Arbitration Agreement Must be Disclosed in Job Order as a “Material Term and Condition” of Employment as part of H-2A Certification
Recent developments in the California courts have shone a spotlight on the H-2A Temporary Agricultural Program. Agricultural employers, please read on for important information regarding your job orders.
As you may know the H-2A visa program allows employers in the agricultural sector to hire temporary foreign workers when “there are not sufficient [domestic] workers who are able, willing, and qualified, and who will be available at the time and place needed, to perform the labor or services.” An employer must seek certification from the Department of Labor (DOL) before it can recruit H-2A foreign workers.
The employer first submits a “Job Order.” DOL’s implementing regulations define a “Job Order” as “[t]he document containing the material terms and conditions of employment that is posted by the State Workforce Agency (SWA) on its interstate and intrastate job clearance systems based on the employer’s Agricultural Clearance Order. DOL transmits the Job Order to the State Workforce Agency (SWA) of each state in which the employer intends to use the workers. SWA places approved orders into a publicly accessible clearance system that domestic workers can use to apply for posted job openings. Orders so posted are called “Clearance Orders.” Employers must try to recruit from the domestic labor market and hire any “qualified, eligible U.S. worker who applies…until 50 percent of the period of the work contract has elapsed.”
The employer next submits an “Application for Temporary Employment Certification”, along with “all supporting documentation and information.” This must include a copy of the completed Job Order. DOL forwards certified Applications and Job Orders to United States Citizenship and Immigration Services. Employers may then hire and admit foreign workers into the country on H-2A visas.
In general, what then are the “material terms and conditions” of employment? A Department of Labor fact sheet provides us with some guidelines:
The work contract must contain all the terms, benefits, and conditions of employment (at a minimum, all the provisions required under the H-2A statute and regulations), including but not limited to:
- Job qualifications and requirements
- Job duties
- Free and safe housing
- Workers’ compensation insurance
- Free tools, supplies, and equipment
- Meals or kitchen facilities
- Inbound & outbound transportation
- Free and safe daily transportation
- Three-fourths guarantee
- Hours of work offered
- Hours and earnings statement
- Rate of pay
- Frequency of pay
- Deductions
- Abandonment or termination of employment
- Contract impossibility
We now know that arbitration agreements can be added to this laundry list. In a case involving a foreign H-2A worker from Mexico who sued his farm labor employer for various employment claims, Guzman v. Alco Harvesting LLC, the employer Alco moved to compel arbitration pursuant to an arbitration agreement presented to and signed by the worker Guzman at his orientation. The trial court denied the motion noting that the defendant employer had not listed mandatory arbitration as one of the material terms of employment when it sought DOL certification to hire the plaintiff and other temporary workers under the H-2A program. Before the Court of Appeal then arose the following key questions that deserve attention:
- Is mandatory arbitration a “material term or condition” of the H-2A worker’s Guzman’s employment with the farm?
- If so, whether the employer disclosed this requirement in its H-2A certifications submissions to DOL?
The court answered “yes” to the first, and “no” to the second.
Let’s touch on the court’s explanation of these two conclusions.
First, Alco’s arbitration agreement required Guzman to forfeit his right to a jury trial. The arbitration agreement also prohibited him from participating in any class action claims against Alco. The court viewed the relinquishing of these rights as “material terms and conditions” of his employment.
Second, the court determined that Alco failed to disclose the arbitration agreement during H-2A certification. The Job Orders submitted to DOL have lengthy addenda describing such things as work experience and physical requirements, the grounds for terminating a worker, training and production standards, and reimbursement of transportation costs. Alco’s submissions, however, did not mention anything about workers signing a separate, all-encompassing arbitration agreement when they reported to orientation. Thus, the arbitration agreement was found to be unlawful and unenforceable.
Agricultural employers should be mindful of all material terms and conditions when submitting petitions to the DOL. This includes disclosing all terms of employment, including arbitration agreements. If you have any questions or concerns regarding arbitration agreements, please contact our office.
