Harker v. State Use Industries

• Decision Date: 24 March 1993
• Docket Number: No. 92-1296,92-1296
• Parties: , 124 Lab.Cas. P 35,789, 1 Wage & Hour Cas.2d (BNA) 508 David W. HARKER, Plaintiff-Appellant, and State Use Industry Envelope Shop Inmates; State Use Industry Warehouse Inmate Workers; State Use Industry Graphics Shop Inmate Workers; State Use Industry Jbruch & Carton Shop Inmate Workers, Plaintiffs, v. STATE USE INDUSTRIES; Commissioner of Corrections; SUI Regional Manager for Graphics; SUI Graphics Manager; SUI Warehouse Manager; SUI Envelope Shop Manager; SUI Graphics Shop-ECI; Louis Albert, Defendants-Appellees.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 131

990 F.2d 131

61 USLW 2644, 124 Lab.Cas. P 35,789,

1 Wage & Hour Cas.2d (BNA) 508

David W. HARKER, Plaintiff-Appellant and State Use Industry Envelope Shop Inmates; State Use Industry Warehouse Inmate Workers; State Use Industry Graphics Shop Inmate Workers; State Use Industry Jbruch &amp Carton Shop Inmate Workers, Plaintiffs, v. STATE USE INDUSTRIES; Commissioner of Corrections; SUI Regional Manager for Graphics; SUI Graphics Manager; SUI Warehouse Manager; SUI Envelope Shop Manager; SUI Graphics Shop-ECI; Louis Albert, Defendants-Appellees.

No. 92-1296.

United States Court of Appeals, Fourth Circuit.

Argued Feb. 5, 1993.

Decided March 24, 1993.

H. Anthony Lehv, Student Atty., Appellate Advocacy Clinic, Washington, DC, argued (Jennifer P. Lyman, Adam G. Silverstein, Student Attys., on brief), for plaintiff-appellant.

Lucy Adams Cardwell, Asst. Atty. Gen., Baltimore, MD, argued (J. Joseph Curran, Jr., Atty. Gen. of Maryland, on brief), for defendants-appellees.

Before WILKINSON, LUTTIG, and WILLIAMS, Circuit Judges.

OPINION

WILKINSON, Circuit Judge:

This case presents the issue of whether inmates participating in prison work programs are covered by the Fair Labor Standards Act ("FLSA" or the "Act"). 29 U.S.C. § 201 et seq. Maryland inmate David W. Harker appeals the district court's dismissal of his suit, in which he and other inmates claimed to be entitled to the federal minimum wage for work performed at a prison workshop located within the penal facility. Because we find no indication that the FLSA applies, or was ever meant to apply, to such inmates, we affirm the dismissal of this lawsuit.

I.

Appellant Harker is an inmate at the Maryland Correctional Institution at Jessup ("MCI-J"). Between 1986 and 1991, he worked in several capacities at the graphic print shop run by State Use Industries of Maryland ("SUI") at MCI-J. The print shop produced stationary, letterhead, and similar products. During that time, Harker did not receive the federal minimum wage or any overtime pay as provided for in the Act, 29 U.S.C. §§ 206-07, but was paid a lower wage determined by the Maryland Division of Corrections ("DOC") Commissioner and the General Manager of SUI. See Md.Ann.Code art. 27, § 681F.

In 1992, Harker sued SUI and various state defendants on behalf of himself and other inmates, alleging, among several claims, violations of the FLSA. SUI is an organization within the DOC created by the Maryland legislature to meet the rehabilitative needs of inmates. Id. at § 680. Specifically, SUI "[p]rovides meaningful work experiences for offenders intended to improve work habits, attitudes, and skills with the objective of improving the employability of the offender upon release." Id. at § 680(1)(iv). Toward this end, SUI operates several plants and service centers, such as the print shop at MCI-J. These operations produce goods and services for sale to government agencies, institutions, and political subdivisions of Maryland, as well as federal institutions and agencies, and those of other states. Id. at § 681C(a)(1). SUI may not sell its products on the open market except in very limited situations, such as sales to charitable or civic entities or when a surplus of goods remains unused after one year. Id. at § 681D. SUI does not generate a profit for the State, and by statute, is supposed to be financially self-supporting. Id. at § 680(1)(i).

Inmates fill all nonmanagerial positions within SUI, and SUI maximizes the rehabilitative value of the inmates' work experience by resembling a "private corporate entity as closely as possible." Id. at § 680(3). Inmates go through a voluntary application and interview process to participate in an SUI program. They work on a regular schedule, although shifts necessarily are shortened to accommodate lock-down schedules and security concerns. SUI may terminate participants in its programs, and although hourly wages are paid, they are set below the FLSA minimum. See id. at § 681F. Even with these parallels between SUI and an outside employer, the Maryland DOC ultimately administers all SUI programs and retains all authority necessary for the proper performance of DOC's statutory mission. Id. at §§ 681(4) and 681M.

After Harker and the other inmates filed their suit, the district court dismissed it under Fed.R.Civ.P. 12(h)(3) "for failure to state any arguable claim within the subject matter jurisdiction" of the court. This appeal followed. Only Harker gave notice of appeal, and he has abandoned his civil rights and Maryland common law claims. ¹

II.

Harker argues that inmates participating in SUI programs must be paid the federal minimum wage because they meet the Act's circular definition of "employee," and are not exempted from the Act's coverage. Specifically, the FLSA defines "employee" as "any individual employed by an employer," 29 U.S.C. § 203(e)(1), and an "employer" as "any person acting ... in the interest of an employer in relation to an employee." Id. at § 203(d). To "employ" means "to suffer or permit to work." Id. at § 203(g). After so widely defining its scope, the Act then exempts from coverage a long list of workers, ranging from executives to casual babysitters. See id. at § 213(a). According to Harker, because the definition of employee must be read broadly, see Tony & Susan Alamo Found. v. Secretary of Labor, 471 U.S. 290, 295-96, 105 S.Ct. 1953, 1958-59, 85 L.Ed.2d 278 (1985), and because the Act does not specifically exempt prisoners, the Act applies to participants in SUI programs. ²

This argument fails. It presupposes that inmates in SUI-type programs should be considered employees for FLSA purposes in the first place. Even with a broad reading of this term, we see no indication that Congress provided FLSA coverage for inmates engaged in prison labor programs like the one in this case.

Initially, the labor being performed in SUI programs differs substantially from the traditional employment paradigm covered by the Act. Inmates perform work for SUI not to turn profits for their supposed employer, but rather as a means of rehabilitation and job training. As a part of the DOC, SUI has a rehabilitative, rather than pecuniary, interest in Harker's labors. By producing useful goods in an atmosphere that mirrors the conditions of a true private employer, SUI helps prepare inmates for gainful employment upon release. DOC's effort to prepare inmates for eventual private employment, however, does not mean that inmates have achieved such a goal while still incarcerated.

SUI and the inmates also have not made the "bargained-for exchange of labor" for mutual economic gain that occurs in a true employer-employee relationship. Vanskike v. Peters, 974 F.2d 806, 809 (7th Cir.1992); Gilbreath v. Cutter Biological, Inc., 931 F.2d 1320, 1325 (9th Cir.1991). They do not deal at arms' length; the inmates enroll in SUI programs solely at the prerogative of the DOC, which both initiates the programs and allows the inmates to participate. Because the inmates are involuntarily incarcerated, the DOC wields virtually absolute control over them to a degree simply not found in the free labor situation of true employment. Vanskike, 974 F.2d at 809-10. Inmates may voluntarily apply for SUI positions, but they certainly are not free to walk off the job site and look for other work. When a shift ends, inmates do not leave DOC supervision, but rather proceed to the next part of their regimented day. SUI and Harker do not enjoy the employer-employee relationship contemplated in the Act, but instead have a custodial relationship to which the Act's mandates do not apply.

Further, the FLSA does not cover these inmates because the statute itself states that Congress passed minimum wage standards in order to maintain a "standard of living necessary for health, efficiency, and general well-being of workers." 29 U.S.C. § 202(a). While incarcerated, inmates have no such needs because the DOC provides them with the food, shelter, and clothing that employees would have to purchase in a true employment situation. So long as the DOC provides for these needs, Harker can have no credible claim that inmates need a minimum wage to ensure their welfare and standard of living. See Vanskike, 974 F.2d at 810-11; Miller v. Dukakis, 961 F.2d 7, 9 (1st Cir.1992).

III.

Harker nevertheless argues that the Act still applies here because of its second intended purpose--preventing unfair competition in commerce. See 29 U.S.C. § 202(a)(3). Harker maintains that because some SUI goods may reach the open market, through sales of surplus goods or sales to civic or charitable entities, see Md.Ann.Code art. 27, § 681D, SUI must pay the minimum wage to prevent it from having an unfair advantage over other producers of similar goods.

We are not persuaded that the limited ways in which SUI goods might enter the open market threaten fair competition. Even assuming, however, the viability of this threat, the FLSA still does not apply here because Congress has dealt more specifically with this problem through the Ashurst-Sumners Act. 18 U.S.C. §§ 1761-62. Ashurst-Sumners criminalizes the transport of prison-made goods in interstate commerce in precisely those situations in which prison labor threatens fair competition. See Kentucky Whip & Collar Co. v. Illinois Central R.R. Co., 299 U.S. 334, 351-52 & n. 19, 57 S.Ct. 277, 282-83 & n. 19, 81 L.Ed. 270 (1937).

Ashurst-Sumners' very existence undercuts Harker's argument. Congress passed Ashurst-Sumners in 1935 and the FLSA in 1938. Under Harker's interpretation, Congress would have passed the FLSA knowing that it made Ashurst-Sumners superfluous. What need would there be to criminalize the transport of prison-made goods if they did not enjoy the unfair economic advantage of being produced by cheap (non-FLSA) labor? Yet not only has Congress never repealed Ashurst-Sumners, it has periodically amended and recodified it. See Vanskike, 974 F.2d at 812.

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