PAYING YOUR OWN WAY: H-2B GUEST WORKERS AND THE FLSA

Whether it’s a matter of trying to stay on top of I-9 form changes or keeping up with the immensely controversial immigration law that the state of Arizona brought forward earlier this year, immigration-related issues certainly have been in the news a lot in the last 12 months or so.  Nevertheless, immigration matters remain a dangerous trap for some employers.  And that’s why you should continue reading.

Earlier this month, the Fifth Circuit held in Castellanos-Contreras v. Decatur Hotels LLC that the Fair Labor Standards Act (“FLSA”) did not require an employer of H-2B (non-agricultural) guest workers to reimburse inbound travel, visa, or recruitment expenses.  While the Fifth Circuit covers states like Texas and Louisiana that aren’t all that close to this area, the case remains relevant to employers nationwide because the Fifth Circuit addressed an issue that appears to be largely one of first impression.

Because of the labor shortage that existed in New Orleans in the wake of Hurricane Katrina in 2005, Decatur Hotels obtained approval from the United States Department of Labor (“DOL”) to temporarily recruit, employ, and obtain visas for prospective employees who resided abroad.  As a thank-you for their efforts, a class of one hundred of those Latin American workers sued the establishment, alleging that it required each worker to pay the $3,500 to $5,000 in recruiters’ fees, visa fees, and transportation costs necessary to bring the workers overseas.  The workers claimed that they were forced to work for three to five months in order to recoup the expenses, and therefore, that the hotel violated the FLSA by paying them less than the federal minimum wage for their first pay period.

In concluding that the hotel was not required to pay for those expenses, the Fifth Circuit determined that one DOL interpretation which required employers to reimburse H-2B guest workers for those costs when the failure to do so would result in them making less than the federal minimum wage (DOL Field Assistance Bulletin No.2009-2 (2009)) was promulgated subsequent to the timeframe pertinent to the case and, thus, was not controlling.

Although the Fifth Circuit’s decision is worth paying attention to, a word of caution is in order for employers of non-agricultural guest workers in these parts.   The United States Supreme Court has consistently held that federal courts must give deference to the DOL’s reasonable interpretations of its own regulations.  Moreover, as the majority opinion in Castellanos-Contreras aptly points out, the outcome of that decision could have been different had the pertinent timeframe come after – rather than before – the DOL’s Bulletin.  For these reasons, the safest practice going forward with regard to the hiring and payment of H-2B guest workers may be one which follows the DOL’s guidance set forth in Bulletin No.2009-2, despite the Fifth Circuit’s recent decision which does not.

And you thought there may be something to be said for paying your own way, after all.

Matt Hansberry focuses his practice in the areas of employment litigation and ski-industry defense. Mr. Hansberry has defended companies and management in both federal court and state court cases. He has also defended employers before the West Virginia Human Rights Commission.
 
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