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Legal Updates

FLSA Violations Can Be Costly For H-2B Employers

A federal judge recently approved a settlement in excess of $700,000 paid by a Pennsylvania landscaping company, Earth Care, Inc., to resolve claims brought against it under the Fair Labor Standards Act (“FLSA”) by Mexican workers who were employed in the U.S. under the H-2B visa program. The plaintiffs’ court complaint accused Earth Care of taking advantage of foreign workers who were unfamiliar with their rights by failing to pay them the wages required under the terms of their H-2B visas and the FLSA.

This costly settlement serves as an important reminder that employers of H-2B workers need to ensure that their wage practices comply with all applicable federal and state wage laws, as well as the immigration laws.

The H-2B Visa Program

The H-2B visa program was created in 1986 as part of an amendment to the Immigration and Nationality Act (“INA”). H-2B visas are used to fill jobs in a variety of temporary circumstances, such as seasonal or peak-load employment.

Employers participating in the H-2B program must first obtain a temporary labor certification from the Department of Labor, certifying that there are no willing and qualified U.S. workers available to perform in the positions at issue and that U.S. workers will not be harmed by the hiring of foreign workers. As such, employers are required to pay H-2B workers at least the prevailing wage or the minimum wage for the positions, whichever is higher.

Wage Requirements For H-2B Employers

It is important for employers that hire H-2B workers to bear in mind that such workers are protected under the FLSA, as well as the immigration laws.

The FLSA establishes minimum wage and overtime requirements for employers, as well as other worker protections. Among other provisions, the statute prohibits employers from making certain deductions from pay, such as for tools, uniforms or similar expenses, if such deductions would bring a worker’s pay below the required minimum hourly wage.

Under prior immigration regulations, including those in effect when Earth Care filed for the H-2B visas at issue, H-2B employers were permitted to deduct transportation expenses and visa fees from the wages paid to foreign workers, so long as doing so did not bring an employee’s pay below the minimum rate set by the FLSA in the first week of employment.

Recently, however, new H-2B regulations were promulgated. Under those new regulations, employers must pay for or reimburse H-2B workers for transportation expenses or visa fees during the first week of employment, regardless of the overall compensation paid to such workers.

Earth Care’s Alleged Violations

The lead plaintiff in the Earth Care case, which was conditionally certified as a class action, was Rogelio Ortega Hernandez. Mr. Ortega worked as a seasonal laborer for Earth Care under the H-2B visa program from 2010 through 2014.

In his complaint, Mr. Ortega alleged that he was paid less than the required prevailing wage rate for the work that he performed. Further, according to Mr. Ortega, Earth Care made improper deductions from his and other H-2B workers’ paychecks, including for visa and travel expenses, bringing their wages below the required minimum rates. Finally, Mr. Ortega alleged that Earth Care did not reimburse those workers who completed their terms of employment for their return transportation costs to Mexico, as required under the H-2B regulations.

Under the settlement approved by the court, Earth Care, while denying liability, agreed to pay a total of more than $700,000 to the H-2B workers, in order to compensate them for their alleged lost wages and the improperly deducted travel and visa costs. In addition, Earth Care agreed to pay Mr. Ortega’s attorneys’ fees.

Recommendations For Employers

Thus, the Ortega lawsuit proved to be an expensive lesson for Earth Care. Employers using the H-2B or other temporary worker visa programs would be wise to take a number of important steps to avoid similar pitfalls:

  • Review the wage rates of all foreign workers, including those working under H-2B visas, to ensure they are in compliance with all requirements, including prevailing wage standards, as well as federal and state minimum wage and overtime laws;
  • Ensure that workers are not charged for work-related expenses in a manner not permitted under the immigration laws or the FLSA;
  • Provide regular training to managers, HR personnel and payroll employees on these wage requirements; and
  • Contact experienced employment or immigration counsel with any questions about these issues.

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Please feel free to contact us if you have questions about the Earth Care settlement, or about any other issues relating to H-2B or other employment visas. We routinely assist employers with such matters and would be happy to help.