In its just-released opinion in Solis v.Matheson, the 9th Circuit Court of Appeals has held that the federal Fair Labor Standards Act (FLSA) applies to Tribal businesses, whether located on-Reservation or not, and that federal enforcement agencies can enter upon Tribal lands and search records to determine compliance.
The Solis case involves a claim for payment of overtime wages by an employee of a Native-owned retail operation. The Puyallup Tribe in Washington state has a store known as Baby Zack’s Smoke Shop located on trust land within its Reservation. Baby Zack’s sells tobacco products and sundries to both Tribal members and non-Natives, and regularly employs both Native and non-Native workers. An employee filed a claim for unpaid overtime wages against the owner of Baby Zack’s, and the Federal District Court entered judgment concluding that the FLSA applied to the shop, and that the failure to pay overtime wages violated the FLSA. The judgment enjoined the owners of Baby Zack's from violating the FLSA and ordered payment of $31,339.27 in overtime wages.
On appeal, the 9th Circuit not only affirmed the applicability of the FLSA to on-Reservation Tribal businesses, but went farther by specifically authorizing federal searches on Tribal lands as part of enforcement practices.
We conclude that the overtime requirements of the FLSA apply to the retail business at issue in this case. Because the FLSA applies to the retail business, we conclude that the Secretary had the authority to enter the Indian reservation to audit the books of the business, as she would regularly do with respect to any private business.
Accordingly, because the FLSA overtime provisions apply to the (shop), we conclude that the Secretary was authorized to make entry on to the reservation in order to locate records via her regular procedure in her effort to enforce the statute in question.
Unless the decision of the 9th Circuit is overturned by the US Supreme Court, Tribes and Native Corporations must now comply with the requirements of the FLSA, and assume they are subject to intrusive inspections by federal regulators. It therefore behooves Native entities to craft and adopt employment and labor policies that will serve their business interests while avoiding conflict with federal standards.