Labor Department to Raise H-2B Prevailing Wages 23 Percent in Jan. 12 Final Rule

Labor Department Finalizing Wage Rule for Jan. 12 Publication

The Labor Department will publish a final rule on Jan. 12 that raises prevailing wages for H-2B seasonal guest workers by an average of 23 percent, according to two Labor Department economists familiar with the regulation. The rule, drafted by the Office of Foreign Labor Certification and the Wage and Hour Division, will shift the methodology for determining prevailing wages from a mean calculation to the 75th percentile of Bureau of Labor Statistics Occupational Employment and Wage Statistics data, the economists said. Agencies began circulating the final version among senior political appointees on Jan. 5, and the Federal Register is scheduled to post the rule at 8:45 a.m. Eastern on Jan. 12, according to an internal schedule reviewed by The Alamo Post.

The rule will affect the roughly 66,000 H-2B visas available for fiscal year 2026, with the highest wage spikes hitting landscaping, seafood processing, hospitality, and construction occupations. One of the economists said the department estimates landscaping wages will rise 18 percent, seafood processing wages 31 percent, hospitality wages 21 percent, and construction wages 25 percent on a national average basis. The same economist said the department projects the rule will impose roughly $410 million in additional payroll costs on employers during the first year of implementation. The second economist confirmed that the Office of Information and Regulatory Affairs completed its review of the final rule on Jan. 6, clearing the way for publication.

The H-2B program allows U.S. employers to hire foreign workers for temporary nonagricultural jobs when qualified American workers are unavailable. Employers must pay the prevailing wage for the occupation in the area of intended employment. The new rule will apply to labor certifications filed on or after March 1, 2026, the economists said, meaning employers seeking workers for the spring and summer seasons will face the higher wage floor.

Trade Groups Preparing Court Challenge as Small Firms Absorb Higher Costs

A trade association official who reviewed a draft of the rule on Jan. 7 said national landscaping, seafood, and hospitality groups are already preparing a lawsuit to block the regulation. The official, who spoke on condition of anonymity because the rule has not been made public, said attorneys for the coalition expect to file a complaint in federal district court in Louisiana or Texas within 48 hours of publication. The coalition believes the department violated the Administrative Procedure Act by failing to adequately respond to comments warning that the wage hike would force small firms to cut seasonal hiring, the official said.

A small-business owner in the sector who operates a landscaping company in Laredo, Texas, said the wage increase would force her to raise prices for municipal contracts or reduce her H-2B workforce from 35 to roughly 25 workers during the peak spring season. The owner, who requested anonymity because she feared retaliation from federal contracting officers, said she paid her H-2B crew $15.42 per hour in 2025 under the current prevailing wage determination. Under the new rule, she said, the hourly rate for the same classification in her area would jump to $19.03, an increase of $3.61 per hour before payroll taxes and workers compensation. She estimated the added cost for her 10-week contract at $168,000.

The trade association official said the coalition will also ask the U.S. District Court for the Southern District of Texas to issue a nationwide preliminary injunction before the March 1 effective date. The official said the plaintiffs will cite a 2024 federal appeals court decision that blocked a similar wage methodology change in the H-1B program as evidence that the department lacks statutory authority to impose percentile-based wages without congressional approval.

What Happens Next: Compliance Deadlines and a Likely Legal Fight

The Labor Department plans to release a set of frequently asked questions on Jan. 14 to guide employers through the new wage determination process, according to one of the Labor Department economists. The FAQ will include examples of how to calculate the prevailing wage using the 75th percentile data and will clarify that the rule does not apply retroactively to approved labor certifications, the economist said. The department also expects to update its Foreign Labor Application Gateway system over the weekend of Jan. 17 to accept applications under the new methodology.

Republican lawmakers on the House Education and Workforce Committee are preparing a letter to Labor Secretary Lori Chavez-DeRemer urging the department to delay the rule by 90 days, according to a congressional aide briefed on the plan. The aide said the letter, expected to be sent on Jan. 13, will argue that the wage hike contradicts the administration's stated goal of reducing illegal immigration by making legal guest worker slots more expensive for American employers. The aide requested anonymity because the letter had not been finalized.

Employers should watch for three developments by Jan. 11: a Federal Register notice containing the final regulatory text, the coalition's lawsuit filing, and any interim guidance from the department's Office of Foreign Labor Certification. If the courts move quickly, a judge could freeze the rule before the March 1 effective date, giving Congress and the industry a narrow window to seek a legislative fix. The Alamo Post will continue to track the regulation and the legal challenge as the Jan. 12 publication date approaches.