Lawmakers hear debate over exempting H‑2A employers from Oregon unemployment taxes

The House Committee on Labor and Workplace Standards heard testimony Feb. 12 on House Bill 3142, which would exempt employers from paying unemployment insurance (UI) taxes on wages paid to noncitizen agricultural workers employed under the federal H‑2A temporary agricultural worker program.

Erin (committee staff) summarized the measure: “House Bill 3,142 exempts employers from unemployment tax on the wages of non citizens who work in Oregon on h 2 a visas. It takes effect on the 90 first day following signing.”

Proponents from farming and agricultural HR organizations told the committee the change would align Oregon with federal tax treatment and reduce what they described as an unfair burden on employers who hire H‑2A workers who typically cannot claim UI benefits. Jenny Dressler of the Oregon Farm Bureau Federation said H‑2A is a highly regulated, costly program and that employers have paid UI taxes on H‑2A wages despite federal guidance that treats such workers differently for FUTA purposes. Rafa Matias of the Worker and Farm Labor Association (WAFFLA) said the program’s contract structure and the requirement that workers be guaranteed a substantial share of contracted hours make those workers ineligible or effectively unavailable for UI in the United States.

Lindsay Leahy, director of the Unemployment Insurance Division at the Oregon Employment Department, told the committee the department’s forecasted revenue loss to the UI trust fund if HB 3142 passed would be approximately $2.2 million for the 2025–27 biennium and $2.7 million for the 2027–29 biennium. Leahy also explained that while there may be rare technical situations in which an H‑2A worker could be temporarily employer‑attached and receive benefits, the department is not aware of common instances of H‑2A recipients collecting UI in Oregon.

Opponents including the Oregon Law Center, SEIU Local 503 and community and farmworker advocates said the exemption would undercut the fairness and stability of Oregon’s UI system and could incentivize employers to substitute temporary H‑2A workers for local workers. Martha Sonado of the Oregon Law Center argued UI contributions fund a pooled insurance system and said employers should not avoid contributions simply because a subset of workers may not be eligible for benefits. Mike Powers of SEIU Local 503 and Ira Collo Martinez for PCUN (Pineros y Campesinos Unidos del Noroeste) said the H‑2A program creates power imbalances that leave temporary workers vulnerable to wage violations, poor housing and threats tied to visa status; they warned an exemption could worsen those dynamics.

Kate Sussman of the Northwest Workers’ Justice Project said the committee should consider the precedent this change could set for other sectors that use foreign visa workers, and recounted a recent trial in which a jury concluded an employer had preferred H‑2A workers over local applicants.

Committee members asked witnesses about the H‑2A guarantees and requirements, the program’s housing obligations, and whether the exemption would create an incentive for employers to rely on temporary foreign labor. Witnesses described program safeguards — including a minimum advertised wage (the adverse effect wage rate), guaranteed contract hours and employer provisions for housing and inbound transportation — and also said enforcement and recruitment practices vary in the field.

No committee action or vote was taken. Staff and witnesses agreed to follow up with further information, and the hearing record includes written testimony and supporting federal IRS guidance submitted by proponents.