Court: Louisiana Hotel Chain Doesn’t Owe Foreign Workers

Employers aren’t obligated to cover the moving costs and other expenses incurred by many immigrant workers, a federal appeals court has ruled in a case against a New Orleans hotelier that hired dozens of foreign workers after Hurricane Katrina.

The 5th Circuit Court of Appeals ordered the dismissal of a lawsuit that accused Decatur Hotels of exploiting foreign workers recruited to work at its hotels after the August 2005 storm, which scattered many of the hotel chain’s employees and left the city with a labor shortage.

The suit claims Decatur violated the Fair Labor Standards Act when it refused to reimburse foreign workers for recruitment, transportation and visa expenses. Decatur’s guest workers spent up to $5,000 apiece to move to New Orleans from Bolivia, Peru and the Dominican Republic.

But a three-judge panel from the 5th Circuit said the law doesn’t require an employer to cover any of those expenses.

The court’s 14-page opinion notes that the Department of Labor and Department of Homeland Security recently adopted regulations designed to curb “unscrupulous practices” by companies recruiting workers to participate in the H-2B visa program.

One of the regulations, which took effect Jan. 18, forbids employers or recruiters participating in the visa program from collecting fees from foreign workers as a condition of employment.

“These regulations may well influence whether H-2B employers must reimburse the recruitment expenses of future guest workers, but they do not apply retroactively to the expenses of the guest workers here,” Judge E. Grady Jolly wrote.

Mary Bauer, a lawyer for the Southern Poverty Law Center who represents Decatur’s immigrant workers, said the 5th Circuit’s decision conflicts with a 2002 ruling in a similar case by the 11th Circuit Court of Appeals in Atlanta.

“We’re obviously very disappointed by (the 5th Circuit’s) decision and believe it was wrongly decided,” Bauer said. “This is an issue of overwhelming importance for low-wage workers.”

Jolly said the 5th Circuit panel “cannot accept” the 11th Circuit’s ruling that employers must reimburse H-2A workers for their transportation expenses. Lower courts also applied that ruling to workers in the H-2B program, but a recent interpretation of the law by the Labor Department “rejects that entire line of cases,” Jolly wrote.

Bauer said plaintiffs’ lawyers will weigh their options before deciding whether to challenge the 5th Circuit’s ruling.

“I don’t think this is the end of this issue, by any means,” she added.

Leslie Ehret, a lawyer for Decatur Hotels, said the lawsuit has discouraged the hotelier and other employers from participating in the H-2B program.

“It’s been pretty scary for employers who thought they were following the letter of the law,” she said.

In a statement, Scott Day, Decatur’s president and CEO, said the company’s “sole objective in using the program was to legally bring in temporary workers to help revitalize the great city of New Orleans post-Katrina.”

“It is unfortunate that this matter became a legal issue to start with,” Day said.

Decatur, which owns and operates eight hotels in New Orleans, employed about 650 workers before Katrina but lost all but 90 to 110 of them after the storm.

Decatur hired a Baton Rouge businesswoman to help recruit H-2B workers to fill jobs for maintenance, housekeeping and front-desk employees, but the hotelier didn’t know about the recruitment expenses incurred by guest workers, the 5th Circuit said.

“Here, there is no evidence that Decatur even knew about the foreign recruitment companies, much less that the companies charged a fee to the guest workers as a condition of receiving an offer of employment,” Jolly wrote.