Supreme Court Will Rule on the DOL’s Power to Issue Penalties

The U.S. Supreme Court has agreed to review in its next term a case that raises the question of whether the U.S. Department of Labor (DOL) could constitutionally impose certain penalties on H-2A employers. If the Supreme Court affirms the 3rd U.S. Circuit Court of Appeals’ decision that the DOL could not, the current litigation frameworks for cases brought by the DOL’s Wage and Hour Division might be at risk, according to Leon Rodriguez, an attorney with Seyfarth in Washington, D.C., and Miami.

H-2A Program

The H-2A program is the temporary agricultural worker classification that lets U.S. agricultural employers bring in foreign workers for temporary or seasonal work, said Amy Peck, an attorney with Jackson Lewis in Omaha, Neb., and Sioux Falls, S.D. 

The DOL administers and reviews applications for temporary labor certification, while U.S. Citizenship and Immigration Services adjudicates the H-2A petition on Form I-129 after certification is obtained, she explained.

If the I-129 is approved, the worker may seek issuance of the visa through the State Department. The DOL’s Wage and Hour Division investigates and enforces H-2A obligations, including through the assessment of back wages and civil money penalties, which is the enforcement role at issue in this case (DOL v. Sun Valley Orchards), Peck said.

Toolkit: Understanding and Obtaining U.S. Employment Visas

The DOL manages the labor certification process through the DOL Office of Foreign Labor Certification to confirm, Rodriguez said, that:

• There are no willing and qualified U.S. workers for the job in question.
• H-2A workers will be paid a wage commensurate with the surrounding market.
• Non-H-2A workers will not be subject to disparate conditions of employment from H-2A workers.
• H-2A workers will be protected with respect to working and living conditions.

Case Background and Preview

In this case, the 3rd Circuit ruled that the DOL could not impose certain civil penalties on H-2A employers unless their cases were decided by a U.S. district court. The 3rd Circuit relied on the Supreme Court’s ruling in SEC v. Jarkesy to reach this holding, Rodriguez noted.

“If the Supreme Court agrees that [the] DOL cannot constitutionally adjudicate and impose these monetary remedies in-house, the immediate effect would be on the H-2A enforcement model at issue in this case and could require the government to pursue such claims in federal court,” Peck said. “More broadly, the reasoning could call into question other agency penalty schemes that resemble traditional private-right disputes and involve punitive monetary relief resolved initially by agency adjudicators rather than Article III courts. That is the direction of the [Supreme] Court’s recent Article III and Seventh Amendment analysis in SEC v. Jarkesy.” 

Article III of the Constitution created the federal court system, and the Seventh Amendment provided the right to a jury trial in civil cases.

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The U.S. Equal Employment Opportunity Commission likely would not be affected by the Supreme Court’s upcoming ruling, Peck said. The commission typically investigates and then seeks relief in federal court on behalf of charging parties, rather than imposing civil money penalties through an in-house adjudicative process. “Agencies that primarily investigate claims and then seek relief through federal court actions may be less vulnerable to the type of constitutional challenge raised in this case,” she said.

Recent administrative law decisions — including Loper Bright — “reflect the court’s willingness to examine whether agencies are exercising authority in a manner consistent with constitutional and statutory limits, rather than deferring to longstanding administrative practice,” she added.

But the outcome is not certain, Peck said. “The government is likely to argue that the H-2A program involves a specialized regulatory framework established by Congress and that [the] DOL’s enforcement authority is distinguishable from the penalty scheme at issue in Jarkesy.”

For now, she concluded, employers should continue treating the H-2A process as fully enforceable. 

Employers Should Stay the Course

“The safety approach is to assume the existing enforcement structure remains in force unless and until the court says otherwise,” Peck said. “Employers should audit job orders and actual practices for consistency, preserve payroll and recruitment records, and verify housing and transportation arrangements. Until there is a change in the law, employers should assume that [the] DOL investigations and enforcement — including administrative proceedings — remain active and ongoing.”

Nonetheless, Peck said that if the court narrows agency penalty authority, that could affect enforcement strategy across many regulated sectors, “particularly where agencies rely on administrative adjudication to impose punitive monetary remedies.”

But Rodriguez said regardless of the Supreme Court’s decision in Sun Valley next term, H-2A cases “will remain a priority for [the] DOL and in the long run, the cases will be brought in district courts if they have to be.”

The Supreme Court’s upcoming term will start Oct. 5.