In the latest in a series of decisions addressing the proper allocation of travel and immigration fee expenses between employers and employees utilizing the H2A agricultural guestworker program, the Court of Appeals for the Ninth Circuit (the largest federal circuit, encompassing Washington, Montana, Idaho, Oregon, Nevada, California, Arizona, Alaska and Hawaii) ruled an employer must reimburse an H2A worker for the employee’s travel and immigration expenses in the initial week of employment, otherwise the employer violates the minimum wage requirements of the FLSA.  Rivera v. Peri & Sons Farms, 2013 U.S. App. LEXIS 22891 (9th Cir. 2013).

At issue in Rivera were whether: 1) FLSA regulations addressing whether employee expenses bringing employees’ wages below the minimum wage applied to H2A workers in light of separate H2A regulations addressing reimbursement of the same expenses; and 2) if the FLSA regulations also applied, whether the worker’s expenditures for travel and the immigration fees were made for the benefit of the employer, resulting in payment of a sub-minimum wage in the initial week of employment.  The Court answered both questions in the affirmative, deferring to the DOL’s regulations stating that the FLSA’s requirements apply independent of separate federal regulations regarding the H2A program (which require reimbursement only upon completion of part of the work assignment in question), and, as to the second question, ruling that, while the expenditures clearly benefited both employer and employee, the DOL’s position that such expenses are primarily for the benefit of the employer and not the worker was entitled to deference under Auer v. Robbins, 519 U.S. 452 (1997).  “In the face of regulatory ambiguity [regarding the primary benefit question],” wrote the Court, “the DOL’s determination that inbound travel and immigration expenses primarily benefit H2A employers was reasonable.”  Thus, these expenses were expenses of the business and subject to reimbursement under the FLSA where they result in payment of less than the minimum wage.

This ruling will impose an “up front” financial cost on businesses bringing H2A workers into states within the Ninth Circuit, as such expenses must be reimbursed immediately rather than following partial completion of the H2A work in question.  All employers utilizing workers pursuant to H2A or other immigration programs must analyze the wage-and-hour and legal implications of the working arrangement.