Revised AEWR Methodology: Key Impacts for California H-2A Employers

The U.S. Department of Labor (DOL) published an interim final rule updating the Adverse Effect Wage Rate (AEWR) methodology. This addresses the USDA's discontinuation of the Farm Labor Survey and a court vacatur of the 2023 rule, resulting in a shift to BLS Occupational Employment and Wage Statistics (OEWS) data. For California employers, the changes appear to result in cost reductions.

The new rule, effective for job orders filed after October 2, utilizes OEWS for state-specific, skill-based rates that are updated annually with the release of BLS data.

Core Changes:

- Skill Tiers:

· Level I

· Level II

- Housing Adjustment: A cap-limited (30%) deduction from AEWRs, offsetting housing value.

(UPDATE: The skill level (Level I or Level II) is assigned to the job opportunity as a whole, not to individual workers. This means all H-2A and corresponding U.S. workers in the certified role receive the same rate, regardless of their personal experience. The assignment is made by DOL’s Office of Foreign Labor Certification (OFLC) based on the employer’s job offer, specifically:

• The duties performed for the majority (>50%) of workdays during the contract period.

• The minimum qualifications specified in the job offer (e.g., required experience, training, or education).

A worker’s years of prior experience do not factor into the assignment—only what the job requires. If the job order describes entry-level tasks with no experience needed, it’s likely Level I, even for a seasoned worker. Conversely, if the job demands demonstrated experience or more complex duties, it’s Level II.

It appears that for multi-duty jobs, the majority-duty level applies; if spanning SOC codes, the highest rate governs).

Note: Employers pay the highest of the AEWR, prevailing wage, CBA, or state/federal minimum wage. Thus, it appears that in California, a Level I rate is equal to the state minimum wage of $16.50, and the Level II rate is $18.71.

Overall, the rule supports improving competitiveness for those operating in a high-cost state such as California.

The interim final rule includes a 60-day comment period, opening upon its publication in the Federal Register on October 2, 2025. Legal challenges to the rule are likely inevitable. Nationally, advocacy efforts are intensifying. A prime example is the ongoing work led by the National Council of Agricultural Employers (NCAE). That said, we do not expect a fully unified response from stakeholders, as the OEWS-based wage calculations may yield uneven benefits across regions. Thus, vigorously defending these new regulatory safeguards will be essential to securing meaningful cost relief (more on that later...).

On a related note, we extend our sincere thanks to the NCAE for recently inviting and approving Grower-Shipper's addition to their Executive Committee, which will enable our efforts to help advance a protective agenda enriched by the unique insights from our Central Coast and Salinas Valley region. To discuss further, contact chris@growershipper.com.

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