Third Circuit: DOL Civil Penalties for H-2A Violations of Agricultural Employment are Unconstitutional
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EFFECTIVE July 29, 2025 |
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Discussion
In Sun Valley Orders, LLC v. U.S. Department of Labor, the Third Circuit Court of Appeals ruled that the DOL enforcement action against an agricultural employer under the H-2A nonimmigrant visa program entitled the employer to have the enforcement action decided in court rather than in an administrative proceeding through the DOL. Therefore, the penalties levied against the employer were unconstitutional. Here, Sun Valley Orchards was a family-run farm in New Jersey relying on seasonal workers hired through the H-2A visa program. Sun Valley promised workers at least 40 hours of work per week for 26 weeks of employment, guaranteed employment for the hourly equivalent of three-fourths of the hours contemplated for employment, offered no-cost housing, provided free transportation to the worksite, and furnished free cooking and kitchen facilities through a job order.
The DOL alleged that Sun Valley did not keep its promises and violated the job order. By letter, the DOL confirmed the violations and assessed $550,000 in civil penalties and back wages against Sun Valley. The letter also notified Sun Valley of a right to request a hearing before an administrative law judge (ALJ) within 30 days before the findings became final and unappealable. Sun Valley appealed; the ALJ agreed with the DOL and only partly modified the penalty amounts. Sun Valley then challenged the DOL’s decision in a federal court alleging statutory and constitutional defects in the DOL’s order under the Administrative Procedure Act.
Although the federal court found in favor of the DOL and granted the motion to dismiss, the Third Circuit Court of Appeals found that Article III of the Constitution vests the judicial power of the United States in the Supreme Court and other courts that Congress establishes. Congress cannot withdraw from judicial review a matter which, in its nature, is the subject of a suit at common law, in equity, or admiralty. In addition, the Supreme Court allows certain public rights to be adjudicated outside of an Article III court. The court used three principles to decide: (1) whether the DOL’s action concerned a private right in the nature of a common lawsuit; (2) whether the DOL’s action fit within the public rights exception; and (3) whether Sun Valley waived its right to have its case heard by an Article III court.
Using this analysis, the court found the DOL treated Sun Valley’s violation of the job order like a breach of contract with its H-2A employees and also sought common law remedies. These actions show that Sun Valley was entitled to have its case before an Article III court and not an administrative hearing. In addition, the H-2A labor certification regulations do not fit within the public rights exception. Lastly, Sun Valley did not waive its right to have its case heard by an Article III court because the letter notifying it of the appeal process did not provide any real choice to where it could challenge the DOL’s ruling.
This ruling is notable for agricultural employers of H-2A visa holders. It means ALJ decisions against employers can be challenged and forced to go through federal court. It remains to be seen whether the DOL will pause its enforcement actions in light of this ruling. Employers with pending cases should consult with legal counsel to determine their options.
Action Items
- Consult with legal counsel regarding compliance with H-2A visa program requirements, if applicable.
Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2025 ManagEase