FLSA Applies To Retail Business on Indian Reservation

The Ninth Circuit Court of Appeals has ruled that the overtime requirements of the Fair Labor Standards Act apply to employees of a retail store owned and operated on the Puyallup Indian Reservation by members of the tribe. The store owners had argued that their tribe's retained sovereignty barred overtime claims under the FLSA. Solis v. Matheson, Case No. 07-35633 (9th Cir. Apr. 20, 2009). The full text of the decision is available here.

The Ninth Circuit explained that Indians and their tribes are subject to federal statutes of general applicability, just like any other United States citizen. There are exceptions if (1) the law touches exclusive rights of self-governance in purely intramural matters, or (2) if the application of the law would abrogate rights guaranteed by Indian treaties. An example of the first is Snyder v. Navajo Nation, 382 F.3d 892 (9th Cir. 2004), where the Ninth Circuit refused to apply the FLSA to tribal law enforcement officers, because law enforcement was a traditional governmental function. An example of the second is United States v. Smiskin, 487 F.3d 1260 (9th Cir. 2007), where a treaty that granted "the right, in common with citizens of the United States, to travel upon all public highways" barred prosecution for violation of the Contraband Cigarette Trafficking Act (which barred transportation of unstamped cigarettes).

The exceptions did not apply to the store owners. There was nothing sufficiently intramural about the employment of Indians and non-Indians by a retail business engaged in interstate commerce to invoke the first exemption. The tribe's right to occupy and exclude others under the treaty did not exempt the store owners from the FLSA because the tribe did not purport to regulate employment and there was no evidence that non-Indians had agreed to subject themselves to tribal jurisdiction.

By contrast, state laws are generally not applicable to operations on reservations. State law has no effect on the reservation unless the tribe has waived its sovereignty, or Congress has authorized an exercise of jurisdiction. See, for example, Middletown Rancheria of Pomo Indians v. Workers Compensation Appeals Bd., 60 Cal.App.4th 1340, 71 Cal.Rptr.2d 105 (1998), in which the California Court of Appeal ruled that the WCAB had no jurisdiction over a tribal gaming casino.

Office Romance

The Risks

Careerbuilder.com reports that 40 percent of respondents to a recent survey say that they have dated a co-worker. When employees get involved romantically, the employer can wind up getting sued, under several theories:

1. There is the case of the employee who will not take "no" for an answer. He or she pursues an object of affection at the workplace to the point where the object of affection is uncomfortable being at work. The object of affection now has a sexual harassment lawsuit. A Sav-On store manager convinced a Los Angeles Superior Court jury that she was the subject of such attention and of retaliation for resisting her male manager's advances, and recovered $3 million in damages, which was affirmed on appeal. See Clifford v. American Drug Stores, Inc., Case No. B158635, (Cal. Ct. App. Aug. 22, 2005).

2. There is the case of two employees in what at least appears to be a consensual relationship. Eventually, the relationship sours, and one romantic partner makes life miserable at work for the other partner. This is a particular problem when one partner has a higher position at the workplace, as there may be a viable claim of coercion. In one such case, a Los Angeles Superior Court jury awarded a secretary at Northrop Corporation $500,000 in compensatory damages and $250,000 in punitive damages. The case settled for $1.3 million after plaintiff filed a motion for her attorney fees. Darrow v. Northrop Corp., Case No. BC067428 (L.A. Superior Ct. Aug 1, 1997). In another such case, a federal court jury awarded a security guard $827, 500 in compensatory damages and $4,137,500 in punitive damages (which the court reduced to $300,000). Paterson v. California Dept. of General Services, Case No. 05-CV-00827 (E.D. Cal. Apr. 10, 2008).

3. There is the case of a high-level manager who flaunts his or her romantic relationships with subordinates in the workplace. Even if the subordinates who are romantically involved with the manager do not complain, other employees may have claims that they felt demeaned by the conduct. The California Supreme Court recognized the validity of such a claim in Miller v. Department of Corrections, 36 Cal.4th 446, 115 P.3d 77 (2005).

What To Do

To reduce sexual harassment liability risk associated with two employees' being involved in an office romance, some employers have such employees sign relationship agreement, or love contract. Through the agreement, the employees acknowledge that they are in a voluntary and mutual consensual romantic relationship and that no harassment has taken place. The efficacy of such agreements has not yet been validated by any court decision. For an example of what such an agreement might look like, click here.

Whether or not an employer chooses to implement a love contract procedure, it must make sure that it follows accepted anti-harassment procedures. That means (1) have a strong anti-harassment policy written into the employee handbook and posted prominently in the workplace, (2) provide anti-harassment training for all your employees, (3) ensure that the policy includes an effective complaint procedure that all managers and supervisors have been trained in, (4) if a complaint is received, make sure that it is investigated immediately, (5) if an investigation reveals a violation of policy, take prompt and effective action to deal with the wrongdoing.

If an employer acts promptly and effectively when first notified of a harassment situation, it may reduce or eliminate its liability. For a case where an employer escaped liability for an employee dating relationship that went sour, see Forrest v. Brinker International Payroll Company, LP, Case No. 07-1714 (1st Cir. Dec. 19, 2007).