Litigation

Ninth Circuit rules Fair Labor Standards Act applies to Indian business

By Rob Roy Smith

The Ninth Circuit today concluded that the Fair Labor Standards Act (FLSA) applies to an Indian-owned smoke shop on trust land on the Puyallup Reservation, and that the Secretary of Labor has authority to enter the business to audit its records as the Secretary can do with any private business.  The case is Solis v. Matheson.

This is the first Ninth Circuit decision to find that the FLSA applies to an Indian business located on Indian trust land.  The court rejected the argument that the operation of the smoke shop was an intramural self-government issue.  In part, this finding was based on the fact that the Puyallup Tribe did not "act[ ] on its right of self governance in the field of wage and hour laws and specifically with respect to overtime," suggesting that if the Tribe did have its own version of the FLSA, that law might have operated to preempt the application of the federal statute.  The court relied on the fact that the smoke shop was a "purely commercial enterprise engaged in interstate commerce selling out-of-state goods to non-Indians and employing non-Indians."  The fact that the smoke shop is owned by individual Indians and not the Tribe seemed to play a minor role in the court's analysis. 

This opinion serves as a reminder that many federal employment laws of "general applicability" govern the operation of tribes and Indian businesses, and that the FLSA mandates, among other things, payment of proper overtime wages to employees.  The case also highlights that Indian and tribal businesses must retain a distinctly tribal government character if they are to avoid unwarranted federal and/or state regulation. 

Full post as published by Northwest Business Litigation Blog on April 20, 2009 (boomark / email).