Whether citrus grower was ‘employer’ of H-2A workers is based on common law agency

By Joy Waltemath

By Dave Strausfeld, J.D.

A district court applied the wrong standard in deciding that a citrus grower was a joint employer of H-2A temporary agricultural workers who traveled to the U.S. from Mexico to harvest fruit. For purposes of their breach-of-contract claims, the proper test to assess whether the citrus grower was their joint employer was the common law agency test, not the FLSA’s “suffer or permit to work” standard, held the Eleventh Circuit. On remand, the district court must assess the evidence of joint employment under the proper standard, in order to determine whether the citrus grower was liable for breaching the employees’ H-2A contracts by failing to pay them the proper minimum wage rate (Garcia-Celestino v. Ruiz Harvesting, Inc., December 15, 2016, Hull, F.).

Labor contractor demanded kickbacks from H-2As. The citrus grower arranged for a labor contractor to hire temporary foreign workers to harvest fruit in its groves. The labor contractor would recruit these temporary workers from Mexico, help them complete the necessary paperwork for obtaining H-2A visas, provide them housing in Florida, and supervise them in the citrus groves. According to the evidence at trial, the contractor also demanded kickbacks from them. The kickbacks related to certain supplemental payments, known as “build-up” pay, that the law required the labor contractor to pay them.

Under DOL regs, the employees were entitled to build-up pay if the piece-rate wages they were paid amounted to less than a certain minimum hourly rate (here, the applicable “adverse effect wage rate” or AEWR). In other words, the build-up pay made up any shortfall between their fruit-picking-quantity-based wage and the AEWR. In the kickback scheme, the labor contractor told the employees that if they did not return the build-up pay, they would be sent back to Mexico. When they cashed their paychecks, the labor contractor was there to collect these monies from them.

Citrus grower unaware. It was undisputed that the citrus grower was unaware of the labor contractor’s kickback scheme. Even so, when the employees sued the labor contractor, they also named the citrus grower. After a bench trial, the district court determined that the citrus grower was a joint employer and ordered it to pay damages for breach of contract and FLSA minimum wage violations, both of which related to the underpayment of wages resulting from the kickback scheme.

Joint employer. The central issue on this appeal was whether the citrus grower was the temporary agricultural workers’ employer (or joint employer). Only if it was their “employer” under the Immigration and Nationality Act (INA), as amended, could it be held liable for breaching their H-2A contracts by failing to pay them the minimum wage set by the AEWR. In holding that the citrus grower was indeed their joint employer, the district court applied the “suffer or permit to work” standard that is used under the FLSA. On appeal, the citrus grower insisted this was not the proper standard for deciding joint-employer status in the H-2A context.

The Eleventh Circuit agreed. When Congress does not clearly define “employer” in a statute, courts should apply the settled common law meaning of the term, as the Supreme Court instructed in Nationwide Mutual Insurance Co. v. Darden. Moreover, since Congress knows how to adopt an explicit definition of “employer” when it wishes to do so (such as in the FLSA) but chose not to do so in the 1986 amendments to the INA, Congress must have intended the common law definition of “employer” to apply here, the appeals court concluded.

Employees’ arguments. The employees made a number of arguments opposing this conclusion but were unable to persuade the appeals court. In a public policy-based argument, they contended that applying common law principles of agency here would “thwart the purpose of the H-2A program.” According to this argument, applying common law agency principles to decide employment status for purposes of the H-2A program while using the more expansive “suffer or permit to work” definition for the Migrant and Seasonal Agricultural Worker Protection Act would create “a two-tiered system of worker protections”—a stronger one for domestic agricultural workers and a weaker one for foreign agricultural workers. This difference in worker protections, they argued, would make foreign workers more attractive to employers, contrary to Congress’ intent in the H-2A visa program to prevent foreign workers from taking domestic workers’ job.

“It is unclear whether Congress contemplated this potential incongruity,” the court observed. “What is clear, however,” is that Congress chose to adopt the common law agency test here when it provided no explicit definition of “employer” in the relevant statute. In light of Darden’s rule of construction, the statutory directive in the INA “is apparent, and we are not free to ignore that directive because of what the plaintiffs perceive to be a shortcoming in legislative policy.”

The employees’ other arguments also failed to hit the mark. They argued that a pre-2009 DOL regulation adopting the “suffer or permit to work” test should apply here, given that many of the underlying events predated 2009. That regulation is no longer in force, having been discarded in 2009 when the agency switched to the common law agency test. Finding that the earlier reg was not due Chevron deference, the appeals court rejected the employees’ argument that the earlier regulation should apply.

Because the narrower common law standard applied here, the appeals court reversed and remanded for further proceedings to determine whether the citrus grower was a joint employer under the H-2A visa program.

FLSA minimum wage. As to the employees’ FLSA minimum wage claims, all parties agreed that the “suffer or permit to work” standard set forth explicitly in the FLSA applied. Because under this expansive standard the citrus grower was a joint employer, the appeals court affirmed the portion of the judgment awarding damages against it for the FLSA minimum wage violation.

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