Dear Clients,

We wish to provide a critical update regarding the Trump Administration’s Interim Final Rule (IFR), which revised the methodology used to calculate the Adverse Effect Wage Rate (AEWR) for H-2A employers.

As you know, the IFR, in place since October 2025, provided much-needed wage relief to growers by introducing skill-based pay differentials and allowing a downward compensation adjustment for H-2A workers to account for employer-provided housing. In many cases, the new methodology resulted in a substantial cost reduction for employers that faced unsustainable wages under the old model.

After the rule’s release, the United Farm Workers (UFW) filed suit in the Eastern District of California to challenge the rule. Yesterday, the district judge issued an Order declaring the IFR to be unlawful. You can read the full Order HERE.

Key Takeaways:

• Per the court’s Order, the U.S. Department of Labor (DOL) is directed to produce a new methodology, consistent with the Order, for calculating the AEWR, and to promptly publish new AEWRs under that methodology.

• DOL is also ordered to provide written notice to State Workforce Agencies (SWAs), employers, and the public within seven (7) days that backpay may be ordered for any workers performing work between the date of the Order (i.e., August 26, 2026) and the date the new AEWRs go into effect under DOL’s revised methodology.

• Important note: To clarify, back pay would NOT be retroactive all the way back to the effective date of the IFR; it would be limited to the current brief period in the aftermath of the court’s ruling.

• The court’s Order does not address the backpay issue, finding it instead appropriate to wait for DOL’s new methodology before making a ruling.

• Once DOL’s revised AEWR methodology is implemented, H-2A employers with current, active contracts will need to adjust their rates of pay to match the new wage requirements. At this time, we cannot speculate what methodology DOL may utilize or the degree to which the new rates may differ from the rates required under the IFR.

• We are also unable to determine DOL's timeline for establishing the new methodology and publishing the associated wages. We will notify you as soon as that information becomes available.

 We share your frustration and concern with this adverse ruling, and understand the substantial impact the ruling may have on your business. It is for precisely this reason that we endorse the Securing Agriculture’s Workforce Act (SAWA) to provide permanent, long-term relief to H-2A employers.

We encourage all clients to share their concerns with their members of Congress and urge them to support SAWA to resolve this longstanding issue once and for all.

Regards,

The másLabor Team