Castellanos-Contreras v. Decatur Hotels (5th Cir. 2009) 

This case illustrates the increasing complexity and frequency of the interplay between immigration law and labor law, two seemingly disparate legal bodies.  It involves a group of H-2B guest workers and an employer who hired the guest workers due to a labor shortage caused by Hurricane Katrina.  The employer, Decatur operated a chain of luxury hotels in the New Orleans area.  It regularly employed 600-650 persons to work in its hotels.  After Hurricane Katrina struck New Orleans, the employer lost most of its staff (due to a variety of reasons) and its employment rolls dropped to 90-110 workers at one point.  It was unable to hire or retain enough workers from the local area to fulfill its staffing requirements.  Decatur had an urgent need for maintenance, housekeeping, and front-desk employees.

For assistance, Decatur turned to a personnel recruiting firm which specialized in the hiring of temporary foreign workers.  The firm assisted Decatur with applying to become an H-2B visa sponsor, which permitted Decatur to lawfully hire foreign workers to fill temporary job positions.  Decatur used the firm’s services to recruit and hire housekeepers, maintenance workers, and front-desk clerks.    For each person which was hired, the firm received a set fee.

The owner of the recruiting firm operated a sister company that specialized in the placing of foreign workers with U.S. employers.  The sister company charged foreigners a fee for placing them with American companies.  It also collected fees from other placement companies for information about U.S. companies with job openings.

The guest workers who Decatur eventually hired came to work through the efforts of the recruiting firm.  Decatur paid the firm a recruiting fee for each worker.  The guest workers also paid the firm placement fees.  Additionally, the guest workers were responsible for the filing fees for H-2B visas, as well as travel costs to the U.S. to begin work.  Each guest worker had to pay $3000-$5000 in placement, travel, and visa expenses to work for Decatur.  The guest workers were paid the appropriate wages for their services, as required by law.  However, Decatur did not reimburse them for the expenses they incurred in order to obtain the positions.

Some of the guest workers sued Decatur for reimbursement of the expenses.  The workers argued that the Fair Labor Standards Act (FLSA) required that Decatur reimburse them for the expenses because the expenses were undertaken for the benefit of Decatur.  The FLSA forbids employers from making unlawful deductions against a worker’s wages.  The guest workers argued that the expenses they incurred are equivalent to wage deductions.  The expenses the guest workers incurred to work for Decatur was a form of “kick-back” which the FLSA prohibits because such expenses were incurred for the benefit of Decatur.  A kick-back is a type of employer expense which the employer shifts to the employees.  Kick-backs are disfavored because they deprive employees of their full, lawful wages.  Essentially, the guest workers argued that the expenses they paid deprived them of their full wages because Decatur should have been responsible for the expenses because the expenses benefited Decatur.

The 5th Circuit Court of Appeals did not agree with the guest workers.  In coming to its decision, it relied on agency decisions from the Department of Labor, which earlier had determined that transportation or relocation expenses born by workers does not constitute a kick-back.  The DOL also found that visa expenses are not the type of worker expenses which would be reimbursable.   If an employer paid for visa expenses, it may lawfully deduct such expenses from the worker’s wages.  The court found that the DOL’s interpretations of labor statutes to be controlling, and so found that the guest workers were not entitled to be reimbursed for the various expenses they incurred to work for Decatur.