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California PIA Employees Lose Minimum Wage Suit
The court of appeals for the ninth circuit affirmed dismissal of a suit by California Prison Industrial Authority (PIA) prisoners who filed suit claiming they were entitled to the minimum wage under the Federal Fair Labor Standards Act (FLSA), 29 U.S.C. § 201. The class action suit was filed by PIA prisoners who were paid between 30 to 95 cents an hour. PIA assignments are considered voluntary and the prisoners claimed they were entitled to the minimum wage as they should be considered "employees" for FLSA standards. In the July, 1994, issue of PLN we reported the filing of the suit. The district court dismissed the suit holding prisoners employed in PIA jobs were not "employees" for FLSA purposes.
California Penal Code § 2700 requires all able bodied state prisoners to work each and every day of their imprisonment under terms prescribed by the California DOC (CDC). The PIA was created by the California legislature in 1982 because the previous prison industries program it replaced had failed to provide prisoners with meaningful jobs, offset the cost of prison operations and reduce prisoner idleness. [Editor's Note: There is no reason to believe the PIA has achieved any of these goals either. See: PLN, October, 1995.] The PIA provides goods and services to public and private entities for a profit. The 30-95 cents an hour was well below the $4.25 an hour the plaintiffs claimed they were entitled to.
FLSA requires that employees who produce goods transported in interstate commerce be paid the minimum wage. In Hale v. Arizona, 993 F.2d 1387 (9th Cir. 1993) (en banc) [PLN, Sep, 1993] the court denied relief to prisoners stating "While we do not believe that prisoners are categorically excluded form the FLSA, we hold that the inmates in this case, who worked for programs structured by the prison pursuant to the state's requirement that prisoners work at hard labor, are not 'employees' of the state within the meaning of the FLSA." In doing so the court adopted an "economic reality" test to analyze the relationship between prisoners and the entity for which they worked. Essentially the court has concluded that prisoners' labor belongs to the state (i.e., prisoners are de facto slaves of the state).
The court followed Hale in Morgan v. McDonald, 41 F.3d 1291 (9th Cir. 1994) [PLN, Vol. 6, No. 9] where it denied FLSA protection to Nevada prisoners employed in a prison work program. The court held that this case did not differ in any significant way from Hale or Morgan. The California work requirement statute gives the PIA program a "penological" purpose because California prisoners are under legal compulsion to work or participate in other prison run programs, as assigned.
The court rejected the argument that no statute required prisoners to work for the PIA without their consent. "The voluntary nature of assignment to the PIA does not create an oasis of contractually 'bargained-for exchange' in the midst of a desert of compelled labor in the California state prison system. As the district court pointed out, plaintiffs 'mistakenly equate the ability to choose between various work programs offered by the CDC, with the freedom to 'sell' their labor to the PIA."
"The consensual nature of a particular work assignment in a hard labor state does not remove the penological purpose from the work relationship.... We therefore hold that the existence of a choice between prison programs in a state with a work requirement statute does not render the inmate's work non-penological."
The court also rejected the argument that the PIA's distinctive organizational structure which is administered separately from the CDC and is financed by a "revolving fund" administered by the state treasurer and state controller lends itself to definition as an employer for FLSA purposes. "Nevertheless, the PIA is by statute a part of the CDC, Cal.Penal Code § 5001. The PIA's status as part of the California correctional system clearly brings it within the ambit of 'prison structured programs.' That it may be separately administered within the CDC does not alter the PIA's fundamentally penological character as a 'prison-structured program.'" The court also rejected the argument that the PIA's profit driven motive [Editor's Note: The PIA has not turned a profit in the years of its existence. See: October, 1995, PLN] made the prisoners' relationship with PIA pecuniary instead of penological. "The fact that California, through the PIA, attempts to generate a profit from plaintiffs' labor does not affect the economic reality that their labor 'belongs' to the state. Nor does it change the penological purpose of PIA's enterprise."
Lastly, the court rejected the argument that because California law considers PIA prisoner employees to be "employees" for purposes of workers' compensation coverage and protection under the California Occupational Safety and Health Act of 1973 the prisoners should be considered "employees" for FLSA purposes. "The argument that these benefits and protections evince an employer/employee relationship has an intuitive appeal. However these provisions cover not only PIA workers, but all workers in California state prisons. The argument proves too much. Benefits and protections under state law for inmate workers in general do not affect the economic reality analysis under the FLSA."
Given this line of rulings from the ninth and other circuits to consider this topic, FLSA litigation seeking the minimum wage for prisoners employed by state operated business appear to be a dead letter. Arguably FLSA still applies to private businesses that set up slave labor operations in prisons, but minimum wage is imposed, by criminal penalty, on those employers by the Ashurst-Summers Act of 1934. Prison workers seeking minimum wage will have to seek it the same way free workers got it in this country in the 1930s--by withholding their labor until they are paid a fair wage. See: Burleson v. State of California, 83 F.3d 311 (9th Cir. 1996).
California Penal Code § 2700 requires all able bodied state prisoners to work each and every day of their imprisonment under terms prescribed by the California DOC (CDC). The PIA was created by the California legislature in 1982 because the previous prison industries program it replaced had failed to provide prisoners with meaningful jobs, offset the cost of prison operations and reduce prisoner idleness. [Editor's Note: There is no reason to believe the PIA has achieved any of these goals either. See: PLN, October, 1995.] The PIA provides goods and services to public and private entities for a profit. The 30-95 cents an hour was well below the $4.25 an hour the plaintiffs claimed they were entitled to.
FLSA requires that employees who produce goods transported in interstate commerce be paid the minimum wage. In Hale v. Arizona, 993 F.2d 1387 (9th Cir. 1993) (en banc) [PLN, Sep, 1993] the court denied relief to prisoners stating "While we do not believe that prisoners are categorically excluded form the FLSA, we hold that the inmates in this case, who worked for programs structured by the prison pursuant to the state's requirement that prisoners work at hard labor, are not 'employees' of the state within the meaning of the FLSA." In doing so the court adopted an "economic reality" test to analyze the relationship between prisoners and the entity for which they worked. Essentially the court has concluded that prisoners' labor belongs to the state (i.e., prisoners are de facto slaves of the state).
The court followed Hale in Morgan v. McDonald, 41 F.3d 1291 (9th Cir. 1994) [PLN, Vol. 6, No. 9] where it denied FLSA protection to Nevada prisoners employed in a prison work program. The court held that this case did not differ in any significant way from Hale or Morgan. The California work requirement statute gives the PIA program a "penological" purpose because California prisoners are under legal compulsion to work or participate in other prison run programs, as assigned.
The court rejected the argument that no statute required prisoners to work for the PIA without their consent. "The voluntary nature of assignment to the PIA does not create an oasis of contractually 'bargained-for exchange' in the midst of a desert of compelled labor in the California state prison system. As the district court pointed out, plaintiffs 'mistakenly equate the ability to choose between various work programs offered by the CDC, with the freedom to 'sell' their labor to the PIA."
"The consensual nature of a particular work assignment in a hard labor state does not remove the penological purpose from the work relationship.... We therefore hold that the existence of a choice between prison programs in a state with a work requirement statute does not render the inmate's work non-penological."
The court also rejected the argument that the PIA's distinctive organizational structure which is administered separately from the CDC and is financed by a "revolving fund" administered by the state treasurer and state controller lends itself to definition as an employer for FLSA purposes. "Nevertheless, the PIA is by statute a part of the CDC, Cal.Penal Code § 5001. The PIA's status as part of the California correctional system clearly brings it within the ambit of 'prison structured programs.' That it may be separately administered within the CDC does not alter the PIA's fundamentally penological character as a 'prison-structured program.'" The court also rejected the argument that the PIA's profit driven motive [Editor's Note: The PIA has not turned a profit in the years of its existence. See: October, 1995, PLN] made the prisoners' relationship with PIA pecuniary instead of penological. "The fact that California, through the PIA, attempts to generate a profit from plaintiffs' labor does not affect the economic reality that their labor 'belongs' to the state. Nor does it change the penological purpose of PIA's enterprise."
Lastly, the court rejected the argument that because California law considers PIA prisoner employees to be "employees" for purposes of workers' compensation coverage and protection under the California Occupational Safety and Health Act of 1973 the prisoners should be considered "employees" for FLSA purposes. "The argument that these benefits and protections evince an employer/employee relationship has an intuitive appeal. However these provisions cover not only PIA workers, but all workers in California state prisons. The argument proves too much. Benefits and protections under state law for inmate workers in general do not affect the economic reality analysis under the FLSA."
Given this line of rulings from the ninth and other circuits to consider this topic, FLSA litigation seeking the minimum wage for prisoners employed by state operated business appear to be a dead letter. Arguably FLSA still applies to private businesses that set up slave labor operations in prisons, but minimum wage is imposed, by criminal penalty, on those employers by the Ashurst-Summers Act of 1934. Prison workers seeking minimum wage will have to seek it the same way free workers got it in this country in the 1930s--by withholding their labor until they are paid a fair wage. See: Burleson v. State of California, 83 F.3d 311 (9th Cir. 1996).
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Related legal case
Burleson v. State of California
| Year | 1996 |
|---|---|
| Cite | 83 F.3d 311 (9th Cir. 1996) |
| Level | Court of Appeals |
Burleson v. California, 83 F.3d 311 (9th Cir. 05/08/1996)
[1] UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT
[2] Nos. 95-16188, 95-16550, No. 95-16192
[4] filed: May 8, 1996.
[5] GAYLIN BURLESON, PLAINTIFF, AND JERRY LEE SYROVATKA, SR., PLAINTIFF-APPELLANT,
v.
STATE OF CALIFORNIA; PRISON INDUSTRY AUTHORITY, DEFENDANTS-APPELLEES. GARY JERNIGAN, PLAINTIFF, AND JERRY LEE SYROVATKA, SR., PLAINTIFF-APPELLANT, V. STATE OF CALIFORNIA; JAMES H. GOMEZ; WAYNE ESTELLE, GENERAL MANAGER, PRISON INDUSTRY AUTHORITY; JAN WINTER, ASST. GENERAL MANAGER OF OPERATIONS, PRISON INDUSTRY BOARD; RAY BROWN, PRODUCTION MANAGER II, PRISON INDUSTRY AUTHORITY; PRISON INDUSTRY AUTHORITY; JOELLA FAZIO; DAVID KING; WILLIAM ALLEN; JOHN BABICH; ROBERT BURTON; LEONARD GREENSTONE; WILLIAM SARACINO; THOMAS WORNHAM, DEFENDANTS-APPELLEES.
[6] Appeals from the United States District Court for the Eastern District of California. D.C. No. CV-93-200-GEB. D.C. No. CV 92-1408-GEB. Garland E. Burrell, Jr., District Judge, Presiding.
[7] Jason Rabinowitz, Mark A. Garver, Certified Law Students; Susan D. Christian, Supervising Attorney, University of California Davis School of Law, Davis, California, for the plaintiff-appellant.
[8] Larry G. Raskin, Deputy Attorney General, Sacramento, California, for the defendants-appellees.
[9] Before: David R. Thompson, Andrew J. Kleinfeld, and A. Wallace Tashima, Circuit Judges. Opinion by Judge Tashima.
[10] Author: Tashima
[11] TASHIMA, Circuit Judge:
[12] Plaintiffs in these consolidated cases*fn* appeal from the order of the district court granting summary judgment to defendants. Plaintiffs are current and former inmates in the California state prison system who claim that they are or were "employees" within the meaning of the Fair Labor Standards Act of 1938 ("FLSA"), 29 U.S.C. § 201 et seq., and are thus entitled to receive the federal minimum wage for work performed for the State of California's Prison Industry Authority ("PIA"). Defendants are the State of California, the PIA, and certain PIA personnel in their official capacities. We have jurisdiction over this timely appeal under 28 U.S.C. § 1291, and we affirm.
[13] BACKGROUND
[14] In the California state prison system, able-bodied prisoners are required to perform "as many hours of faithful labor in each day and every day during his or her term of imprisonment as shall be prescribed by the rules and regulations of the Director of Corrections." Cal. Penal Code § 2700. The implementing regulation provides that a prisoner's work obligation "may be a full day of work, education, or other program activity, or a combination [thereof]." Cal. Code Regs. tit. 15, § 3040(a).
[15] Plaintiffs worked for enterprises operated by the PIA, producing various goods and services that the PIA sold to other entities, public and private, for a profit. The PIA paid plaintiffs between $.30 and $.95 an hour for their work, far below the federal minimum wage of $4.25 an hour to which plaintiffs claim they are entitled.*fn1
[16] The California Legislature created the PIA in 1982 to replace the old prison industries program administered directly by the Director (the "Director") of the California Department of Corrections ("CDC"). The legislature found that the old prison industries program had failed to provide inmates with meaningful jobs, offset the cost of operating the prison system, and reduce inmate idleness. See 1982 Cal. Stat., c. 1549, §§ 2-3, at 6034. It intended the PIA to achieve these goals. Id.
[17] Discussion
[18] I
[19] We recently determined the applicability of the FLSA's minimum wage provisions to prisoners in Arizona's prison work program. Hale v. Arizona, 993 F.2d 1387 (9th Cir.) (en banc), cert. denied, 126 L. Ed. 2d 335, 114 S. Ct. 386 (1993). In denying the plaintiffs' claims, we held:
[20] While we do not believe that prisoners are categorically excluded from the FLSA, we hold that the inmates in this case, who worked for programs structured by the prison pursuant to the state's requirement that prisoners work at hard labor, are not "employees" of the state within the meaning of the FLSA.
[21] Id. at 1389. In so holding, we adapted the "economic reality" test to the circumstances of inmate workers, noting that the "economic reality of the relationship between the worker and the entity for which the work was performed lies in the relationship between prison and prisoner. It is penological, not pecuniary." Id. at 1395 (emphasis added). Hale concluded "the economic reality is that their [plaintiffs'] labor belonged to the institution," and held that "they were not 'employees' of the prison entitled to be paid a minimum wage under the FLSA." Id.
[22] We followed Hale in Morgan v. MacDonald, 41 F.3d 1291 (9th Cir. 1994), cert. denied, 132 L. Ed. 2d 839, 115 S. Ct. 2591 (1995). There, we denied FLSA coverage to prisoners in Nevada's prison work program. Id. at 1293.
[23] The case at bench falls squarely within Hale and Morgan. The workers of California's PIA work in a prison-structured program pursuant to a state hard labor statute,*fn2 and are therefore not "employees" under FLSA.
[24] II
[25] California's work requirement statute, Cal. Penal Code § 2700, is not significantly different from the Arizona and Nevada statutes which gave the prison industries programs in Hale and Morgan their "penological" purpose.*fn3 California's inmates are under legal compulsion to work or to participate in other prison-run programs, as assigned.*fn4
[26] Plaintiffs stress that no apparent statutory or regulatory authority exists for the CDC to assign them to work for the PIA without their consent. Indeed, prison authorities make work assignments only after consideration of, inter alia, the inmate's "express needs and desires." Cal. Code Regs. tit. 15, § 3040(c). However, "in lieu of an inmate's assignment to a mutually agreed upon program" the CDC can compel inmates to perform "any work deemed necessary to operate and maintain the institution and its services in a clean, safe, and efficient manner." Cal. Code Regs. tit. 15, § 3040(d).*fn5
[27] The voluntary nature of assignment to the PIA does not create an oasis of contractually "bargained-for exchange" in the midst of a desert of compelled labor in the California state prison system. As the district court pointed out, plaintiffs "mistakenly equate the ability to choose between various work programs offered by the CDC, with the freedom to 'sell' their labor to the PIA."
[28] The consensual nature of a particular work assignment in a hard-labor state does not remove the penological purpose from the work relationship. As we stated in Hale :
[29] Inmates submit that it is significant that they had to apply for the work they did and were screened for security and other purposes. The fact that prison authorities may have structured certain programs more selectively than others does not, however, make them less of a prison-structured program pursuant to the State of Arizona's requirement that prisoners work at hard labor.*fn6
[30] Hale, 993 F.2d at 1394 n.10; see also Morgan, 41 F.3d at 1292 (inmate "chose" to fulfill Nevada's hard-labor requirement by working at education center run by local county school board). We therefore hold that the existence of a choice between prison programs in a state with a work-requirement statute does not render the inmate's work nonpenological.
[31] III
[32] Plaintiffs also argue that the PIA's distinctive organizational structure renders work for PIA not work in a "prison-structured program."
[33] The PIA is administered separately from the rest of the CDC by its own Prison Industry Board. See Cal. Penal Code § 2802-08.*fn7 The monies of the PIA are maintained in a "revolving fund" administered with the outside involvement of only the State Treasurer and the State Controller. See § 2806.
[34] Nevertheless, the PIA is by statute a part of the CDC. Cal. Penal Code § 5001. The PIA's status as a part of the California correctional system clearly brings it within the ambit of "prison-structured programs." That it may be separately administered within the CDC does not alter the PIA's fundamentally penological character as a "prison-structured program."
[35] IV
[36] Citing no authority, plaintiffs argue that the PIA's focus on generating a profit from its industries renders the inmates' relationship with PIA "pecuniary" rather than "penological."
[37] Defendants do not contest that PIA seeks to raise net revenue from "profit-making enterprises" and otherwise "replicates as closely as possible free world production and service operations . . . ." See 1982 Cal. Stat., c. 1549, § 3(a)-(b), at 6034. However, this is not inconsistent with ascribing a "penological" purpose to the work relationship. As the Seventh Circuit has noted:
[38] For the government . . . profits are not the ultimate goal. A governmental advantage from the use of prisoner labor is not the same as a similar low-wage advantage on the part of a private entity: while the latter amounts to an unfair windfall, the former may be seen as simply paying the costs of public goods - including the costs of incarceration. . . .
[39] Vanskike v. Peters, 974 F.2d 806, 811-12 (7th Cir. 1992), cert. denied, 507 U.S. 928, 113 S. Ct. 1303, 122 L. Ed. 2d 692 (1993). The fact that California, through the PIA, attempts to generate a profit from plaintiffs' labor does not affect the economic reality that their labor "belongs" to the state. Nor does it change the penological purpose of PIA's enterprise. See also 1982 Cal. Stat., c. 1549, § 3, at 6034.*fn8
[40] V
[41] Finally, by reference to certain worker benefits and protections under state law, plaintiffs attempt to shore up their argument that the "economic reality" of their relationship to the PIA is one of an "employee."
[42] California law considers PIA workers to be "employees" for purposes of workers' compensation coverage and protection under the California Occupational Safety and Health Act of 1973. See Cal. Lab. Code §§ 3351(e), 6304.2. PIA workers are paid for official break time, job-related training, and state holidays. A PIA affirmative action program fosters equal employment opportunity and a discrimination-free workplace.
[43] The argument that these benefits and protections evince an employer/employee relationship has an intuitive appeal. However, these provisions cover not only PIA workers, but all workers in California state prisons. The argument proves too much. Benefits and protections under state law for inmate workers in general do not affect the economic reality analysis under the FLSA.
[44] Conclusion
[45] California's prison work scheme cannot be distinguished from Hale.*fn9 The "economic reality" of plaintiffs' relationship to the PIA is penological. Plaintiffs are not "employees" under the FLSA. Therefore, their claims for damages and injunctive relief under the FLSA must fail.
[46] AFFIRMED.
[47] Disposition
[48] AFFIRMED.
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Opinion Footnotes
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[49] *fn1 Legislation now pending in Congress, if enacted, would probably moot this case. That bill would amend the FLSA by, inter alia, exempting "any employee who is an inmate of a penal or correctional institution and who participates in a correctional work program which is sanctioned by a State or Federal corrections agency or which is administered by a nonprofit organization authorized by State law to conduct a correctional work program on behalf of the State," effective as of Jun. 25, 1938. H.R. 868, 104th Cong., 1st Sess. §§ 1, 2 (1995).
[50] *fn2 Definitionally, a "hard labor" statute does not necessarily require only physically difficult or purely menial assignments. As we stated in Morgan, "our holding in Hale did not turn on the fact that the prisoners there were engaged in hard labor or purely menial tasks. In fact we noted that one of the plaintiffs worked as a bookkeeper and office manager." 41 F.3d at 1293. The plaintiff in Morgan worked as a computer "troubleshooter." Id.
[51] *fn3 Arizona law gives the state "the authority to require that each able-bodied prisoner . . . engage in hard labor for not less than forty hours per week . . . ." Ariz. Rev. Stat. § 31-251(A). Similarly, Nev. Rev. Stat. § 209.461(1)(b) provides: "The director [of the Nevada Department of Prisons] shall . . . to the extent practicable, require each offender . . . to spend 40 hours each week in vocational training or employment . . . ."
[52] *fn4 An inmate's refusal or failure to perform work or to participate in programs, as ordered or assigned, is considered to be a "serious rule violation." Cal. Code Regs. tit. 15, § 3315(a)(3)(J). Refusal of work assignments results in the inmate not being allowed to earn credit reduction off his or her sentence of incarceration and in having his or her privileges curtailed. See Cal. Code Regs. tit. 15, §§ 3043.4, 3044(f).
[53] *fn5 These work assignments do not include PIA jobs.
[54] *fn6 One of the prison work programs in Hale allowed for the establishment of an Inmate-Operated Business Enterprise ("IOBE"). The IOBE program permits an inmate to organize and operate a business enterpise under the supervision of the prison industries program. 993 F.2d at 1390.
[55] *fn7 The Prison Industry Board consists of eleven members, including the Director, who serves as Chairperson. Cal. Penal Code §§ 2802, 2803. The remaining ten members either are directors of designated state agencies or are appointed by the Governor and the Legislature. § 2802. Day-to-day operations are directed by the PIA's general manager, an appointee of the Board. § 2808(e).
[56] *fn8 That statute provides:
It is the intent of the Legislature that: (b) The prison industries program reduces the burdensome cost of the correctional system on the citizens of this state through the establishment of self-sustaining or profit-making enterprises . . . . (c) The prison industries program promote the security goals of the Department of Corrections by reducing idleness and providing an incentive for work in prisons, thereby contributing to an atmosphere in which tensions and violence will be reduced. (d) The prison industries program serve the goal of reintegrating ex-offenders into the outside working population by replicating as closely as possible free world production and service operations, in conjunction with relevant education, training, and post-release job placement. 1982 Cal. Stat., c. 1549, § 3, at 6034 (emphasis added).
[57] *fn9 Plaintiffs also seek reconsideration of our decision in Hale. However, such reconsideration may be had only by en banc review or after an intervening Supreme Court decision. E.g., Class Plaintiffs v. City of Seattle, 955 F.2d 1268, 1285 (9th Cir. 1992). This is especially true here, since Hale itself was an en banc decision.
[58] *fn* There are 79 cases consolidated on this appeal. The remaining 76 cases are disposed of by an unpublished Memorandum.
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[1] UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT
[2] Nos. 95-16188, 95-16550, No. 95-16192
[4] filed: May 8, 1996.
[5] GAYLIN BURLESON, PLAINTIFF, AND JERRY LEE SYROVATKA, SR., PLAINTIFF-APPELLANT,
v.
STATE OF CALIFORNIA; PRISON INDUSTRY AUTHORITY, DEFENDANTS-APPELLEES. GARY JERNIGAN, PLAINTIFF, AND JERRY LEE SYROVATKA, SR., PLAINTIFF-APPELLANT, V. STATE OF CALIFORNIA; JAMES H. GOMEZ; WAYNE ESTELLE, GENERAL MANAGER, PRISON INDUSTRY AUTHORITY; JAN WINTER, ASST. GENERAL MANAGER OF OPERATIONS, PRISON INDUSTRY BOARD; RAY BROWN, PRODUCTION MANAGER II, PRISON INDUSTRY AUTHORITY; PRISON INDUSTRY AUTHORITY; JOELLA FAZIO; DAVID KING; WILLIAM ALLEN; JOHN BABICH; ROBERT BURTON; LEONARD GREENSTONE; WILLIAM SARACINO; THOMAS WORNHAM, DEFENDANTS-APPELLEES.
[6] Appeals from the United States District Court for the Eastern District of California. D.C. No. CV-93-200-GEB. D.C. No. CV 92-1408-GEB. Garland E. Burrell, Jr., District Judge, Presiding.
[7] Jason Rabinowitz, Mark A. Garver, Certified Law Students; Susan D. Christian, Supervising Attorney, University of California Davis School of Law, Davis, California, for the plaintiff-appellant.
[8] Larry G. Raskin, Deputy Attorney General, Sacramento, California, for the defendants-appellees.
[9] Before: David R. Thompson, Andrew J. Kleinfeld, and A. Wallace Tashima, Circuit Judges. Opinion by Judge Tashima.
[10] Author: Tashima
[11] TASHIMA, Circuit Judge:
[12] Plaintiffs in these consolidated cases*fn* appeal from the order of the district court granting summary judgment to defendants. Plaintiffs are current and former inmates in the California state prison system who claim that they are or were "employees" within the meaning of the Fair Labor Standards Act of 1938 ("FLSA"), 29 U.S.C. § 201 et seq., and are thus entitled to receive the federal minimum wage for work performed for the State of California's Prison Industry Authority ("PIA"). Defendants are the State of California, the PIA, and certain PIA personnel in their official capacities. We have jurisdiction over this timely appeal under 28 U.S.C. § 1291, and we affirm.
[13] BACKGROUND
[14] In the California state prison system, able-bodied prisoners are required to perform "as many hours of faithful labor in each day and every day during his or her term of imprisonment as shall be prescribed by the rules and regulations of the Director of Corrections." Cal. Penal Code § 2700. The implementing regulation provides that a prisoner's work obligation "may be a full day of work, education, or other program activity, or a combination [thereof]." Cal. Code Regs. tit. 15, § 3040(a).
[15] Plaintiffs worked for enterprises operated by the PIA, producing various goods and services that the PIA sold to other entities, public and private, for a profit. The PIA paid plaintiffs between $.30 and $.95 an hour for their work, far below the federal minimum wage of $4.25 an hour to which plaintiffs claim they are entitled.*fn1
[16] The California Legislature created the PIA in 1982 to replace the old prison industries program administered directly by the Director (the "Director") of the California Department of Corrections ("CDC"). The legislature found that the old prison industries program had failed to provide inmates with meaningful jobs, offset the cost of operating the prison system, and reduce inmate idleness. See 1982 Cal. Stat., c. 1549, §§ 2-3, at 6034. It intended the PIA to achieve these goals. Id.
[17] Discussion
[18] I
[19] We recently determined the applicability of the FLSA's minimum wage provisions to prisoners in Arizona's prison work program. Hale v. Arizona, 993 F.2d 1387 (9th Cir.) (en banc), cert. denied, 126 L. Ed. 2d 335, 114 S. Ct. 386 (1993). In denying the plaintiffs' claims, we held:
[20] While we do not believe that prisoners are categorically excluded from the FLSA, we hold that the inmates in this case, who worked for programs structured by the prison pursuant to the state's requirement that prisoners work at hard labor, are not "employees" of the state within the meaning of the FLSA.
[21] Id. at 1389. In so holding, we adapted the "economic reality" test to the circumstances of inmate workers, noting that the "economic reality of the relationship between the worker and the entity for which the work was performed lies in the relationship between prison and prisoner. It is penological, not pecuniary." Id. at 1395 (emphasis added). Hale concluded "the economic reality is that their [plaintiffs'] labor belonged to the institution," and held that "they were not 'employees' of the prison entitled to be paid a minimum wage under the FLSA." Id.
[22] We followed Hale in Morgan v. MacDonald, 41 F.3d 1291 (9th Cir. 1994), cert. denied, 132 L. Ed. 2d 839, 115 S. Ct. 2591 (1995). There, we denied FLSA coverage to prisoners in Nevada's prison work program. Id. at 1293.
[23] The case at bench falls squarely within Hale and Morgan. The workers of California's PIA work in a prison-structured program pursuant to a state hard labor statute,*fn2 and are therefore not "employees" under FLSA.
[24] II
[25] California's work requirement statute, Cal. Penal Code § 2700, is not significantly different from the Arizona and Nevada statutes which gave the prison industries programs in Hale and Morgan their "penological" purpose.*fn3 California's inmates are under legal compulsion to work or to participate in other prison-run programs, as assigned.*fn4
[26] Plaintiffs stress that no apparent statutory or regulatory authority exists for the CDC to assign them to work for the PIA without their consent. Indeed, prison authorities make work assignments only after consideration of, inter alia, the inmate's "express needs and desires." Cal. Code Regs. tit. 15, § 3040(c). However, "in lieu of an inmate's assignment to a mutually agreed upon program" the CDC can compel inmates to perform "any work deemed necessary to operate and maintain the institution and its services in a clean, safe, and efficient manner." Cal. Code Regs. tit. 15, § 3040(d).*fn5
[27] The voluntary nature of assignment to the PIA does not create an oasis of contractually "bargained-for exchange" in the midst of a desert of compelled labor in the California state prison system. As the district court pointed out, plaintiffs "mistakenly equate the ability to choose between various work programs offered by the CDC, with the freedom to 'sell' their labor to the PIA."
[28] The consensual nature of a particular work assignment in a hard-labor state does not remove the penological purpose from the work relationship. As we stated in Hale :
[29] Inmates submit that it is significant that they had to apply for the work they did and were screened for security and other purposes. The fact that prison authorities may have structured certain programs more selectively than others does not, however, make them less of a prison-structured program pursuant to the State of Arizona's requirement that prisoners work at hard labor.*fn6
[30] Hale, 993 F.2d at 1394 n.10; see also Morgan, 41 F.3d at 1292 (inmate "chose" to fulfill Nevada's hard-labor requirement by working at education center run by local county school board). We therefore hold that the existence of a choice between prison programs in a state with a work-requirement statute does not render the inmate's work nonpenological.
[31] III
[32] Plaintiffs also argue that the PIA's distinctive organizational structure renders work for PIA not work in a "prison-structured program."
[33] The PIA is administered separately from the rest of the CDC by its own Prison Industry Board. See Cal. Penal Code § 2802-08.*fn7 The monies of the PIA are maintained in a "revolving fund" administered with the outside involvement of only the State Treasurer and the State Controller. See § 2806.
[34] Nevertheless, the PIA is by statute a part of the CDC. Cal. Penal Code § 5001. The PIA's status as a part of the California correctional system clearly brings it within the ambit of "prison-structured programs." That it may be separately administered within the CDC does not alter the PIA's fundamentally penological character as a "prison-structured program."
[35] IV
[36] Citing no authority, plaintiffs argue that the PIA's focus on generating a profit from its industries renders the inmates' relationship with PIA "pecuniary" rather than "penological."
[37] Defendants do not contest that PIA seeks to raise net revenue from "profit-making enterprises" and otherwise "replicates as closely as possible free world production and service operations . . . ." See 1982 Cal. Stat., c. 1549, § 3(a)-(b), at 6034. However, this is not inconsistent with ascribing a "penological" purpose to the work relationship. As the Seventh Circuit has noted:
[38] For the government . . . profits are not the ultimate goal. A governmental advantage from the use of prisoner labor is not the same as a similar low-wage advantage on the part of a private entity: while the latter amounts to an unfair windfall, the former may be seen as simply paying the costs of public goods - including the costs of incarceration. . . .
[39] Vanskike v. Peters, 974 F.2d 806, 811-12 (7th Cir. 1992), cert. denied, 507 U.S. 928, 113 S. Ct. 1303, 122 L. Ed. 2d 692 (1993). The fact that California, through the PIA, attempts to generate a profit from plaintiffs' labor does not affect the economic reality that their labor "belongs" to the state. Nor does it change the penological purpose of PIA's enterprise. See also 1982 Cal. Stat., c. 1549, § 3, at 6034.*fn8
[40] V
[41] Finally, by reference to certain worker benefits and protections under state law, plaintiffs attempt to shore up their argument that the "economic reality" of their relationship to the PIA is one of an "employee."
[42] California law considers PIA workers to be "employees" for purposes of workers' compensation coverage and protection under the California Occupational Safety and Health Act of 1973. See Cal. Lab. Code §§ 3351(e), 6304.2. PIA workers are paid for official break time, job-related training, and state holidays. A PIA affirmative action program fosters equal employment opportunity and a discrimination-free workplace.
[43] The argument that these benefits and protections evince an employer/employee relationship has an intuitive appeal. However, these provisions cover not only PIA workers, but all workers in California state prisons. The argument proves too much. Benefits and protections under state law for inmate workers in general do not affect the economic reality analysis under the FLSA.
[44] Conclusion
[45] California's prison work scheme cannot be distinguished from Hale.*fn9 The "economic reality" of plaintiffs' relationship to the PIA is penological. Plaintiffs are not "employees" under the FLSA. Therefore, their claims for damages and injunctive relief under the FLSA must fail.
[46] AFFIRMED.
[47] Disposition
[48] AFFIRMED.
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Opinion Footnotes
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[49] *fn1 Legislation now pending in Congress, if enacted, would probably moot this case. That bill would amend the FLSA by, inter alia, exempting "any employee who is an inmate of a penal or correctional institution and who participates in a correctional work program which is sanctioned by a State or Federal corrections agency or which is administered by a nonprofit organization authorized by State law to conduct a correctional work program on behalf of the State," effective as of Jun. 25, 1938. H.R. 868, 104th Cong., 1st Sess. §§ 1, 2 (1995).
[50] *fn2 Definitionally, a "hard labor" statute does not necessarily require only physically difficult or purely menial assignments. As we stated in Morgan, "our holding in Hale did not turn on the fact that the prisoners there were engaged in hard labor or purely menial tasks. In fact we noted that one of the plaintiffs worked as a bookkeeper and office manager." 41 F.3d at 1293. The plaintiff in Morgan worked as a computer "troubleshooter." Id.
[51] *fn3 Arizona law gives the state "the authority to require that each able-bodied prisoner . . . engage in hard labor for not less than forty hours per week . . . ." Ariz. Rev. Stat. § 31-251(A). Similarly, Nev. Rev. Stat. § 209.461(1)(b) provides: "The director [of the Nevada Department of Prisons] shall . . . to the extent practicable, require each offender . . . to spend 40 hours each week in vocational training or employment . . . ."
[52] *fn4 An inmate's refusal or failure to perform work or to participate in programs, as ordered or assigned, is considered to be a "serious rule violation." Cal. Code Regs. tit. 15, § 3315(a)(3)(J). Refusal of work assignments results in the inmate not being allowed to earn credit reduction off his or her sentence of incarceration and in having his or her privileges curtailed. See Cal. Code Regs. tit. 15, §§ 3043.4, 3044(f).
[53] *fn5 These work assignments do not include PIA jobs.
[54] *fn6 One of the prison work programs in Hale allowed for the establishment of an Inmate-Operated Business Enterprise ("IOBE"). The IOBE program permits an inmate to organize and operate a business enterpise under the supervision of the prison industries program. 993 F.2d at 1390.
[55] *fn7 The Prison Industry Board consists of eleven members, including the Director, who serves as Chairperson. Cal. Penal Code §§ 2802, 2803. The remaining ten members either are directors of designated state agencies or are appointed by the Governor and the Legislature. § 2802. Day-to-day operations are directed by the PIA's general manager, an appointee of the Board. § 2808(e).
[56] *fn8 That statute provides:
It is the intent of the Legislature that: (b) The prison industries program reduces the burdensome cost of the correctional system on the citizens of this state through the establishment of self-sustaining or profit-making enterprises . . . . (c) The prison industries program promote the security goals of the Department of Corrections by reducing idleness and providing an incentive for work in prisons, thereby contributing to an atmosphere in which tensions and violence will be reduced. (d) The prison industries program serve the goal of reintegrating ex-offenders into the outside working population by replicating as closely as possible free world production and service operations, in conjunction with relevant education, training, and post-release job placement. 1982 Cal. Stat., c. 1549, § 3, at 6034 (emphasis added).
[57] *fn9 Plaintiffs also seek reconsideration of our decision in Hale. However, such reconsideration may be had only by en banc review or after an intervening Supreme Court decision. E.g., Class Plaintiffs v. City of Seattle, 955 F.2d 1268, 1285 (9th Cir. 1992). This is especially true here, since Hale itself was an en banc decision.
[58] *fn* There are 79 cases consolidated on this appeal. The remaining 76 cases are disposed of by an unpublished Memorandum.
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