Ugochukwu Nwauzor v. the Geo Group, Inc.
Not provided (2025)
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Rule of Law:
The application of a generally applicable state minimum wage law to a private federal contractor operating an immigration detention facility does not violate intergovernmental immunity, is not preempted by federal law, and does not trigger derivative sovereign immunity, especially when the federal contract requires compliance with state labor laws and does not set a maximum wage.
Facts:
- The GEO Group (GEO), a private, for-profit corporation, operates the Northwest Immigration and Customs Enforcement Processing Center (NWIPC) in Tacoma, Washington, under a contract with U.S. Immigration and Customs Enforcement (ICE).
- GEO implemented a Voluntary Work Program (VWP) at the NWIPC where hundreds of civil detainees performed various tasks essential to the facility's daily operations, such as meal preparation, janitorial work, and laundry.
- GEO typically compensated these detained workers $1 per day, the minimum rate mandated by ICE, but occasionally increased pay up to $5 per day to incentivize participation or cover undesirable shifts, without objection from ICE.
- GEO heavily relied on the labor provided by the detained workers in the VWP, operating the facility with just a few full-time staff and saving millions of dollars in payroll costs.
- GEO's contract with ICE explicitly required compliance with 'all applicable federal, state, and local laws and standards,' including 'labor laws and codes,' and stipulated that 'the most stringent standard shall apply' in the event of a conflict.
- ICE did not involve itself in the development or management of the VWP; GEO created job roles, set schedules, provided training, supervised workers, and managed payroll.
- Detainees participated in the VWP primarily because of their desperate need for money while confined, lacking other options for income.
Procedural Posture:
- In 2017, a class of detained workers at the NWIPC and Washington State each filed separate actions against GEO Group in federal district court, alleging violations of Washington’s Minimum Wage Act (MWA).
- The district court consolidated the actions.
- A jury found that GEO Group violated the MWA and awarded $17,287,063.05 in back pay damages to the detainee class.
- After a bench trial, the district court awarded $5,950,340.00 in unjust enrichment to Washington State and enjoined GEO Group from employing detainees without paying Washington’s minimum wage.
- GEO Group appealed the district court's judgment to the Ninth Circuit Court of Appeals as the appellant.
- After hearing oral argument, the Ninth Circuit certified three questions of state law to the Washington Supreme Court: (1) whether detained workers at the NWIPC were 'employees' under the MWA; (2) whether the MWA's government-institutions exemption applied to private detention facilities contracting with the state; and (3) whether the damages award to the class foreclosed equitable relief to the State in the form of an unjust enrichment award.
- The Washington Supreme Court answered 'yes' to the first question and 'no' to the second and third questions, concluding that the detainees were MWA employees, the government institutions exception did not apply to private facilities regardless of whether they contracted with state or federal government, and GEO could be held liable to the State for unjust enrichment.
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Issue:
Does the application of Washington's Minimum Wage Act (MWA) to a private federal contractor, operating an immigration detention facility and employing civil detainees, violate the doctrine of intergovernmental immunity, is it preempted by federal law, or does it trigger derivative sovereign immunity?
Opinions:
Majority - W. Fletcher
No, the application of Washington's Minimum Wage Act to GEO Group does not violate intergovernmental immunity, is not preempted by federal law, nor does it trigger derivative sovereign immunity. The court held that Washington's MWA is a generally applicable state law that treats all private employers equally, including those contracting with the federal government. It does not directly regulate federal operations or discriminate against the federal government because the Washington Supreme Court clarified that the MWA's government institutions exemption applies only to publicly run facilities, not private facilities contracting with either the state or federal government. Thus, GEO is treated the same as any other private contractor. Any increased costs to the federal government are merely an indirect effect of a neutral state law and do not trigger intergovernmental immunity. Regarding preemption, the court found no clear and manifest purpose by Congress to preempt state minimum wage laws for private federal contractors employing civil detainees. Federal statutes concerning detainee allowances merely authorize payments or set reimbursement limits but do not impose a maximum wage or explicitly preempt state minimum wage laws for private entities. The government's speculative concerns about the VWP's viability were deemed insufficient to establish an 'obstacle' to Congress's objectives. Finally, GEO's claim for derivative sovereign immunity failed because its contract with ICE explicitly mandated compliance with 'all applicable federal, state, and local laws and standards,' including state labor laws, and required the 'most stringent standard' in case of conflict. The contract also set only a minimum wage, not a maximum, allowing GEO discretion to pay higher wages. Therefore, GEO's conduct of paying below the MWA was not dictated by the federal government, thus precluding derivative immunity.
Dissenting - Mark J. Bennett
Yes, the application of Washington’s Minimum Wage Act (MWA) to the Northwest Immigration and Customs Enforcement Processing Center (NWIPC) violates the Supremacy Clause due to intergovernmental immunity and is preempted by federal immigration law. Judge Bennett argued that the MWA is unconstitutionally discriminatory because it explicitly exempts state, county, and municipal detention facilities from its minimum wage requirements but does not extend this exemption to federal facilities or their private contractors like GEO. This disparity effectively 'singles out' the federal contractor for less favorable treatment, contrary to the principles established in Dawson v. Steager, where similarly situated federal and state entities must be treated equally. He noted that Washington's own detainee labor programs cap pay at $40 per week, a significant difference from the MWA rate, and the NWIPC is the only detention facility in Washington subject to the MWA. On preemption, Judge Bennett contended that the MWA creates an 'obstacle to the accomplishment and execution of the full purposes and objectives of Congress' in the uniquely federal domain of immigration. Congress has already authorized detainee allowances and set a reimbursement cap of $1 per day, indicating an intent to control this area. The MWA's drastically higher wage requirement (a 1500% increase) fundamentally frustrates this federal scheme, making the Voluntary Work Program (VWP) financially unviable, as evidenced by its suspension at the NWIPC following the district court's injunction. He asserted that the contract's general compliance clause should not be interpreted to override specific federal congressional intent regarding detainee allowances, and the presumption against preemption should not apply when state law interferes with inherently federal relationships.
Analysis:
This case significantly clarifies the boundaries of intergovernmental immunity and preemption in the context of state wage laws affecting federal contractors. It reinforces that generally applicable state laws, even if they increase federal costs, are permissible unless they directly regulate federal operations, discriminate against the federal government, or present a clear, unavoidable conflict with federal law. The ruling underscores the Ninth Circuit's deference to state supreme court interpretations of state law, even when applied to hypothetical scenarios. For federal agencies, the case highlights the importance of precise and explicit contract language if they intend to exempt contractors from specific state regulations, as general 'compliance with laws' clauses may not suffice. Conversely, states can assert their traditional police powers to regulate employment, even within federal contracting spheres, if done neutrally.
