Western District of New York: Employers Must Reimburse Guest Workers for Costs of Travel, Visa, Recruitment

The U.S. District Court for the Western District of New York has determined that the Fair Labor Standards Act requires employers to reimburse foreign H-2B visa workers for certain expenses paid by the workers if, after subtracting the costs from the workers’ wages, the workers’ effective net salary would fall below minimum wage. See Teoba v. Trugreen Landcare, No. 10-CV-6132 (W.D.N.Y. filed Feb. 15, 2011). The plaintiffs in Teoba alleged that they had paid for the costs of obtaining an H-2B visa, traveling to the United States, and the services of a third-party recruitment firm, which the employer had retained. The plaintiffs further alleged that after deducting the costs from their earned wages they received a net salary that fell below minimum wage.

The court found that the visa, travel, and recruitment expenses primarily benefited the employer and that, as per U.S. Department of Labor regulations, the employer must reimburse the workers for those costs if the workers would otherwise effectively receive sub-minimum wage compensation. See 29 C.F.R. §§ 531.3(d), 531.35.

The court relied heavily on the fact that a 2009 Department of Labor Field Assistance Bulletin declared that employers must reimburse H-2B visa workers for the costs of transportation, obtaining a visa, and third-party recruiters whose services the employer retains. The Field Assistance Bulletin reasoned that the costs of transporting H-2B workers and of obtaining an H-2B visa primarily benefit the employer because the H-2B visa program provides “greater-than-normal” benefits to the employer, since such workers are available to an employer only if it attests that no comparable domestic workers are available. In concluding that the recruitment costs primarily benefited the employer, the district court emphasized that the employer had retained the third-party recruiter’s services.

The courts have been divided on this issue. The Eleventh Circuit has similarly ruled that travel and visa expenses must be reimbursed when a worker’s effective wage received would otherwise be below minimum wage. See Morante-Navarro v. T&Y Pine Straw, Inc., 350 F.3d 1163, 1166 n.2 (11th Cir. 2003). The Fifth Circuit, however, has held to the contrary. See Castellanos-Contreras v. Decatur Hotels, 622 F.3d 393 (5th Cir. 2010) (en banc).

This entry was written by Bruce Millman and Nicholas Ortiz.

Photo credit: oddrose