Opinion ID: 674585
Heading Depth: 2
Heading Rank: 1

Heading: When can prisoners be employees under the FLSA?

Text: 6 The FLSA provides that [e]very employer shall pay to each of his employees ... not less than the minimum wage. See 29 U.S.C. Sec. 206(a)(1) (Supp.IV 1992). The Act provides generally unhelpful definitions of its critical terms. It defines employee as any individual employed by an employer. 29 U.S.C. Sec. 203(e)(1). The term employer includes any person acting directly or indirectly in the interest of an employer in relation to an employee and includes a public agency. Id. Sec. 203(d). An individual employed by a public agency includes, inter alia, any individual employed by the Government of the United States ... as a civilian in the military departments (as defined by section 102 of Title 5), ... [or] in a nonappropriated fund instrumentality under the jurisdiction of the Armed Forces. Id. Sec. 203(e)(2)(A)(i) & (iv). Finally the term employ means to suffer or permit to work. Id. Sec. 203(g). 7 Perhaps because these definitions are so unhelpful, the Supreme Court in Goldberg v. Whitaker House Coop., Inc., 366 U.S. 28, 81 S.Ct. 933, 6 L.Ed.2d 100 (1961), announced that  'economic reality' rather than 'technical concepts' is to be the test of employment for purposes of the FLSA. 366 U.S. at 33, 81 S.Ct. at 936. Obedient to this direction from the Supreme Court, some lower federal courts have articulated a four-factor economic reality test for determining whether an individual is an employee covered by the FLSA. This test considers the extent to which typical employer prerogatives govern the relationship between the putative employer and employee. The test asks: whether the alleged employer (1) had the power to hire and fire the employees, (2) supervised and controlled employee work schedules or conditions of employment, (3) determined the rate and method of payment, and (4) maintained employment records. See Bonnette v. California Health & Welfare Agency, 704 F.2d 1465, 1470 (9th Cir.1983) (internal quotations omitted). Although this Court has not explicitly adopted the economic reality test, the district court for the District of Columbia recently employed the test in determining whether a group of prisoners supervised by a prison foreman were employees under the FLSA, so that it could in turn determine whether the foreman was an executive within the meaning of the Act. See Wilks v. District of Columbia, 721 F.Supp. 1383, 1384 (D.D.C.1989). 8 Courts applying the economic reality test to prisoner-laborers have generally held that the prisoners are not employees entitled to minimum wage under the FLSA. See, e.g., Franks v. Oklahoma State Indus., 7 F.3d 971 (10th Cir.1993); Hale v. Arizona, 993 F.2d 1387 (9th Cir.) (en banc), cert. denied, --- U.S. ----, 114 S.Ct. 386, 126 L.Ed.2d 335 (1993); Vanskike v. Peters, 974 F.2d 806 (7th Cir.1992), cert. denied,--- U.S. ----, 113 S.Ct. 1303, 122 L.Ed.2d 692 (1993); Miller v. Dukakis, 961 F.2d 7 (1st Cir.), cert. denied, --- U.S. ----, 113 S.Ct. 666, 121 L.Ed.2d 590 (1992). However, in at least two cases, courts have found that particular prisoner employment situations were covered by the minimum wage provisions of the FLSA. See, e.g., Watson v. Graves, 909 F.2d 1549 (5th Cir.1990); Carter v. Dutchess Community College, 735 F.2d 8 (2d Cir.1984). Furthermore, most courts refuse to hold that prisoners are categorically barred from ever being employees within the meaning of the FLSA merely because of their prisoner status. See Vanskike, 974 F.2d at 808; Hale, 993 F.2d at 1393. Our task is to construct a test that can identify cognizable prisoner claims for minimum wage under the FLSA. 9 Cases that have held that prisoner-laborers were not employees under the FLSA have generally involved inmates working for prison authorities or for private employers within the prison compound. See Franks, 7 F.3d at 973 (FLSA does not apply to prisoners working inside prison); Hale, 993 F.2d at 1389 (prisoners working in prison programs structured pursuant to Arizona law requiring prisoners to work at hard labor are not employees for FLSA purposes); Vanskike, 974 F.2d at 808 (prisoner assigned to forced labor within prison is not employee under FLSA). In contrast, cases in which courts have found that the FLSA does govern inmate labor have involved prisoners working outside the prison for private employers. See Watson, 909 F.2d at 1553-54 (prisoners working for construction company outside the prison on work release program were employees of company governed by the FLSA); Carter, 735 F.2d at 13-14 (prisoner working as a teaching assistant at community college which paid him his wages directly could be FLSA employee). 10 Based on the facts of these cases, Henthorn suggests that we adopt an inside/outside-the-prison distinction as the critical factor in determining the economic reality of a prisoner's working situation. Thus, in a case such as Henthorn's, where the prisoner performs his work off the prison compound, Henthorn argues that this factor should cut strongly toward a finding that the FLSA applies. In contrast, the government argues that the public/private employer distinction in the above cases is the factor that carries more weight. Thus, the government argues that Watson and Carter, which found that the FLSA applied to prisoner workers, can be distinguished from Henthorn's case because in both Carter and Watson, the inmates worked for private, outside employers. Government's Br. at 18. 11 In practice, each of these distinctions raises some difficult questions. For example, should a prisoner working for a private employer who sets up shop within the prison compound not be paid minimum wage because he does not leave the prison grounds to do his work, while a prisoner performing the same work for the same employer but in a facility outside the prison should receive FLSA protection? 3 In the same manner, should a prisoner working in a privately-run bookstore outside the prison be paid the minimum wage, but not an inmate working outside the prison in a public library? Neither the inside/outside nor the public/private distinction alone provides an adequate answer to which prisoner work situations should be covered by the FLSA. 12 In order to find a more principled ground for distinguishing cognizable from noncognizable claims by prisoners for minimum wages under the FLSA, we look behind the economic reality test to determine its goal. As Judge Gesell explained in Wilks, the economic reality test is designed to measure the extent to which typical employer prerogatives, such as authority to hire and fire, control work schedules and conditions, determine the rate of payment, and maintain employee records, are exercised over the inmate by the outside employer. Wilks, 721 F.Supp. at 1384. Thus, the more indicia of traditional, free-market employment the relationship between the prisoner and his putative employer bears, the more likely it is that the FLSA will govern the employment relationship. 13 However, as the Seventh and Ninth Circuits have explained, the traditional factors of the economic reality test fail to capture the true nature of [most prison employment] relationship[s] for essentially they presuppose a free labor situation. Vanskike, 974 F.2d at 809; see also Hale, 993 F.2d at 1394 (quoting Vanskike ). The Seventh Circuit in Vanskike went on to explain: 14 Prisoners are essentially taken out of the national economy upon incarceration. When they are assigned work within the prison for purposes of training and rehabilitation, they have not contracted with the government to become its employees. Rather, they are working as part of their sentences of incarceration. 15 Vanskike, 974 F.2d at 810. For the prisoner in Vanskike, who worked inside the prison for the Department of Corrections pursuant to a penological work assignment, the Seventh Circuit determined that the economic reality is that he [is] not an 'employee' under the FLSA. Id. Reasoning along the same lines, the Ninth Circuit, sitting en banc, noted that [t]he case of inmate labor is different from [the] type of situation where labor is exchanged for wages in a free market. Convicted criminals do not have the right freely to sell their labor and are not protected by the Thirteenth Amendment against involuntary servitude. Hale, 993 F.2d at 1394. Thus, the court declined to apply the traditional economic reality factors to prisoners who work for a prison-structured program because they have to. Id. 16 These courts have appropriately distinguished prisoner labor cases that state a claim for minimum wages under the Fair Labor Standards Act from those that do not. In cases such as Watson and Carter where the prisoner is voluntarily selling his labor in exchange for a wage paid by an employer other than the prison itself, the Fair Labor Standards Act may apply. In such cases, it makes sense to apply the four-factor economic reality test to determine the extent to which the prisoner's relationship with his putative employer bears indicia of traditional employment concepts. However, in cases such as Hale and Vanskike, in which the prisoner is legally compelled to part with his labor as part of a penological work assignment and is paid by the prison authorities themselves, the prisoner may not state a claim under the FLSA, for he is truly an involuntary servant to whom no compensation is actually owed. See Vanskike, 974 F.2d at 809 (Thirteenth Amendment's specific exclusion of prisoner labor supports the idea that a prisoner performing required work for the prison is actually engaged in involuntary servitude, not employment.); see also Wilks, 721 F.Supp. at 1384 (typically inmate labor belongs to the penal institution and inmates do not lose their primary status as inmates just because they perform work). 17 Thus, we hold that a prerequisite to finding that an inmate has employee status under the FLSA is that the prisoner has freely contracted with a non-prison employer to sell his labor. Under this analysis, where an inmate participates in a non-obligatory work release program in which he is paid by an outside employer, he may be able to state a claim under the FLSA for compensation at the minimum wage. However, where the inmate's labor is compelled and/or where any compensation he receives is set and paid by his custodian, the prisoner is barred from asserting a claim under the FLSA, since he is definitively not an employee. At the pleading stage, this means that a federal prisoner seeking to state a claim under the FLSA must allege that his work was performed without legal compulsion and that his compensation was set and paid by a source other than the Bureau of Prisons itself. Absent such allegations, prison labor is presumptively not employment and thus does not fall within the ambit of the FLSA.