John J. Tollefsen Litigation Law Blog on Lawyers.com

Overtime applies to Indian retail store - receivership requires findings of necessity

Saturday, May 30, 2009 by John J. Tollefsen

Solis v. Matheson, 2009 WL 1036083 (9th Cir.(Wash.) Apr 20, 2009) (NO. 07-35633)

Indian tribes have a special status as sovereigns with limited powers. Indian tribes are dependent on, and subordinate to the federal government, yet retain powers of self-government. These powers can be limited, modified, or eliminated by Congress. The tribes' retained sovereignty reaches only that power needed to control internal relations, preserve their own unique customs and social order, and prescribe and enforce rules of conduct for their own members. Toward this end, the Supreme Court has recognized that a tribe may regulate any internal conduct which threatens the political integrity, the economic security, or the health or welfare of the tribe. Indians and their tribes are equally subject to statutes of general applicability, just as any other United States citizen.

However, a statute of general applicability that is silent on the issue of applicability to Indian tribes, like the FLSA, does not apply to Indian tribes if: (1) the law touches exclusive rights of self-governance in purely intramural matters; (2) the application of the law to the tribe would abrogate rights guaranteed by Indian treaties; or (3) there is proof by legislative history or some other means that Congress intended the law not to apply to Indians on their reservations. In any of these three situations, Congress must expressly apply a statute to Indians before a court will hold that it reaches them.

The court held that none of these exemptions apply and a retail business located on an Indian reservation and owned by Indian tribal members is subject to the Fair Labor Standards Act (“FLSA”). Therefore the store must comply with federal wage and hour laws and pay overtime wages.

The district court ordered the automatic appointment of a receiver upon a failure to pay. The Circuit Court reversed. The court has authority to order a receivership, but only after evidence has been presented and findings made showing the necessity of a receivership.

Posted at 19:04 PM

Topic: Litigation