations which have the potential to disrupt harvests and interfere with the marketing process. The national economy and the American consumer depend upon a stable and adequate supply of agricultural labor to maintain commodity supplies at reasonable prices.”

Cayleigh Phillips is in the process of taking over her retired father’s produce farm in the Bethel area of Haywood County. Her father, Gary Griffith, just began using H-2A migrant workers in the last couple of years. Although Phillips grew up in Canton, after college she moved to the Midwest where she took a job with a company that provides H-2A compliant software and services. She said the program is beneficial to farmers because there simply isn’t a domestic labor force willing to do the tough jobs on farms, jobs necessary to put food on American families’ tables.

“The H-2A program is an integral part of being able to produce food and other things the U.S. consumer wants to buy,” she said. “It’s very important that a program like this is set up to keep food prices where people want to pay them.”

Likewise, she said the program is good for workers who are able to enter the country legally for a predetermined length of time and can send money back to family in their home countries. In addition, although some farms have faced criticism for providing inhumane living and working conditions , the program requires farmers to take several steps to provide for workers’ safety and health.

Philips said navigating the H-2A process can be burdensome and complicated but that having a good agency working on a farm’s behalf makes things go much smoother.

“It can make the process very easy and not as scary if you have a good agent,” she said.

One such agency is USA Farm Labor, which sits in a nondescript office on Dellwood Road between Maggie Valley and Waynesville. According to the lawsuit, the company is among the top three H-2A agents and submits over 800 applications per year, many of which cover multiple workers. It has a nationwide client base, including the farms who also appeared as plaintiffs below USA Farm Labor in the civil complaint.

Alex Cracchiolo has been with the company since 2015 except for a brief period around 2017 when he moved to Kentucky and then came back. He currently works as a technical writer and is also moving into a marketing role. He said many of the company’s customers are midwestern farmers in states with low unemployment rates, such as Wisconsin and Minnesota, who can’t find help. Their options are limited to either handling the labor themselves, which isn’t practical in a lot of farms with larger operations, hiring migrant workers who entered the country illegally or using the H-2A program.

“We are the best option for people who want to follow the rules and do things the right way,” Cracchiolo said. “Typically, what we see is we’ll talk to people who say, ‘I can’t find anyone; I’m desperate for workers,’”

USA Farm Labor partners with recruiters in countries all over the world, from Central America to Eastern Europe to South Africa. The exchange rate in countries such as South Africa is advantageous for laborers who send money to their home country from the United States, so these workers’ families stand to benefit tremendously off a relatively short contract.

The company is different from other H-2A agents in that it often recruits people with unique skills, such as equipment operators and truck drivers. Such laborers are the point of frustration with the new rule.

The Department of Labor protects the wages of some agricultural workers through the Adverse Effect Wage Rate, which is basically a minimum wage that varies from state to state based on a survey of farmworker wages in each state. This prevents wages of domestic laborers from becoming depressed by competition from foreign workers willing to work for less. The goal is market neutrality.

In December 2021, DOL proposed a new rule that sought to establish a new wage obligation for those who perform “specialized” duties such as driving a truck. Although DOL accepted comments from farmers and stakeholders such as USA Farm Labor, the proposed rule was finalized as originally written with no changes. The rule, referred to at times in the lawsuit as the “Final Rule,” was published on Feb. 28 of this year. While six occupations — such as field labor, agricultural equipment operator and packagers — will have AEWRs based on the farm survey, other jobs’ wages will be based on the Occupational Employment and Wage Statistics Survey, which the suit claims “does not represent agricultural wages.”

“The Final Rule severs the link between agricultural wages and surveys of wages paid to actual farmworkers,” the suit reads.

Basically, the rule would make it so that if a worker performs a task other than the six for even a minute out of one day during their time with a farm, they must be paid at the higher OEWS rate for all their labor.

Many concerns voiced in the civil complaint were first raised in a letter sent to DOL from Wendel Hall, a Washington, D.C., attorney who now represents the plaintiffs. The letter was addressed to Brian Pasternak, a Director of Program Services at DOL who is the administrator over the Office of Foreign Labor Certification.

“While the Department may have discretion, that discretion is not limitless,” the letter reads. “It must engage in reasoned decision making and its conclusion must provide a rational solution. For the reasons described below, the NPRM’s proposal does not.”

The letter notes that having been through the process of determining AEWRs multiple times, such “mistakes” should not be made.

“The NPRM proposal compares the wages paid to movers, chemical haulers, haulers of retail supplies, haulers of construction supplies, and about everything else and asserts, without evidence, that the wage paid to a truck driver hauling nitric acid long distance reflects the market wage for a truck driver hauling a load of grain to an elevator or storage facility three miles away,” it reads.

The letter offered plenty of hypothetical arguments to show why some felt the rule was illogical and cumbersome.

“What happens if the truck driver is sick? The field workers show up. John Doe, a field worker has a CDL, but he cannot be legally assigned to drive the truck. President Biden’s Executive Order and the APA require much more than dismissive irrationalities like the above,” the letter reads.

Ultimately, Hall simply argues that the system works and should be left alone. “if it ain’t broke, don’t fix it,” he wrote.

The civil complaint reiterates much of what was said in the letter and claims. It notes that USA Farm Labor surveyed the farms it serves, and of the farms surveyed, 64% said they’d stop using the H-2A program, 33% were uncertain and 3% said they would continue using it.

“The Final Rule will reduce the income of USA Farm Labor, Inc. by $635,800 to $3M annually,” the complaint reads. “The lower figure is assuming that all uncertain farms and survey non-respondents will continue to use the H-2A program. The higher figure is assuming that the survey results represent likely behavior even for those who did not respond to the survey.”

The complaint says that one farm in Wisconsin already saw the AEWR for the state go up from $15.37 an hour to $17.34, which has in itself proven cumbersome. In addition, under the Final Rule, that farm would be required to pay its workers the truck driver rate of $24.34 because their employees “occasionally” drive grain trucks 12-25 miles away.

The complaint draws a few final conclusions. One, it notes that the new rule undermines the aim of the AEWR to provide a wage that won’t undermine what domestic workers could make. Two, it makes the cost of producing food higher, which may drive some farmers out of the industry altogether, which can increase overall food insecurity. Finally, it would incentivize farms to hire people who are in the country illegally since they can be paid lower wages under the table.

“Even if Plaintiffs could pass on increased costs (to consumers) the Final Rule fails to consider the reliance interests consumers have in reasonably priced food,” the complaint reads. “Passing increased costs on would force many people on the margins into hunger.”

Cracchiolo said the rule change has been on their radar since 2019 when something similar was discussed; that dispute ultimately ended in a two-year wage freeze. Once that freeze was up, the Final Rule was proposed.

“It popped back up with the Biden administration, and we were like, ‘hold on, this is not over yet,’” he said. “This all of the sudden throws a wrench in a lot of the H-2A stuff. We were immediately like, ‘this is going to be disastrous for the program.’”

While DOL has suggested that 98% of farms will be unaffected by the rule change, Hall’s letter to Pasternak and the lawsuit both claim that number doesn’t come close to showing how many will actually be hurt by the change. Cracchiolo agreed.

“Everything we’ve seen suggests otherwise,” he said. “We think they’ve grossly underestimated that number. It’s not that the farmers are trying to be stingy and not pay people what they’re worth, but most people we work with can’t afford to pay more.”

The suit calls for injunctive relief preventing the DOL from implementing or enforcing the rule, an order vacating and setting aside the rule, a declaration that the rule is unlawful, court costs and attorney fees.

Multiple DOL officials didn’t respond to requests for comment from SMN. SMN also reached out to Farmworker Justice, which has vocally supported DOL’s rule change, but did not hear back.

Tags: