Industrial Holographics, Inc. v. Donovan
722 F.2d 1362 (1983)
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Rule of Law:
The Secretary of Labor has the authority to issue regulations requiring an employer seeking labor certification for an alien to first advertise the job to U.S. workers at the 'prevailing wage.' This regulation is a reasonable interpretation of the statutory mandate to ensure that the employment of aliens does not 'adversely affect the wages and working conditions' of similarly employed U.S. workers.
Facts:
- Industrial Holographics, Inc., a manufacturer of machinery for rubber tires, sought to employ Roger K. Yu, an alien, as an export manager.
- In June 1979, Industrial Holographics applied to the Department of Labor for a labor certification on behalf of Yu.
- As part of this process, the company advertised the export manager position to U.S. workers at a salary of $1,000 per month.
- The Michigan Employment Security Commission (MESC) determined that the prevailing wage for export managers in the relevant area was $1,666 per month.
- After being notified of this discrepancy, Industrial Holographics agreed to re-advertise the position at the higher, prevailing wage.
- During its second recruitment effort at the higher wage, Industrial Holographics failed to comply with several regulatory requirements, including posting the job internally, documenting recruitment results, and posting the job with the state employment service for the required duration.
Procedural Posture:
- Industrial Holographics, Inc. and Roger K. Yu (plaintiffs) applied to the Department of Labor for an alien labor certification.
- The certifying officer for the Department of Labor issued a Notice of Findings proposing to deny certification because the offered wage was below the prevailing wage.
- After the employer failed to properly comply with recruitment regulations at the corrected wage, the certifying officer issued a final determination denying the certification.
- On review, an administrative law judge within the Department of Labor affirmed the denial of certification.
- Plaintiffs sought judicial review in the United States District Court, which granted summary judgment in favor of the Department of Labor.
- Plaintiffs, as appellants, then appealed the district court's decision to the United States Court of Appeals for the Seventh Circuit.
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Issue:
Does the Department of Labor's regulation, requiring employers to offer the 'prevailing wage' when recruiting U.S. workers before hiring an alien, exceed the statutory authority granted by the Immigration and Nationality Act's mandate to prevent 'adverse effects' on the wages and conditions of U.S. workers?
Opinions:
Majority - Cudahy, Circuit Judge
No, the Department of Labor's regulation does not exceed its statutory authority. The requirement to offer the prevailing wage is a valid and reasonable method for the Secretary of Labor to implement the Immigration and Nationality Act's directive to protect American workers' wages. The statute grants the Secretary broad discretion to determine what constitutes an 'adverse effect,' and given the high volume of applications, creating a simplified, systematic standard like the prevailing wage rule is an appropriate exercise of that discretion to ensure consistency and prevent arbitrary decisions. The court found that the regulation's assumption—that employing an alien at a sub-prevailing wage will adversely affect U.S. workers—is not arbitrary or capricious. Furthermore, the denial of certification was justified because the employer failed to substantially comply with the procedural requirements for advertising the position after agreeing to offer the corrected, higher wage.
Analysis:
This decision solidifies the significant deference courts give to administrative agencies in creating specific regulations to implement broad statutory mandates. By upholding the 'prevailing wage' requirement as a reasonable proxy for the statutory 'adverse effect' standard, the court affirmed the agency's power to create bright-line, administrable rules rather than engaging in complex, case-by-case economic analyses. This strengthens the Department of Labor's ability to efficiently process a large volume of labor certifications and makes it more difficult for employers to challenge the validity of such procedural regulations. The ruling emphasizes that employers must strictly adhere to these procedural rules to obtain certification.
