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Notice

Withdrawal of Interpretation of the Fair Labor Standards Act Concerning Relocation Expenses Incurred by H-2A and H-2B Workers

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AGENCY:

Employment and Training Administration, Department of Labor in concurrence with the Wage and Hour Division, Employment Standards Administration, Department of Labor.

ACTION:

Notice of withdrawal of interpretation.

SUMMARY:

The Department of Labor (DOL or the Department) withdraws for further consideration an interpretation of the Fair Labor Standards Act (FLSA) published on December 18 and 19, 2008. The interpretation, which was published at 73 FR 77148-52 (H-2A program) and 73 FR 78039-41 (H-2B program), articulated an opinion that the FLSA and its implementing regulations do not require employers to reimburse workers under the H-2A and H-2B nonimmigrant visa programs, respectively, for relocation expenses even when such costs result in the workers being paid less than the minimum wage. This interpretation is hereby withdrawn for further consideration by the Department and may not be relied upon as a statement of agency policy.

DATES: Effective Date: March 26, 2009.

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FOR FURTHER INFORMATION CONTACT:

Richard Brennan, Director of Office of Interpretations and Regulatory Analysis, Wage and Hour Division, Employment Standards Administration, U.S. Department of Labor, 200 Constitution Avenue, NW., Room S-3506, Washington, DC 20210; Telephone (202) 693-0051 (this is not a toll-free number). Individuals with hearing or speech impairments may access the telephone numbers above via TTY by calling the toll-free Federal Information Relay Service at 1-800-877-8339.

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SUPPLEMENTARY INFORMATION:

The Fair Labor Standards Act (FLSA), 29 U.S.C. 201 et seq., requires covered employers to pay their nonexempt employees a federal minimum wage and overtime premium pay of time and one-half the regular rate of pay for hours worked in excess of 40 in a week. The agency responsible for administration of the FLSA is the Wage and Hour Division, Employment Standards Administration, of the Department of Labor. The FLSA and its regulations prohibit an employer from either deducting from an employee's pay or imposing an expense upon an employee for costs that are primarily for the benefit of the employer, if to do so results in an employee receiving less than the minimum wage. 29 U.S.C. 203(m); 29 CFR part 531. Thus, during the first workweek, workers must be compensated at a rate that would bring their wages up to minimum wage, taking into account pre-employment expenses that primarily benefit the employer. In Arriaga v. Florida Pacific Farms, L.L.C., 305 F.3d 1228 (11th Cir. 2002), the U.S. Court of Appeals for the Eleventh Circuit held that, under the FLSA regulations, the transportation from Mexico to Florida and visa costs of temporary nonimmigrant workers coming to the U.S. under the H-2A visa program, see 8 U.S.C. 1101(a)(15)(H)(ii)(a), were primarily for the grower's benefit because such costs were necessary and incident to the employment of such workers. A number of U.S. district courts have extended the Arriaga holding regarding the FLSA requirements to temporary nonimmigrant workers admitted into the U.S. under the H-2B visa program, 8 U.S.C. 1101(a)(15)(H)(ii)(b). See, e.g., De Leon-Granados v. Eller & Sons Trees Inc., 2008 WL 4531813 (N.D. Ga., Oct. 7, 2008); Rosales v. Hispanic Employee Leasing Program, 2008 WL 363479 (W.D. Mich. Feb. 11, 2008); Rivera v. Brickman Group, 2008 WL 81570 (E.D. Pa. Jan. 7, 2008); Recinos-Recinos v. Express Forestry Inc., 2006 WL 197030 (E.D. La. Jan. 24, 2006); but see Castellanos-Contreras v. Decatur Hotels LLC, No. 07-30942 (5th Cir. Feb. 11, 2009), pet. for reh'g filed (Mar. 11, 2009), rev'g, 488 F. Supp. 2d 565 (E.D. La. 2007).

On December 18, 2008, DOL published final regulations revising the procedures for the issuance of labor certifications to employers sponsoring H-2A nonimmigrants for admission to perform temporary agricultural labor or services and the procedures for enforcing compliance with attestations made by those employers. 73 FR 77110. The H-2A Final Rule became effective on January 17, 2009. The preamble accompanying the H-2A Final Rule included a discussion of the Arriaga issue, concluding that the Eleventh Circuit's decision was wrongly decided and that inbound travel expenses of H-2A workers do not primarily benefit their employers. 73 FR 77148-52. DOL characterized this discussion as an interpretation of the FLSA, 73 FR 77151, and did not seek public comment on the issue when it issued the H-2A Notice of Proposed Rulemaking, 73 FR 8538 (Feb. 13, 2008). Prior to the issuance of the preamble discussion, courts uniformly had held that relocation expenses were primarily for the benefit of employers.

On December 19, 2008, DOL published final regulations revising the procedures for the issuance of labor certifications to employers sponsoring H-2B nonimmigrants for admission to perform temporary nonagricultural labor or services and the procedures for enforcing compliance with attestations made by those employers. 73 FR 78019. The Final Rule became effective on January 18, 2009. The preamble accompanying the Final H-2B Rule included a discussion of the Arriaga issue, concluding that the Eleventh Circuit's decision and the district court Start Printed Page 13262decisions that followed its reasoning in the H-2B context were wrongly decided and that inbound travel expenses of H-2B workers do not primarily benefit their employers. 73 FR 78039-41. DOL characterized this discussion as an interpretation of the FLSA, 73 FR 78041, and did not seek public comment on the issue when it issued the H-2B Notice of Proposed Rulemaking, 73 FR 29941 (May 22, 2008). Prior to the issuance of the preamble discussion, courts uniformly had held that relocation expenses were primarily for the benefit of employers.

This matter concerns important issues as to whether various pre-employment expenses incurred by workers lawfully may result in workers' weekly wages being reduced below the minimum wage. Because of the reach of FLSA coverage, any interpretation of FLSA regulations has wide-ranging effects; the interpretation of section 203(m) of the FLSA and its regulations in the preamble of the H-2A and H-2B Final Rules may have ramifications well beyond the workers and employers subject to the H-2A and H-2B rules. Indeed, the H-2A and H-2B preamble interpretation of the FLSA is not codified in any regulatory requirement set out in the H-2A and H-2B rules, and DOL did not seek public comment on the issue from the H-2A and H-2B regulated communities. DOL is especially sensitive to potential adverse impacts an interpretation, which was included in the preamble in order to state a policy position of the prior Administration, might have on our Nation's most vulnerable workers, including low-wage U.S. workers and foreign guest workers. For these reasons, DOL believes that this issue warrants further review. Consequently, in accordance with authority granted under the FLSA, 29 U.S.C. 203(m) and 259, as well as the INA, 8 U.S.C. 1101(a)(15)(h)(ii)(a), 1101(a)(15)(h)(ii)(b), 1103(a)(6), 1184(c), 1188; 8 CFR 214.2(h); and 20 CFR 655.50(a), DOL withdraws the FLSA interpretation at 73 FR 77148-52 and at 73 FR 78039-41 for further consideration and the interpretation may not be relied upon as a statement of agency policy for purposes of the Portal-to-Portal Act, 29 U.S.C. 259 or otherwise.[1] After reconsideration of this issue, DOL will provide the public with interpretive guidance through a mechanism established for disseminating the Department's opinions and interpretations of the FLSA.

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Signed in Washington, DC, this 20th day of March 2009.

Douglas F. Small,

Deputy Assistant Secretary, Employment and Training Administration.

Shelby Hallmark,

Acting Assistant Secretary, Employment Standards Administration.

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Footnotes

1.  On March 17, 2009, DOL proposed to suspend the H-2A Final Rule. 74 FR 11408. The proposed suspension is open to public comment, but regardless of the outcome of the notice of proposed rulemaking, the Department withdraws for further consideration the interpretation of the FLSA that appeared in the preamble to the H-2A Final Rule.

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[FR Doc. E9-6623 Filed 3-25-09; 8:45 am]

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