A case pending in a federal appeals court could force private prison companies that run U.S. Immigration and Customs Enforcement detention centers to pay the state minimum wage to detainees who voluntarily work in the facilities.
For-profit firms that manage prisons and immigration detention centers have received significant media attention since Donald Trump won the 2024 election. One of Trump’s top policy priorities centers on deporting “millions and millions” of undocumented individuals, and already, ICE detention centers are now at 109 percent capacity.
Less attention has been paid to an important legal battle involving private prison company and federal contractor GEO Group, which is appealing a decision finding that it should have paid civil detainees in immigration detention facilities it operated minimum wage for doing voluntary work during their confinement.
GEO Group runs the Northwest Immigration and Customs Enforcement Processing Center in Tacoma, Washington, on behalf of ICE. It is a 1,575 bed facility and the fourth-largest immigration detention center in the country.
In 2021, a jury said GEO Group owed $17.3 million in back pay for detainees in the facility who had received $1 a day for work performed for the detention center. The jury also awarded $6 million to the state, which had sued GEO Group for unjust enrichment due to not paying detainees the minimum wage. The detainees and the state both alleged that GEO Group violated the state’s minimum wage law by paying detainees only $1 a day for participating in the company’s Voluntary Work Program, which included tasks such as kitchen and janitorial work, building repairs, waste management, and laundry. A split 3-judge panel of the U.S. Court of Appeals for the Ninth Circuit affirmed the verdict in January. On February 6, GEO Group filed a petition with the same court, asking that the panel or the full court rehear the case.
Contractors operating ICE detention facilities are required to offer the Voluntary Work Program, and GEO Group’s contract with ICE to operate the Washington detention center requires contractors to compensate detainees at a rate of at least $1 a day. GEO Group estimated that if the Voluntary Work Program ended at just this one facility, the company would need to hire roughly 85 additional full-time employees to make up for work detainees conducted at the facility.
The case hinges on whether a private company that is serving as a federal government contractor is subject to the state’s minimum wage law or whether, as GEO Group argues, the state’s application of this law is precluded by principles of federal preemption and violates principles of intergovernmental immunity. GEO Group contends that applying Washington state’s minimum wage law in this situation violates the U.S. Constitution’s Supremacy Clause, which states that federal law takes precedence over state law.
The Ninth Circuit panel held that the state minimum wage laws apply equally to all private employers in the state, regardless of their contractual arrangement with the federal government. If upheld, that decision would create significant financial burdens for firms that manage federal detention centers for ICE and would put those facilities in contrast with state-run detention facilities in Washington. The Washington State Department of Corrections, for example, does not contract with any firms to manage state facilities, but its minimum wage law exempts “any resident, inmate, or patient of a state, county, or municipal correctional, detention, treatment or rehabilitative institution” from receiving minimum wage.
GEO Group signed a 10-year contract with ICE to manage the Washington detention center in 2015, and at the time, the company expected the facility to produce $57 million a year in revenue. In February 2024, the Biden administration’s Justice Department submitted a friend-of-the-court brief to the Ninth Circuit supporting GEO Group’s position that applying the state’s minimum wage law to federal contractors violated preemption principles.
GEO Group’s minimum wage fights are not limited to Washington. The company faces similar lawsuits in California and Colorado, and it clearly doesn’t want to set a precedent that it needs to pay the state’s minimum wage for detainees who work in this program in any of its federally contracted detention centers.
The Colorado case involving the minimum wage issue could eventually be heard by the Tenth Circuit Court of Appeals. If the Ninth Circuit and Tenth Circuit reach different conclusions, the U.S. Supreme Court could choose to resolve that split. The justices might also be interested in addressing this case because of the inherent potential conflict between federal and state law. If recent history is any indication, any Tenth Circuit decision may be the better predictor of a final ruling. The Ninth Circuit’s reversal rate has typically fluctuated between 70 percent and 90 percent, although last term the Supreme Court reversed the Ninth Circuit in 50 percent of the cases reviewed.
GEO Group is just one for-profit company that contracts with ICE to manage immigrant detention centers. The federal government relies on federal contractors to manage its network of immigrant detention centers, with more than 90 percent of individuals in immigrant detention housed in facilities owned or managed by for-profit entities.
The outcome of this case could impact other federal contractors that manage immigrant detention centers, including CoreCivic, MTC, and LaSalle Corrections. If forced to pay minimum wage, the companies could attempt to pass some of their increased costs onto the federal government when they negotiate or renegotiate their contracts, which could increase the federal government’s costs to outsource the operation of immigration detention.
