The H-2A Program: Considerations in Hiring Temporary, Nonimmigrant Foreign Workers

Jennifer Tobias

With immigration laws and illegal aliens becoming a political and media headline lately, it is important for agricultural employers to know what is available to them to gain access to foreign labor.

The H-2A temporary agricultural labor certification program has become an increasingly popular option for U.S. employers to fill temporary or seasonal agricultural labor needs. Statistics released by the Office of Foreign Labor report that 8,801 applications were received in 2016 - a 16.4% increase over 2015 - with 165,741 total positions certified, an 18.5% increase when compared to 2015. Currently 85 countries are eligible to participate in the H-2A program.

What is the H-2A temporary agricultural labor certification program?

The program is a means for U.S. agricultural employers who anticipate a shortage in domestic workers to employ nonimmigrant foreign workers. Generally the certification is in force for a 10-month term or less. Potential employers are required to demonstrate that there are not a sufficient number of domestic workers who are able, willing, qualified, and available to work. It further requires the employer to agree that employing aliens will not adversely impact the wages or working conditions of similarly employed domestic workers. Employers who fill their labor needs with foreign labor are required to continue to engage in the recruitment of U.S. labor.

Other considerations for employers who wish to apply for temporary foreign labor under the H-2A regulations include providing specific conditions that would be available to the labor. These include, but are not limited to, housing, meals, transportation, tools, and workers’ compensation.

If an employer is certified under H-2A, precise records must be maintained and payroll taxes and forms must be considered. An employer is required to maintain records for each foreign employee for hours worked, hours offered but the worker refused to work, when an employee has terminated, and the reason for the termination. Each pay period, the employer must provide a wage statement to the employee reporting hours worked, hours refused and the basis for the pay. The basis for the pay should be broken down by crop and detail if it was based on hours worked, per piece, per task, etc.

In addition, employers are required to notify U.S. Citizenship and Immigration Services within two workdays if the foreign employee:

  • fails to report to work within five workdays of the employment start date;
  • leaves without notice and fails to report to work for five consecutive workdays without consent of the employer;
  • is terminated before completing the H-2A labor services they were hired to perform; or
  • completes the services they were hired to perform more than 30 days earlier than the date specified on the H-2A application.

How do you report the foreign labor for payroll taxes and forms?

Compensation paid to workers employed under an H-2A visa are exempt from Social Security and Medicare taxes. Also, any compensation paid for services performed in connection with the H-2A are not considered wages for federal income tax withholding; no mandatory withholding is required for the employer, but backup withholding may apply. If the employer and employee agree, the employer can voluntarily withhold federal income taxes. If the employer chooses to do this, they are required to remit the taxes and report the withholding on Form 943 and Form W-2, similar to any other employee.

Wages paid to an employee covered by the H-2A visa in excess of $600 are required to be reported on Form W-2; compensation will be reported in box 1, and boxes 3 and 5 will remain blank. If voluntary federal withholding was utilized, then the withholding would be reported in box 2. The wages paid will not be reported on Form 943. If an employee covered under H-2A anticipates owing federal income taxes, but does not participate in voluntary withholding, the employee may be subject to estimated tax payments.

The H-2A temporary agricultural labor certification program may be the right fit or your agribusiness. Contact your Yeo & Yeo professional for assistance.

Jennifer Tobias

Jennifer Tobias

CPA

Jennifer is a Senior Manager in Yeo & Yeo’s Kalamazoo office. Her areas of expertise include business consulting as well as tax preparation and tax planning with a strong focus on the agribusiness, construction and transportation industries. She is a member of the firm’s Agribusiness Services Group and the Death Care Services Group. She is also a QuickBooks ProAdvisor. Contact Jen at jentob@yeoandyeo.com or 269.329-7007.