The U.S. Court of Appeals for the Fifth Circuit has decided that H-2B temporary workers are not entitled to recover costs associated with their work visa process (i.e., recruitment, visa and travel expenses) from sponsoring employers under the Fair Labor Standards Act (FLSA). While the FLSA applies to such workers, in Castellanos-Contreras v. Decatur Hotels LLC the court indicated that the FLSA does not require such foreign workers’ visa costs to be considered in calculating whether the employer has satisfied its FLSA wage obligations.
By way of background, the H-2B nonimmigrant program permits U.S. employers to hire temporary foreign workers to perform nonagricultural labor/services to meet short-term seasonal or intermittent needs. The H-2B program is commonly used by employers in construction, landscaping and hospitality industries to perform a variety of services. As the workers are commonly sourced from distant locations, it has become commonplace for labor supply and recruiting companies to assist in locating qualified workers. Within the past several years, H-2B workers have brought actions under the FLSA seeking reimbursement of travel and visa expenses as costs “primarily for the benefit of the employer.”
While the case seemingly provides some clarity in the Fifth Circuit, it is not certain that other circuits will follow this decision. The U.S. Department of Labor (DOL) recently changed its interpretation of the FLSA and takes the position that travel, visa and recruitment expenses are to be deducted when calculating the FLSA wage of H-2B workers. Despite a strong dissent, the Fifth Circuit declined to follow the DOL interpretation, in part because the interpretation was not adopted until 2009, years after the relevant pay periods in this case. Thus, employers still need to be aware of the potential liability faced when not covering such expenses on behalf of affected H-2B workers.