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Minimum Wage Provisions Apply to Prisoners Employed by Community College

The Second Circuit Court of Appeals held that the status of being a prisoner does not exclude the prisoner from being entitled to minimum wage for employment services by non-prison employers. This action was filed by a New York prisoner at the Fishkill Correctional Facility. The Dutchess Community College (DCC) employed several inmates in the institution (using only those who have actually graduated from a four-year college program) to act as teaching assistants to our regular staff." The prisoner was selected to conduct twenty tutorial classes on business math, all of which were taught inside the prison. Each session lasted 2 ½ hours. He was paid a total of $60, which breaks down to $3 per class, or $1.20 per hour. The federal minimum wage at the time was $3.10 per hour. The prisoner's suit alleged his compensation violated the Fair Labor Standards Act (FLSA), 29 U.S.C. §201 et. seq. (1982).

The district court granted DCC and prison officials' summary judgment on grounds that the FLSA does not apply to prisoners because DCC had only qualified control over the prisoner while the prison had ultimate control. The Second Circuit rejected the creation of a two-tiered analysis of control to determine the employment relationship. When determining an employment relationship for FLSA purposes a court must evaluate the economic reality" of the relationship. That test has been refined to include inquiries into whether the alleged employer (1) had the power to hire and fire employees, (2) supervised and controlled employee work schedules or conditions of employment, (3) determined the rate and method of payment, and (4) maintained employment records.

The Court believed an entity's control over a worker need not be ultimate" in order to justify a finding of an employer-employee relationship. So long as an employer exercises substantial control over a worker, the FLSA applies. Courts should refrain from exempting a whole class of workers, based on technical labels, from coverage of the FLSA, because such action would have the potential of upsetting the desired equilibrium in the workplace.

Second, the FLSA has an exclusive list of workers exempted from FLSA coverage. The category of prisoners is not on the list, and the court held it would be improper to hold that an unlisted class of workers is excluded from the FLSA.

Thus, the ultimate control test is improper and the economic reality" test must be applied. In this case the court found the DCC made the initial proposal to employ" workers; suggested a wage as to which there was no legal impediment; developed eligibility criteria; recommended several prisoners for tutoring positions; was not required to take any prisoner it did not want; decided how many and how long sessions would last that prisoners taught; and sent compensation directly to the prisoner trust account.

The Court held these facts may be sufficient to warrant FLSA coverage and remanded the matter for further proceedings and reversal of the grant of summary judgment. See: Carter v. Dutchess Community College, 735 F. 2d 8 (2nd Cir. 1984).

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Related legal case

Carter v. Dutchess Community College

735 F.2d 8, 26 Wage & Hour Cas. (BNA) 1239, 101 Lab.Cas. P 34,540, 17 Ed. Law Rep. 1031

United States Court of Appeals, Second Circuit.

Louis CARTER, Plaintiff-Appellant,


DUTCHESS COMMUNITY COLLEGE, et al., Defendants-Appellees.

No. 778, Docket 83-2053.

Argued Feb. 17, 1984.
Decided May 14, 1984.

On appeal from a judgment entered in the Southern District of New York, Robert L. Carter, District Judge, granting defendants' motions for summary judgment on ground that plaintiff, as a state prison inmate, was not entitled to the federal minimum wage as prescribed by the Fair Labor Standards Act, the Court of Appeals, Timbers, Circuit Judge, held: (1) that an inmate may be entitled under the law to receive the federal minimum wage from an outside employer depending on how many typical employer prerogatives are exercised over the inmate by the outside employer, and to what extent, and (2) that in a case involving an inmate conducting tutorial classes at prison in a program conducted by a community college in which, among other things, the college sent compensation directly to the inmate's prison account, inmate demonstrated genuine issues issues as to material facts regarding whether he was covered by the Fair Labor Standards Act, precluding summary judgment.

Reversed and remanded.

*9 Claudia J. Flynn, New York City (Parker Auspitz Neesemann & Delehanty P.C., New York City, on the brief), for plaintiff-appellant.

*10 Stephen J. Wing, County Atty., Poughkeepsie, N.Y., for defendants-appellees Dutchess Community College and F. Kennon Moody.

Nancy Miller Lerner, Asst. Atty. Gen., New York City (Robert Abrams, Atty. Gen. of State of N.Y., Melvyn R. Leventhal, Deputy First Asst. Atty. Gen., Barbara Butler and Brenda S. Spears, Asst. Attys. Gen., New York City, on the brief), for defendants-appellees Walter Chattman and Patrick J. Fish.

Before TIMBERS, KEARSE and PIERCE, Circuit Judges.

TIMBERS, Circuit Judge:

This is an appeal from a summary judgment entered January 11, 1983 on the motions of defendants in the Southern District of New York, Robert L. Carter, District Judge. The court granted the motions based on the report and recommendation of Magistrate Naomi Reice Buchwald, dated December 13, 1982. The magistrate recommended that, because plaintiff Louis Carter, as a state inmate, is under the "ultimate control" of the New York State Department of Correctional Services, he cannot be an employee of defendant Dutchess Community College within the meaning of the Fair Labor Standards Act (FLSA), 29 U.S.C. § 201 et seq. (1982). We reverse and remand.

At the time this § 1983 action was commenced on February 25, 1981, Carter was an inmate at the Fishkill Correctional Facility (FCF) in New York. He alleged that he was participating in a program at FCF conducted by Dutchess Community College (DCC), pursuant to which, in conjunction with the several college level courses offered by DCC to inmates at FCF, DCC "employ[ed] several inmates in [the] institution (using only those who have actually graduated from a four-year college program) to act as teaching assistants to our regular staff." In his amended complaint filed December 5, 1981, Carter alleged that he was compensated at a level well below the federal minimum wage, in violation of the FLSA.

The origins of the inmate-teaching assistant program at FCF can be traced to a letter dated March 25, 1978 from defendant F. Kennon Moody, a former Coordinator of Inmate Education at DCC, to defendant Walter Chattman, who at the time was the Director of Educational Services for the New York State Department of Correctional Services (DCS). In that letter Moody first proposed the program. The duties of the inmate-teaching assistants would include meeting with DCC teachers, attending class meetings, and tutoring inmate-students outside of classroom hours. Moody requested the permission of DCS to supplement the inmates' prison wages so that a total day's salary would amount to between $3 and $4, five days a week. Moody also suggested that DCC send a check on a monthly basis to the prison's Office of Inmates Accounts to cover the supplementary wages.

The inquiry regarding the payment of supplementary wages to inmates was referred to defendant Patrick J. Fish, an attorney with DCS. According to Chattman's memorandum of April 20, 1978 to a deputy superintendent of programs, Fish advised that he saw "no legal impediment" to the supplementary compensation plan.

DCC then conducted a screening process to find inmates it considered to be qualified for the teaching assistant positions. Eligibility criteria were determined solely by DCC. DCC then submitted to DCS a list of inmates who it recommended be permitted by DCS to participate in the teaching assistant program. It is not clear from the record how many inmates were proposed by DCC, and consequently how many, if any, were rejected by DCS. What is clear is that Carter was among the eight inmates selected during the Fall of 1980. He was selected to conduct twenty tutorial classes in business math, all of which were held within the prison. Each session lasted 2 1/2 hours. He was paid a total of $60, which breaks down to $3 per class, or $1.20 per *11 hour. The federal minimum wage at the time was $3.10 per hour.

At some point during or after his participation in the teaching assistant program, Carter learned that student tutors at the campus of DCC earned at least the federal minimum wage, which DCC was required to pay by law. On February 4, 1981, Carter wrote letters to the Director of Education at DCS and the Director of Financial Aid at DCC, inquiring about the disparate compensation scheme. He referred in both letters to the fact that the current Coordinator of Inmate Education at DCC had told Carter that DCS did not permit DCC to pay any more than $3 per day.

Carter received a prompt response on February 10 from the DCC Director of Financial Aid, Daniel Sistarenik, who informed Carter that indeed DCS did restrict the maximum amount of compensation that could be paid to the inmate tutors. Sistarenik advised Carter to state his concerns to DCS. By the time Carter commenced his § 1983 pro se action on February 25, he had received no response from DCS. He attached the response he finally did receive, dated April 9, to his affidavit in opposition to defendants' motions to dismiss. This letter told Carter to direct his concerns to DCC.

In his pro se complaint, Carter named DCS and DCC as defendants. He alleged that he had been denied the equal protection of the laws, in violation of the Fourteenth Amendment, and had been subjected to involuntary servitude in violation of the Thirteenth Amendment. He sought back wages in amount of $107.50, plus interest, punitive damages in amount $150,000, and an injunction requiring defendants to begin paying all tutors the same compensation.

After DCS was dismissed from the action by an order entered June 17, 1981, Carter filed an amended complaint on November 23, 1981. The amended complaint added the individual defendants Moody, Chattman and Fish and alleged that defendants' actions violated the labor laws by compensating him at a rate less than the minimum wage.

On July 20, 1982, defendants DCC and Moody filed a motion to dismiss the complaint pursuant to Fed.R.Civ.P. 12(b)(6). On July 21, 1982, defendants Chattman and Fish filed a similar motion to dismiss. The motions were referred to the magistrate in accordance with a prior order referring the entire case to her.

In her well reasoned report and recommendation to Judge Carter, the magistrate rejected both constitutional arguments made by plaintiff. These arguments are not pressed on appeal.

In stating the alleged FLSA violation, the magistrate framed the issue as follows:
"In order to determine whether such an employment relationship exists the court must look to the 'economic reality' of the situation and determine whether DCC has 'ultimate control' over plaintiff."
The magistrate then applied the following standard to the facts before her:
"Although DCC does have discretion in the selection of inmates for positions in the teaching assistant program, these inmates nevertheless remain under the supervision and control of prison officials. It was the prison administrators that initially approved the program, and inevitably it is these same officials who retain the authority to disqualify an inmate or discontinue the program as they see fit. The fact that DCC was responsible for initiating the program and paying the inmates' wages does not compel a contrary result. Rather, the college's control over the inmates is 'qualified,' that is, 'subject to the ultimate control of prison administrators.' ... In short, inmates who participate in the teaching assistant program nevertheless retain their status as inmates under the control of New York State's correctional facilities, rather than becoming 'employees' of DCC."

In a footnote, the magistrate added that it was "unlikely that Congress intended that the FLSA's minimum wage protection be extended to prisoners." She recommended that defendants' motions, which *12 she correctly treated as motions for summary judgment because the parties had conducted some discovery and relied on matters outside the pleadings, be granted.

The magistrate's report and recommendation was accepted and adopted by Judge Carter as the opinion of the court. From the judgment entered thereon, plaintiff has taken this appeal on which he has been represented by competent counsel. He argues (1) that the court applied an improper legal standard under the FLSA; (2) that defendants failed to sustain their burden under Rule 56; (3) that the court resolved factual disputes against him, the non-moving party; and (4) that the court did not allow sufficient discovery. For the reasons set forth below, we reverse the judgment of the district court and remand the case to that court for further proceedings.

In our view, the issues in this case really boil down to one question: whether prisoners ever may be considered employees for the purposes of the minimum wage provisions of the FLSA. We frame the question in this way because, upon close examination, the only issue of fact considered material by defendants in their moving papers was Carter's inmate status. Moreover, the practical effect of the district court's decision is an absolute preclusion of FLSA coverage for prisoners. The court acknowledged that DCC exercised some control over the inmate-teaching assistants, but held that, since prison officials "inevitably" had "ultimate control" over the inmates, DCC could not be considered to be the inmates' employer.

It is common ground that courts, in determining whether an employment relationship exists for purposes of the FLSA, must evaluate the "economic reality" of the relationship. [FN1] Such an evaluation was first applied in the FLSA context in Goldberg v. Whitaker House Cooperative, Inc., 366 U.S. 28 (1961). The "economic reality" test since has been refined and now is understood to include inquiries into:

FN1. A case by case analysis is required because the statute's definitions are stated in only the broadest terms. Section 3(e) defines "employee" as "any individual employed by an employer." 29 U.S.C. § 203(e) (1982). "Employ" is defined as "to suffer or permit to work." Id. § 203(g). An "employer" is one who acts "directly or indirectly in the interest of an employer in relation to an employee." Id. § 203(d).

"whether the alleged employer (1) had the power to hire and fire the employees, (2) supervised and controlled employee work schedules or conditions of employment, (3) determined the rate and method of payment, and (4) maintained employment records."
Bonnette v. California Health and Welfare Agency, 704 F.2d 1465, 1470 (9 Cir.1983). The power to control a worker clearly is a crucial factor in determining whether an employment relationship exists. The district court here was correct in considering it.

The point at which we believe the court below erred was in giving undue weight to the control factor alone. More specifically, the court created a two-tiered analysis of control, recognizing that DCC had "qualified control" and that DCS had "ultimate control". Based on this distinction, as in Alexander v. Sara, Inc., 559 F.Supp. 42 (M.D.La.), aff'd per curiam, 721 F.2d 149 (5 Cir.1983), the court here held that Carter was not an employee within the meaning of the FLSA.