Just before the Government Shutdown on September 30, the Department of Labor released an Interim Final Rule (IFR) for the calculation of the Adverse Effect Wage Rate. While the rule was released and it has a lot of details, questions still remain but here are the highlights. This is a preliminary review and we reserve the right to get a few details wrong due to interpretation without explanation from DoL Staff. Remember this is for NEW CONTRACTS after October 1, not current contracts.

As we discussed int he State Meetings last month, with the discontinuation of the USDA FLS, the wages will be based on the OWES survey. It reduces that classifications from 6 to 5 that are included. Those 5 classifications will be averaged and a two tier skill system will be implemented. Tier 1 will be low skill with little to no experience needed and Tier 2 will be workers with more than 2 months or special qualifications or training required.

If the workers fall into categories outside the five main categories, then their AEWR will be calculated directly from OEWS survey just like the 2023 rule. For example Truck Drivers will get a higher wage. At this time we are unclear if working in the gin occasionally would make them raise the wage of the other gin employees, but at this point it doesn’t look like it. (a question to be answered)

A second change is that if you have a job that may fit more than one description, the job that is the more predominant in terms of time, is the wage they are calculated on. So if you have a gin employee that sometimes drives a truck, they will get the general AEWR and not the truck driver AWER.

Another important change is that DoL has calculated a housing allowance to reduce the hourly rate for H-2A workers. The housing adjustment is based on HUD data for a 4 bedroom house able to house 8 workers and a 40 hour week. Alabama for example is set at $1.20. Domestic workers that are doing the same jobs would get the full AEWR and you would reduce the H-2A workers by the Housing adjustment. They call it an “Adverse Compensation Adjustment”.

For example: You have a gin in Alabama and are looking for a gin crew. The Skill level 1 rate will be $11.25 per hour and Skill 2 rate will be $14.95. You only need Skill Level 1 workers. The calculated housing allowance is $1.20/hr. You would advertise for the job to and pay US workers at $11.25 but the H-2A workers would only get $10.05 because you’re providing housing to the H-2A’s and not the domestic workers in corresponding employment.

The OEWS data is typically released in May and the new AEWR will change around July 1 although it is not spelled out exactly.

There are still a lot of unanswered questions about this and while this is an Interim Final Rule, there is an opportunity to comment until December 1. As the experts and attorneys digest this rule, it will all become clearer. We just wanted you know there is a new AEWR formula, in most cases it is lower than previously calculated and there is an adjustment for housing.

Below is a table of the AEWR for applications after October 1, 2025 in the Southeast. A full table can be found in the document below.

State	Skill Level 1	Skill Level 2	Adverse Compensation Adjustment
Alabama	$11.25	$14.95	$1.20
Florida	$12.47	$15.06	$2.29
Georgia	$12.27	$16.22	$1.75
North Carolina	$12.28	$16.39	$1.69
South Carolina	$12.14	$15.92	$1.54
Virginia	$13.90	$18.40	$2.08

Click above to download full rule.