Shawn Packer, principal member of JPH Law, a Washington, D.C.-based firm focusing on the needs of employers dealing with programs and investigations administered by the federal government, led a webinar sponsored by PickTrace to break down the updates in a court decision requiring the Labor Department to overhaul how it sets mandatory minimum farmworker wages.
In August, the U.S. District Court for the Eastern District of California ruled in favor of the United Farm Workers, ordering the Department of Labor to replace its interim final rule for calculating the Adverse Effect Wage Rate for H-2A guest workers and domestic peers. While the court ordered a new rule to be issued by Dec. 30, it allowed the current calculation methodology to temporarily remain in effect until that date to prevent disruption before it is officially vacated.
How the H-2A Adverse Effect Wage Rate Legal Challenge Began
Packer explained why the case was brought forward. In August 2025, a federal court case vacated an Adverse Effect Wage Rate calculation in a 2023 rule that had incorporated Occupational Employment and Wage Statistics (OEWS) to assign higher pay scales for duties like driving or holding a CDL. Also in 2025, the USDA had discontinued its Farm Labor Survey, which had been used to calculate AEWR. This left the department with no baseline to calculate minimum H-2A wages. The agency decided to bypass the rulemaking process under good cause provisions that sidestepped public comment and issued the Interim Final Rule that uses OEWS wage structures alongside new skill tiers, primary duties tests, and housing adjustments.
“Because they didn’t immediately vacate, they gave DOL a couple of weeks to come back to the court and give them a roadmap as to how DOL was going to do this — because there was going to be a vacuum without the FLS,” he says. “The court did say that it was reserving jurisdiction in the case for any issues that would come out of the updated IFR and if there was any possibility of back pay that they would take into account when the new regulation came out.”
Then on Oct. 2, the court also issued an order that gave the Department of Labor until Dec. 30 to issue a new IFR and also vacated the current IFR on that date.
Packer says the main changes to the updated IFR that was issued in 2025 were moving to the OEWS survey, establishing a two-wage framework tied to skill — Tier 1 at the 17th percentile and Tier 2 at the 50th percentile, introducing housing and transportation adjustments to allow employers to take consideration of those costs and set out the task the worker performs the most is the rate of pay.
“What the court actually found was that there were substantive [Administrative Procedure Act] problems with several of the portions of the rule, mainly the two-tier structure, the housing adjustment and the mixed duty approach,” he says. “The court did believe that DOL had the authority to do an IFR just to go to the OEWS system. [The judge] also talked about that there were issues in the OEWS system, particularly the fact that it doesn’t survey actual farms.”
Packer says the court did not prescribe a wage methodology but instead asked for better explanation of why the DOL chose to use OEWS. The court also did not calculate a back pay obligation, but the judge did say it reserved jurisdiction.
In the Oct. 22 report, the Department of Labor has indicated it is working on the new Interim Final Rule and has started its inter-agency clearance process with the USDA and Department of Homeland Security.
Packer also revealed what could happen if the Department of Labor is not able to issue a new rule by Dec. 30 and the current IFR is vacated.
“From an employer perspective, that might not be a horrible thing because the way the definition currently works, if we do vacate back to the 2010 regulation, is the AEWR is set by the Farm Labor Survey. That’s gone. Well, then it’s set by the prevailing wage.”
For those states with prevailing wage, that may not be a good thing, Packer says. But if the state doesn’t have a prevailing wage in place, then it goes to a collective bargaining wage if there’s a union agreement and if not, then it would fall to a federal, state or local minimum wage, whatever is highest.
“If the IFR is vacated and DOL hasn’t published a methodology, we could be sitting in a situation where 95% of the country is paying $7.25 an hour as the wage floor,” he says. “I don’t think DOL is going to let that happen, but that is something that could happen.”
H-2A Back Pay Window and Calculating Employer Liabilities
Also in that Oct. 22 report, Packer says the UFW has explicitly stated it will seek a back pay order, which is also something for growers to keep in mind.
While it’s hard to speculate what the new IFR will look like, Packer thinks the easiest thing would be to follow how the H-2B wages are set, using the OEWS arithmetic mean for the state, or essentially the Tier 2 wage. That calculation, he says, follows some of what the court’s ruling stated.
“DOL already has those numbers calculated. BLS, that produces the OEWS survey, already has those methodologies to give DOL the data when the update is supposed to come,” he says.
Packer doesn’t expect to see the housing adjustment, primary duties, or the tier system in this new IFR. He says the rule will likely serve as a basic fallback in the absence of the FLS. And while he suspects that might be the easiest outcome to meet the Dec. 30 deadline, he told growers in attendance that doesn’t spell the end for some of these cost-saving updates.
“They may resurface before the end of the administration,” he says. “We’ll see how [the DOL] articulates its explanations to the court because there will most likely be litigation around it as well.”
But, he says one thing growers need to plan for and prepare is that “the potential for back pay is actually a real thing.” Growers who have paid H-2A workers from Sept. 2 until the new rule are going to be the main focus of this back pay as well as any corresponding workers paid the same wage during the same time period.
While Packer says the UFW in its litigation claimed that most workers would make the Tier 1 wage that’s not what happened.
“For the most part, workers who return year after year are still getting paid what they were paid before — whatever that was — while workers in their first year are getting paid the lower wage,” he says.
This, he says, is where it’s important to keep good records. For example, if a state’s AEWR is $16.50 an hour and a grower pays $17 and the new AEWR comes out at $16.99, those workers would not fall into the category of back pay.
“It’s going to come down to what the new rates look like and what the court ultimately rules if this back pay order is sought by UFW,” he says.
UFW Legal Standing and Industry Arguments Against Back Wages
He says there’s also some question of whether the UFW has the legal standing to seek back pay, citing 800 members as being a small representative of the farmworkers in the U.S.
He also gave a quick hypothetical example of how back pay might apply. If the new IFR went to the 50th percentile, and a job order had a $12.31 an hour wage and the new IFR came in at $16.07, the hourly back pay a grower would be required to pay is the difference between the previous IFR wage and the new IFR wage. He says it could be higher or lower, depending on the rate the new IFR comes in at. But, if it’s 1,000 hours of back pay, multiplied by 100 workers and an employer could easily owe $376,000.
Making it clear that’s just a hypothetical, back of the napkin calculation, he stressed to attendees that it’s something worth monitoring. He says growers shouldn’t change pay structures but instead keep very clear records to help in the event potential back pay comes into play.
Payroll Preservation and Compliance Guidance for Agricultural Employers
“Right now, the most important thing to do is preserving your payroll data — the actual wage rates that are being paid, the hours that are being worked, the dates and duties and job location,” he says. “All of that’s really important, especially if you’re a grower who’s doing piece rate. That makes it a lot more complicated as well. You’re going to have to figure out what [the worker’s] actual hourly piece rate wage is, and then in the event of the new IFR, compare that to what that mandated wage would be. In a lot of situations, I think employers are going to have a smaller back pay obligation if it does come.”
Other things he recommends growers do is keep very good records of worker rosters, including H-2A and corresponding workers. This includes names, permanent addresses and WhatsApp and email to be able to contact workers in case employers need to send a check with back pay.
Bonuses, too, may lessen the back pay burden, depending on how they’re structured, because they could be considered part of a worker’s hourly payment. Packer, again, stressed that this is where good record keeping comes into play, especially with promotions for workers with experience. He says based on previous times when back pay was issued, employers signed a form attesting to meeting those back pay obligations.
Budgeting and Applying for Future H-2A Contracts Under New Wage Rules
Packer also acknowledged that while a lot of H-2A contracts have ended for the year, some new contracts have begun and workers will arrive. He suggested that attendees should continue to apply for contracts in the same manner and potentially make assumptions in labor budgets that wage rates could come in at the Tier 2 level. He also says that those who plan to apply with Tier 1 wages should be prepared that the DOL will ask for a wage update to match whatever the new IFR will call for.
He points out this follows the trajectory that so many employers experienced before 2025 when contracts would begin and then a new AEWR would be published. One question would be whether there will be any leeway between when a new AEWR is published and enacted. He says he’s optimistic the Department will give some leeway.
To address the court’s notice-and-comment concerns, the Department of Labor faces key operational choices, including whether to simplify the framework by strictly relying on OEWS wages or attempt to preserve complex elements like skill tiers and primary duty tests through separate rulemaking. Additionally, questions remain regarding how the agency will handle old versus new wage contracts and whether the court will grant the UFW’s request for back pay.
His advice to growers is four parts. First, don’t make any wage change or payouts, understanding that back pay hasn’t been ordered yet. Second, preserve payroll records and worker contact information. Third, budget for uncertainty in the new wage rate. Lastly, monitor for any DOL wage notices as that’s likely how any updates will be disseminated.
In the Q&A portion of the webinar, Packer was asked if there is a chance a new IFR will come before Dec. 30. He says it’s possible, but it’s a matter of how quickly the DOL can get the new rule through its clearance process.
While Packer says the back pay period began on Sept. 2, 2026, and will run until the date the new replacement IFR is published in the Federal Register, the judge may not make a decision on back pay until January or February.
“The only time we’re going to know what that potential back pay is and what our new wages are is when DOL actually publishes the IFR,” he says. “They have until Dec. 30, but they said they might publish it early. We may get a single day’s notice that it’s up on public inspection and then that’s when it goes into effect. It could happen in November, but we don’t know.”
He was also asked about the likelihood of back pay standing up to court challenges. He says in the Sept. 2 notice, the DOL indicated a plan to challenge the back pay issue.
“I think there are a lot of good legal arguments as to why the judge does not have authority to issue back wage orders on employers who are not members or who are not employers of members of the plaintiff class,” he says.
