In a sign that some courts are flexing their muscles and resisting attempts by the U.S. Department of Labor (DOL) to crack down on employers, the 5th Circuit Court of Appeals has rejected an effort to force employers to cover more guest worker costs.
The 5th Circuit Court of Appeals covers Texas employers.
Recent case: After Hurricane Katrina struck New Orleans and the Gulf Coast, hotels that wanted to reopen found they were unable to hire enough employees. They then used the federal government’s guest worker program to import employees from other countries.
While those employees received more than the minimum wage, they had to incur significant costs associated with coming to the United States. For example, they had to pay their own travel expenses and costs associated with securing visas.
Once here, about 100 Latin American guest workers who were hired by a hotel chain sued, alleging Fair Labor Standards Act () violations.
Essentially, they argued that after paying for their own transportation and visa fees, they ended up earning less than minimum wage.
According to the DOL, employers that hire nonagricultural guest workers are responsible for their visa fees and transportation costs unless the guest workers earn enough after subtracting the costs to make at least the minimum wage. In other words, the DOL has taken the position that guest workers are covered by the FLSA and are entitled to at least minimum wage after subtracting their expenses from their wages.
The 5th Circuit heard the case as a group rather than having a three-judge panel decide the case, which is the usual practice.
A few dissenting judges thought the employer should have either paid the travel and visa expenses or raised the workers’ wages.
But the majority of judges concluded that the FLSA covered the guest workers: Yes, they were entitled to minimum wage, but they had to cover their own transportation and visa costs. If that meant they ended up earning less than minimum wage, so be it; the courts can’t do anything to help them.
Because other courts have ruled otherwise, this case may end up in the U.S. Supreme Court, testing the Obama administration’s efforts to expand worker rights, including workers here on temporary or other visas. (Castellanos-Contreras v. Decatur Hotels LLC, No. 07-30942, 5th Cir., 2010)
Final notes: Employers can’t use an employee or former employee’s immigration status as an excuse or defense for paying less than minimum wage or not paying proper overtime. Even illegal immigrants can sue, seeking back pay for work performed. What they cannot get from the court is a reinstatement order or so-called front pay for lost future wages.
Courts don’t want to encourage employee exploitation. If employers can’t be held liable for breaking the FLSA if they pay employees less than the law requires, that would create a perverse incentive to hire illegal workers.
By allowing the employees to sue, the DOL and many courts assume at least one incentive for using illegal labor (lower wages) is removed from the equation.
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