In early 2020, Alco Harvesting, LLC hired Jesus Guzman, a citizen of Mexico, to perform agricultural work in Santa Maria under the H-2A visa program. The H-2A visa program allows employers to hire foreign nationals to engage in temporary agricultural work in the United States. The United States Department of Labor (“DOL”) administers the H-2A visa program. Employers seeking to employ foreign workers under this visa program must declare all material terms and conditions of employment to the DOL.  

While in orientation in Mexico, Guzman signed an arbitration agreement. This agreement required Guzman to arbitrate all claims against Alco and forfeit his right to a jury trial. Alco did not list the arbitration agreement in its H-2A petition. Guzman then entered the US and worked for Alco.

In 2022, Guzman filed suit against Alco in San Luis Obispo County Superior Court for various state labor and employment law violations both individually and as a Private Attorney General pursuant to PAGA. Alco responded by moving to compel Guzman to arbitrate his claims. The Superior Court denied Alco’s arbitration motion. Alco appealed and the Court of Appeal affirmed the denial of the arbitration motion.  The appellate court found that the arbitration agreement was not enforceable because it was a material term or condition of employment that was not disclosed to the DOL in Alco’s H-2A petition, and thus it was unlawful and unenforceable.  

This decision is another data point in the trend showing the government finding common industry practices to be material terms and conditions of employment. In 2009, the DOL’s Board of Alien Certification Appeal held that business-related travel is a material term and condition of employment that must be advertised as a part of the PERM Process. In 2013, BALCA held that pre-employment drug testing and background checks were material terms and conditions of employment.  

This decision has implications beyond H-2A visa holders in agricultural employment. It has the potential to touch all foreign nationals employed in California under a temporary nonimmigrant visa. The DOL requires employers to declare all material terms and conditions in H-2B temporary, non-agricultural employment programs and in the job order process in the Permanent Labor Certification (“PERM”) program. The H-2B visa program is analogous to the H-2A visa program, except it allows the employment of foreign national in temporary, seasonal, or peak-load non-agricultural employment.  Amusement parks, ski lodges, and golf courses are typical users of this visa. The PERM program is the process employers use to seek permanent residency for foreign nationals through employment.  This program is commonly used to extend employment for H-1B and similarly skilled foreign workers beyond the expiration date of their visas.  

California employers wishing to enforce arbitration agreements against the foreign national employees they petition should take care to see that the existence of the arbitration agreement is declared to the US Department of Labor in the petition process.  Failure to do so may render it unenforceable in California’s courts.