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Court Ruling Against Foreign Guestworkers Highlights Need for Reform

A recent federal appeals court ruling in an SPLC lawsuit involving fees paid by foreign guestworkers illustrates the need for reform of a program that results in widespread exploitation, workers and their advocates said.

A recent federal appeals court ruling in an SPLC lawsuit involving fees paid by foreign guestworkers illustrates the need for reform of a program that results in widespread exploitation, workers and their advocates said.

In reversing a lower court's ruling, the 5th U.S. Circuit Court of Appeals ruled on Feb. 11 that a New Orleans hotel company was not required to reimburse guestworkers for thousands of dollars in fees they paid to obtain jobs in luxury hotels in the aftermath of Hurricane Katrina.

The 5th Circuit's decision — which relies on a statement issued by the Department of Labor in the Bush administration's last days — conflicts with a ruling in the 11th Circuit and every other lower federal court that has ruled on the issue.

"This court's ruling supports employers like Decatur Hotels who are looking for indentured servants," said Daniel Castellanos-Contreras, the named plaintiff in the litigation, who paid more than $5,000 to obtain a low-wage, temporary job with Decatur Hotels.

As documented in the SPLC's 2007 report Close to Slavery, the charging of exorbitant fees to obtain low-paying jobs is one of the worst abuses of the H-2B guestworker program, under which U.S. businesses bring in tens of thousands of workers each year for low-skill jobs that last less than one year.

Because they are prohibited by law from finding other work, guestworkers are highly vulnerable to abuse by unscrupulous employers who hold the power to send them home, in debt, if they complain about pay or working conditions.

"We mortgaged our homes, sold property and plunged our families into debt to pay the fees," Castellanos said. "Then we found out we could not even earn enough to cover our living expenses and pay off our loans. Our crushing debts block us as guestworkers from protecting our fundamental labor rights, including our right to organize."

The Bush administration's new H-2B regulations, which took effect Jan. 18, further erode worker protections and make it easier for U.S. businesses to bring in guestworkers.

"Instead of reforming the guestworker program, the Bush administration has given more tools to employers who are shopping for the most exploitable workforce," said Mary Bauer, director of the SPLC's Immigrant Justice Project. "This hurts workers in the United States as well as those who come here from other countries."

The SPLC and the New Orleans Workers Center for Racial Justice are urging the U.S. Senate to confirm U.S. Rep. Hilda Solis as labor secretary. A new labor secretary could put the new Bush regulations on hold and could write new regulations to overhaul the program.

Saket Soni, director of the New Orleans Workers' Center for Racial Justice, noted that the Decatur Hotels case illustrates how some employers use the guestworker system to undermine worker rights. The company hired about 300 guestworkers after certifying to the Department of Labor that U.S. workers were not available.

"Decatur Hotels hired exploitable guestworkers just after Katrina, at a time when its rooms were filled with displaced African-American workers desperate for employment," Soni said. "Instead of hiring those workers, the company imported guestworkers at a lower wage, under worse conditions."

In the context of the current economy, Soni said, "the guestworker program holds foreign workers hostage to exorbitant recruitment fees and uses them to undermine U.S. workers."

The new Bush rules prohibit employers or recruiters from collecting fees as a condition of employment but rely on the employer to vouch no such fees have been collected. There is also no requirement that employers reimburse transportation costs, passports and visa and inspection fees. Further, no process is provided for workers or their advocates to intervene when there are fee abuses.

"At a time of global economic despair, we need Congress and the administration to lead the way in enacting sound policies that do not undermine the labor rights of temporary workers or of U.S. workers," said Marielena Hincapié, executive director of the National Immigration Law Center. "This is an opportunity for the Obama administration to help create jobs in the U.S. that pay a living wage and prioritize labor protections for all workers in the U.S. regardless of their immigration status."