The H-2A wage rule, the court, and what farm labor costs in California now

Labor is the largest cost on most specialty-crop farms, and since October 2025 the rule that sets the wage floor for the H-2A guestworker program has been in dispute. The Department of Labor's interim final rule swapped the USDA survey that had anchored those wages for Bureau of Labor Statistics data and a two-tier skill system, and by August 2026 the national average rate had fallen from $17.74 to $15.96 an hour^{1, 4}. On August 26, 2026, a federal judge in Fresno found the rule unlawful but left it in place while DOL writes a new one, and told employers they may owe back pay^{5, 8}. For California, where the state minimum wage sits above the new federal floor, the arithmetic is different².

How the H-2A wage floor works

The H-2A program lets farms hire foreign workers on temporary visas when they cannot find enough domestic workers. To keep that from undercutting U.S. farmworkers, employers must pay the highest of several floors: the Adverse Effect Wage Rate set by DOL, the state or federal minimum wage, or the local prevailing wage⁴. For most of the program's history DOL set the AEWR for each state or region from USDA's Farm Labor Survey, which asked farms what they actually paid. The national average rose from $8.56 in 2005 to $17.74 in 2025, when rates ranged from $14.83 in the Delta region to $19.97 in California, the highest in the country¹.

Over the past decade the number of H-2A jobs certified nationally quadrupled to about 400,000 in 2025, and California's count rose to nearly 40,000, about 10% of the total². Guestworkers are still only about 5% of California farm employment; the state employs roughly a third of all U.S. farmworkers, and the great majority are not on H-2A visas².

What the October 2025 rule changed

Two things happened in late summer 2025. A court vacated the 2023 AEWR rule on August 25, and USDA's decision to discontinue the Farm Labor Survey took effect on August 31, leaving DOL with no data source for the rates it must publish each year¹. DOL responded with an interim final rule, published and effective October 2, 2025, with comments taken afterward through December 1. It skipped advance comment by citing a risk to the food supply and harm to growers from a labor shortage it expected as immigration enforcement shrank the unauthorized workforce¹.

The rule's methodology has four parts, and all four matter to the lawsuit. First, it draws wages from the BLS Occupational Employment and Wage Statistics survey instead of USDA's farm survey; critics note that OEWS covers farm labor contractors rather than farms themselves^{1, 8}. Second, it folds the most common field and livestock jobs into five occupational codes and sets a worker's rate by the duties performed for most of the contract^{1, 8}. Third, it splits each rate into two skill levels, Level I at the 17th percentile of wages and Level II at the 50th, where the old AEWR had been the average; DOL said more than 90% of H-2A workers would fall in Level I⁸. Fourth, it subtracts a standard adjustment for employer-provided housing, which employers must still supply at no cost^{1, 8}.

For California the rule set Level I at $16.45 and Level II at $18.71, with a $3.00 reduction for workers in free housing, which brings the figures to $13.45 and $15.71^{1, 2}. Against the 2025 AEWR of $19.97, that is a cut of up to $6.52 an hour on paper². Nationally, the UFW Foundation put the cuts at roughly $5 to $7 an hour, or about 15%⁶.

Why California is different

On paper is the key phrase. California's minimum wage is $16.90 in 2026, and the rule did not change the requirement to pay the highest applicable floor, so the binding wage for California H-2A jobs at either skill level is $16.90^{2, 4}. Economists Zachariah Rutledge, Philip Martin and Michael Hall, writing for UC's Giannini Foundation, worked through what that means. California's H-2A wage bill was about $655 million in 2025. If employers paid the 2026 minimum wage instead of the old AEWR, the bill would fall about 15%, to $555 million, a reduction of just over $100 million². Monterey County accounts for about $30 million of that, Santa Barbara $15 million, Sonoma $7 million, Riverside $6 million and San Benito $5 million².

The same researchers cautioned that growers may not cut wages to the minimum, because lower pay can hurt retention, morale and productivity and push more growers toward farm labor contractors². Early filings bear that out. Rutledge's review of California H-2A job orders in the first quarter of fiscal 2026 found about 40% of offers at or below the minimum wage, 20% at the Level II rate without the housing adjustment, 20% still at the old $19.97, and 5% above it, mostly mechanics, equipment operators and supervisors³.

A state bill, AB 2646, proposed a $19.75 floor for H-2A workers and U.S. workers in corresponding employment; it had passed the Assembly as of July 2026 and still needed the Senate and the governor⁴.

The court ruling

The United Farm Workers, the UFW Foundation and 18 farmworkers from six states sued DOL on November 21, 2025^{6, 8}. On August 26, 2026, Judge Kirk E. Sherriff of the U.S. District Court for the Eastern District of California held the rule unlawful under the Administrative Procedure Act^{6, 7, 8}. The court found the skill tiers, the housing adjustment, the OEWS data source and the duties-based classification arbitrary and capricious, and said DOL had failed to consider reasonable alternatives or to explain how the methods protected U.S. workers' wages⁸. It accepted DOL's emergency justification for switching data sources, since the USDA survey had ended and rates were due by January 1, but not for the other three changes, which were not tied to that deadline⁸. It also noted DOL had not explained why lower wages would solve a labor shortage in a program with no cap on visas⁸.

The remedy is the unusual part. The court did not vacate the rule. It sent the rule back to DOL with an order to promptly produce a new methodology and publish new rates, and it required DOL to tell employers and the public within seven days that back pay may be owed⁸. The plaintiffs are seeking back wages from the date of that notice until a new methodology takes effect, an issue to be briefed once DOL publishes it⁸.

DOL's notice went out on September 2, 2026. It states that the current AEWRs remain in effect, that the potential back-wage period runs from September 2 until new rates are issued, that it covers employers with current certifications, pending applications and new filings, and that no payment obligation exists at this time⁷. It reminds employers to keep names, addresses, Social Security and I-94 numbers and contact details current for H-2A workers and U.S. workers in corresponding employment⁷.

Reaction split along the usual lines. UFW president Teresa Romero said the decision recognized the essential work of the people who put food on the table⁶. John Hollay of the National Council of Agricultural Employers called it a devastating setback and said any back-pay requirement would undo the savings the rule was projected to deliver, about $2.4 billion in its first year and $17.3 billion over ten⁵. Fisher Phillips attorney Chris Schulte advised employers to track workers' hours and tasks, since any back pay would be computed from those records⁵.

What it means for Los Angeles buyers

First, the cost picture in California changed less than the headlines suggested, because the state minimum wage caught the fall. Growers who had been paying $19.97 to H-2A crews saw a potential saving of about $3 an hour, not $6.50, and a fifth of job orders kept the old rate anyway^{2, 3}. Do not expect California labor savings to show up as lower produce prices; the researchers' own estimate is a 15% reduction in a wage bill that covers 5% of the workforce².

Second, the uncertainty is itself a cost. A grower filing H-2A contracts for 2027 does not know the wage rate that will apply or whether back pay will be owed for the 2026 fall harvest, and that tilts decisions toward farm labor contractors or imported product^{2, 5}. Updated AEWRs effective August 3, 2026 lowered the national average to $15.96 an hour, but in California the state floor still governs⁴.

Third, wages are one line among many. The Giannini researchers note that the United States imports 60% of its fresh fruit and 35% of its fresh vegetables, largely because of climate and lower foreign labor costs, and that trade policy has so far left most of that produce untouched². The AEWR fight adds a variable on the domestic side of that ledger. We buy from growers in California, the Southwest and Mexico and watch all three cost structures; when DOL publishes its new methodology, we will tell you what it does to the California numbers.