776 F. Supp. 2d 117
E.D.N.C.2011Background
- H-2B workers, including Gaxiola, alleged FLSA and NCWHA violations at a North Carolina crab-picking facility (2005–2007).
- Plaintiffs claim piece-rate pay sometimes fell below federal minimum wage and that employer deductions for visa, transportation, and border crossing expenses reduced wages below minimum.
- Defendants argue compliance or lack of liability due to pre-2009 H-2B regulation changes and interpretation of deductions.
- Court previously granted conditional FLSA collective certification; now considers Rule 23 class certification for NCWHA claims.
- Court analyzes whether transportation/visa costs are deductible under FLSA; whether such deductions violate NCWHA; and whether willfulness affects statutes of limitations.
- Court ultimately grants NCWHA class certification, grants in part defendants’ and plaintiffs’ partial summary judgments, and schedules notice and damages proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| FLSA minimum wage liability for piece-rate workers | Gaxiola argues piece-rate pay failed to meet minimum wage for all hours worked | Midyette contends occasional underpayment did not violate FLSA; not always clear-cut | Yes; liability established for times when piece-rate pay fell below minimum wage |
| FLSA deductions for visa/transport costs | Costs primarily benefited employer; deductions drive wages below minimum | Costs may be legitimate or offset by wages; pre-2009 regulatory context not controlling under FLSA | Liable for deductions that reduced first-week wages below minimum; transportation/visa costs deemed employer-borne and non-deductible to meet minimum wage |
| Willfulness and statute of limitations | Defendants knowingly underpaid under piece-rate and deductions were willful | Defendants relied on H-2B program understanding and limited guidance | Piece-rate violations willful; deduction violations not proven willful; limitations accordingly modest for the former, not for the latter |
| NCWHA class certification | NCWHA claims should be certified as class action under Rule 23 | NCWHA claims should not be certified due to variations and preemption concerns | NCWHA class certified under Rule 23(b)(3) as the claims are common, typical, and adequate representation exists |
Key Cases Cited
- Powell v. U.S. Cartridge Co., 339 U.S. 497 (1950) (FLSA remedial purpose; wage protections for workers lacking bargaining power)
- McLaughlin v. Richland Shoe Co., 486 U.S. 128 (1988) (Willfulness and statute of limitations under FLSA)
- De Luna-Guerrero v. N.C. Grower's Ass'n, 338 F.Supp.2d 649 (E.D.N.C. 2004) (Costs constituting wages under FLSA; visa/transport costs as incident to employment; de facto deductions)
- Garcia v. Frog Island Seafood, Inc., 644 F.Supp.2d 696 (E.D.N.C. 2009) (NCWHA uses FLSA guidance on wages; deductions when wages kept above promised wage)
- Frog Island Seafood, Inc., No. 2:06-CV-46-F (E.D.N.C. 2009) (H-2B passport/visa costs and deductions; related regulatory guidance)