NAACP, Jefferson County Branch v. Donovan, 84-5721

Decision Date09 July 1985
Docket NumberNo. 84-5721,84-5721
Citation765 F.2d 1178
Parties, 103 Lab.Cas. P 34,715 NATIONAL ASSOCIATION FOR THE ADVANCEMENT OF COLORED PEOPLE, JEFFERSON COUNTY BRANCH, et al., Appellants, v. Honorable Raymond J. DONOVAN, Secretary, United States Department of Labor, in his official capacity, et al.
CourtU.S. Court of Appeals — District of Columbia Circuit

Thomas D. Goldberg, Washington, D.C., with whom Philip A. Lacovara and Ronald A. Stern, Washington, D.C., were on the brief, for appellants.

Richard A. Stanley, Asst. U.S. Atty., Washington, D.C., with whom Joseph E. diGenova, U.S. Atty., Royce C. Lamberth, R. Craig Lawrence and Michael J. Ryan, Asst. U.S. Attys., Washington, D.C., were on the brief, for appellees.

Before GINSBURG and BORK, Circuit Judges, and McGOWAN, Senior Circuit judge.

Opinion for the Court filed by Circuit Judge GINSBURG.

GINSBURG, Circuit Judge:

Appellants, fifteen migrant farmworkers and two organizations whose members include migrant farmworkers, challenge the validity of an amended Department of Labor (DOL or Department) regulation concerning the minimum piece rates employers seeking to hire foreign workers must guarantee all their employees. The regulation is intended to effectuate in part DOL's responsibility to ensure that the employment of foreign workers "will not adversely affect wages and working conditions of workers in the United States similarly employed." 8 C.F.R. Sec. 214.2(h)(3)(i)(A) (1985).

The district court held that the amended regulation did not represent a change in agency policy, that DOL had adequately explained the revision, and that the agency action was not otherwise arbitrary or capricious. NAACP, Jefferson County Branch v. Donovan, Civ. No. 82-2315 (D.D.C. Aug. 15, 1984).

We reverse the judgment and remand the case to the district court with instructions to return the regulation to DOL. The piece rate regulation at issue complements provisions setting a minimum hourly wage employers must guarantee all their employees before hiring foreign workers. In the absence of piece rate regulation, employers paying workers by the box or bushel picked, for example, could meet an increase in the minimum hourly wage by requiring workers to pick more boxes or bushels each hour. The stated policy of the piece rate regulation is to "avoid requiring [piece rate] workers to increase productivity to earn" the minimum hourly wage. 48 Fed.Reg. 40,168, 40,173 (1983). Despite this stated policy, however, the amended regulation allows an increase in productivity to substitute for an otherwise mandatory increase in the piece rate corresponding to an increase in the minimum hourly wage. The amended regulation thus appears to open to employers an enhanced incentive constantly to drive up worker productivity.

The DOL statement accompanying the amended regulation did not deal with the anomaly that the new provision would allow the employer practice (requiring piece rate workers to increase productivity to earn the minimum hourly wage) that it is DOL's stated policy to prevent. The Department accordingly passed over, without discussion, the additional incentive that the amended regulation appears to give employers to increase worker productivity. Until DOL demonstrates by reasoned explanation that it has considered these extremely relevant aspects of the amended provision, the alterations in the piece rate regulation cannot stand.

I. BACKGROUND
A. Statutory and Regulatory Framework

The Immigration and Nationality Act, 8 U.S.C. Secs. 1101-1525 (1982 & Supp. I 1983) (as amended), permits entry of nonimmigrant aliens "temporarily to the United States to perform temporary services or labor, if unemployed persons capable of performing such service or labor cannot be found in this country." Id. Sec. 1101(a)(15)(H)(ii) (1982). Immigration and Naturalization Service (INS) implementing regulations require that every visa issued under this provision contain a "certification from the Secretary of Labor ... stating that qualified persons in the United States are not available and that ... employment of the [nonimmigrant alien] will not adversely affect wages and working conditions of workers in the United States similarly employed." 8 C.F.R. Sec. 214.2(h)(3)(i)(A) (1985).

DOL has established a detailed regulatory framework "to secure information sufficient to make [the] factual determinations" required by INS. 20 C.F.R. Sec. 655.0 (1984). The DOL provisions require employers desiring to use temporary alien agricultural workers to file an application eighty days before the estimated date the workers would be needed, and to take steps to recruit United States workers for the

first sixty days of this period. Id. Sec. 655.200(a). At the end of the sixty days the application will be granted if the Department finds, inter alia, that sufficient qualified United States workers are not available; that alien workers are being offered no higher wages or better working conditions than United States workers; and that wages offered to both alien and United States workers will not be less than the hourly "adverse effect rate" (AER) determined to be necessary to prevent depressing comparable United States wages. Id. Secs. 655.200(a), .202(b)(9)(i). The AER, which is to be computed annually on a state-by-state basis, id. Secs. 655.200(b), .207, thus sets the minimum wage to be paid by employers of alien harvest workers. If workers are paid by piece rates rather than hourly rates, the piece rate must be designed to produce "average hourly earnings" at least equal to the AER. Id. Sec. 655.202(b)(9)(ii). A worker must be paid the AER even if his piece rate earnings fall below that minimum wage level. Id.

B. Old Piece Rate Regulation; NAACP I and NAACP II

In 1978, after receiving extensive comments and conducting hearings at six different locations, DOL amended its regulations relating to temporary employment of alien agricultural workers. Included was an amendment to the piece rate regulation:

In any year in which the applicable adverse effect rate is increased, employers shall adjust their piece rates upward to avoid requiring a worker to increase his or her productivity over the previous year in order to earn an amount equal to what the worker would earn if the worker were paid at the adverse effect rate.

20 C.F.R. Sec. 655.207(c) (1984). The Department statement accompanying the 1978 regulation noted the observation of worker representatives that in the past "when the adverse effect rate [went] up, employers, instead of raising the piece rate, often simply require[d] their workers to work faster." 43 Fed.Reg. 10,306, 10,309 (1978). The effect of the amendment, the Department said, was to "clarif[y] and adjust[ ]" the DOL's "past policy" by requiring that "in any year in which the adverse effect rate increases, employers must redesign their piece rates accordingly." Id. at 10,310 (emphasis supplied).

In NAACP, Jefferson County Branch v. Donovan, 558 F.Supp. 218 (D.D.C.1982) (NAACP I ), the present plaintiff-appellants challenged a 1981 Department interpretation of the 1978 piece rate regulation. The interpretation stated that an employer may fulfill his obligations by "adjust[ing] the previous season's piece rate upward to a point where the employer's average worker in that activity will make hourly earnings equal to the season's applicable wage rate." Id. at 222 (quoting General Administration Letter No. 46-81 (Sept. 11, 1981)).

Under the 1981 interpretation, if the employer increased worker productivity in one year, that increased productivity rate would be the basis for calculating the next year's minimum piece rate. In other words, by driving up the productivity rate used in the calculation, the employer could thereafter lower any increase in piece rates required to match an increase in the AER. "The employer would only be required to increase the piece rate if the increase in the productivity rate did not offset the rise in the AER." Id. The particular growers involved in NAACP I had raised the productivity rate used for calculating piece rates from eighty bushels to ninety bushels a day. The Department, which had rejected the identical productivity rate increases in 1979, accepted them in 1980 and 1981.

The district court declared DOL's 1981 interpretation of the piece rate regulation "directly contrary to the plain meaning of Sec. 655.207(c)." Id. The court found that the interpretation allowed the "abuse which the regulations were specifically aimed at containing"--increasing productivity to meet increases in the AER. Id. at 223. "The terms of this regulation clearly mandate" that "[i]f the AER is increased, ... the piece rate be increased accordingly." Id. at 222. To correct DOL's misinterpretation, the district court ordered that minimum piece rates under Sec. 655.207(c) be calculated based on a constant, rather than The claim in NAACP I covered three West Virginia growers and the calculation of the West Virginia AER and corresponding minimum piece rates. The original plaintiffs filed an amended supplemental complaint on behalf of a nationwide class of migrant farmworkers who work in states affected by DOL's temporary labor certification program. In NAACP, Jefferson County Branch v. Donovan, 566 F.Supp. 1202, 1206 (D.D.C.1983) (NAACP II ), the district court in essence extended its NAACP I holdings to the nationwide class.

increased, productivity rate, thus mandating increases in piece rates directly proportional to yearly increases in the AER.

DOL did not appeal the district court's decisions.

C. New Piece Rate Regulation

In 1983, DOL proposed the amended regulation here under review; in this revision, 20 C.F.R. Sec. 655.207(c) reads:

Piece rate adjustments. In any year in which the applicable adverse effect rate increases to the point where the employer's previous year's piece rate in a crop activity will not enable the average...

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