Excerpted From: Madison Tallant, Progressive Slavery: Violations of the Fair Labor Standards Act in Court-ordered Rehabilitation Programs, 25 Journal of Gender, Race and Justice 555 (Spring, 2022) (232 Footnotes) (Full Document)


MadisonTallantReformists have long advocated a total overhaul of the American criminal justice system. In particular, two things have drawn the attention of advocates. First, many activists emphasize the importance of ending exploitative prison labor to reduce rates of recidivism and to engage in a more humane treatment of incarcerated individuals. A second concern of progressives deals with a push for health-based treatment of addiction instead of incarceration. Underdiscussed in these communities is the disturbing relationship between unpaid labor and treatment facilities.

Recent reporting by Reveal has begun to shed light on this connection. Presently, there are nearly 300 rehabilitation facilities in forty four states across the United States that require patients to work without pay. These participants receive room and board, alongside less than twenty dollars per week, far below the federal minimum wage. Only one in five of these programs are licensed. Most important for the purposes of this Note, is despite the lack of licensing, roughly one-third of the facilities identified by Reveal accept court referrals for participants to attend the rehabilitation programs in lieu of prison time. In other words, the shift toward alternative sentencing also contains the pitfall that advocates criticize about incarceration--unpaid labor.

Legally, the general rule is that inmates in prison are not covered under the Fair Labor Standards Act (“FLSA”). The Department of Labor's (“DOL”) Field Operations Handbook, for example, states that “[g]enerally, a prison inmate who, while serving a sentence, is required to work by or who does work for the prison ... is not an employee within the meaning of the act.” However, according to the DOL, there are limited exceptions:

A different situation exists, however, where inmates are contracted out by an institution to a private company or individual. In such instances an employee-employer relationship is created between the private company or individual and the prisoners. This is true regardless of whether the work is performed within the confines of the institution or elsewhere.

While the majority of courts have found that prisoners are not covered by the FLSA even in the second context, some courts have been willing to recognize instances where an employment relationship was created between inmates and third parties such that the inmates were deemed employees under the FLSA.

Courts, however, have largely left untouched the question of whether court-ordered patients attending rehabilitation centers may be deemed employees under the FLSA. A recent case on point for this issue comes from the Second Circuit in the case Vaughn v. Phoenix House. In Vaughn, the Second Circuit applied the primary beneficiary test to determine that a court-ordered rehabilitation participant was not an employee for the purposes of the FLSA. In so finding, the Second Circuit noted that rehabilitation participant received “significant benefits,” especially because he was able to attend the rehabilitation center instead of jail and received food, housing, therapy, vocational training, and jobs “that kept him busy and off drugs.” Yet this application of the primary beneficiary test runs inapposite to prior Supreme Court precedent in Tony and Susan Alamo Foundation v. Secretary of Labor, a 1953 case that found that rehabilitation center participants were in fact employees for the purposes of the FLSA.

This Note will provide a brief history of the FLSA and the tests for employee status before exploring how these tests have been applied in the contexts of prison labor and rehabilitation centers writ large. Then, this Note will discuss court-ordered rehabilitation before arguing that the application of the primary beneficiary test is inappropriate for court-ordered rehabilitation center participants as it runs counter to Supreme Court precedent in Alamo Foundation, provides legal cover to the growing number of exploitative rehabilitation facilities, and ignores the fact that court-ordered rehabilitation participants are much more similar to prison inmates than they are to the unpaid interns, the primary beneficiary the test was created to address. Finally, this Note will provide a legislative and regulatory solution to these issues by proposing an amendment to the FLSA and suggest the implementation of stricter licensing and enforcement of any rehabilitation center that receives court-referrals.

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While this Note does discuss the darker side of court-ordered residential rehabilitation, it should not be read as a wholesale campaign against the usage of these programs. The reality is the use of rehabilitation programs as a general matter is laudable. The American incarceration system is overloaded with prisoners who could benefit massively from the use of rehabilitation programs as an estimate fifty percent of all prisoners meet the criteria for a diagnosis of drug abuse or dependance. Incarceration by itself is insufficient to address America's addiction crisis as nearly twenty-five percent of individuals released from prison will return with three years for violations such as testing positive for drug abuse. Evidence-based drug treatment can absolutely help reduce reoffending. Drug court graduates have rearrest rates of half of their counterparts. Furthermore, the use of rehabilitation programs in lieu of imprisonment is a massively effective cost saving measure. On average, incarceration in the United States costs $31,000 per year, ultimately costing taxpayers about eighty billion dollars per year. As an economic matter, the use of rehabilitative methods over incarceration just makes sense.

That, however, does not mean that the exploitative nature of some of America's rehabilitation programs does not need to be addressed. Among the Fair Labor Standards considerations there are additional problems including fraud and Thirteenth Amendment violations. A solution must be found that balances the efficacy of these programs with the very real risk of exploitation. Limiting the use of the primary beneficiary test and increasing licensing requirements will go a long way to ensuring those in rehabilitation programs are treated fairly.

J.D. Candidate, The University of Iowa College of Law, 2022; B.A. Rhodes College, 2019.